“Whether the Tribunal has correctly interpreted the terms of Power Purchase Agreement dated 30th May, 1996 (PPA) and is justified in reversing the finding of the Commission based on interpretation of the said PPA and other documents on record.?”= The questions which may be required to be examined by the Law Commission are : I Whether any changes in the statutory framework constituting various Tribunals with regard to persons appointed, manner of appointment, duration of appointment, etc. is necessary in the light of judgment of this Court in Madras Bar Association (supra) or on any other consideration from the point of view of strengthening the rule of law? II Whether it is permissible and advisable to provide appeals routinely to this Court only on a question of law or substantial question of law which is not of national or public importance without affecting the constitutional role assigned to the Supreme Court having regard to the desirability of decision being rendered within reasonable time? III Whether direct statutory appeals to the Supreme Court bypassing the High Courts from the orders of Tribunal affects access to justice to litigants in remote areas of the country? IV Whether it is desirable to exclude jurisdiction of all courts in absence of equally effective alternative mechanism for access to justice at grass root level as has been done in provisions of TDSAT Act (Sections 14 and 15). V Any other incidental or connected issue which may be considered appropriate.

                                 REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 3455  OF 2010

Gujarat Urja Vikas Nigam Ltd.                         … APPELLANT

                                   VERSUS

ESSAR POWER LIMITED                                         ...RESPONDENT


                               J U D G M E N T


ADARSH KUMAR GOEL, J.


Part I : Introductory


1.     This  appeal  has  been  preferred   under   Section   125   of   the
Electricity  Act,  2003  (‘the  Act’)  against  the   judgment   and   order
       dated 22nd February,  2010  passed  by  the  Appellate  Tribunal  for
Electricity (the Tribunal) in Appeal No.86 of 2009 whereby the Tribunal  has
set aside the order of the Gujarat Electricity Regulatory  Commission  (‘the
Commission’) which was in favour of the appellant.


2.    The substantial question of law sought to be raised by  the  appellant
is :


“Whether the Tribunal has correctly interpreted the terms of Power  Purchase
Agreement dated 30th May, 1996 (PPA)  and  is  justified  in  reversing  the
finding of the Commission based on interpretation of the said PPA and  other
documents on record.?”


Part II : Facts


3.    The appellant, Gujarat Urja Vikas Nigam Ltd.  (‘the  GUVNL’),  is  the
successor of the Gujarat Electricity Board and is a  deemed  licencee  under
Section 2 (39) read with Sections 12 and 14 of  the  Act.   The  respondent,
ESSAR Power Limited (‘the EPL’), is a generation company within the  meaning
of Section 2 (28) of the Act.   The appellant filed a  petition  before  the
Commission under Section 86 (i)(f)  of  the  Act  for  adjudication  of  the
dispute arising out of  the  Power  Purchase  Agreement  (‘the  PPA’).   The
appellant  inter  alia  sought  compensation  for  wrongful  allocation   of
electricity by the EPL to its sister concern,  Essar  Steel  Ltd.  (ESL)  in
preference to the appellant.


4.    According to the appellant, the EPL was required to  allocate  300  MW
out of the total 515 MW of electricity and the remaining 215 MW  was  to  be
allocated to ESL.  In case the quantum of generation was less than  515  MW,
the allocation was to be in the proportion of 300 : 215.  Contrary  to  this
requirement, the EPL allocated more electricity to  ESL.   The  EPL  agreed,
vide letter dated  17.02.2000,  that  the  appellant  will  be  entitled  to
electricity in the proportion of 300 : 215 but the same was not adhered  to.
 This resulted in  loss  to  the  appellant  and  gain  to  the  EPL  which,
according to the appellant,  tentatively  worked  out  to  Rs.476.22  crores
(towards principal amount).   It was further pleaded by the  appellant  that
under the agreement, the appellant  was  liable  to  pay  the  annual  fixed
charges, the variable charges, incentive etc. in relation to  the  allocated
capacity of 300 MW out of total 515 MW.  Similarly, the ESL to whom  balance
capacity of 215 MW was allocated was  to  bear  proportionate  annual  fixed
cost, thus, the EPL was  required  to  make  electricity  available  to  the
appellant in the proportion of 300 : 215 as per clause 3 of  the  Agreement.
The EPL was required to declare the availability in the same  proportion  so
that the dispatch instruction could be issued  as  per  the  Agreement.  The
appellant pleaded that it was entitled to compensation for wrong  allocation
of electricity based on the applicable HT  rate  from  time  to  time.   The
appellant  claimed  damages  equal  to  the  difference  of  rate  at  which
electricity was to be supplied to it and the rate  at  which  the  appellant
was to supply the same to its consumers.  For this purpose,  the  respondent
was liable to give true details and complete account of the allocation  made
to the appellant and to ESL. The appellant  had  also  raised  a  claim  for
recovery of Deemed Generation Incentive paid to the respondent to which  the
respondent was not entitled but the said claim is no longer  subject  matter
of this appeal, the order of the Tribunal  in  that  respect  having  become
final.


5.     It will be appropriate to refer to the prayer clause in the  petition
filed by the appellant :-


      “(a)  hold that the petitioner is entitled to  adjust  in  the  tariff
payable by the petitioner to the respondent for purchase of electricity  all
amounts received by  the respondent as  a  result  of  wrong  allocation  of
electricity; and deemed generation incentive when Naphtha is proposed to  be
used as fuel;


      (b)   award cost of the proceedings in favour of  the  petitioner  and
against the respondent; and


      (c)   pass such other or further orders as may  be  deemed  proper  to
give relief to the petitioner;


      (d)   continue to raise  bills  on  Essar  Group  Companies  based  on
proportionate methodology.”





6.     The  above  claims  were  contested  by  the  respondent   based   on
preliminary objections including the  plea  of  limitation  as  well  as  on
merits.


Part III : Pleadings


7.    As noticed in Para 4 above, the case of the appellant in the  petition
filed before the Commission was that the  respondent  had  wrongly  utilized
the capacity of the generating station in  favour  of  its  sister  concern,
against the rights and interest of the appellant in violation  of  the  PPA,
the  respondent  allocated  part  of  generating  capacity  required  to  be
allocated to the appellant to its sister concern.   The  appellant  had  the
obligation to pay annual fixed charges, variable charges, incentive etc.  in
relation to the specified allocated capacity and the sister concern  of  the
respondent was to  pay  proportionate  annual  fixed  cost.   The  Agreement
required the EPL to declare availability in the  specified  proportion  even
when generation was less than the  total 515 MW capacity.  Contrary  to  the
said requirement, the respondent  allocated  more  electricity  to  ESL  and
offered proportionately less electricity  to  the  appellant.  Thereby,  not
only the agreement was violated,  the  understanding  reflected  in  letters
issued by the respondent  was  also  not  honored.   In  para  23.0  it  was
specifically  mentioned  that  the   appellant   was   entitled   to   claim
compensation for the wrong allocation and in para  24.0,  it  was  mentioned
that the respondent was required to give detailed and  complete  account  of
the allocation made.


8.    As against the  above  stand  of  the  appellant,  the  stand  of  the
respondent in its written submission filed before  the  Commission  on  15th
January, 2009 is that its only obligation was to supply 300 MW to the  Board
as and when called upon to do so.  There was no bar to supply more than  215
MW to ESL.  There is no evidence of any  loss  suffered  by  the  appellant.
Article 3.1 of  the  Agreement  could  not  be  read  as  suggested  by  the
appellant.  Further, if supply  was  below  the  quantum  specified  in  the
dispatch instructions, penalty could be  claimed  as  per  clause  7.4.3  of
Schedule VII of the Agreement.  Further,  the  appellant  was  defaulter  in
complying with its obligations in making timely payment.


Part IV : Finding of the Commission


9.    The Commission upheld the plea of limitation raised by the  respondent
to the extent that the appellant was held entitled to its  claims  only  for
three  years  preceding  the  filing  of  the  petition,  i.e.,  from   14th
September, 2002, the petition having been filed  on  14th  September,  2005.
The Tribunal upheld the said finding.  Though the appellant had filed  Civil
Appeal No.3454 of 2010 on this aspect, the  said  appeal  was  dismissed  by
this Court vide order dated 2nd September, 2011 as follows :


“The      appeal      directed      against     the      decision      dated
22.2.2010      rendered     by      the     Appellate      Tribunal      for
Electricity  in  appeal  No.77/2009  upholding  the  finding  of  the  State
Commission that the claim of the appellant against the  respondent  for  any
period upto 14.9.2002 is barred by  time  except  to  the  extent  of  Rs.64
crores paid by the respondent to the appellant  pursuant  to  the  full  and
final settlement of claims for the period from 1998  upto  September,  2004,
is dismissed.”





10.   The Tribunal also upheld the order of  the  Commission  accepting  the
claim of the appellant under the head of a Deemed Generation  Incentive  and
the respondent has not challenged this aspect.


11.   Thus, the  only  question  for  consideration  is  the  claim  of  the
appellant for failure to declare availability of power in the proportion  of
300 : 215 MW for the period from 14th September, 2002 onwards.


12.   The Commission on this aspect held as follows :

“9.1 The PPA was executed on 30.5.1996 and effective  for  a  period  of  20
years. The relevant clauses of the PPA  have  been  examined.  It  is  quite
clear that under the PPA, GUVNL has an obligation to  pay  an  annual  fixed
cost for the allocated capacity, which is 300 MW.  Having  paid  the  annual
fixed cost for the said capacity,  GUVNL  has  a  right  for  an  equivalent
amount of electrical output. The purpose of paying annual fixed cost  is  to
ensure that GUVNL alone has the right to the said capacity and that no  part
of the same can be sold to any other party. It is true that  41  the  normal
industry practice is that unless the allocated  capacity,  for  which  fixed
charges are being paid by the beneficiary is  surrendered,  the  beneficiary
has the ability to sell/ negotiate any transaction for utilisation  of  such
allocated capacity. In this context, reference is  also  made  to  the  CERC
(Terms and Conditions of Determination of Tariff) Regulations, 2004.

9.2 The question that arises for consideration is whether  GUVNL  can  claim
allocation on a proportionate basis i.e. to say, that if EPL  is  unable  to
declare 300MW capacity which is allocated to GUVNL under the PPA, EPL  would
then have to declare capacity proportionately in the  ratio  of  58:42  from
the total declared capacity. In this context one is  required  to  carefully
review Article 3.1 of the PPA.

 9.3 Although in the definition of allocated capacity, it is only  mentioned
that 192MW capacity during Open Cycle  mode  operation  and  300MW  capacity
during Combined Cycle mode operation is allocated  to  GUVNL,  the  same  is
further elaborated in Article 3.1. In Article 3.1, the parties  have  agreed
as follows:

“3.1 The allocation of the Capacity shall be as under:

a) During Open Cycle mode operation prior to commissioning of  the  Combined
Cycle mode operation: 138MW to the Essar Group of Companies; and 192  MW  to
the Board
 b) During Combined Cycle mode:
215 MW to the Essar Group of Companies; and
300 MW to the Board

The Company undertakes that, subject to the provisions and during  the  term
of this Agreement, it will fuel and operate the Generating Station  to  meet
the requirements of electrical output that can  be  generated  corresponding
to the allocated capacity, in accordance with its Dynamic Parameters  so  as
to comply with the Operating Characteristics except to the extent:

 (i) as anticipated under the Maintenance Programme  during  the  period  of
Scheduled Outage.
(ii) That to do so would not be in accordance with Good Industry Practice;
 (iii) That may be necessary due to circumstances  relating  to  Safety  (of
personnel or plant apparatus);
(iv) that to do so would be unlawful;
(v)  That  may  be  necessary  for  reasons  of  Force  Majeure  Natural  or
NonNatural.”

 9.4 For the interpretation of the contract the following principle as  laid
down by the Supreme Court in  Mrs.  M.N.  Clubwala  v.  Fida  Hussain  Saheb
(1964) 6 SCR 642 has to be kept in mind:

 Whether an agreement  creates  between  the  parties  the  relationship  of
landlord and tenant or merely that of licensor  and  licensee  the  decisive
consideration is the intention of the parties.  This  intention  has  to  be
ascertained on a consideration  of  "all  the  relevant  provisions  in  the
agreement.”
“…The dispute may arise between the very parties to the written  instrument,
where  on  the  construction  of  the  deed  one  party  contends  that  the
transaction is a  'licence'  and  the  other  that  it  is  a  'lease'.  The
intention to be gathered from the  document  read  as  a  whole  has,  quite
obviously, a direct bearing.” (Underline Supplied).

 Also, the Hon’ble Supreme Court has held in State of  Andhra  Pradesh.  Vs.
Kone Elevators India Ltd. (2005) 3 SCC 386:

 “It is a settled law that the substance and not the form  of  the  contract
is material in determining the nature of the transaction”.

Therefore, it is necessary to read the PPA as a whole in  order  to  give  a
correct interpretation to the terms therein  contained.  The  definition  of
‘Allocated Capacity’ in the PPA has to be read in conjunction  with  Article
3.1. Article 3.1 clearly records the  allocation  of  capacity  between  two
entities i.e. GUVNL as well as Essar Steel.

9.5  From  the  reading  of  the  Article  3.1  of  the  PPA  as  also   the
corresponding Articles in the PPA with Essar Steel, it  is  clear  that  the
intention of the parties was that the capacity of the generating plant  will
be shared between the two beneficiaries only. The fact that Article  3.1  of
the present PPA records the capacity allocated to the Essar Group  companies
along with the capacity allocated to  GUVNL  shows  that  intention  of  the
parties was to provide for allocation in the proportion  of  138:192  (while
working in open cycle mode) and 215:300 (while  working  in  combined  cycle
mode). Otherwise there is no reason for mentioning in Article  3.1.  of  PPA
about the quantum that is contracted with Essar Steel. Similarly,  the  fact
that the PPA with Essar Steel states the allocation to GUVNL  goes  to  show
that the allocation was intended to be on  a  proportionate  basis,  between
the two parties  /  purchasers  only.  During  the  arguments,  the  Learned
Counsel  for  the  Respondent  also  clarified  that  apart  from  the   two
purchasers of power there is no  other  third  party  sale  that  has  taken
place. The intention of EPL is to recover the fixed  charges  is  only  from
the two beneficiaries, in proportion to  the  allocated  capacity.  This  is
clear from the reading of the two PPAs. Hence, EPL  cannot  argue  that  the
PPA  does  not  recognise  the  proportionate  principle  at  all.  If   the
proportionate principle is acceptable for  recovery  of  fixed  charges,  it
cannot be abandoned for allocation of supply.

9.6 The submission of EPL that there is no clause in the PPA that it  cannot
supply more than 215 MW to Essar Steel is also not correct. Once the  entire
capacity has  been  allocated  between  the  two  parties  in  a  particular
proportion, EPL cannot violate the proportionate allocation for the  benefit
of any one party. Having sold the capacity of 300 MW to GUVNL and 215 MW  to
Essar Steel, for which fixed charges are paid in the  said  proportion,  EPL
cannot argue that it can sell power  to  Essar  Steel  beyond  the  capacity
allocated to it. There is no spare capacity that  allows  EPL  to  do  that.
Under the procedure for dispatch in Schedule VI  of  the  PPA,  EPL  had  to
declare weekly schedules of the “Capacity” that is available for the  entire
station  (and  not  the  “Allocated  capacity”).  On  the  basis   of   such
declaration, requirement-schedule and dispatch instructions are issued.  The
obligation of EPL is clearly to declare the  “Capacity”  of  the  generating
plant as a whole. Once the declared availability for  the  entire  plant  is
known, the beneficiaries will proceed  to  issue  dispatch  instructions  in
accordance with the terms of the PPA. Hence, the argument  of  EPL  that  it
does not have the obligation to declare capacity for  the  entire  plant  is
incorrect and contrary to  the  terms  of  Schedule  VI  of  the  PPA.  This
submission is contrary to the procedure prescribed in the  PPA  as  well  as
the normal industry practice. Once the capacity of  the  generating  station
as a whole is available, the allocation of capacity has  to  take  place  in
the proportion that is contracted. Also, the  submission  of  EPL  that  the
Petitioner's only concern, under terms of the  PPA,  is  that  it  must  get
electricity in accordance with its Dispatch Instructions, within the  limits
of allocated capacity is not entirely correct. The Petitioner  has  a  right
to be supplied electrical output proportionate to the declared  capacity  of
the generating plant in terms of the PPA. EPL cannot ignore  its  obligation
of  declaring  the  entire  capacity.  Once  the  entire  capacity  of   the
generating plant is declared, the proportionate principle of  allocation  of
capacity  will  become  applicable  and  as  a  natural   consequence,   the
electrical  output  will  be  allocated  and  supplied   between   the   two
beneficiaries on  proportionate  basis,  in  accordance  with  the  dispatch
instructions. It appears that EPL is avoiding its obligation to declare  the
entire capacity. The  ability  to  recover  deemed  non  generation  due  to
difference in schedule generation and actual generation has  nothing  to  do
with the requirement to allocate capacity and supply electrical output on  a
proportionate basis.

9.7 In view of the aforesaid, the Commission accepts the submission made  by
GUVNL to the effect that, if in a time block the declared  availability  for
the station with 515 MW of the installed capacity in only 400 MW,  the  same
should be declared available to GUVNL to the extent of 233 MW and  to  Essar
Group to the extent of 167 MW, maintaining the proportion  of            58%
: 42% (300:215). It is not valid for EPL to declare available  in  any  time
block to Essar Group to the  extent  of  215  MW  towards  their  share  and
declare available to GUVNL 185 MW. Such an act would mean that  Essar  Group
is being preferred at the cost of GUVNL. As against the GUVNL’s  entitlement
of 233 MW they will get only 185  MW  and  therefore  a  deficit  of  48  MW
equivalent of electricity. That certainly cannot be  the  intention  of  the
parties.

9.8 Under the PPA, the obligation  to  supply  power  by  EPL  to  GUVNL  is
limited to the electrical output equivalent to  the  allocated  capacity  of
300 MW. The fact that the EPL has an obligation to make  payment  of  deemed
non generation incentive and reduce annual  fixed  charges  on  a  pro  rata
basis,  cannot  in  any  manner  negate  the  proportionate   principle   of
allocation when EPL declares availability less than the allocated capacity.

9.9 In this context, EPL’s reliance on  the  letter  of  the  Government  of
Gujarat dated 05.06.1995 to argue that only the surplus, after  meeting  the
requirement of its sister companies, is to  be  supplied  to  GUVNL  is  not
correct. Once the PPA has been executed, the parties  are  governed  by  the
terms of the PPA. In fact Article 12.5 of the PPA  clarifies  that  the  PPA
and the schedules attached thereto are a complete  and  exclusive  statement
of  the  terms  of  the  agreement  and  that  all  prior  written  or  oral
understandings, offers or other communication of every  kind  pertaining  to
the sale or purchase of electrical output and  dependable  capacity  between
the parties is abrogated and withdrawn.

9.10 Furthermore, in the letter dated 17.02.2000, EPL  categorically  agreed
to the concept that power should be supplied in the ratio of 58:42  provided
certain conditions are fulfilled.  The  conditions  mentioned  in  the  said
letter will demonstrate that the each condition is either in the  nature  of
additional concessions / modification that were sought  by  EPL  or  alleged
defaults on the part of GUVNL, which was not agreed to by GUVNL.

9.11 However, if GUVNL does not take the power declared available by EPL  in
terms of the aforesaid ratio, EPL will have the right to sell the  power  to
its sister concern subject to reimbursement  of  the  proportionate  of  the
annual fixed charges. GUVNL cannot make a submission that although  it  will
not purchase such power as declared available by EPL, EPL  cannot  sell  the
same to its sister concern. Such a submission would defeat  the  purpose  of
the  Electricity  Act,  2003  and  the  National  Electricity  Policy  which
promotes generation and encourages sale of surplus capacity. If  GUVNL  does
not schedule the power to the extent of availability declared by EPL of  the
entire plant in terms of the PPA, it cannot complain if the  power  is  sold
to EPL’s sister concern and the proportionate of the annual  fixed  cost  is
reimbursed.

9.12 The Commission  is  of  the  view  that  GUVNL  is  entitled  to  claim
compensation for the energy  diverted  to  Essar  Steel  from  the  capacity
allocated to GUVNL under the PPA. EPL at all times has an  obligation  under
the present PPA to declare availability for the entire  plant  and  allocate
the supply on the basis of 300:215 or 58:42.

9.13  As  regards  the  quantum  of  compensation  payable  on  account   of
diversion, the PPA is silent on the same. The parties in the settlement  for
dues on account of diversion for the  period  between  1998  and  September,
2004 agreed on a particular methodology for determining  such  compensation.
The parties had agreed that GUVNL is entitled to the  HTP  1  energy  tariff
after excluding the variable cost. The diversion in the circumstance  should
be computed on an hourly  basis.  This  appears  to  be  a  fair  manner  of
determining the compensation that  is  to  be  paid  for  the  period  after
September, 2004. The parties are required to reconcile the  generation  data
and make final calculation on the basis of the aforesaid principle.

9.14 The Commission also directs that for the remaining period of  the  PPA,
EPL has a legal obligation to declare availability for the  entire  capacity
and that it shall not divert any power to its sister  concern  in  a  manner
contrary to the proportionate  principle.  If  GUVNL  declines  to  purchase
power allocated on the proportionate basis, EPL will have the right to  sell
the power to its sister concern subject to  reimbursement  of  proportionate
of the fixed cost.”




Part V : Appeal to the Tribunal and the Finding of the Tribunal


13.   The respondent preferred an appeal before the  Tribunal  being  Appeal
No.86 of 2009.  Contention of  the  appellant  was  that  the  EPL  was  not
obliged to declare electricity availability in ratio of 300 : 215 MW to  the
appellant.  The PPA signed with the appellant and the sister concern of  the
EPL  were  independent.   The  obligation  to  supply  was  to  arise  after
receiving dispatch instructions only.


14.   The Tribunal framed following questions for consideration :


“ (i) Whether under the PPA I and II the supply of electrical output  to  be
made by the Appellant shall be in the ratio of  300:215  MW,  the  allocated
capacity of the Electricity Board (R-1) and Essar Steels Ltd. respectively?


 (ii) Whether the Appellant, which failed to declare the entire capacity  of
its  generating  station  to  the  Electricity  Board  made  the  supply  of
electricity to its sister concern Essar Steels Ltd. in excess  of  the  said
ratio is liable to be held responsible for the breach of the  terms  of  PPA
and consequently the Appellant  is  liable  to  compensate  the  Electricity
Board (R-1)”…..





15.   The Tribunal upheld the stand of the EPL.  It was held  that  Articles
I    and III of Schedule VI to the PPA did not require the  EPL  to  declare
the capacity in the ratio of   300  :  215 MW.   As  regards  letters  dated
17th February,  2000    and  4th  October,  2001  by  which  the  respondent
accepted its liability, it  was  held  that  the  GUVNL  never  accepted  or
complied with its obligations and therefore, the respondent  was  not  bound
by the stand in the said letters.  It was further observed  that  the  claim
for the period from 1st July, 1996 stood settled in view letter  dated  13th
October, 2006 of the GUVNL to accept Rs.64 crores for diverting  electricity
to ESL. Non-declaration of available capacity  on  proportionate  basis  was
not shown to have resulted in any loss or damage to GUVNL.   GUVNL  had  not
proved any actual loss.   It was observed that on the principle  of  Section
35 of the Sale of Goods Act, 1920, there was no  obligation  to  deliver  in
absence of dispatch instructions.  Further, the ESL  supplied  fuel  to  EPL
for conversion into electricity but for supply to the GUVNL, the EPL had  to
procure fuel from outside.  GUVNL also made default  in  making  payment  to
the EPL which amounted to  breach  of  reciprocal  obligation.   GUVNL  also
failed to establish letter of credit to secure the  payment  of  the  amount
payable to the EPL which also was breach on the part of the appellant.


16.   The finding of the Tribunal is :-


“45. From these provisions of Schedule-VI, it is  clear  that  there  is  no
provision, express or implied, to suggest that the EPL is liable to  declare
the available capacity in the said ratio to the Board and the  Essar  Steels
Ltd. All these provisions would only say that the  EPL  has  to  first  give
Weekly Schedules to the Electricity Board indicating the time  and  capacity
which would be available and the Electricity Board  shall  thereafter  issue
its requirement schedule through Despatch Instructions and thereupon EPL  is
liable to  operate  generating  station  in  accordance  with  the  Despatch
Instructions given by the Electricity Board and supply.


46. On a combined reading of Articles 1 and 3 and Schedule VI of the  PPA-1,
it is clear that EPL has to declare available capacity up to  the  allocated
capacity to both the Electricity Board as well as to Essar Steels  Ltd.  and
not on proportionate theory basis.


 47.  As  a  matter  of  fact,  Article  5.2  of  the  PPA-1  obligates  the
Electricity  Board  to  pay  to  the  Appellant  its  Annual  Fixed  Charges
including the cost of the project on the level of generation achieved up  to
the allocated capacity  and  not  on  the  allocated  capacity  itself.  The
Electricity Board has accordingly paid the Annual Fixed Charges  on  monthly
basis on the level of generation achieved up to the allocated capacity.


48. It is pointed out by the Ld. Senior Counsel for the  Appellant  that  so
far  as  the  payment  towards  cost  of  the  project  is  concerned,   the
Electricity Board had agreed to pay Rs. 945 crores out of the total cost  of
the project amounting to Rs. 2061 crores which only comes  to  approximately
46%, i.e. less than 58% of the total project cost.


 49. In such circumstances, the Electricity Board (R-1)  cannot  claim  that
by reasons of it’s making payment for the Annual Fixed  Charges  up  to  the
allocated capacity, it was always obligatory on  the  part  of  the  EPL  to
supply power to the extent of 58% to the Electricity Board  and  that  since
EPL has sold a part of Electricity Board’s share in the power  generated  by
the EPL to its sister concern, EPL is liable to compensate  the  Electricity
Board for the same by treating such power which sold by EPL to  Essar  Steel
Ltd. as if it was sold by the Electricity Board itself to Essar  Steel  Ltd.
after purchasing the same from the EPL.


50. On  the  basis  of  letters  dated  17.02.2000  and  04.10.2001,  it  is
contended on behalf of the Electricity Board (R-1) that EPL has conceded  to
its proportionate  theory  basis  and  as  such  it  cannot  go  back.  This
contention is not  tenable.  EPL  in  those  letters  merely  expressed  its
willingness to agree to  the  proportionate  theory  basis  subject  to  the
condition that  Electricity  Board  should  commit  default  in  making  the
payment of dues payable under the PPA-1 to  EPL  and  also  subject  to  the
condition that the Electricity Board shall comply with other  conditions  of
the PPA-1.


51. Admittedly, the stipulated conditions  in  those  letters  were  neither
accepted nor complied with by the Electricity Board. Hence  the  offer  made
by the EPL to the  Electricity  Board  for  agreeing  to  the  proportionate
theory basis would not be construed to  be  conceding  and  as  such  it  is
binding on it.


52.  In  the  second  letter  dated  04.10.2001  also,  EPL  stipulated  the
condition of making prompt payments by the Electricity Board to EPL and  for
establishment of Letter of Credit to secure payments under PPA-1. Even  this
condition, the Electricity Board was not ready to comply with. As  such  the
proposal made by the EPL to the Electricity  Board  regarding  proportionate
theory subject to the conditions is not binding on the Appellant.


53. Furthermore, when there is an amendment  to  the  PPA-1  on  18.12.2003,
there is no reference about these amendments for declaration  of  supply  of
power in the ratio of 58:42 to the Electricity  Board  as  well  as  to  the
Essar Steels Ltd.  respectively.  The  preamble  of  the  said  Supplemental
Agreement dated 18.12.2003 clearly establishes that EPL is only  obliged  to
generate the electricity up to 300 MW allocated  to  the  Electricity  Board
and nothing more. In other words, there is no amendment with regard  to  the
declaration of electricity generated on  proportionate  basis  in  the  said
Supplemental Agreement dated 18.12.2003.


54. Under such circumstances, it is not open to  the  Electricity  Board  to
rely upon the aforesaid letters dated 17.02.2000 and 04.10.2001  to  advance
the plea of its proportionate theory.


55. It is an admitted fact that the Electricity  Board  through  its  letter
dated 29.10.2003 demanded from EPL the payment of  an  aggregate  amount  of
Rs. 537 crores on account of alleged diversion of  power  by  EPL  to  Essar
Steels Ltd for the period commencing from 01.07.1996 to 31st March 1999.  It
is also an admitted fact that the parties thereafter held several rounds  of
discussions and as a result of those discussions, a settlement was  actually
arrived at by the parties in October 2004. Pursuant to the said  settlement,
the Electricity Board recalculated the amount, due on  the  basis  of  power
supplied by the EPL to Essar Steels Ltd in excess of the allocated  capacity
of 215 MW shall alone be treated as sold and  supplied  by  the  Electricity
Board. On this basis, the Electricity Board itself furnished a statement  to
the Appellant, EPL showing that a sum of Rs. 64 crores is  payable  for  the
aforesaid period and on the aforesaid basis, the EPL accepted the same as  a
part of overall package and authorized the Electricity Board to recover  the
same on a condition that the same methodology would  be  adopted  in  future
also. Thereafter, through their letter  dated  13.10.2006,  the  Electricity
Board accepted to receive Rs. 64 crores for  diverting  the  electricity  to
the Essar Steels Ltd.


56.  Under  those  circumstances,  it  is  clear  that  the  claim  of   the
Electricity Board against the EPL with respect to the alleged  diversion  of
power by the EPL to Essar Steels Ltd.  for  the  period  from  01.07.96  had
already  been  settled  by  the  payment  and  this  settlement  is   final,
conclusive and binding on the parties. As correctly observed  by  the  State
Commission, the same is not liable to be reopened at this stage.


57. Admittedly, it is not established  that  there  is  any  breach  of  the
contract as the part of  the  Appellant  under  PPA-1  on  account  of  non-
declaration of available capacity to the Electricity Board on  proportionate
basis. The compensation can be claimed only when there is a breach  and  due
to the same there was a  loss  or  damage  caused  by  the  said  breach  of
contract. This has to be  pleaded  and  proved.  Unless  this  is  done,  no
compensation can be claimed. This is a settled law as held  by  the  Supreme
Court in (1974) Vol-2 SCC 231 – Raman Foundry V/s Union of India.


58. In the present case, the Electricity Board has not  pleaded  and  proved
the actual loss or damage  caused  to  it  due  to  the  alleged  breach  of
contract. The principle enshrined in section 73  of  the  Contract  Act  has
been incorporated in Article 10.1 of the PPA-1 which reads as follows:


“……neither Party shall be liable to  the  other  Party  in  contract,  trot,
warranty, strict liability or any other  any  other  legal  theory  for  any
indirect, consequential, incidental, punitive or exemplary damages.  Neither
Party shall have any liability to the other Party  except  pursuant  to,  or
for breach of this Agreement, provided, however, that this provision is  not
intended to constitute a waiver of any  rights  of  one  Party  against  the
other with regard to matters related  to  this  Agreement  or  any  activity
contemplated by this Agreement”.


59. Similarly, the explanation to Section 73  of  the  Indian  Contract  Act
provides that in estimating the  loss  or  damage  arising  from  breach  of
contract, the means which existed of remedying the inconvenience  caused  by
the non-performance of the contract must be taken into account.  It  is  the
duty of the court to take into account whether the party affected by  breach
of contract has performed its duty to mitigate  the  loss  while  estimating
the loss or damage arising from the  breach  of  contract.  In  the  present
case, the Electricity Board merely pleads that EPL  has  failed  to  declare
and supply the available capacity of electricity on proportionate  basis  to
the Electricity Board and nothing more.


60. As indicated above, as per Article 3.2 of PPA-1, the EPL becomes  liable
to deliver the capacity to the Electricity Board at the  delivery  point  in
accordance with the Despatch Instructions.  The  Despatch  Instructions  are
instructions  for  delivery  of  electricity.  The  principle  contained  in
Article 3.2 of PPA-1 is in terms of the provisions  of  Section  35  of  the
Sale of Goods Act, 1920. Section 35 of the Sale of Goods Act  declares  that
the seller of goods is not bound to deliver until the buyer applies for  the
delivery.


xxx


74. One more aspect needs to be mentioned. The arrangement  in  relation  to
supply of electricity up to the  allocated capacity of 300  MW  between  the
Appellant EPL and the Electricity Board under the PPA-1 and between the  EPL
and its sister  concern  Essar  Steels  Ltd.  under  PPA-2  read  with  Fuel
Management Agreement dated 18.10.1996 are materially  different.  The  Essar
Steels Ltd supplies fuel to EPL for  conversion  into  electricity,  whereas
the Electricity Board  is  under  no  obligation  to  supply  fuel  to  EPL.
Admittedly, the EPL has  to  procure  fuel  from  outside  and  use  it  for
generating electricity for sale to the Electricity Board.


75. The PPA-1 is a contract  between  the  EPL  and  the  Electricity  Board
containing  reciprocal  promises.  In   consideration   of   EPL   supplying
electricity to the  Electricity  Board  up  to  the  allocated  capacity  in
accordance with the Despatch Instructions, the Electricity Board had  agreed
and undertaken to pay the EPL the tariff as mentioned in the PPA- 1.  It  is
an admitted fact that the Electricity Board has committed default in  making
payment when due to be made to the EPL under the PPA-1. In  fact,  the  EPL,
the Appellant has produced materials to show that at one point  of  time  in
March 2008, the aggregate amount due to EPL was  to  the  tune  of  Rs.  519
crores. EPL has produced documents to show that the Electricity Board  is  a
defaulter in making payment of its  due  under  the  PPA-1  right  from  the
inception of it.


76. It is also an admitted fact that EPL had written several letters to  the
Electricity Board to establish Letter of Credit to  secure  the  payment  of
the amount payable under PPA-1 and also pay the amounts when  due.  But  the
Electricity Board did not heed to the  request  made  by  the  EPL  in  this
behalf and as a result of it the ability of EPL to  purchase  the  fuel  for
generating  electricity  meant  for  sale  to  the  Electricity  Board   got
impaired.


77. As mentioned above, the claim for compensation made by  the  Electricity
Board against EPL in the present case  is  due  to  the  alleged  breach  of
contract by EPL in declaring and supplying  the  power  to  the  Electricity
Board in the proportion of 300MW out of  the  total  capacity  515  MW.  The
grievance is that EPL has supplied less  power  than  what  is  due  to  the
Electricity Board under the PPA-1. As aforesaid, Article 3.2  of  the  PPA-1
obliges the Appellant to supply electricity to the  Electricity  Board  only
in accordance with the Despatch Instructions given by the Electricity  Board
from time to time. As a matter of fact, there is no provision in  the  PPA-1
which restricts the right of the Electricity Board to demand for  supply  of
electricity  only  up  to  the  declared  available  capacity  of  the  EPL.
Admittedly, many a times the Electricity Board  asked  for  supply  of  more
quantum of electricity than what was declared as available to it by the  EPL
by revising its Despatch Instructions and  immediately  thereafter  the  EPL
met this demand.


xxx


81. In the light of the above position, the direction  given  by  the  State
Commission with reference to reimbursement of Annual Fixed  Charges  to  the
Electricity Board when the Electricity Board has not secured energy  to  the
extent allocated under the proportionate principle is  not  correct  as  the
same is misconceived. In this case we are of the view that the Annual  Fixed
Charges are not refundable for the surrendered portion  of  the  electricity
to the person in whose favour such electricity  is  surrendered.  Hence,  in
regard to the issue relating to the liability to pay  compensation  we  hold
that, in Electricity Board is  not  entitled  to  get  the  compensation  as
claimed and as such the Appellant EPL succeeds in this  issue.  Consequently
the findings given by the State Commission on this issue are set aside.  “





Part VI : Rival Submissions


17.   We have heard Shri C.A.  Sundaram,  learned  senior  counsel  for  the
appellant  and  Shri  K.K.  Venugopal,  learned  senior  counsel   for   the
respondent.


18.   Learned counsel for the appellant  submitted  that  the  Tribunal  had
ignored the implications of Article 3 of the PPA.  The true  import  of  the
PPA clearly casts an obligation on the EPL to allocate electricity in  ratio
of 300 : 215 MW.  This  interpretation  was  accepted  by  the  EPL  in  its
letters dated 17th February, 2000, 4th March, 2000 and  4th  October,  2001.
Issues of non payment of money due or not opening the letter of  credit  and
not making advance payment of fuel stood settled by Supplementary  Agreement
dated 18th December, 2003 and letter dated 19th December, 2003.   Thus,  the
Tribunal erroneously assumed that amount of Rs.519 crores  was  outstanding.
  Moreover, there is an error in the order  of  the  Tribunal  in  observing
that GUVNL had not proved suffering of any damage. Para 23 of  the  petition
expressly asserted the damage.  There is further error in interpretation  of
Schedule VI  in regard to the obligation  to  declare  the  availability  of
generating power upon which the dispatch instructions could  be  issued.  In
absence of such declaration, the dispatch instructions could not be  issued.
 Finding that the appellant accepted Rs.64 crores by way of  settlement  was
against record.


19.    The EPL supports the view taken by the  Tribunal.   It  is  submitted
that there was no obligation  for  proportionate  declaration  of  available
generation  capacity.   The  respondent  was  to  meet  the  requirement  of
electric output  corresponding  to  allocated  capacity  of  300  MW.   This
obligation was subject  to  reciprocal  performance  of  obligation  by  the
appellant.  The  PPA  executed  by  the  respondent  with  the  ESL  was  on
different terms. The appellant was required to make  payment  on  due  dates
under Article 5.3 of the Agreement and was  also  required  to  establish  a
letter of credit under Article 5.5.  As against this, under Article  4.1  of
the PPA with the ESL, fuel is to be supplied by the  ESL  which  created  an
obligation to generate electrical output upto the capacity allocated to  the
ESL.  For supply to the appellant, fuel is required to be  arranged  by  the
respondent.  The appellant had not paid cost  for  its  allocated  capacity.
The cost was pegged at  Rs.945  crores  as  against  investment  of  Rs.2061
crores by the respondent.  The stand taken in the letter of  the  Respondent
dated 17th February, 2000 could not be read as obligation of the  respondent
for proportionate generation of  the  output  or  declaration  of  available
capacity in absence of compliance  of  obligations  under  the  PPA  by  the
appellant.  In letter dated 4th March, 2000,  it  was  made  clear  that  if
letter of credit was not opened by the appellant,  respondent  will  not  be
obliged to supply power.


Part VII : Points for consideration


20.   The points which arise for consideration are :


      (i)   True interpretation of PPA to determine  whether  there  is  any
obligation to declare availability of power in the ratio of 300 : 215;


      (ii)   Effect of letters dated 17th February, 2000,  4th  March,  2000
and 4th October, 2001on the rights of the parties;


       (iii)  Interpretation  of  Schedule  VI  to  determine  whether   the
obligation to  issue  dispatch  instructions  arose  before  declaration  of
availability.


(iv)  Relief to which the appellant may be entitled to.





Part VIII : Decision on above points and reasons therefor


Re : (i) :


21.   It is necessary to refer to the relevant provisions of the Agreement:


“Article 3

3.1 Allocation of the Capacity

The allocation of the Capacity shall be as under:
a) During Open Cycle mode operation prior to commissioning of  the  Combined
Cycle mode operation: 138MW to the Essar Group of Companies; and 192  MW  to
the Board
 b) During Combined Cycle mode:
215 MW to the Essar Group of Companies; and
300 MW to the Board

The Company undertakes that, subject to the provisions and during  the  term
of this Agreement, it will fuel and operate the Generating Station  to  meet
the requirements of electrical output that can  be  generated  corresponding
to the allocated capacity, in accordance with its Dynamic Parameters  so  as
to comply with the Operating Characteristics except to the extent:
 (i) as anticipated under the Maintenance Programme  during  the  period  of
Scheduled Outage.
(ii) That to do so would not be in accordance with Good Industry Practice;
 (iii) That may be necessary due to circumstances  relating  to  Safety  (of
personnel or plant apparatus);
(iv) that to do so would be unlawful;
(v) That may be necessary for reasons  of  Force  Majeure  Natural  or  Non-
Natural.”




3.2   Delivery of Active Energy


      The Company shall deliver Active Energy and  Reactive  Energy  to  the
Board at the Delivery Point in accordance with Dispatch Instructions  issued
by the Board under the Dispatch procedures  as  specified  in  Schedule  VI.
All Active Energy delivered by  the  Company  shall  have  at  the  Delivery
Point,  the  voltage,  frequency  and  the   other   electrical   parameters
associated with active/reactive power as may be  decided  by  the  Board  in
accordance with the Operating Characteristics.


3.3   Availability Declarations


      From the date of Entry into Commercial Service of the first  Unit  the
Company shall, submit to the Board from time  to  time,  Declared  Available
Generation Capacity as per the procedures set forth in Schedule VI.


xxx


Schedule VI


6.1   Submission of Weekly Schedules


      The Company will  submit  to  the  Board’s  Load  Dispatch  Centre  at
Jambua, Baroda weekly schedules indicating  the  times  and  Capacity  which
will be available from Generating Station and if not available  and  reasons
therefor.  These weekly schedules  will  be  submitted  on  or  before  each
Friday for the next week starting from Monday.  If at  any  time  after  the
issue of such schedule, there is any change in  circumstances,  the  Company
will notify the Board about the revisions necessary in the  weekly  schedule
and the reasons therefor.


6.2   Issuance of Requirement Schedule


      The Board shall issue to the Company’s Generating Station at Hazira  a
Schedule of its requirement with respect to the generation of the  Allocated
Capacity by the Generating Station  during  each  day  by  5.00  PM  on  the
preceding day.  This schedule  will  indicate  the  level  of  Active  Power
required to be produced by Generating Station.


6.3   Issuance of Dispatch Schedule


      The Board may issue Dispatch Instruction at any time  after  issue  of
the schedule as mentioned in Clause  6.2  above.  Dispatch  instruction  may
include requirements in respect of the reactive  power  output  measured  at
the Delivery Point to be maintained by the Generating Station.


6.4   Operation of Generating Station


      The Company, subject to the provisions contained  in  Article  3.3  of
this Agreement, shall operate Generating  Station  in  accordance  with  the
relevant Dispatch  Instructions  given  by  the  Board  from  time  to  time
provided that  the  Company  shall  not  be  obliged  to  comply  with  such
instructions to the extent that it would require the Company to operate  the
Generating Station otherwise than the  Dynamic  Parameters  applicable  from
time to time.


Schedule VII


7.1 TARIFF


The Tariff shall be determined as follows


Annual Fixed Charges to be determined in terms of Section 7.1.1


Variable Charges to be determined in terms of Section 7.2


Incentive Payment to be determined in terms of Section 7.3.





7.1.1 Annual Fixed Charges: Computation and payment


The Annual Fixed Charge shall be computed on the following basis:


Interest on Debt:


It shall be computed on the Debt as per the Financial Plan approved  by  the
Board.  Interest on  Debt  shall  also  include  lease  rentals  payable  in
respect of lease assistance obtained by the Company  towards  financing  the
Capital Cost.


If the Financing Plan envisages variable rates of interest on any  component
of  Debt,  the  Interest  on  Debt  shall  be  recomputed  by  applying  the
prevailing rates of interest during the month on each such Debt.


In respect of interest on  Foreign  Debt,  the  interest  liability  on  the
applicable Foreign Debt shall first be computed in  the  applicable  foreign
currencies and thereafter be  converted  to  Rupees  by  adopting  the  Base
Exchange Rate  and  such  amount  shall  be  adopted  for  the  purposes  of
computing Interest on Debt.


A Supplementary  Invoice  shall  be  raised  for  an  amount  equal  to  the
difference between the amount of  interest  liability  on  Foreign  Debt  as
determined on the basis of Base Exchange Rate and  the  amount  of  interest
liability as on the due  dates  of  the  payment  of  interest  as  per  the
Financing Plan computed on the basis of the then prevailing  exchange  rate.
If the amount payable to the Company is determined to be  less,  on  account
of foreign exchange variation, than the amount paid  by  the  Board  at  the
Base Exchange Rate, such difference shall be repaid to the Board  within  14
days from the date of the determination.


Operation and Maintenance Expenses (O&M) Expenses:


 O&M Expenses including Insurance Charges  for  the  first  full  Accounting
Year, after commissioning of Combined  Cycle  Operation  of  the  Generating
Station, shall be calculated at the rate of 2.5%  of  the  Capital  Cost  of
Rs.945 crores in respect of the Allocated Capacity.


The expenditure on the O&M expense in each subsequent year shall be  revised
on the basis of the weighted Price Index based on the Wholesale Price  Index
and Consumer Price Index in the ratio of 70:30 respectively or at  the  rate
of 10% progressively every year, whichever is  lower.   O&M  expenses  shall
not qualify for foreign exchange variations.


Depreciation


Depreciation will mean the depreciation as notified  by  the  Government  of
India from time to time and provided under  the  Electricity  (Supply)  Act,
1948 and shall be first computed on the assets  of  the  Generating  Station
and thereafter apportioned for the purposes of the  determining  the  Annual
Fixed Charges as a proportion of the Allocated  Capacity  over  the  Nominal
Installed Capacity.


Tax on Income:


Tax on Income shall be determined in accordance with the provisions  of  the
Income Tax Act, 1961 every year as under:

Tax payable by the Company   x    Return on Equity plus
Total taxable Income              Incentive Payment




For the purposes of determination of the Annual Fixed Charges,  the  Tax  on
Income shall be computed on an estimated basis.  Any under or over  recovery
of Tax on Income shall be adjusted every year on the  basis  of  certificate
of documentation of Tax paid  and  assessment  by  the  Income  Tax  Officer
concerned.


Return on Equity (ROE):


Return on Equity shall be computed on Equity at  16%  per  annum  and  shall
include ROFE.


Return on Foreign Equity (ROFE) shall be computed at the rate of 16% on  the
amount of Foreign Equity in the applicable foreign currency  and  thereafter
be converted to Rupees at the Base Exchange Rate and such  amount  shall  be
adopted for the purpose of computing ROFE.


A Supplementary Invoice shall be raised at the end of  each  Quarter  in  an
Accounting Year, for an amount equal to the difference  between  the  amount
of ROFE determined on the basis of Base Exchange  Rate  and  the  amount  of
ROFE as at the end of each  Quarter  computed  on  the  basis  of  the  then
prevailing  exchange  rate.   If  the  amount  payable  to  the  Company  is
determined to be less, on account of foreign  exchange  variation  than  the
amount paid by the Board at the Base Exchange Rate,  such  difference  shall
be re-paid to the Board within 14 days from the date of  the  determination.



Interest on Working Capital :


The amount of working capital on the Allocated Capacity  shall  be  computed
on the basis of annual estimated level of generation adopting the  following
norms:


Fuel Cost for liquid fuels only for one month;


Operation & Maintenance expenses (Cash) for one month;


Maintenance Spares at actual but not exceeding one year’s requirement,  less
value of One Fifth of initial spares already capitalized; and


Receivable  equivalent  to  two  months’  average  billing   for   sale   of
electricity.


The Interest on Working Capital shall be computed by applying  the  rate  of
interest as  applied  by  the  Company’s  bankers  or  the  Board’s  Bankers
whichever is lower on the amount of working capital computed above.


Base Foreign Debt Repayment Adjustment Amount:


In respect of the Foreign  Debt,  the  amounts  falling  due  for  repayment
during the Accounting  Year  shall  be  first  computed  in  the  applicable
foreign currencies and thereafter be converted to  Rupees  by  adopting  the
Base Exchange  Rate.   The  difference  between  the  amounts  of  repayment
determined as above and the amount of repayment of Foreign Debt falling  due
during the relevant Accounting Year and expressed  in  rupees  adopting  the
exchange rate as per the Financing Plan shall  be  included  in  the  Annual
Fixed Charges.


A Supplementary  Invoice  shall  be  raised  for  an  amount  equal  to  the
difference between the amount of repayment on  Foreign  Debt  determined  on
the basis of Base Exchange Rate and the amount of repayment on Foreign  Debt
as on the due dates of repayment of Foreign Debt as per  Financing  Plan  on
the then prevailing exchange rates.  If the amount payable  to  the  Company
is determined to be less on account of foreign exchange variation  than  the
amount paid by the Board at the Base Exchange Rate,  such  difference  shall
be re-paid to the Board within 14 days from the date of  the  determination.



The amount of Annual Fixed Charges for the purposes of this Agreement  shall
the aggregate of (a) to (g), but  excluding  the  amounts  of  supplementary
Invoices under (a), (e) and (g) above.  For the purpose of  monthly  Invoice
1/ 12th of the Annual Fixed Charges will be claimed.


The Invoice in each month shall further  specify  the  number  of  units  of
Active Energy and Deemed Generation expressed in Kwh  achieved  during  such
month and the cumulative Level of  Generation  including  Deemed  Generation
less Deemed Non-Generation achieved upto end of such month.





22.   The agreement clearly contemplates the proportion of allocation  of  a
capacity.  The EPL has to fuel and operate the generating  station  to  meet
the requirement of electric output that can be  generated  corresponding  to
the allocated capacity.  The appellant has  to  pay  annual  fixed  cost  as
determined in terms of clause 7.1.1 of Schedule VII of the  Agreement.   The
Commission is thus, right in observing that once  the  entire  capacity  has
been allocated in two parts in a particular proportion,  the  contention  of
the EPL that it could sell power to ESL beyond the allocated capacity  could
not be accepted. The EPL was under obligation as per Schedule VI to  declare
weekly schedule of the capacity  available  and  the  dispatch  instructions
were to be issued on the basis of the said declaration.  It could  not  thus
be said that the EPL had no obligation  to  declare  the  capacity  and  the
obligation of GUVNL to issue dispatch  instructions  was  not  dependent  on
declaration of the available capacity by the  EPL.   Contrary  view  of  the
Tribunal is clearly erroneous.  In paras 45 and  46  and  elsewhere  in  its
judgment, the Tribunal erred in holding that  there  was  no  obligation  to
declare available capacity on  proportionate  basis.   The  finding  of  the
Commission in paras 9.5 to 9.12 of its order quoted  above  is  the  correct
interpretation of the Agreement.  We hold accordingly.


Re : (ii) :





23.   The Commission in this aspect observed :


“8.4 In the present case, the PPA was  executed  on  30.5.1996  and  remains
operational for a period of twenty years. Under the terms of  the  PPA,  the
generating company i.e. EPL is required to declare availability  and  supply
of electricity for the entire duration of  the  PPA,  while  the  Petitioner
GUVNL has an obligation to purchase electricity and pay the tariff in  terms
thereof. The dispute appears to have arisen sometime in  1998-99,  when  the
CAG Report for the year 1998-99 rejected the contention  of  the  Government
that there was no adverse financial impact  as  a  result  of  diversion  of
power. Thereafter, on or around 10.2.2000, a meeting was conducted with  the
GEB to discuss the issue of diversion. On 17.2.2000, EPL subject to  certain
conditions accepted that power is required to be supplied on a 58:42  basis.
Attempts were made to renegotiate the PPA. By a letter dated 23.4.2002,  GEB
wrote to EPL identifying certain key  areas  for  negotiation  of  PPA.  The
issue of allocation of power was also part of the agenda.  Since  the  issue
of allocation of power could  not  be  settled,  GEB  by  its  letter  dated
29.10.2003 raised a claim of Rs. 537  crores  for  the  period  1.7.1996  to
31.3.1999. EPL by its letters  dated  1.11.2003  and  1.12.2003  denied  the
claim of GUVNL.


xxxx


9.10 Furthermore, in the letter dated 17.02.2000, EPL  categorically  agreed
to the concept that power should be supplied in the ratio of 58:42  provided
certain conditions are fulfilled.  The  conditions  mentioned  in  the  said
letter will demonstrate that the each condition is either in the  nature  of
additional concessions / modification that were sought  by  EPL  or  alleged
defaults on the part of GUVNL, which was not agreed to by GUVNL. “





24.   It is clear  from  the  above  that  the  letters  of  the  respondent
acknowledged its liability to allocate the generated power to the  appellant
and to the ESL in the ratio of 58 : 42.  The  Tribunal  in  para  54  quoted
above, held that the said letters could not be relied  upon  in  support  of
the claim that the appellant was entitled to be  allocated  generated  power
in proportion of            58 : 42.  This finding is clearly erroneous  and
is without any basis and is liable to be set  aside.   The  finding  of  the
Commission is based on record.


Re : (iii) :





25.   In interpreting  Schedule VI, the Commission held  that  the  EPL  was
liable to declare weekly capacity  available  and  on  that  basis  dispatch
instructions were  required to be issued  (para  9.6).   The  contrary  view
taken by the Tribunal in para 45 and elsewhere is clearly  contrary  to  the
agreement between the parties as reflected in Schedule VI quoted above.


Re : (iv) :


26.   The main basis of the order of the Tribunal in rejecting the claim  of
the appellant is the finding  that  the  respondent  had  no  obligation  to
allocate available power in the ratio of 58 : 42  under  the  terms  of  the
Agreement and in terms of correspondence between the  parties.   Apart  from
this, the Tribunal held that the appellant had claimed Rs.64 crores  by  way
of full and final settlement  (para  55)  and  that  the  appellant  was  in
default in not opening letter of credit and not paying  Rs.519  crores.   In
doing so, the Tribunal has ignored clear stipulation in the  letter  of  the
appellant dated 13th  December,  2004  referred  to  in  para  8.14  of  the
Commission that the amount of Rs.64 crores was not accepted by way of  final
settlement.   Similarly,  the  Tribunal  has   ignored   the   supplementary
agreement between the parties dated 18th December, 2003 followed  by  letter
dated 19th December, 2003 (page 337 and 341,Vol.V)  under  which  amount  of
Rs.289.40 crores was paid to the respondent by way  of  settlement  for  the
delayed payment charges  and  other  heads.   Thus,  the  Tribunal  was  not
justified in observing in para  75  that  the  appellant  had  defaulted  in
making payment of Rs.519 crores which was a breach of promise  on  the  part
of the appellant, thereby absolving the  respondent  of  its  obligation  to
supply power as per the agreement.  Similar is the position with  regard  to
letter of credit referred in para 17.6 of the order  of  the  Tribunal.   We
have been informed that these aspects have  been  gone  into  by  the  State
Commission in a subsequent dispute vide order dated 22nd October,  2014  and
Appeal No.2 of 2015 against the said order before the  Tribunal.   We  thus,
make it clear that our observations may not  be  treated  as  affecting  the
decision of the said appeal.


27.   We thus, hold that the order of the Tribunal is erroneous.   The  said
order has given rise to the substantial  question  of  law  which  has  been
discussed above, i.e., the  interpretation  of  the  Agreement  between  the
parties and the obligation of the  respondent  to  declare  availability  of
generated power in the  ratio  of  58  :  42   and  consequence  of  default
therein.  The Tribunal erroneously held  that  there  was  no  pleading  for
making the claim.  Thus, the Tribunal has committed error of law as well  as
of record in recording its finding as demonstrated above.  It  may  also  be
noted that the Commission has left actual working out  of  the  loss  to  be
worked out separately and on that basis the appellant has already filed  its
claim which was pending  consideration  before  the  Commission.   The  said
proceeding can now be revived in the light of our finding.





28.   Accordingly, we  allow  this  appeal,  set  aside  the  order  of  the
Tribunal and restore that of the Commission.


An Epilogue


29.   Before we part with this judgment, it appears to be necessary to  draw
attention of all concerned to a vital issue of composition  and  functioning
of Tribunals and  statutory  framework  thereof  especially  its  impact  on
working of this Court and in turn on the rule of law.


30.   It  is  well  known  that  in  the  wake  of  42nd  Amendment  to  the
Constitution  of  India,  incorporating  Article  323A  and  323B   of   the
Constitution under Part XIVA, various  Tribunals  have  been  set  up.   The
Tribunals  constitute  alternative  institutional  mechanism   for   dispute
resolution.  The declared objective of such Tribunals is  inability  of  the
existing system of courts to cope up with the volume of  work.   This  Court
has gone into the question of validity of scheme under which the High  Court
is bypassed without the alternative institutional  mechanism  being  equally
effective for the access to justice which was necessary  component  of  rule
of law and this Court being over burdened with routine  matters  in  several
judgments to which reference may be made.


31.    In  L  Chandra  Kumar  Vs.  Union  of  India[1],  in  the  course  of
considering the constitutional validity of exclusion of jurisdiction of  the
High  Courts  in  service  matters  against  the  orders  of   the   Central
Administrative Tribunal, this  Court  observed  that  the  manner  in  which
justice is dispensed with by the Tribunals left much  to  be  desired.   The
remedy of appeal to this Court from the  order  of  the  Tribunals  was  too
costly and inaccessible for it to be real and  effective.  Furthermore,  the
result of providing such remedy was  that  the  docket  of  this  Court  was
crowded with decisions of  the  Tribunals  and  this  Court  was  forced  to
perform the role of a first appellate court.  It  was  necessary  that  High
Courts are able to exercise judicial superintendence over decisions  of  the
Tribunals.   With  these  observations  this  Court  directed   that   “all”
decisions  of  the  Tribunals  will  be  subject  to   High   Court’s   writ
jurisdiction under Article 226/227[2].  It was  further  observed  that  the
then existing position of  direct  appeal  to  this  Court  from  orders  of
Tribunal will stand modified[3].


32.   In Madras Bar Association Vs. Union of India[4], the issue  considered
by this Court was validity of setting up of  National  Tax  Tribunals  under
the National Tax Tribunal Act, 2005.   While striking  down  the  Act,  this
Court commented upon  validity  of  various  provisions  of  the  said  Act.
Section 5 of the Act which provided for sittings to  be  at  Delhi,  it  was
observed that a litigant who may belong to a distant/remote State, may  have
to travel a long distance and may find it difficult to identify an  advocate
who will  represent  him.   It  was  further  observed  that  while  vesting
jurisdiction in an alternative court/Tribunal, it  was  imperative  for  the
legislature to ensure  that  redress  should  be  available  with  the  same
convenience and expediency as it was prior to the introduction of the  newly
created  court/tribunal[5].   As  regards  Section  6   dealing   with   the
qualification for appointment of a member,  it  was  observed  that  it  was
difficult to appreciate how non judicial members  could  handle  complicated
questions of law which the Tribunal was required to deal with[6].   Further,
composition of tribunals which were like  courts  of  first  instance  whose
decisions are amenable to challenge under  Article  226/227  and  which  are
subservient to jurisdiction of the High Court stood on a  different  footing
from the Tribunals whose appeals were directly provided  to  Supreme  Court.
Such Tribunals were practically substitute for the High Courts.  Process  of
selection and appointment of  Chairperson  and  members  of  such  Tribunals
could not be different from the  manner  of  selection  of  the  High  Court
Judges[7].


33.   The above resume of law laid down by this Court may  call  for  review
of  composition  of  Tribunals  under   the   Electricity   Act   or   other
corresponding statutes.  Appeals  to  this  Court  on  question  of  law  or
substantial question of law show that Tribunals deal with such questions  or
substantial questions.  Direct appeals to  this  Court  has  the  result  of
denial of access to the High Court.  Such Tribunals thus  become  substitute
for High Courts without manner of appointment to such  Tribunals  being  the
same as the manner of appointment  of  High  Court  Judges.   A  perusal  of
Sections 113(b)(i) to (iii) and 113(3) read with Section  78,  Sections  84,
85 and 125 of the Electricity Act and corresponding  provisions  of  similar
Acts may, thus, need a fresh look.


34.   It may also  be  noted  that  in  some  Tribunals  (For  example,  the
tribunal constituted under the Telecom Regulatory Authority  of  India  Act,
1997), the Tribunal exercises original jurisdiction to the exclusion of  all
courts and is located only at  Delhi[8].   It  may  further  be  noted  that
normally tenure of office of the Chairman and members is of  short  duration
of three to five years.  Access to justice may not be, thus, available  with
the convenience with which it is available when  jurisdiction  is  with  the
local civil courts sought to  be  substituted.   Such  provisions  may  need
review in larger public interest and for providing access to justice.


35.   Apart from the above aspect, further  question  is  whether  providing
appeals to this Court in routine, without  there  being  issues  of  general
public importance, is not a serious obstruction to the effective working  of
this Court.


36.    This issue has already been subject matter of debate.  In an  Article
by  Shri  T.R.  Andhyarujina  former  Solicitor  General  of  India,  titled
“Restoring the Character and Stature  of  the  Supreme  Court  of  India[9]”
learned author states that it was necessary to  restore  the  character  and
stature of the Supreme Court.  The jurisdiction of the Supreme Court  should
by and large be limited to matters of constitutional importance and  matters
involving substantial questions of law of general importance.   The  Supreme
Court of India, like apex Courts in other jurisdictions, was  not  to  be  a
final court to decide  ordinary  disputes  between  parties.    The  highest
court has its unique assigned role.  But after the year  1990,  the  Supreme
Court is losing its original character  and  becoming  a  general  court  of
appeal by entertaining and deciding cases which  do  not  involve  important
constitutional issues or issues of law of national importance.  The  adverse
effect of this trend is that matters of constitutional  importance  are  not
getting the due priority and are pending for several years.   Reference  has
been made to the  Statement  of  Objects  for  amending  the  Supreme  Court
(Number of Judges) Act, 1956 in the year 2008, to the effect  that  “it  has
not been possible for the Chief Justice of India to constitute a  five-judge
Bench on a regular basis to  hear  the  cases  involving  interpretation  of
constitutional law as doing  that  would  result  in  constitution  of  less
number of Division Benches which in turn would result in  delay  in  hearing
of other civil and criminal cases”.  In  spite  of  the  said  amendment  to
increase strength of judges to 31, larger Benches to  decide  constitutional
and important cases have not been  regularly  functioning.   On  account  of
increase in number of issues other than constitutional  law  or  substantial
questions of general importance, all the Benches  are  engaged  in  handling
the heavy routine work.  The court rooms are so crowded that  it  is  hardly
possible to enter a court room or to pass through the corridors.  “No  other
Supreme Court presents such an undignified sight.”   Further  reference  has
been made to functioning of other Supreme/highest courts  in  the  world  to
emphasize that the highest courts are engaged in deciding cases of  national
importance by larger benches of 9/11  judges  while  the  Supreme  Court  of
India is deciding most of the cases by Benches of two-judges, which has  its
own adverse implications.  Reference has also been made  to  the  discussion
between Sir B.N. Rau, the Constitutional Advisor and Justice Frankfurter  of
the U.S. Supreme Court that the  jurisdiction  exercisable  by  the  Supreme
Court should be exercised by Full Court.  It  is  further  stated  that  the
highest court should  have  limited  number  of  cases  and  should  not  be
overloaded.  On an average, in a year 80 cases are decided by Supreme  Court
of U.K., the Canadian Supreme Court  and  the  Australian  High  Court.   38
cases are decided by  Constitutional  Court  of  South  Africa  in  a  year.
Supreme Court of India is deciding large number of cases and the reports  in
the cases sometimes run upto 19 volumes in a year with only a few  cases  of
real constitutional or of national importance.  In  Australia  there  is  no
appeal to the highest court as of right and the cases are  entertained  only
if they are of  public  importance.   They  are  to  resolve  difference  of
opinion in different courts.  This was necessary to preserve efficiency  and
standing.  Reference is also made to the expert  opinion  that  no  litigant
should get more than two chances in litigation.  It is further  stated  that
“The Supreme Court of India must cease to be  a  mere  court  of  appeal  to
litigants and a daily mentor of the Government, if it  is  to  preserve  its
pristine character, dignity and stature comparable to the Supreme  Court  in
other jurisdictions.”  The Article ends with observation  “This  requires  a
national debate by Judges, Lawyers, jurists and informed public.”


37.   In Mathai alias Joby Vs. George[10], this Court referred to  the  R.K.
Jain  Memorial  Lecture  delivered  on  30th  January,  2010  by  Shri  K.K.
Venugopal, senior advocate to the effect that “an alarming state of  affairs
has developed in this Court  because  this  Court  has  gradually  converted
itself into a mere court of appeal which has sought to correct  every  error
which it finds in the judgments of the High Courts of the  country  as  well
as the vast number of  tribunals[11].    The  court  has  strayed  from  its
original character as a constitutional court  and  the  apex  court  of  the
country.  Failure to hear and dispose of cases within reasonable time  erode
confidence of the litigants in the apex court.  Reference  was  made  to  an
Article by Justice K.K. Mathew  to  the  effect  that  time,  attention  and
energy should be devoted to matters of larger public  concern.   Functioning
of Supreme Court was not  to  remedy  a  particular  litigant’s  wrong,  but
consideration of cases involving principles of wide public  or  governmental
interest which ought to be authoritatively  declared  by  the  final  court.
The docket of the court should be kept down  so  that  its  volume  did  not
preclude wise adjudication.  The matter was referred  for  consideration  of
the larger Bench for interpretation of Article 136. By the time, the  matter
came up for consideration of the larger Bench on  11th  January,  2016,  the
SLP became infructuous as the suit in which the impugned interim  order  was
passed itself had been decided.  This Court  while  dismissing  the  SLP  as
infructuous  observed  that  while  Article   136   could   be   used   with
circumspection but its scope could not be limited.





38.   In Bihar Legal Support Society Vs. Chief Justice of India[12], it  was
observed that Supreme Court was not  a  regular  court  of  appeal.   If  an
additional forum above the Tribunal was required to be set  up,  a  separate
national court of appeal could be created.  In this respect, the matter  was
also considered in 229th Report of the Law Commission submitted  in  August,
2009.  However, that is a different issue particularly when this  aspect  is
being separately considered by a different Bench in Writ Petition (C)  No.36
of 2016 titled V. Vasanthakumar Vs. Sri H.C. Bhatia.





39.   In Justice H.R. Khanna Memorial Lecture delivered  on  8th  September,
2014 by Hon’ble Mr. Justice J. Chelameswar of  this  Court,  the  topic  was
“the Supreme Court of India, its jurisdiction and problem  of  arrears”[13].
 It was stated that :

“The law declared by the Supreme Court in Hindustan Commercial Bank Ltd.  v.
Bhagwan Dass [AIR 1965 SC 1142] was that normally a  party  should  approach
the Supreme Court with a certificate of the High Court. Only in  exceptional
circumstances would the Supreme Court  relax  that  requirement,  is  simply
ignored. The exception has become the rule now. The result is more and  more
unsuccessful  people  getting  encouraged  to  have  another  go  at  it  by
approaching the Supreme Court. In most of the cases, what  is  sought  is  a
simple second or third “guess on facts” or taking another plausible view  of
the matter.

xxxx
Coming to matters where the  rights  and  obligations  of  the  parties  are
purely founded upon a local law i.e. a law made  by  the  legislature  of  a
State, etc., I do not see any harm befalling the nation, if the judgment  of
the High Court is to become final. At least in these  areas  of  litigation,
the time worn cliche “we are not final because we  are  infallible,  but  we
are infallible only because we are final” might as well be extended  to  the
decisions of the High Courts which are equally constitutional courts.”




40.   While there  may  be  no  lack  of  legislative  competence  with  the
Parliament to make provision for direct appeal to  the  Supreme  Court  from
orders  of  Tribunals  but  the  legislative  competence  is  not  the  only
parameter of constitutionality.  It can  hardly  be  gainsaid  that  routine
appeals  to  the  highest  court  may   result   in   obstruction   of   the
Constitutional role assigned to the highest court as observed above.    This
may affect the balance required to be maintained by  the  highest  court  of
giving priority to cases of national importance, for  which  larger  Benches
may be required to be constituted.  Routine direct appeals  to  the  highest
court in commercial litigation affecting individual  parties  without  there
being any issue of national  importance  may  call  for  reconsideration  at
appropriate  levels.   Further  question  is  composition  of  Tribunals  as
substitutes for High Courts and exclusion  of  High  Court  jurisdiction  on
account of  direct  appeals  to  this  Court.     Apart  from  desirability,
constitutionality of such provisions may need to  be  gone  into.   We  are,
however, not expressing any opinion on this aspect at this stage.


41.   We are thus of the view that in the first instance the Law  Commission
may look into the matter with the involvement of all the stakeholders.


42.   We make it clear that as far  as  heavy  pendency  in  this  Court  on
account of liberal  exercise  of  jurisdiction  under  Article  136  of  the
Constitution of India is concerned, we do not wish to make  any  comment  as
this is a matter in the discretion of the Court and it is for the  Court  to
address this issue.  Our discussion  is  limited  to  the  consideration  of
desirability of providing statutory appeals  directly  to  this  Court  from
orders of Tribunals on issues not affecting national or public interest  and
other aspects of statutory framework in respect of  Tribunals  as  discussed
above.


43.   The questions which  may  be  required  to  be  examined  by  the  Law
Commission are :


I     Whether any changes in the statutory  framework  constituting  various
Tribunals with regard to persons appointed, manner of appointment,  duration
of appointment, etc. is necessary in the light of judgment of this Court  in
Madras Bar Association (supra) or on any other consideration from the  point
of view of strengthening the rule of law?


II    Whether it is permissible and advisable to provide  appeals  routinely
to this Court only on a question of  law  or  substantial  question  of  law
which is  not  of  national  or  public  importance  without  affecting  the
constitutional role assigned to the  Supreme  Court  having  regard  to  the
desirability of decision being rendered within reasonable time?


III   Whether direct statutory appeals to the Supreme  Court  bypassing  the
High Courts from the  orders  of  Tribunal  affects  access  to  justice  to
litigants in remote areas of the country?


IV    Whether it is desirable to  exclude  jurisdiction  of  all  courts  in
absence of equally effective alternative mechanism for access to justice  at
grass root level as has been done in provisions of TDSAT  Act  (Sections  14
     and 15).


V     Any other incidental  or  connected  issue  which  may  be  considered
appropriate.


44.   We request the Law Commission to give its report as  far  as  possible
within one year.   Thereafter  the  matter  may  be  examined  by  concerned
authorities.


45.   Action taken by the Central Government, after its  consideration,  may
be  placed  on  record.   List  the  matter  in  November,  2017  before  an
appropriate Bench, preferably of three Judges to consider the  above  issue.


                                                      ………………………………………………..J.
                                                            [ ANIL R. DAVE ]



                                                      ………………………………………………..J.
                                                       [ ADARSH KUMAR GOEL ]
NEW DELHI;
AUGUST 09, 2016.

1A-FOR JUDGMENT            COURT NO.13               SECTION XVII

               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

Civil Appeal  No(s).  3455/2010

GUJARAT URJA VIKAS NIGAM LTD.                      Appellant(s)

                                VERSUS

ESSAR POWER LIMITED                                Respondent(s)

Date : 09/08/2016 This appeal was called on for pronouncement of JUDGMENT
today.


For Appellant(s)
                     Ms. Hemantika Wahi,Adv.
                        Ms. Puja Singh, Adv.
                        Mr. Shubham Arya, Adv.

For Respondent(s)       Ms. N. Nagpal, Adv.
                     Mr. E. C. Agrawala,Adv.


      Hon'ble Mr. Justice Adarsh Kumar Goel pronounced the judgment  of  the
Bench comprising Hon'ble Mr. Justice Anil R. Dave and His Lordship.
      The appeal is allowed in  terms  of  the  signed  Reportable  Judgment
inter alia with following observations.
“We are thus of the view that in the first instance the Law  Commission  may
look into the matter with the involvement of all the stakeholders.

      We make it clear that as far  as  heavy  pendency  in  this  Court  on
account of liberal  exercise  of  jurisdiction  under  Article  136  of  the
Constitution of India is concerned, we do not wish to make  any  comment  as
this is a matter in the discretion of the Court and it is for the  Court  to
address this issue.  Our discussion  is  limited  to  the  consideration  of
desirability of providing statutory appeals  directly  to  this  Court  from
orders of Tribunals on issues not affecting national or public interest  and
other aspects of statutory framework in respect of  Tribunals  as  discussed
above.

      The questions which  may  be  required  to  be  examined  by  the  Law
Commission are :

I     Whether any changes in the statutory  framework  constituting  various
Tribunals with regard to persons appointed, manner of appointment,  duration
of appointment, etc. is necessary in the light of judgment of this Court  in
Madras Bar Association (supra) or on any other consideration from the  point
of view of strengthening the rule of law?

II    Whether it is permissible and advisable to provide  appeals  routinely
to this Court only on a question of  law  or  substantial  question  of  law
which is  not  of  national  or  public  importance  without  affecting  the
constitutional role assigned to the  Supreme  Court  having  regard  to  the
desirability of decision being rendered within reasonable time?

III   Whether direct statutory appeals to the Supreme  Court  bypassing  the
High Courts from the  orders  of  Tribunal  affects  access  to  justice  to
litigants in remote areas of the country?

IV    Whether it is desirable to  exclude  jurisdiction  of  all  courts  in
absence of equally effective alternative mechanism for access to justice  at
grass root level as has been done in provisions of TDSAT  Act  (Sections  14
and 15).

V     Any other incidental  or  connected  issue  which  may  be  considered
appropriate.

      We request the Law Commission to give its report as  far  as  possible
within one year.   Thereafter  the  matter  may  be  examined  by  concerned
authorities.

      Action taken by the Central Government, after its  consideration,  may
be  placed  on  record.   List  the  matter  in  November,  2017  before  an
appropriate Bench, preferably of three Judges to consider the above  issue.”



|       (VINOD KUMAR JHA)               | |        (SUMAN JAIN)                  |
|AR-CUM-PS                              | |COURT MASTER                          |


                 (Signed Reportable judgment is placed on the file)
|                                       | |                                      |


-----------------------
[1]    (1997) 3 SCC 261
[2]    Para 91
[3]    Para 92
[4]    (2014) 10 SCC 1
[5]    Para 123
[6]    Para 126
[7]    Para 130
[8]    Sections 14 and 15
[9]    (2013) 9 SCC (J) 43
[10]   .(2010) 4 SCC 358
[11]   Para 15
[12]   (1986) 4 SCC 767
[13]   (2015) 9 SCC (J-I)

“The challenge in the present writ application is to the communication, dated 16th of February, 2016, whereby representation of the petitioners to appear in interview for the post of District Judge Entry Level (Direct from Bar) Examination, 2015, was rejected and a condition was imposed that petitioners will have to tender their rejection, first, from the Subordinate Judicial Service of the State of Bihar and only, thereafter, they could appear in the interview. An Advertisement No. 01/2015 was issued inviting applications from eligible Advocates for direct recruitment in respect of 99 vacancies as on 31st of March, 2015. The cut off date for the eligibility was 5th of February, 2015. The petitioners appeared in the Preliminary as well as in the Mains Examination pursuant to such advertisement.= lies a subtle distinction between the words “selection" and "appointment” in service jurisprudence= In my opinion, there is no bar for a person to apply for the post of district judge, if he otherwise, satisfies the qualifications prescribed for the post while remaining in service of Union/State. It is only at the time of his appointment (if occasion so arises) the question of his eligibility arises. Denying such person to apply for participating in selection process when he otherwise fulfills all conditions prescribed in the advertisement by taking recourse to clause (2) of Article 233 would, in my opinion, amount to violating his right guaranteed under Articles 14 and 16 of the Constitution of India. It is a settled principle of rule of interpretation that one must have regard to subject and the object for which the Act is enacted. To interpret a Statue in a reasonable manner, the Court must place itself in a chair of reasonable legislator/author. So done, the rules of purposive construction have to be resorted to so that the object of the Act is fulfilled. Similarly, it is also a recognized rule of interpretation of Statutes that expressions used therein should ordinarily be understood in the sense in which they best harmonize with the object of the Statute and which effectuate the object of the legislature. (See-Interpretation of Statues 12th Edition, pages 119 and 127 by G.P.Singh). The aforesaid principle, in my opinion, equally applies while interpreting the provisions of Article 233(2) of the Constitution.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.7358  OF 2016
                 (Arising out of SLP (C) No. 17466 of 2016)

Vijay Kumar Mishra and Another                      … Appellants
            Versus
High Court of Judicature at Patna and Others        … Respondents


                               J U D G M E N T


Chelameswar, J.

1.    Leave granted.

2.    To explore the true purport of Art.  233(2)  of  the  Constitution  of
India is the task of this Court in this appeal.   The facts of the case  are
very elegantly narrated in the first six paragraphs of  the  judgment  under
appeal. They are:
“The challenge in the present writ  application  is  to  the  communication,
dated 16th of February, 2016, whereby representation of the  petitioners  to
appear in interview for the post of District Judge Entry Level (Direct  from
Bar) Examination, 2015, was  rejected  and  a  condition  was  imposed  that
petitioners  will  have  to  tender  their  rejection,   first,   from   the
Subordinate Judicial Service of the State of  Bihar  and  only,  thereafter,
they could appear in the interview.

An Advertisement No. 01/2015 was issued inviting applications from  eligible
Advocates for direct recruitment in respect of 99 vacancies as  on  31st  of
March, 2015.   The cut off date for the eligibility  was  5th  of  February,
2015.   The petitioners appeared in the Preliminary as well as in the  Mains
Examination pursuant to such advertisement.

In the meantime, petitioners qualified for the Subordinate Judicial  Service
of the State of Bihar in 28th Batch.   The  petitioners  accordingly  joined
the Subordinate Judicial Service of the State of Bihar in August, 2015.
The result of the Mains  Examination  of  the  District  Judge  Entry  Level
(Direct from Bar) was  published  on  22nd  of  January,  2016.    Both  the
petitioners qualified in the Mains Examination.
The High Court published the detail of interview schedule  and  issued  Call
Letters  for  the  interview  to  both  the  petitioners;  but  one  of  the
conditions in the Interview Letter  was  ‘No-Objection  Certificate  of  the
Employer’.   Therefore, the petitioners filed  their  representation  before
the Registrar General, Patna High Court, Patna, to appear in the  interview.
  The requests were declined on 16th of February, 2016.   The  communication
to one of the petitioners reads as under:-

     “To,
            The District & Sessions Judge
            Siwan

                       Dated, Patna the 16th February, 2016

Sir,
            With reference to your letter no.  80  dated  05.02.2016,  I  am
directed  to  say  that  the  Court  have  been  pleased   to   reject   the
representation dated 05.02.2016 of  Sri  Vijay  Kumar  Mishra,  Probationary
Civil Judge (Junior Division), Siwan with regard to permission to appear  in
the interview in respect of District Judge Entry  Level  (Direct  from  Bar)
Examination, 2015, in view of Article 233(2) of the Constitution  of  India,
as he is already in the State Subordinate Judicial  Service.    However,  he
may  choose  to  resign  before  participating  in  the   interview,   which
resignation, once tendered, would not be permitted to be withdrawn.

            The officer concerned may be informed accordingly.

                                        Yours faithfully

                                             Sd/-
                                        Registrar General

6.    It is the said letter, which is subject matter  of  challenge  in  the
present writ application, wherein the  petitioners  claim  that  since  they
were eligible on the date of inviting applications, the action of  the  High
Court in not permitting them to appear in the interview is illegal.”


The High Court repelled the challenge holding that to permit  the  appellant
to participate in the interview would  be  breaching  the  mandate  of  Art.
233(2).

“11….. Since before the  date  of  interview,  the  petitioners  joined  the
Judicial Service, the  petitioners,  cannot,  in  terms  of  Clause  (2)  of
Article  233  of  the  Constitution,  be  permitted  to  continue  with  the
selection process for District Judge Entry Level  (Direct from Bar) as  they
are, now, members of the  Judicial  Service.    Therefore,  the  petitioners
have rightly not called for interview.”

      Hence the appeal.


3.    Unfortunately, it was neither argued nor did the  High  Court  examine
the true meaning and purport of Article 233(2).   The  appellants’  argument
before the High Court appears to be that notwithstanding the fact that  they
are the members of the judicial service, the eligibility for  competing  for
the post of District Judges should be considered on the basis of  the  facts
as they existed on the “cut off date”, and the subsequent events are not  be
taken  into  consideration  for  determining  the   question   whether   the
appellants are barred from appearing in the interview.

“…intervening fact of the petitioners joining the Judicial Service will  not
act as bar for their appearance in the interview.”[1]

We  are  afraid  that  the  entire  enquiry  before  the  High   Court   was
misdirected.  The real question which arises in the case on hand is  whether
the bar under Article 233(2) is only for the appointment  or  even  for  the
participation in the selection process.

4.    The High Court believed  in  its  administrative  facet  that  Article
233(2) would not permit the participation of the appellant in the  selection
process because of his existing employment.  The High Court came out with  a
‘brilliant’ solution to the problem of the  appellant  i.e.,  the  appellant
may resign his membership of the subordinate judicial service if he  aspires
to become a district judge. But the trouble is the  tantalizing  caveat.  If
the appellant tenders resignation, he would not  be  permitted  to  withdraw
the same at a later stage.

5.    For any youngster the choice must appear very cruel,  to give  up  the
existing employment for the  uncertain  possibility  of  securing  a  better
employment. If the appellant accepted the  advice  of  the  High  Court  but
eventually failed to get selected and appointed  as  a  District  Judge,  he
might have to regret his choice for the rest of his life. Unless  providence
comes to the help of the appellant to secure better employment elsewhere  or
become a successful lawyer, if he chooses to practice thereafter the  choice
is bound to ruin the appellant. The High Court we are sure  did  not  intend
any such  unwholesome  consequences.  The  advice  emanated  from  the  High
Court’s understanding of the purport of Art. 233(2). Our  assay  is  whether
the High Court’s understanding is right.

6.    Article 233(1)[2] stipulates that appointment of  District  Judges  be
made by the Governor of the  State  in  consultation  with  the  High  Court
exercising  jurisdiction  in  relation  to  such  State.  However,   Article
233(2)[3] declares that only a person not already in the service  of  either
the Union or of the State shall be eligible  to  be  appointed  as  District
Judges. The said article is couched in negative language creating a bar  for
the appointment of certain class of persons described therein. It  does  not
prescribe any qualification. It only prescribes a disqualification.

7.    It is well settled in service law that there is a distinction  between
selection and appointment.[4]    Every  person  who  is  successful  in  the
selection process undertaken by the State for the purpose of filling  up  of
certain posts under the State does not acquire any  right  to  be  appointed
automatically.[5]     Textually,   Article   233(2)   only   prohibits   the
appointment of a person who is already in the service of the  Union  or  the
State, but not the selection of such a person. The right of  such  a  person
to participate  in  the  selection  process  undertaken  by  the  State  for
appointment to any  post  in  public  service  (subject  to  other  rational
prescriptions regarding the eligibility for participating in  the  selection
process such as age, educational qualification etc.) and  be  considered  is
guaranteed under Art. 14 and 16 of the Constitution.

8.    The text of Article 233(2) only prohibits the appointment of a  person
as a District Judge, if such person is already in the service of either  the
Union or the  State.    It  does  not  prohibit  the  consideration  of  the
candidature of a person who is in the service of the Union or the State.   A
person who is in the service of either of  the  Union  or  the  State  would
still have the option, if selected to join the service as a  District  Judge
or continue with his existing employment.  Compelling  a  person  to  resign
his job even for the purpose of assessing his  suitability  for  appointment
as a District Judge, in our opinion, is not permitted either by the text  of
Art. 233(2) nor contemplated under the scheme  of  the  constitution  as  it
would not serve any constitutionally desirable purpose.

9.    The respondents relied upon two judgments of this Court in  a  bid  to
sustain the judgment under appeal, Satya Narain  Singh  Vs.  High  Court  of
Judicature at Allahabad and Others (1985) 1 SCC 225 and Deepak Aggarwal  Vs.
Keshav Kaushik and Others (2013) 5 SCC 277.

10.   In first of the above-mentioned judgments, the  petitioners/appellants
before this Court were members of the Uttar  Pradesh  Judicial  Service.  In
response to  an  advertisement  by  the  High  Court,  they  applied  to  be
appointed by  direct  recruitment  to  the  Uttar  Pradesh  Higher  Judicial
Service (District Judges).

It appears from the judgment “as there was a question about the  eligibility
of the members of the Uttar  Pradesh  Judicial  Service  to  appointment  by
direct  recruitment  to  the  higher  judicial  service…….”,  some  of  them
approached the High Court by way of writ petitions which were dismissed  and
therefore, they approached this Court.   It  is  not  very  clear  from  the
judgment, as to how the question about their eligibility arose and  at  what
stage it arose.   But the fact remains, by virtue of  an  interim  order  of
this Court, they were allowed to appear in the examination.    The  argument
before this Court was that all the petitioners had practiced  for  a  period
of seven years before their joining the subordinate  judicial  service,  and
therefore, they are entitled to be considered for  appointment  as  District
Judges notwithstanding the fact that  they  were  already  in  the  judicial
service.

It  appears  from  the  reading  of  the  judgment  that  the  case  of  the
petitioners was that their claims for appointment to the  post  of  District
Judges be considered under the category  of  members  of  the  Bar  who  had
completed seven years of practice ignoring the fact that they  were  already
in the judicial service. The said fact operates as a bar  undoubtedly  under
Article 233(2) for their appointment to the higher  judicial  service.    It
is in this context this Court rejected their claim.   The  question  whether
at what stage the bar comes into operation  was  not  in  issue  before  the
Court nor did this Court go into that question.

11.   In the case of Deepak  Aggarwal  (supra),  the  question  before  this
Court was;

“52. The question that has  been  raised  before  us  is  whether  a  Public
Prosecutor/Assistant Public Prosecutor/District Attorney/Assistant  District
Attorney/Deputy Advocate General, who is  in  full-time  employment  of  the
Government, ceases to be an  advocate  or  pleader  within  the  meaning  of
Article 233(2) of the Constitution.”

On an elaborate examination of the various aspects of the legal  profession,
the provisions of the Bar  Council  Act  etc.,  this  Court  concluded  that
public prosecutors etc. did not cease to be advocates, and  therefore,  they
could not be considered to be in the service  of  the  Union  or  the  State
within the meaning of Article 232.

“101. ….In our view, none of the Attorney/Public Prosecutor/Deputy  Advocate
General, ceased to be “advocate” and since each one of them continued to  be
“advocate”, they cannot be considered to be in the service of the  Union  or
the State within the meaning of Article 233(2).   The view of  the  Division
Bench is clearly erroneous and cannot be sustained.”

and finally held that they are not debarred under Article 233.   A  judgment
which has no relevance to the issue before us

12.   We are of the opinion that neither of the cases really dealt with  the
issue on hand.   Therefore,  in  our  opinion,  neither  of  the  above  two
judgments is an authority governing the issue before us.

13.    For   the   above-mentioned   reasons,   the   Appeal   is   allowed.
Consequently, the Writ Petition  (CWJC  No.  3504  of  2016)  filed  by  the
appellants also stands allowed  directing  the  respondents  to  permit  the
appellants to participate in the selection process  without  insisting  upon
their resigning from their current employment.  If the appellants are  found
suitable, it is open to the appellants to resign  their  current  employment
and opt for the post of District Judge, if they so choose.


                                                             ….………………………….J.
                                                          (J. Chelameswar)



                                                             …….……………………….J.
                                        (Abhay Manohar Sapre)
New Delhi;
August 9, 2016

                                                                  Reportable

                        IN THE SUPREME COURT OF INDIA

                             CIVIL APPELLATE JURISDICTION

                              CIVIL APPEAL No.7358 OF 2016
                      (ARISING OUT OF SLP (C) No. 17466/2016)

Vijay Kumar Mishra and Another    …….Appellant(s)

                 VERSUS

High Court of Judicature at Patna
& Others
                                        ……Respondent(s)

                               J U D G M E N T
Abhay Manohar Sapre, J.
1)    I have  had  the  advantage  of  going  through  the  elaborate,  well
considered and scholarly draft judgment  proposed  by  my  esteemed  Brother
Jasti  Chelameswar  J.  I  entirely  agree  with  the  reasoning   and   the
conclusion,  which  my  erudite  Brother  has  drawn,  which  are  based  on
remarkably articulate process of reasoning. However, having  regard  to  the
issues involved, which were ably argued by learned counsel appearing in  the
case, I wish to add few lines of concurrence.
2)    I need not set out the facts, which are not in dispute and set out  in
the order proposed by my learned Brother.
3)    The short question, which arises for consideration in this appeal,  is
what is the true object, purport  and  scope  of  Article  233  (2)  of  the
Constitution of  India  and,  in  particular,  the  words  "eligible  to  be
appointed as district judge" occurring in the Article?
4)    Chapter VI of the Constitution of India  deals  with  the  subordinate
courts in the State. Articles 233 and 236, which are  part  of  Chapter  VI,
read as under:
“233. Appointment of district judges. – (1) Appointments of persons  to  be,
and the posting and promotion of, district judges  in  any  State  shall  be
made by the Governor of the  State  in  consultation  with  the  High  Court
exercising jurisdiction in relation to such State.

(2) A person not already in the service of the Union or of the  State  shall
only be eligible to be appointed a district judge if he  has  been  for  not
less than seven years an advocate or a pleader and  is  recommended  by  the
High Court for appointment.



236. Interpretation. – In this Chapter-
(a) The expression “district judge” includes judge of a  city  civil  court,
additional district judge, joint district judge, assistant  district  judge,
chief judge of a small cause court, chief presidency magistrate,  additional
chief presidency magistrate, sessions judge, additional sessions  judge  and
assistant sessions judge;

(b)  the  expression  “judicial  service”   means   a   service   consisting
exclusively of persons intended to fill  the  post  of  district  judge  and
other civil judicial posts inferior to the post of district judge.”

5)    Article 233 deals with  appointment,  posting  and  promotion  of  the
district judges in the State. Clause (1) provides that appointment,  posting
and promotion of the district judges in any  State  shall  be  made  by  the
Governor of the  State  in  consultation  with  the  High  Court  exercising
jurisdiction in relation to such State.
6)    Clause (2) of Article 233 with which we are  concerned  here  provides
that a person not already in service of the Union  or  of  the  State  shall
only be eligible to be appointed as a district judge if he has been for  not
less than 7 years as an advocate or a pleader  and  is  recommended  by  the
High Court for appointment.
7)    Article 236  (a)  defines  the  word  "district  judge"  occurring  in
Chapter VI.
8)    Reading of clause (2) of Article 233 shows that the  "eligibility"  of
a person applying for the post of district judge  has  to  be  seen  in  the
context of his appointment.  A fortiori, the eligibility of a person  as  to
whether he is in the service of Union or State is required  to  be  seen  at
the time of his appointment for such post and not prior to it.
9)    Mr. Ranjit  Kumar,  Solicitor  General  of  India  appearing  for  the
respondent (High  Court),  however,  contended  that  the  word  "appointed”
occurring in Article 233(2) of the Constitution should  necessarily  include
the entire selection  process  starting  from  the  date  of  submitting  an
application by the person concerned till the date  of  his  appointment.  It
was his submission that if any such person is found  to  be  in  service  of
Union or State, as the case may be, on the date when  he  has  applied  then
such person would  suffer  disqualification  prescribed  in  clause  (2)  of
Article 233 and would neither be eligible  to  apply  nor  be  eligible  for
appointment to the post of district judge.
10)   This submission though look attractive is not acceptable. Neither  the
text of Article and nor the words occurring in Article 233(2)  suggest  such
interpretation. Indeed, if his argument is accepted,  it  would  be  against
the spirit  of  Article  233(2).  My  learned  Brother  for  rejecting  this
argument has narrated the consequences, which are likely  to  arise  in  the
event of accepting such argument and I agree with what he has narrated.
11)   In my  view,  there  lies  a  subtle  distinction  between  the  words
“selection" and "appointment” in service  jurisprudence.   (See  :  Prafulla
Kumar Swain vs. Prakash Chandra Misra & Ors.,  (1993) Supp.  (3)  SCC  181).
When the framers of the Constitution  have  used  the  word  "appointed"  in
clause (2) of Article 233 for determining the eligibility of a  person  with
reference to  his  service  then  it  is  not  possible  to  read  the  word
"selection" or  "recruitment"  in  its  place.  In  other  words,  the  word
"appointed" cannot be read to include the  word  "selection”,  “recruitment”
or “recruitment process”.
12)   In my opinion, there is no bar for a person to apply for the  post  of
district judge, if he otherwise,  satisfies  the  qualifications  prescribed
for the post while remaining in service of Union/State.  It is only  at  the
time of his  appointment  (if  occasion  so  arises)  the  question  of  his
eligibility arises. Denying  such  person  to  apply  for  participating  in
selection process when he otherwise fulfills all  conditions  prescribed  in
the advertisement by taking recourse to clause (2) of Article 233 would,  in
my opinion, amount to violating his right guaranteed under Articles  14  and
16 of the Constitution of India.
13)   It is a settled principle of rule  of  interpretation  that  one  must
have regard to subject and the object for  which  the  Act  is  enacted.  To
interpret a Statue in a reasonable manner, the Court must place itself in  a
chair of reasonable legislator/author.  So  done,  the  rules  of  purposive
construction have to be resorted to  so  that  the  object  of  the  Act  is
fulfilled. Similarly, it is also a  recognized  rule  of  interpretation  of
Statutes that expressions used therein should ordinarily  be  understood  in
the sense in which they best harmonize with the object of  the  Statute  and
which effectuate the  object  of  the  legislature.  (See-Interpretation  of
Statues 12th Edition, pages 119  and  127  by  G.P.Singh).    The  aforesaid
principle, in my opinion, equally applies while interpreting the  provisions
of Article 233(2) of the Constitution.

14)   With these few words of mine, I  agree  with  the  reasoning  and  the
conclusion arrived at by my learned Brother.

                    ..……..................................J.
                                  [ABHAY MANOHAR SAPRE]  New Delhi;
August 09, 2016
-----------------------
[1]
       See Para 9 of the Judgment under appeal
[2]    233 (1) Appointments of persons to be, and the posting and  promotion
of, district judges in any State shall be made by the Governor of the  State
in consultation with the High Court exercising jurisdiction in  relation  to
such State

[3]    233(2) A person not already in the service of the  Union  or  of  the
State shall only be eligible to be appointed a  district  judge  if  he  has
been for not less  than  seven  years  an  advocate  or  a  pleader  and  is
recommended by the High Court for appointment

[4]    (1993) Supp (3) SCC 181 at  pg  190  “29.  At  this  stage,  we  will
proceed to decide as to the meaning and effect of  the  words  "recruitment"
and "appointment". The term "recruitment"  connotes  and  clearly  signifies
enlistments, acceptance, selection or approval for  appointment.  Certainly,
this is not actual appointment or posting in service.  In  contradistinction
the word "appointment" means  an  actual  act  of  posting  a  person  to  a
particular office.  30. Recruitment is just an  initial  process.  That  may
lead to eventual appointment in the service. But, that cannot tantamount  to
an appointment.”
[5]    (1994) 1 SCC 126 at pg 129 “8. “It is now well settled that a  person
who is selected does not, on account of being empanelled alone, acquire  any
indefeasible right of appointment. Empanelment is at the  best  a  condition
of eligibility for purposes of appointment, and by itself  does  not  amount
to selection or create a  vested  right  to  be  appointed  unless  relevant
service rule says to the contrary. (See Shankarsan Dash v.  Union  of  India
and Sabita Prasad and Ors. v. State in Bihar and Ors”

-----------------------
18

Review of order in respect of Back wages = For the limited purpose of modifying the relief granted in the Civil Appeal only with regard to the Back wages, we directed Mr. Ashok Panigrahi, the learned counsel appearing on behalf of the review petitioner-LIC to submit a document containing the pay scales indicating the basic pay and other emoluments payable to the concerned workmen. The same were furnished with the periodic revisions in the years 1992, 1997, 2002, 2007 and 2012, without furnishing the other component figures which would be the gross salary of the different classes of workmen in the present dispute. These periodic revisions of pay of basic salary, along with other component figures comprising the gross salary including Dearness Allowance, House Rent Allowance etc. etc., as applicable, must be accounted for while computing the amount due to the workmen towards the back wages.The temporary and badli workers of LIC, who are entitled for regularisation as permanent workmen in terms of the impugned judgment and order dated 18.03.2015 passed by this Court, by applying the terms and conditions of the modified award dated 26.08.1988 passed by Justice Jamdar, are held to be entitled to full back wages as well. However, keeping in mind the immense financial burden this would cause to LIC, we deem it fit to modify the relief only with regard to the back wages payable and therefore, we award 50% of the back wages with consequential benefits. The back wages must be calculated on the basis of the gross salary of the workmen, applicable as on the date as per the periodical revisions of pay scale as stated supra. The computation must be made from the date of entitlement of the workmen involved in these cases, that is, their absorption, till the age of superannuation, if any concerned workman has attained the age of superannuation as per the regulations of the review petitioner-LIC, as applicable to the concerned workman. With the above modifications to the judgment and order sought to be reviewed, these review petitions are disposed of in the terms as indicated above. Since the judgment and order is passed in favour of workmen and their dispute is being litigated for nearly twenty five years, the directions contained in the judgment and order dated 18.03.2015 with the above modifications shall be complied with by the review petitioner-LIC within eight weeks of the receipt of the copy of this order.

                               NON REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                    CONTEMPT PETITION (C) NO. 459 OF 2015
                                     IN
                        CIVIL APPEAL NO. 6950 OF 2009

 TAMILNADU TERMINATED FULL TIME
 TEMPORARY LIC EMPLOYEES ASSOCIATION    …PETITIONER

                                     Vs.

  S.K. ROY, THE CHAIRMAN, LIFE
  INSURANCE CORPORATION OF INDIA & ANR.  …CONTEMNORS

                     WITH
                    CONTEMPT PETITION (C) NO. 634 OF 2015
                     IN
                        CIVIL APPEAL NO.6956 OF 2009,

                     REVIEW PETITION (C) NO. 3846 OF 2015
                                     IN
                       CIVIL APPEAL NO. 6950 OF 2009,

                    REVIEW PETITION (C) NO. 2994 OF 2015
                                     IN
                        CIVIL APPEAL NO.6953 OF 2009,

                    REVIEW PETITION (C) NO. 2991 OF 2015
                                     IN
                        CIVIL APPEAL NO.6956 OF 2009,

                    CONTEMPT PETITION (C) NO. 637 OF 2015
                                     IN
                        CIVIL APPEAL NO.6953 OF 2009,

                    REVIEW PETITION (C) NO. 2990 OF 2015
                                       IN
                        CIVIL APPEAL NO.6954 OF 2009,

                    REVIEW PETITION (C) NO. 2993 OF 2015
                                       IN
                        CIVIL APPEAL NO.6952 OF 2009,

                    CONTEMPT PETITION (C) NO. 502 OF 2015
                                     IN
                        CIVIL APPEAL NO.6952 OF 2009,

                     REVIEW PETITION (C) NO. 2989 OF 2015
                                     IN
          CIVIL APPEAL NO.6951 OF 2009
                                       AND

                     CONTEMPT PETITION (C) NO. 21 OF 2016
                        IN
                        CIVIL APPEAL NO.6950 OF 2009



                               J U D G M E N T

V. GOPALA GOWDA, J.



      Delay condoned in filing the Review Petitions.

 These Review Petitions arise from the impugned  judgment  and  order  dated
18.03.2015 passed by this Court  in  Civil  Appeal  No.  6950  of  2009  and
connected appeals, whereby it was held that  the  Award  passed  by  Central
Government Industrial Tribunal, New Delhi (CGIT) in I.D. No. 27 of  1991  is
legal and valid and the  same  be  restored  and  implemented  by  the  Life
Insurance Corporation of India (hereinafter referred to  as  the  “LIC”)  by
absorbing the concerned workmen in the permanent posts. It was further  held
that the Corporation would be  liable  to  pay  all  consequential  benefits
including monetary benefits taking into consideration the revised pay  scale
in the cases of those workmen who had attained the age of superannuation.


As the facts of the case are already stated in the judgment in Civil  Appeal
No. 6950 of 2009, the same need not be reiterated herein  for  the  sake  of
brevity. The following contentions were  advanced  by  the  learned  counsel
appearing on behalf of the parties in support of their case:



    Mr. Mukul Rohatgi, the learned Attorney General appearing on  behalf  of
the review petitioner-LIC  contends  that  this  Court,  while  passing  the
judgment and order dated 18.03.2015, failed to appreciate that  the  Tulpule
and Jamdar awards stood substituted by the “Terms of  Compromise”  way  back
on 01.03.1989, which stood finally  disposed  of  vide  judgment  and  order
dated 07.02.1996 passed by this Court in Civil Appeal No. 1790 of  1989.  It
is further contended that this Court failed  to  appreciate  the  effect  of
settlement of an award, in the light of the decision of this  Court  in  the
case of Herbertsons Ltd. v. Workmen[1], which has further been  followed  by
this Court in the cases of Transmission Corpn., A.P. Ltd. v.  P.  Ramchandra
Rao[2] and ITC Ltd. Workers Welfare Assn. v. ITC Ltd.[3]



The learned Attorney General further submits that under Section  24  of  the
Life Insurance Corporation Act, 1956 (hereinafter referred to  as  the  “LIC
Act, 1956”), the Central Government does not allocate any fund for LIC,  and
the funds for LIC are generated from the payments made to it  and  that  the
Central Government does not contribute towards the funding  of  LIC.  It  is
further submitted that under Section 28 of the LIC Act,  1956,  95%  of  the
surplus of LIC is to be allocated to or  reserved  for  its  life  insurance
policy-holders. Thus, the contention that LIC has a huge surplus and  is  in
a position to implement the order of this Court is misconceived as the  same
goes against the statutory provisions of the LIC Act, 1956.



The  learned  Attorney  General   further   submits   that   the   financial
implications on LIC in complying with the impugned  judgment  and  order  of
this Court cannot be ignored.



At this stage, we would deem it fit to point out  that  the  same,  however,
does not find any mention in the Review Petition filed by  LIC  before  this
Court and does not form a part of its pleadings.





The learned Attorney General further submits that as on 31 03.2015, LIC  had
55,427 Class III employees and 5,190 Class IV employees. If LIC is  directed
to consider the absorption of the workmen to  the  advertisement,  then  the
number of  Class  III  employees  will  increase  by  11.14%  and  Class  IV
employees by 56.65% and  the  same  will  affect  the  employee’s  ratio  in
addition to the increase in its financial burden and that the same  will  be
contrary to  the  interests  of  the  policyholders.  The  learned  Attorney
General estimates the financial liability  for  implementing  the  order  of
this Court at approximately Rs.7087 crores, with  the  annual  liability  at
around Rs.728 crores per year and that this will be a huge financial  burden
for LIC to bear.



On  the  other  hand,  the  learned  counsel  appearing  on  behalf  of  the
respondents-workers submit that it becomes  clear  from  a  perusal  of  the
Review Petitions filed by LIC that it is trying to re-agitate  the  case  on
merits. The learned counsel placed reliance on the decision  of  this  Court
in the case of Enviro Legal Action v. Union of India[4] wherein  this  Court
elaborated the scope of the review power of this Court under Article 137  of
the Constitution. It was held as under:



“The ratio of these judgments is that a court of final appeal has  power  in
truly exceptional circumstances to recall its order  even  after  they  have
been entered in order to avoid irremediable injustice.

Reviewing of various cases of different jurisdictions lead  to  irresistible
conclusion that though the judgments of the apex court can also be  reviewed
or recalled but it must  be  done  in  extremely  exceptional  circumstances
where there is gross violation of principles of natural justice.”



Further reliance is placed on the decision of this  Court  in  the  case  of
Kamlesh Verma v. Mayawati[5], wherein this Court held as under:

“20.1 When the review will be maintainable:-

Discovery of new and important matter or evidence which, after the  exercise
of due diligence, was not within knowledge of the petitioner  or  could  not
be produced by him;

Mistake or error apparent on the face of the record;

Any other sufficient reason.

The words “any other sufficient reason” has been interpreted in Chhajju  Ram
vs. Neki, AIR 1922 PC 112 and approved by this Court in Moran Mar  Basselios
Catholicos vs. Most Rev. Mar Poulose Athanasius & Ors., (1955)  1  SCR  520,
to mean “a  reason  sufficient  on  grounds  at  least  analogous  to  those
specified in the rule”. The same principles have been  reiterated  in  Union
of India vs. Sandur Manganese & Iron Ores Ltd. & Ors.

20.2 When the review will not be maintainable:-

(i) A repetition of old and overruled  argument  is  not  enough  to  reopen
concluded adjudications.

(ii) Minor mistakes of inconsequential import.

(iii) Review proceedings cannot be equated with the original hearing of  the
case.

(iv) Review is not maintainable unless the material error, manifest  on  the
face of the order, undermines its soundness or  results  in  miscarriage  of
justice.

(v) A review is by no means an  appeal  in  disguise  whereby  an  erroneous
decision is re-heard and corrected but lies only for patent error.

(vi)The mere possibility of two views on the subject cannot be a ground  for
review.

(vii) The error apparent on the face of the record should not  be  an  error
which has to be fished out and searched.

(viii) The appreciation of evidence on record is fully within the domain  of
the appellate court, it cannot be permitted to be  advanced  in  the  review
petition.

(ix) Review is not maintainable when the same relief sought at the  time  of
arguing the main matter had been negatived.”



The learned counsel contend that the ground raised in the  review  petitions
filed by LIC do not warrant any interference by this Court in  the  name  of
exercise of power of review under Article 137 of the  Constitution,  as  all
the averments in the Review petition are nothing but attempts  made  by  the
review petitioner-LIC to protract the implementation of the order passed  by
this Court.



We have heard the learned counsel appearing on behalf  of  the  parties.  At
this stage, it would be useful to reiterate what this Court had held in  the
impugned judgment and order dated 18.03.2015:

“27. In view of the law laid by this Court in the case  referred  to  supra,
both the Award of Justice Tulpule reiterated by way of  clarification  Award
by Justice Jamdar are still operative as the  same  are  not  terminated  by
either of the parties as provided  under  Section  19(6)  of  the  Act.  The
compromise between the parties in SLP No.  14906  of  1988  and  the  Scheme
formed in E. Prabhavathy & Ors. and G. Sudhakar &  Ors.  cases  referred  to
supra do not amount to substitution of the Awards passed by  Justice  R.  D.
Tulpule and by Justice S.  M.  Jamdar.  Hence,  in  view  of  the  aforesaid
reasons, the submissions made by Mr.  Naphade,  learned  Amicus  Curiae,  in
justification of the Award passed by the CGIT is  based  on  the  terms  and
conditions laid down in the Awards passed by the  NIT  (by  Justice  Tulpule
and Justice Jamdar) in favour of the workmen for  absorption  as  they  have
been rendering their service to the Corporation in the perennial  nature  of
work for a number of years and hence, the High Court was  not  justified  in
interfering with the said Award passed by  the  CGIT.  The  said  contention
urged by the learned amicus curiae  is  accepted  by  us,  as  the  impugned
judgment and order of the High Court is contrary to the Awards  referred  to
supra, the provisions of the Industrial Disputes Act and the law  laid  down
by this Court in the aforesaid cases.  The  Awards  passed  by  the  NIT  is
binding upon the Corporation till it is  substituted  by  another  Award  or
replaced by another settlement in relation to the service conditions of  the
workmen of the Corporation in accordance with law as provided under  Section
12 read with Section 18(3) of the Act or another Award that is  required  to
be passed by the Jurisdictional  CGIT  in  relation  to  the  above  subject
matter after the Awards which are in operation are terminated by  either  of
the parties as provided under Section 19(6) of  the  Act.  Until  then,  the
said Award passed by the NIT will still be operative in law. Therefore,  the
same has been rightly applied to the fact situation on  hand  in  the  Award
passed by the CGIT and it could not have been set aside by the  High  Court.
Thus, we are of the opinion that the single Judge erroneously set aside  the
Award passed by the CGIT and the said judgment of the single judge has  been
further erroneously affirmed by the Division Bench of the  High  Court.  The
said judgments of the High Court are  clearly  contrary  to  law  and  legal
principles laid down by this Court in cases referred to  supra.  Hence,  the
same are liable to be set aside by allowing these appeals and restoring  the
Award of the CGIT.”



The review petitioner-LIC has not submitted anything on  record  to  suggest
that the impugned judgment and order suffers from an error apparent in  law.
While in the review petitions the factual and  legal  submissions  urged  in
the Civil Appeal have been reiterated, in  the  written  submissions  placed
before  us,  the  emphasis  shifted   to   the   practical   difficulty   in
implementation of the order of this Court. It has been well settled by  this
Court that a mere repetition of the same arguments which were urged  in  the
appeal and have been rejected, is not sufficient to justify the exercise  of
power of review under Article 137 of the Constitution by this Court. In  the
case of Kamlesh Verma (supra), this Court has held as under:

“Review is not re-hearing of an original matter. The power of review  cannot
be confused with appellate power which enables a superior court  to  correct
all errors committed by  a  subordinate  court.  A  repetition  of  old  and
overruled argument is not enough to re-open  concluded  adjudications.  This
Court, in Jain Studios Ltd. v. Shin Satellite Public Co. Ltd. (2006)  5  SCC
501, held as under:

11. So far as the grievance of the applicant on  merits  is  concerned,  the
Learned Counsel for the opponent is right in submitting that  virtually  the
applicant seeks the same relief  which  had  been  sought  at  the  time  of
arguing the main matter and had been negatived. Once such a prayer had  been
refused, no review petition would lie which would convert rehearing  of  the
original matter. It is settled law  that  the  power  of  review  cannot  be
confused with appellate power which enables a superior court to correct  all
errors committed by a subordinate court. It is not rehearing of an  original
matter. A repetition of old and overruled argument is not enough  to  reopen
concluded adjudications. The power of review can be exercised  with  extreme
care, caution and circumspection and only in exceptional cases.”
                          (emphasis laid by this Court)


While  ordinarily,  the  aspect  of  financial  hardship  would  not  be   a
sufficient ground to warrant our  interference  in  the  instant  case,  but
keeping in view the fact that LIC is a statutory  Corporation  operating  in
the interest of the public at large, on the  limited  point  of  payment  of
full back wages to the temporary and badli  workers  who  are  entitled  for
regularisation, we may reconsider the same. A  constitution  bench  of  this
Court in the case of Keshav Mills Co. v. CIT[6] held as under:

“23. ………In reviewing and revising its earlier decision,  this  Court  should
ask itself whether in the interests of the public  good  or  for  any  other
valid and compulsive reasons, it is  necessary  that  the  earlier  decision
should be revised. When this Court decides questions of law,  its  decisions
are, under Art. 141, binding on all courts within the  territory  of  India,
and so, it must be the constant endeavour  and  concern  of  this  Court  to
introduce and maintain  an  element  of  certainty  and  continuity  in  the
interpretation of law in the country. Frequent exercise  by  this  Court  of
its power to review its earlier  decisions  on  the  ground  that  the  view
pressed before it later appears to the Court  to  be  more  reasonable,  may
incidentally tend to make law uncertain and introduce confusion  which  must
be consistently avoided. That  is  not  to  say  that  if  on  a  subsequent
occasion, the Court is satisfied  that  its  earlier  decision  was  clearly
erroneous, it should hesitate to correct the error; but  before  a  previous
decision is pronounced to be plainly erroneous, the Court must be  satisfied
with a fair amount of unanimity amongst its members that a revision  of  the
said view is fully justified. It is not possible or desirable,  and  in  any
case it would be inexpedient to lay down any principles which should  govern
the approach of the Court in dealing with  the  question  of  reviewing  and
revising  its  earlier  decisions.  It  would  always  depend  upon  several
relevant considerations: What is the nature of the  infirmity  or  error  on
which a plea for a review and revision of the earlier view is based? On  the
earlier occasion, did some patent aspects of the question remain  unnoticed,
or was the attention of the Court not drawn to  any  relevant  and  material
statutory provision, or was any previous decision of this Court  bearing  on
the point not noticed? Is the Court hearing such plea fairly unanimous  that
there is such an error in the earlier view? What would be the impact of  the
error on the general administration of  law  or  on  public  good?  Has  the
earlier decision been followed on subsequent occasions either by this  Court
or by the High Courts? And, would the reversal of the earlier decision  lead
to public inconvenience, hardship or  mischief?  These  and  other  relevant
considerations must be carefully  borne  in  mind  whenever  this  Court  is
called upon to exercise its jurisdiction to review and  revise  its  earlier
decisions.”



For the limited purpose of modifying the relief granted in the Civil  Appeal
only with regard to the Back wages, we directed  Mr.  Ashok  Panigrahi,  the
learned counsel appearing on behalf of the review petitioner-LIC  to  submit
a document containing the pay scales indicating  the  basic  pay  and  other
emoluments payable to the concerned workmen. The same  were  furnished  with
the periodic revisions in  the  years  1992,  1997,  2002,  2007  and  2012,
without furnishing the other component figures  which  would  be  the  gross
salary of the different classes of workmen in  the  present  dispute.  These
periodic revisions of pay  of  basic  salary,  along  with  other  component
figures comprising the gross  salary  including  Dearness  Allowance,  House
Rent Allowance etc.  etc.,  as  applicable,  must  be  accounted  for  while
computing the amount due to the workmen towards the back wages.



The temporary and badli workers of LIC, who are entitled for  regularisation
as permanent workmen in terms of  the  impugned  judgment  and  order  dated
18.03.2015 passed by this Court, by applying the  terms  and  conditions  of
the modified award dated 26.08.1988 passed by Justice Jamdar,  are  held  to
be entitled to full back  wages  as  well.  However,  keeping  in  mind  the
immense financial burden this would cause to LIC, we deem it fit  to  modify
the relief only with regard to the back  wages  payable  and  therefore,  we
award 50% of the back wages with  consequential  benefits.  The  back  wages
must be calculated on  the  basis  of  the  gross  salary  of  the  workmen,
applicable as on the date as per the periodical revisions of  pay  scale  as
stated supra. The computation must be made from the date of  entitlement  of
the workmen involved in these cases, that is,  their  absorption,  till  the
age of superannuation, if any concerned workman  has  attained  the  age  of
superannuation as per the  regulations  of  the  review  petitioner-LIC,  as
applicable to the concerned workman.



With the above  modifications  to  the  judgment  and  order  sought  to  be
reviewed, these review petitions are disposed of in the terms  as  indicated
above. Since the judgment and order is  passed  in  favour  of  workmen  and
their  dispute  is  being  litigated  for  nearly  twenty  five  years,  the
directions contained in the judgment and order  dated  18.03.2015  with  the
above modifications shall be complied  with  by  the  review  petitioner-LIC
within eight weeks of the receipt of the copy of this order.



 In view of the disposal of the Review  Petitions,  the  Contempt  Petitions
are also disposed of, but in case  of  non-compliance  of  the  above  order
within the stipulated time, the parties will be at liberty to file  Contempt
Petitions afresh. All pending applications are disposed of.





…………………………………………………J.                       [V. GOPALA GOWDA]




     …………………………………………………J.
      [C. NAGAPPAN]

New Delhi,
August 9, 2016

-----------------------
[1]   (1976) 4 SCC 736

      [2]
[3]   (2006) 9 SCC 623

      [4]
[5]   (2002) 3 SCC 411

      [6]
[7]    (2011) 8 SCC 161

      [8]
[9]   (2013) 8 SCC 320

      [10]
[11]   AIR 1965 SC 1636

      [12]

“tenant’s estoppel”=Tenant estopped to question the ownership of the landlords.=though defendant Bhanaram in his written statement had denied ownership of the plaintiffs he went on to add, “This being a suit for eviction of a tenant, the question of ownership is not relevant to the suit”. In his cross-examination he clearly admitted that the lease from Nazul Department stood in the name of the plaintiffs and that the witness himself had produced that document in some other proceedings. He had further admitted that he used to pay rent by money orders in the name of the father of the plaintiffs. On facts, it must be held that defendant Bhanaram had without any doubt regarded the plaintiffs as landlords and owners of the suit house. This matter is thus fully covered by the decision of this Court in Anar Devi’s case and it was not open to defendant Bhanaram to question the ownership of the plaintiffs- landlords.- In the circumstances, the view taken by the High Court while setting aside the concurrent decisions of the Courts below was not correct and justified. We, therefore, allow this appeal. While setting aside the judgment under appeal, we restore the decisions of the Trial Court and the Lower Appellate Court passed in the instant case.Since respondents are in occupation of the suit house for last more than 40 years, we deem it appropriate to grant them time upto 31st August, 2017 to vacate and hand-over peaceful possession of the suit house to the appellants subject to the respondents filing usual undertakings within four weeks from the date of this judgment. In case no such undertakings are filed by each of the respondents within the time so stipulated, the appellants shall be free to execute the decree for eviction of the suit house.

                                                              Non-Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.7360 OF 2016
                 (Arising out of SLP(Civil) No.9418 of 2011)


Ambika Savaria & Ors.                               ….Appellants



                                   Versus



Sanjay Sharma & Ors.                               …. Respondents

[[



                                   JUDGMENT



[

Uday Umesh Lalit,  J.



      1.     Leave  granted.  This  appeal  challenges  correctness  of  the
judgment  and  order  dated  20.10.2010  passed  by  the   High   Court   of
Chhattisgarh at Bilaspur allowing Second Appeal No.242 of 1989  and  setting
aside concurrent decisions of the Trial  Court  and  Lower  Appellate  Court
granting decree of eviction in favour of the appellants.





      2.    Civil Suit No.67-A of 1979 was  filed  by  Vasudev  Shyamji  and
Govind Shyamji, the predecessors of the appellants seeking eviction  of  one
Bhanaram Sharma, predecessor of the respondents from suit  house  which  was
described in the plaint as the front portion of house No.189/1, Ward  No.18,
Raigarh. The eviction was sought on grounds including bona  fide  need.   In
paragraph  2  of  his  written  statement  Bhanaram   stated,   “……..It   is
specifically denied that the plaintiffs are  owners  of  house  No.189/1  in
Ward No.18 of Raigarh Town. This being a suit for eviction of a  tenant  the
question of ownership is not relevant to the suit.”


      3.    Thus though it was denied that the  plaintiffs  were  owners  of
the suit house, in the very next sentence defendant Bhanaram  asserted  that
the question of ownership was not relevant in the  instant  suit.   Bhanaram
entered the witness box and  in  his  cross-examination  admitted  that  the
lease from Nazul Department stood in the name of  plaintiffs  and  that  the
witness himself had produced the same in  some  other  proceedings.  It  was
further accepted that he had paid rent by money orders sent in the  name  of
Shyamji Gangji, father of the plaintiffs.


      4.    The aforesaid suit was re-numbered  as  Civil  Suit  No.417A  of
1986.  After considering the evidence on  record  the  Trial  Court  by  its
judgment and order dated 21.01.1987 decreed  the  suit  principally  on  the
ground that the plaintiffs required the suit house  for  reconstruction  and
for bona fide need.



      5.    The matter having been carried in appeal by Bhanaram, the  Lower
Appellate Court also considered the  question  regarding  ownership  of  the
suit house.  While  considering  the  evidence  of  Bhanaram,  it  observed,
“……This witness has also admitted that lease from  nazul  of  this  property
was also accepted in the name of plaintiffs  and  he  himself  has  produced
that lease on his behalf in other civil court.”   The Lower Appellate  Court
affirmed the view taken by  the  Trial  Court  and  dismissed  Civil  Appeal
No.3A/87 vide its judgment and order dated 20.03.1989.



      6.    The heirs of Bhanaram namely the  respondents  being  aggrieved,
filed Second Appeal No.242 of 1989 in the  High  Court  of  Chhattisgarh  at
Bilaspur. This appeal came to be allowed by the  High  Court  vide  judgment
and order dated 20.10.2010.  It was observed by the High Court  that  for  a
plaintiff to succeed in seeking eviction of tenant on  the  ground  of  bona
fide need under Section 12(1)(e) of the  Chhatisgarh  Accommodation  Control
Act, 1961 (hereinafter referred to  as  the  “Act”)  it  was  incumbent   to
establish that he  was  owner  of  the  accommodation  in  question.   After
considering  the  evidence  on  record,  particularly  that   of   defendant
Bhanaram it was observed:

“Evidence of this witness, pleadings  and  evidence  of  defendant  Bhanaram
Sharma clearly reveal that father of Vasudev  Shyamji  i.e.  Shyamji  Gangji
was landlord of the suit accommodation,  but  was  not  owner  of  the  suit
accommodation.  In his detailed evidence, Vasudev  Shyamji  has  not  stated
anything to show that how he became owner of the suit accommodation.”



      According to the High Court, the fact that defendant Bhanaram used  to
pay rent of the suit  house  to  the  father  of  the  plaintiffs,  was  not
sufficient to prove ownership over the suit house especially when  ownership
was under dispute and the plaintiffs had not adduced any evidence  to  prove
the issue of ownership.



      7.    The aforesaid judgment of the  High  Court  is  presently  under
appeal. We heard Mr. Kamal Mohan Gupta, learned Advocate in support  of  the
quotation and Mr. Ujjal Banerjee,  learned  Advocate  for  the  respondents.
Relying on the decision of this Court in Anar Devi(Smt) v. Nathu  Ram[1]  it
was submitted  by  Mr.  Gupta,  learned  Advocate  that  the  defendant  was
estopped from questioning the title of the  plaintiffs  and  that  the  High
Court was in error in allowing the second  appeal.   Mr.  Banerjee,  learned
Advocate supported the view taken by the High Court and  submitted  that  no
evidence whatsoever was led to prove ownership of the suit house  which  was
necessary in view of Section 12(1)(e) of the Act.



      8.    The relevant provision, namely, Section 12(1)(e) of the  Act  is
as under:
 “12.   Restriction on eviction of tenants – (1)  Nothwithstanding  anything
to the contrary contained in any other law or contract,  no  suit  shall  be
filed in any civil  Court  against  a  tenant  for  his  eviction  from  any
accommodation except on one or more of the following grounds only, namely:
…………………………………………

(e) that the accommodation let for  residential  purpose  is  required  bona
fide by the landlord for occupation as a residence for himself  or  for  any
member of his family, if he is the owner thereof,  or  for  any  person  for
whose benefit the accommodation is  held  and  that  the  landlord  or  such
person has no other reasonably suitable  residential  accommodation  of  his
own in his occupation in the city or town concerned;
……………………………………………..”



      9.     In   Anar  Devi’s   case   the  provision  which  came  up  for
consideration was Section 23-A(b) of M.P. Accommodation  Control  Act  which
was  as under:-



“23-A. Special provisions for eviction of tenant  on  ground  of  bona  fide
requirement.— Notwithstanding anything contained in any other  law  for  the
time being in force or contract to the contrary, a landlord  may  submit  an
application, signed and verified in a manner provided in Rules 14 and 15  of
Order VI of the First Schedule to the Code of Civil Procedure,  1908  (V  of
1908) as if it were a plaint to the Rent Controlling  Authority  on  one  or
more of the following grounds for an order directing the tenant to  put  the
landlord in possession of the accommodation, namely—

(a)………..

Explanation….

(b)    that the accommodation let for non-residential purpose of  continuing
or starting his business or that of any  of  his  major  sons  or  unmarried
daughters, if he is the owner thereof or for any person  for  whose  benefit
the accommodation is held and that the landlord or such person has no  other
reasonably  suitable  non-residential  accommodation  of  his  own  in   his
occupation in the city or town concerned:

     …………………………………..….”




      10.   The relevant provision in  the  instant  case,  namely,  Section
12(1)(e) of the  Act  is  pari  materia   with  Section  23-A(b)  which  was
considered in Anar Devi’s  case.   The  expression,  “if  he  is  the  owner
thereof” is common and identically placed.  Para 18 of the decision in  Anar
Devi’s case  discloses  that  the  respondent-tenant  had  acknowledged  the
ownership of the accommodation as that of the  appellant  and  had  regarded
her as the landlord in his counter notice.    In the  circumstances  it  was
held that the  respondent  was  not  entitled  to  deny  the  title  of  the
appellant to the accommodation.  During the course  of  its  judgment,  this
Court dealt with “tenant’s estoppel”  as statutorily recognized  in  Section
116 of the Evidence Act and observed as under:-



“10. Since the doctrine of “tenant’s estoppel”  could  throw  light  on  the
question as to what can make a landlord to succeed in  enforcing  his  right
to recover possession of accommodation from a tenant  under  clause  (b)  of
Section 23-A of the Act, it would be advantageous to refer to its scope  and
applicability, before taking it up for our consideration.

11.“Doctrine  of  tenant’s  estoppel”  which  governs  the  relationship  of
landlord and tenant is founded on a contract  of  tenancy  entered  into  by
them, is well settled. Jessel,  M.R.,  who  adverted  to  that  doctrine  in
Stringer’s Estate, Shaw v. Jones-Ford[2] explains it thus:

       “Where a man having no title  obtains  possession  of  land  under  a
demise by a man in possession who assumes to give him a title as tenant,  he
cannot deny his landlord’s title, as, for instance, if he takes for  twenty-
one years and he finds that the landlord has  only  five  years’  title,  he
cannot after five years set up against the landlord the jus tertii,  though,
of course, the real  owner  can  always  recover  against  him.  That  is  a
perfectly intelligible doctrine. He took possession under a contract to  pay
rent so long as he held possession under the landlord, and to give it up  at
the end of the term to the landlord, and having taken it in that way  he  is
not allowed to say that the man whose title he admits and under whose  title
he took possession has not a title. That  is  a  well-established  doctrine.
That is estoppel by contract.”

12.  Indeed,  the  said  doctrine  of  tenant’s  estoppel,  finds  statutory
recognition in Section 116 of the Indian Evidence Act, 1872, for short  ‘the
Evidence Act’, in that, it states that “no tenant of immovable property,  or
person claiming through such tenant, shall during  the  continuance  of  the
tenancy, be permitted to deny that the landlord of such tenant had,  at  the
beginning of the tenancy, a title to such immovable property”.

13. This Court in Sri Ram Pasricha v. Jagannath[3], has also ruled  that  in
a suit for eviction by landlord, the tenant  is  estopped  from  questioning
the title of the landlord because of Section 116 of the  Act.  The  Judicial
Committee in Kumar Krishna Prasad Lal Singha Deo v.  Baraboni  Coal  Concern
Ltd.[4], when had occasion to examine the contention based on the words  ‘at
the  beginning  of  the  tenancy’  in  Section  116  of  the  Evidence  Act,
pronounced that  they  do  not  give  a  ground  for  a  person  already  in
possession of land becoming tenant of another, to contend that there  is  no
estoppel against his denying his subsequent lessor’s title. Ever since,  the
accepted position is that Section  116  of  the  Evidence  Act  applies  and
estops even a person already in possession  as  tenant  under  one  landlord
from denying the title of his subsequent landlord when once he  acknowledges
him as his landlord  by  attornment  or  conduct.  Therefore,  a  tenant  of
immovable property  under  landlord  who  becomes  a  tenant  under  another
landlord by accepting him to be the owner who had  derived  title  from  the
former landlord, cannot be permitted to deny the latter’s title,  even  when
he is sought to be evicted by the latter on a permitted ground.

14. The scope and applicability  of  the  doctrine  of  “tenant’s  estoppel”
being what we have said  of  it,  we  shall  now  proceed  to  consider  the
aforesaid question which has arisen with reference to the right of  landlord
under Section 23-A(b) of the Act in the matter of recovery of possession  of
the accommodation from the tenant.”


11.    In  the  instant  case  though  defendant  Bhanaram  in  his  written
statement had denied ownership of the plaintiffs he went on  to  add,  “This
being a suit for eviction of a tenant, the  question  of  ownership  is  not
relevant to the suit”. In his cross-examination  he  clearly  admitted  that
the lease from Nazul Department stood in the  name  of  the  plaintiffs  and
that  the  witness  himself  had  produced  that  document  in  some   other
proceedings.  He had further admitted that he used  to  pay  rent  by  money
orders in the name of the father of the plaintiffs.  On facts,  it  must  be
held that defendant Bhanaram had without any doubt regarded  the  plaintiffs
as landlords and owners of the  suit  house.   This  matter  is  thus  fully
covered by the decision of this Court in Anar Devi’s case  and  it  was  not
open to defendant Bhanaram to question  the  ownership  of  the  plaintiffs-
landlords.

12.   In the circumstances, the view taken by the High Court  while  setting
aside the concurrent decisions of the  Courts  below  was  not  correct  and
justified.  We, therefore,  allow  this  appeal.  While  setting  aside  the
judgment under appeal, we restore the decisions of the Trial Court  and  the
Lower Appellate Court passed in the instant case.





13.   Since respondents are in occupation of the suit house  for  last  more
than 40 years, we deem it appropriate to grant them time upto  31st  August,
2017 to vacate and hand-over peaceful possession of the suit  house  to  the
appellants subject to the respondents filing usual undertakings within  four
weeks from the date of this judgment.  In  case  no  such  undertakings  are
filed by each  of  the  respondents  within  the  time  so  stipulated,  the
appellants shall be free to execute the decree  for  eviction  of  the  suit
house.



14.   The appeal stands allowed in the aforesaid terms without any order  as
to costs.


      ………………………………J.
      (C. Nagappan)


      ………………………………J.
      (Uday Umesh Lalit)

      New Delhi,
      August 09, 2016











-----------------------
[1]

      [2]  (1994) 4 SCC 250
[3]

      [4] LR 6 Ch D 1:37 LT 233
[5]

      [6] (1976) 4 SCC 184

[7]

      [8] AIR 1937 PC 251