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IN THE HIGH COURT OF BOMBAY
Dr. B.P. Saraf M.S. Rane, JJ.
Center of Indian Trade Unions another.....Petitioners
Versus
The Union of India others ....Respondents.
Writ Petition No. 2456 of 1996 with Writ Petition No. 2912 of 1996, decided on 2-12-1996.
Advocates appeared :
Shanti Bhushan, S.A. with Sunip Sen, Vishwajit Sawant and Ms. Dipti Bhutta, for the petitioners in Writ Petition No. 2456.
K.S. Cooper with Satish Shah and H.D. Rathod for respondents Nos. 1 and 4 in Writ Petition No. 2456.
Ram Jethmalani, S.A. with C.J. Sawant, A.G., M.N. Zambre, A.G.P, Nitin Pradhan and Milind Sathe for respondents Nos. 2 and 5 in Writ Petition No. 2456 and for respondent No. 2 in Writ Petition No. 2912.
J.J. Bhat with P.A. Sawant, V.B. Agarwala, Ms. Rashmi Chandrachud and Vishal Phal instructed by M/s. Gagrat Company for respondent No. 3. in W.P. 2456.
Atul Setalvad, S.A. with Atul Rajadhyaksha and G.R. Joshi instructed by M/s. Bhaishankar Kanga Girdharlal for respondent No. 6 in Writ Petition No. 2456 and for respondent No. 4 in Writ Petition No. 2912.
K.K. Venugopal, S.A. with Atul Rajadhyaksha and Ms. Ambika Nair instructed by Bhaishankar Kanga Girdharlal for respondent No. 7 in Writ Petition No. 2456.
Arvind Bobade with S.G. Deshmukh, for the petitioners in Writ Petition No. 2912.
The High Court of Bombay dismissed two writ petitions challenging the Power Purchase Agreement (PPA) entered into between the Maharashtra State Electricity Board (MSEB) and Dabhol Power Company (Dabhol), as well as the guarantee and counter-guarantee furnished by the State Government and the Central Government, respectively. The petitions were filed by the Center of Indian Trade Unions and Shri P. B. Samant, alleging lack of clearance from the Central Electricity Authority (CEA), absence of competitive bidding, and lack of transparency. The Court held that the challenge to the PPA and the guarantee and counter-guarantee on the basis of materials available at the time of the hearing and disposal of earlier writ petitions was barred by the principles of res judicata and laches and delay. The Court also rejected the challenge to the PPA on the grounds of corruption, bribery, fraud, and misrepresentation, as the petitioners failed to provide any material justifying their allegations. The Court observed that the State Government's allegations of corruption, bribery, fraud, etc. made in the plaint filed in a suit were a part of the Government's strategy in confrontation with Dabhol and were intended merely to stall the arbitration proceedings, which amounted to perjury. However, the Court declined to enter into this controversy in the present writ petitions. The Court also criticized Enron, the majority shareholder of Dabhol, for its statement that it spent an enormous amount of its own money on education and project development, which caused furore and misunderstanding among the people. The Court emphasized that multi-nationals should act and behave like investors or industrial houses and not as a Government.
Fact of the Case:
The petitioners, the Center of Indian Trade Unions and Shri P. B. Samant, filed two writ petitions challenging the Power Purchase Agreement (PPA) entered into between the Maharashtra State Electricity Board (MSEB) and Dabhol Power Company (Dabhol), as well as the guarantee and counter-guarantee furnished by the State Government and the Central Government, respectively. The petitions alleged lack of clearance from the Central Electricity Authority (CEA), absence of competitive bidding, and lack of transparency. The PPA was challenged on the grounds of corruption, bribery, fraud, and misrepresentation. The State Government had earlier filed a suit in the High Court seeking a declaration that the PPA was null and void on the ground of fraud and misrepresentation, and had made serious allegations of corruption, bribery, and fraud against Dabhol and various authorities. However, the State Government later withdrew the suit and the arbitration proceedings initiated by Dabhol in London.
Finding of the Court:
The High Court of Bombay dismissed both writ petitions. The Court held that the challenge to the PPA and the guarantee and counter-guarantee on the basis of materials available at the time of the hearing and disposal of earlier writ petitions was barred by the principles of res judicata and laches and delay. The Court also rejected the challenge to the PPA on the grounds of corruption, bribery, fraud, and misrepresentation, as the petitioners failed to provide any material justifying their allegations. The Court observed that the State Government's allegations of corruption, bribery, fraud, etc. made in the plaint filed in a suit were a part of the Government's strategy in confrontation with Dabhol and were intended merely to stall the arbitration proceedings, which amounted to perjury. However, the Court declined to enter into this controversy in the present writ petitions.
Issues: 1. Whether the challenge to the PPA and the guarantee and counter-guarantee on the basis of materials available at the time of the hearing and disposal of earlier writ petitions was barred by the principles of res judicata and laches and delay? 2. Whether the challenge to the PPA on the grounds of corruption, bribery, fraud, and misrepresentation was maintainable? 3. Whether the State Government's allegations of corruption, bribery, fraud, etc. made in the plaint filed in a suit amounted to perjury?
Ratio Decidendi: 1. The Court held that the challenge to the PPA and the guarantee and counter-guarantee on the basis of materials available at the time of the hearing and disposal of earlier writ petitions was barred by the principles of res judicata and laches and delay. The Court observed that the same issues had been raised in earlier writ petitions which were dismissed by the Court, and that the petitioners had not provided any explanation for the delay in filing the present petitions. 2. The Court held that the challenge to the PPA on the grounds of corruption, bribery, fraud, and misrepresentation was not maintainable as the petitioners failed to provide any material justifying their allegations. The Court observed that the State Government's allegations of corruption, bribery, fraud, etc. made in the plaint filed in a suit were a part of the Government's strategy in confrontation with Dabhol and were intended merely to stall the arbitration proceedings. 3. The Court declined to enter into the controversy regarding whether the State Government's allegations of corruption, bribery, fraud, etc. made in the plaint filed in a suit amounted to perjury, as it was outside the scope of the present writ petitions.
Final Decision: Both writ petitions were dismissed.
Dr. B.P. SARAF, J.:---By these writ petitions, the petitioners seek to challenge the power project agreement entered into between the Maharashtra State Electricity Board and the Dabhol Power Company on 8th November 1993 as amended from time to time . Writ Petition No. 2456 of 1996 has been filed by the Center of Indian Trade Unions, a federation of registered trade unions, and Shri Abhay Mehta, a resident of Mumbai and a citizen of India. This writ petition has been filed by way of public interest litigation. The Union of India, the State of Maharashtra, the Maharashtra State Electricity Board, the Central Electricity Authority, Mr. Nizamuddin Patel (Deputy Secretary, Department of Energy, Government of Maharashtra), the Dabhol Power Company with which the Maharashtra State Electricity Board has entered into the power project agreement and the Enron Power Development Corporation have been arrayed as respondent Nos. 1 to 7 respectively. Writ Petition No. 2912 of 1996 has been filed by Shri P. B. Samant and two others. The subject matter of challenge in both these writ petitions being the same, both the petitions were heard together and are being disposed of by this common judgment. However, for the sake of convenience, reference to petitioners and respondents hereinafter would be as per Writ Petition No. 2456 of 1996.
2.The challenge to the power project agreement ("PPA") is on various grounds. One of the main grounds of challenge is that it was concluded without proper clearance under the Indian Electricity (Supply) Act, 1948, in particular, section 29 read with section 31 thereof. The petitioners contend that the requisite clearance was not granted by the Central Electricity Authority ("CEA") and if granted was not validly granted after full compliance with the requirements of the Act. It is also contended that even if concurrence or clearance was granted to the original PPA, there was no fresh clearance or concurrence obtained from the CEA under section 31 of the Act to the amended or supplementary scheme. The petitioners also contend that the above PPA should be declared as void as the same was induced by corruption, bribery, fraud and misrepresentation. In support of the allegation of corruption, bribery, fraud and misrepresentation, the petitioners rely on (i) the statement of Shri Manohar Joshi, Chief Minister of the State of Maharashtra, made on the floor of the Assembly on 3rd August 1995, (ii) report dated 3rd May 1995 of the Cabinet Sub-Committee headed by the Deputy Chief Minister Shri Gopinath Munde constituted to review the Dabhol Power Project, (iii) statements made in the public and the press by the Government and the leaders of the Shiv Sena - BJP combine from time to time in regard to the legitimacy of the PPA entered into by the previous Government, (iv) the suit filed by the State of Maharashtra in this Court seeking a declaration that the PPA entered into by the previous Government was illegal, null and void and grave and serious allegations of corruption, bribery, fraud and misrepresentation made in the plaint in the said suit and (v) the "Outline Submissions on Jurisdiction" submitted by the Government of Maharashtra before the arbitrators in London in the arbitration proceedings initiated by the 6th respondent, Dabhol Power Company. The PPA has also been challenged on the ground of absence of competitive bidding and lack of transparency. The contention of the petitioners is that despite (i) the decision of this Court in (Ramdas Shriniwas Nayak v. Union of India)1, A.I.R. 1995 S.C. 235 to the effect that the PPA could not be faulted with on the ground that it was negotiated and was not a result of invitation of tenders and competitive bidding, (ii) the consistent stance of the present Shiv Sena - BJP combine Government that such deals could not have been finalised without competitive bidding and (iii) the PPA having been scrapped on that ground, it was not open to them to enter into the modi
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