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Adani Power Limited v/s State of Himachal Pradesh

    Civil Writ Petition No. 406 of 2019

    Decided On, 12 April 2022

    At, High Court of Himachal Pradesh

    By, THE HONOURABLE MR. JUSTICE SANDEEP SHARMA

    For the Appellant: Vikram Nankani, Neeraj Gupta, Senior Advocates, Malav deliwala, Ajeet jaswal, Advocates. For the Respondent: Ashok Sharma, Advocate General, Sudhir Bhatnagar, Arvind Sharma, Desh Raj Thakur, Additional Advocates General, Narinder Thakur, Gaurav Sharma, Kamal Kishore, Deputy Advocates General.



Judgment Text

1. Being aggrieved and dissatisfied with issuance of communication dated 7.12.2017 (Annexure-R)(page-187), issued by the Special Secretary (Power) to the Government of Himachal Pradesh, whereby the petitioner came to be apprised that due to various legal intricacies and contractual complications involved in the matter, the Council of Ministers has reconsidered and reviewed the decision taken in its meeting held on 4.9.2015, to refund the amount of upfront premium deposited by the petitioner for Jangi-Thopan- Powari Power Project, petitioner has approached this Court in the instant proceedings filed under Art. 226 of the Constitution of India, praying therein for the following main reliefs:

(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or direction, calling for the records and proceedings leading to the issuance of the impugned letter dated 7th December, 2017 (Annexure-R hereto) and after going into the legality, validity and propriety thereof, to quash and set aside the same.

(b) that this Hon'ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or direction calling for the records and proceedings leading to the issuance of the impugned letter dated 10th October, 2017 (Annexure-N hereto) and after going into the legality, validity and propriety thereof, to quash and set aside the same.

(c) That this Hon'ble Court be pleased to issue a Writ of Mandamus, or a Writ in the nature of Mandamus, or any other appropriate Writ, Order or direction, directing the Respondents by themselves, their servants, agents, officers and subordinates to forthwith refund the sum of Rs.280.969 crores together with interest thereon @ 18% p.a. from the date of receipt of the payment until refund to the petitioner.

(d) that pending the hearing and final disposal of this petition, this Hon'ble Court be pleased to direct the Respondents by themselves, their servants, agents, officers and subordinates to forthwith pay a sum of Rs.280.969 crores to the Petitioner."

History of the case :-

2. For having birds eye view of the matter, certain undisputed facts, which may be relevant for the adjudication of the case at hand, are as under.

3. In October, 2005, State of Himachal Pradesh floated global tender in respect of two Hydro-Electric Projects Jangi-Thopan-Powari Power Project of 980 MW (hereinafter, JTP Projects). Though, initially, last date of submission of bid was 21.1.2006, but on account of issuance of corrigendum, dated 27.12.2005 whereby a condition was incorporated in the tender that the State of Himachal Pradesh shall have the right of equity participation to the extent of 49% in the Hydro-Electric Project on selective basis, the last date of submission of bids was extended to 16.3.2006, Tender Inviting Bids provided that the bidders should have strong financial and technical pre-investment resources for development of Hydro-Electric Project. As per tender, 50% of upfront premium was to be paid immediately on the issuance of Letter of Intent (hereinafter, LoI). One M/s Brakel Corporation NV (hereinafter, Brakel) participated in the bidding process alongwith another company namely Reliance Infrastructure Limited (hereinafter, RIL). Though, before opening of the bids, certain queries were raised by Himachal Pradesh State Electricity Board Limited (hereinafter, HPSEBL) but on 5.9.2006, all the shortlisted bids were opened and Brakel was found to be the highest bidder for the projects. On 16.11.2006, RIL offered to match its bid to that of Brakel, but on 1.12.2006, the Letter of Intent (hereinafter, LoI) was issued by the State in favour of Brakel, awarding therein both the contracts being the highest bidder, having bid of Rs.36.00 Lakh/MW. After issuance of LoI, Brakel was directed to sign a Pre-implementation Agreement (hereinafter, PIA) and deposit the upfront premium. Brakel accepted the LoI and informed the Government of Himachal Pradesh that they are going through the draft PIA. In the meantime, on 11.12.2006, State of Himachal Pradesh notified the Himachal Pradesh Hydro Power Policy (hereinafter, Policy) permitting the investment by third party to the extent of 49% of the paid up capital of the lead member, which in the case at hand was Brakel, who otherwise as per terms and conditions of the LoI as well as the Policy also set up an Indian subsidiary namely Brakel Kinnaur Power Private Limited (hereinafter, BKPPL). Since Brakel did not deposit the upfront premium qua the projects awarded in its favour within the stipulated time, RIL on 20.8.2007, sent a letter to the Government that it was willing to match the bid of Brakel, but since no heed was paid to the aforesaid request of RIL, it filed CWP No. 2074 of 2007 in this Court. However, during the pendency of the aforesaid writ petition, respondent-State issued a show cause notice on 7.1.2008, to Brakel, asking it to show cause that, why the allotment made in its favour of two projects, be not cancelled on account of the fact that neither it paid the upfront premium, nor took any steps to implement the projects.

4. However, on 29.1.2008, BKPPL offered to deposit sum of Rs.173.43 Crore on behalf of Brakel. RIL filed a miscellaneous application in CWP No. 2074 of 2007, seeking therein direction to the respondent-State not to accept the upfront premium being offered by BKPPL. Besides above, RIL also filed an application for amendment of writ petition.

5. State of Himachal Pradesh, while permitting the BKPPL to deposit Rs. 173.43 Crore, issued another show cause notice to Brakel, directing it to pay interest on delayed payment of upfront premium. Though, interest was paid by BKPPL, however, on 1.5.2008, respondent-State apprised the Court that they will not enter into the PIA.

6. On 3.6.2008, the Division Bench of this Court, after hearing the matter, passed the following order:

"The respondent-State has filed various affidavits during the pendency of this petition. We have noticed the contents of the affidavits filed from time to time by the State. We are of the prima facie opinion that the pleadings are contradictory though they are supposed to be precise and concise besides being consistent.

Confronted with this, the learned Advocate General prays for and is granted four weeks time to explain the stand of the State in the present case.

Consequently, the State shall take a decision duly supported by reasons. The decision of the State will be placed on record of this case on the affidavit of the Chief Secretary to the Government of Himachal Pradesh. it is clarified that this exercise has been undertaken by the court to adjudicate upon the case effectively and to arrive at a just conclusion. The decision taken by the State Government will be without prejudice to the rights of all the parties."

7. Pursuant to aforesaid direction issued by Division Bench of this Court, a memorandum was prepared for consideration of the Council of Ministers. Relevant portion of the same is reproduced herein below:

"34. In nutshell, the following important points concerning this Company are required to be noted in this case before proceeding further with any conclusion

1. Mis-statement of fact that the Company is incorporated on 13.2.2005 when it seems that it was actually incorporated on 13.2.2006.

2. Claim that M/s SNC-Lavalin is an equity partner of 30% made in the bid documents (Pre Contract JV Agreement dated 13.3.2006 supplied by Brakel NV), a fact which is denied by the said company during inquiry.

3. Claim that M/s Standard Bank is an equity partner of 45% made in the bid documents (Pre Contract JV as mentioned above), a claim that is denied and asserted false by the Standard Bank in their response to the SV and ACB.

4. As per Pre Contract JV Agreement dated 13.3.2006 supplied by the Company as clarification, the Company M/s Brakel has no Equity in the Company/JV. The entire equity of the Company is divided to others as SNC Lavalin (30%), M/s Standard Banka (45%), Eco Securities (5%) and Energy Infrastructure Overseas (10%) and M/s Halcrow Consulting the balance (10%). In effect this means that the allottee firm is nothing but a simple name for an association of diverse companies which was sought to be presented as a Joint Venture Company. As is now coming out from the scrutiny of documents submitted as also from the inquiries made, these constituents of the JV never agreed to pay any equity stake in the Joint Venture and all claims made in this regard by Brakel NV seem false.

5. Brakel NV have accepted in their response to the Department of Power (Letter dated 21.5.2008) that they have agreed to transfer 49% equity to M/s Adani Power. This is against the terms of allotment and the clauses of PIA prescribed for signing.

6. While taking shelter behind their Company of Foreign Origin status all the time for delay in payment of Upfront Premium, finally deposited the UFP amount from Indian sources only.

7. Claims of being a Netherlands based company highly doubtful. Companys Incorporation in Curacao, an island (Tax Heaven -?) in the pacific raises serious doubts. Netherlands address is just a P.O. Box Number.

8. Paid up Capital of M/s Brakel Corp. NV is only (one) Dollar at the time of incorporation and at the time of bidding for a project that is likely to cost Rs.6000 crores ($ 1.5bn).

9. Paid up capital of the Indian company created by M/s Brakel Corporation NV in the name and style of M/s Brakel Kinnaur Power Pvt. Ltd. is INR 1 lakh only. Company registered at ROC Jalandhar (Punjab) on 9.3.2007.

10. There are no common Directors or Promoters in the 2 companies above.

11. Contrary to the claims made in the bid documents, M/s SNC- Lavalin, M/s Standard Bank, M/s Eco Securities and M/s Halcrow Consulting are not partners of share holders in the Indian JV Company M/s Brakel Kinnaur Power Pvt. Ltd.

12. Amount of Upfront Premium deposited under the letter head of Brakel Corp. NV whereas the money has actually come from the account of M/s Brakel Kinnaur Power Ltd. a fact ascertained and admitted by Brakel during our inquiry.

13. Inquiry Report dated 23.5.2008 received from the Income-tax (Inv) department suggests that the Company appears to be a paper company only with no capacity or expertise to develop the Project allotted.

14. Inquiry Report of the Vigilance Department of Himachal Pradesh also suggests that the matter of allotment to this Company needs further probe and a prima facie case under Section 420 is made out in the allotment of this Project to the Company.

15. All claims of Technical and Financial strengths of the company (based on the tie ups made with other companies) at the time of bidding for the projects seems doubtful in view of the denials already received from M/s SNC Lavalin and M/s Standard Bank."

8. Record reveals that before preparation of aforesaid Cabinet memorandum, an enquiry was got conducted through the Police and Income- Tax Department qua the source of investment /payment made by Brakel, wherein it clearly transpired that the entire sum deposited as upfront premium was given from the Companies managed/controlled by the petitioner. In the aforesaid background, following points were put up for consideration before the Cabinet:

"1. Whether the allotment of Jangi-Thopan Powari HEP (960 MW) made in favour of M/s Brakel Corporation NV vide Government letter dated 1.12.2006 may be cancelled?

2. If the (1) above is approved, whether the request dated 25.9.2007 of M/s Reliance Energy for allotment of the project to them on their matching the Upfront Premium amount quoted by M/s Brakel Corp. NV Project be rejected and the project be re- advertised for development in Private Sector on BOOT basis in terms of the present Hydro Power Policy of the State.

3. Whether a case under Section 420 of the IPC may be registered against M/s Brakel Corporation NV as has been recommended by the State Vigilance and Anti Corruption Bureau in their preliminary Inquiry Report?

4. Whether M/s Brakel Corporation be issued a notice subsequent to cancellation of the allotment as to why the amount of Rs.193.98 crores received from them may not be forfeited to compensate the State Government for the loss caused to it due to the delay that may be caused in the development of the Project? This would, however, not absolve the Company from its liability to compensate the State Government for such losses as may be assessed as a result of appropriate civil proceedings that the State may initiate against the Company"

9. On 7.7.2008, Cabinet ordered that the show cause notice be issued to Brakel that, why the allotment should not be cancelled and the upfront premium money be not forfeited for misrepresenting the facts to the State Government, with regard to its technical and financial competence. Besides above, while directing action to be taken against the officials, who evaluated the bids in HPSEBL, Cabinet also ordered for fresh advertisement calling for bids.

10. On 19.7.2008, a show cause notice was issued pursuant to the aforesaid decision of Cabinet to Brakel specifically stating therein that it misrepresented to the State of Himachal Pradesh about its incorporation and about the equity participation of the so called members of consortium. It also alleged that Brakel transferred 49% equity to the petitioner without taking prior approval of the Cabinet. In the show cause notice, respondent alleged that there was a delay in payment of upfront premium as such, Department contemplates to withdraw the LoI. Since the respondent-State had already issued show cause notice to Brakel for cancellation of allotment of the projects in its favour and had taken a decision to re-advertise the same, the earlier petition having been filed by RIL i.e. CWP No. 2074 of 2007 was rendered infructuous and accordingly, the same was disposed of vide order dated 31.7.2008.

11. Brakel filed a reply on 4.8.2008 to the show cause notice dated 19.7.2008, besides making written submissions to the Principal Secretary (Power) on 4.10.2008 and 9.10.2008. In these communications, Brakel, while furnishing explanation and replying to the allegations levelled against it, admitted that it had identified the petitioner as a partner for 49% equity. It also disclosed that the individual consortium members shall hold shares in it (Brakel).

12. On the other hand, being aggrieved and dissatisfied with the decision of the respondent-State to call for fresh bids in respect of Jangi- Thopan-Powari Hydro-Electric Projects, RIL, filed another writ petition i.e. CWP No. 1803/2008, but the same was disposed of being premature, because, admittedly, by that time, final decision, if any, pursuant to show cause notice dated 19.7.2008, issued against Brakel was pending. However, while disposing of the aforesaid writ petition, Division Bench of this Court directed the State Government to take a final decision with regard to show cause issued to Brakel, expeditiously, preferably within a period of eight weeks. In the aforesaid background, a memorandum was prepared on 1.11.2004 for consideration of the Council of Ministers. In the aforesaid memorandum, main points put up for consideration of the Council of Ministers, were that, whether allotment of two projects in favour of Brakel be cancelled; whether the order of cancellation should be in terms of the draft order attached and, whether the matter should be referred to the Vigilance Department for further investigation.

13. Cabinet considered the matter and took a decision to constitute a Committee under the Chairmanship of the Chief Secretary to decide the issues on merit, by taking note of all the aspects of the matter and submit the proposal in the next meeting of the Cabinet to be held on 12.11.2008.

14. Record clearly reveals that representative of the petitioner was also present during the course of hearing before the Committee constituted pursuant to the direction of the Cabinet. Committee after having considered the representation of Brakel, arrived at a conclusion that since suppression of material information by Brakel and its consortium partners cannot be established and Government is legally considered to be a perpetual entity irrespective of change of political party, it would be therefore, legally difficult to sustain cancellation of allotment made by the previous Government.

15. Besides above, the Committee also resolved that though the evaluation process made by the previous Government can be considered to be vitiated on the ground that the lead member (Brakel) had no financial strength and the partner of the consortium, whose financial strength was used for the bidding purpose had made no definite commitment of its equity participation in projects and this aspect having been consciously over looked by the previous Government, the blame thereof cannot be now at this belated stage be laid on Brakel.

16. Most importantly, the Committee recorded in its finding that it has come to its notice that the evaluation had been consciously overlooked by the then Whole Time Members of the HPSEB on the premise that enlarging the competition would be in the interest of the State Government for getting better choice of financial bids. Committee recorded that since suppression of material information by Brakel and its partners, cannot be established, the allotment already made in favour of Brakel cannot sustain the test of legal issues now involved in cancellation at this stage, because the blame for infirmity in the financial strength evaluation cannot be attributed to Brakel, based upon the records in the notice of the Committee. Having taken note of the aforesaid report submitted by the Committee headed by the Chief Secretary, Council of Ministers in its meeting held on 25.11.2008, took the following decision:-

""The recommendations of the Committee of Secretaries were perused by the Cabinet and the following was noted in this context by the State Cabinet:-

(a) The previous Government had created infirmities in the bid document whereby the lead member of the bidding consortium was not required to have any substantial financial standing.

(b) When M/s Brakel Corporation NV made the tender bid alongwith its consortium partner, the previous government knew that M/s Brakel as the lead partner, did not have any financial strength. Even then, it overlooked this aspect and on the basis of one partner in the consortium i.e. Standard Bank, the financial strength marks were awarded even though no definite commitment of equity participation was made by the Standard Bank.

(c) Cabinet further noted that the previous Government continuously allowed M/s Brakel to delay the required deposit of UpFront premium. Further, contrary to the State Policy, the previous Government agreed to subject the proposed implementation Agreement to International Arbitration which was completely against State interest.

(d) Cabinet noted that the present Government firstly got M/s Brakel to agree that dispute would not be subject to international Arbitrations. Secondly, it imposed penalty of interest on M/s Brakel for delay in payment of the required Up-Front Premium of Rs.173.42 crore. Thus alongwith this Up-Front Premium of Rs.173.42 crore the company was also made to deposit Rs.20.64 crore as interest for delay payment.

(e) Cabinet further noted the advise of the Law Department and the views of the Committee of the Secretaries that because the previous Government had consciously overlooked the infirmities in the bidding process of M/s Brakel, and because legally a successor Government cannot put the blame for said infirmities now on M/s Brakel, it would now not be legally possible to back out from the allotment made by the previous Government, especially since in the eyes of law the contract has been established with the payment by M/s Brakel of the Up-Front and penal interest imposed by the present Government.

(f) Keeping in view therefore the specific view of the Law Department and the views of the Committee of Secretaries constituted by the Cabinet in the matter, it was decided not to cancel now the allotment of the project made by the previous Government. However, Cabinet desired that HPSEB would need to change its bid document as well as technical evaluation procedure in future so that it does not allow financial bids to be opened of such parties which cannot display the required financial strength."

17. As a consequence of above, the show cause notice issued to Brakel was withdrawn, against which RIL approached this Court by way of CWP No. 2748 of 2008, alleging therein that since the upfront premium was not paid by Brakel within the time stipulated in the bid document, allotment should have been cancelled. RIL, further claimed that firm commitment of equity participation and confirmation of liability/responsibility of each consortium member was an essential feature of the consortium and the failure of the members of the consortium to confirm their participation in the consortium should result in rejection of the bid. Besides above, RIL also claimed that Brakel misrepresented various facts, which misrepresentation constitutes fraud and therefore vitiates all actions and the allotment is bound to be cancelled.

18. In these proceedings, respondent-State vehemently argued that since the Government has taken a view, which is possible and plausible, this court cannot substitute its opinion for the decision of the Government. It also claimed that it has the power to relax the tender conditions and since the tender conditions were relaxed in the case of RIL also, it could not lay challenge to the award of contract in favour of highest bidder. It was further stated by the State that since the decision to award the contract in favour of Brakel was taken by experts i.e. whole time members of the HPSEB on three occasions as well as by the H.P. Infrastructure Development Board (hereinafter, HPIDB) and it had been approved by the Cabinet, as such, same cannot be set aside.

19. Having taken note of the aforesaid pleadings/submissions made on behalf of the parties to the aforesaid lis, Division Bench vide judgment dated 7.10.2009, quashed the decision of the Council of Ministers dated 25.11.2008, being arbitrary, illegal and irrational. Division Bench also held that in view of the misrepresentations made by Brakel, allotment of Jangi-Thopan and Thopan-Powari Projects (480 MW each) was illegal and is bound to be cancelled. However, the Division Bench in that case declined prayer of RIL to award the project in its favour being second highest bidder and directed the respondent-State to take a fresh decision as to whether it wants to re- advertise the said project or wants to act on the basis of old tender. (Annexure-B, p. 26)

20. Being aggrieved and dissatisfied with the aforesaid judgment passed by Division Bench of this Court, Brakel filed SLP No. 888/2010 in the Hon'ble Apex Court, wherein respondent State reiterated the stand, which was taken by it in CWP No. 2748 of 2008. Since, during the pendency of the proceedings before Hon'ble Apex Court, respondent-State issued show cause notice to Brakel on 28.3.2014, calling upon it to show cause as to why the amount mentioned in notice, be not forfeited and damages recovered from it, Brakel withdrew its SLP with liberty to challenge the forfeiture, if any, made by respondent-State pursuant to show cause notice, as is evident from Annexure-C, order dated 1.4.2014. RIL also filed SLP No. 29135/2014 but the same was dismissed as withdrawn on 7.10.2009 (Annexure-D, p.94). Record further reveals that the petitioner herein had also gone to Hon'ble Apex Court by filing an application for impleadment as an intervener in SLP having been filed by Brakel, but the same was also withdrawn on account of withdrawal of SLP filed by Brakel.

21. It also emerges from record that while the SLPs having been filed by Brakel and RIL were pending adjudication before Hon'ble Apex Court, petitioner herein made a representation to Hon'ble Chief Minister, Himachal Pradesh (Annexure-E, p.95) stating therein that it being the largest independent power producer in the country, with aggregate capacity of 9280 MW, decided to invest in 980 MW Jangi-Thopan and Thopan-Powari Projects, believing that the bid made by Brakel was wholly compliant and in accordance with law, because of the LoI dated 1.12.2006 issued by the Governor, Himachal Pradesh. Petitioner also claimed that since the letter of acceptance dated 1.12.2006 issued by the Government of Himachal Pradesh in favour of Brakel and conditions contained in PIA, enclosed with LoA, revealed that Brakel can transfer/ sell 49% equity in Special Purpose Vehicle (hereinafter, SPV) to be incorporated for the execution of the project, it decided to invest huge amount in the project(s). Petitioner also claimed that relying upon the representations, assurances and promises flowing out of the LoA, which was at that time valid and the covenants in the draft PIA, it decided to invest in the above project. Petitioner also submitted in the aforesaid representation that the show cause notice dated 7.1.2008, was issued to Brakel, calling upon it to show cause that, why the LoA should not be cancelled on account of delay in payment of 50% of upfront premium, but there was no allegation in the show cause that Brakel did not quality for the bid as such, petitioner found it appropriate to pay 50% upfront premium. Petitioner claimed that it was fortified in its decision to invest as the Government of Himachal Pradesh granted approval for withdrawal of show cause notice in April, 2008 and soon thereafter, further amount of Rs. 20.50 Crore was paid to Brakel towards payment of interest on delayed payment. Besides above, petitioner also claimed that under Clause 4.2 of the Bid conditions, Government of Himachal Pradesh has the power to allow change in the consortium structure and clause 39(ii) provided for setting up of an SPV, in which 49% share holding could be held by any person other than the lead consortium member who together with other members of the consortium, could hold an aggregate 51% equity in the SPV. Petitioner also claimed in the aforesaid representation that after dropping of the second show cause notice by the Special Committee constituted by the Government, it further advanced loan to Brakel to make payment of 25% of upfront premium, although such payment was not due at that time according to LoA.

22. Pith and substance of the aforesaid representation made by the petitioner is/was that, it bona fidely advanced a sum of Rs. 280.00 Crore for payment of upfront premium and since, at no point of time, any misrepresentation was made by it and it had invested huge amount expecting it to have 49% share holding in terms of Hydro Power Policy and provisions contained under PIA, sum of Rs. 280.00 Crore alongwith upto date interest be refunded to it. (Annexure-E, p.95).

23. Since no action, if any, came to be taken on the aforesaid representation made by the petitioner, it repeatedly reminded the respondent vide several communications, which have been placed on record as Annexure-E (collectively) (Pp.95-126). Since the State Government decided to go for re-bidding of the projects in question, after rejection of the representation made by Brakel as well as RIL, Brakel vide communication dated 24.8.2013 (Annexure-F, p.127), informed and requested the Government of Himachal Pradesh to refund the upfront premium of Rs. 280.00 Crore with upto date interest to the petitioner. In the aforesaid communication, Brakel categorically stated that the petitioner is a bona fide investor and was not involved at the evaluation and award stage, as such, it has no objection, if the money is paid to the petitioner and it shall have no right or claim on the same in future. (Annexure-F, p.127).

24. Finally, pursuant to repeated requests having been made by the petitioner, Chief Engineer (Energy), Directorate of Energy, vide communication dated 10.9.2015 (Annexure-G, p.128), conveyed to the petitioner the decision taken by the Government of Himachal Pradesh/Cabinet in its meeting held on 4.9.2015, which reads as under:

"(i) show cause notice served upon M/s Brakel Corporation NV has been decided to be dropped on the basis of the facts that the Project indeed got embroiled in litigation since 2007.

(ii) The amount of Upfront Premium received from M/s Brakel Corporation NV be refunded to M/s Adani Power Limited, without interest and the payment be made on receipt of Upfront Premium from M/s Reliance Infrastructures Limited."

25. Vide aforesaid communication, it was also informed that the Government of Himachal Pradesh has offered Jangi-Thopan and Thopan- Powari Projects (480 MW each) in favour of RIL vide LoI dated 10.8.2015, upon which RIL has conveyed its in-principle consent and further requested to extend the period of LoI so that legal formalities with respect to the pending Special Leave to Petition (SLP) before the Hon'ble Supreme Court of India, be fulfilled.

26. Since, despite the decision taken by Cabinet in its meeting held on 4.9.2015, amount of upfront premium received from the petitioner, was not refunded to it, it (petitioner) sent a communication dated 17.1.2017 (Annexure-H, P.129), specifically stating therein that almost one year has passed since the decision of the Government of Himachal Pradesh but despite repeated requests and reminders, neither RIL has deposited upfront premium to the Government nor has it (petitioner) received the amount from Government of Himachal Pradesh. Petitioner claimed that since Government of Himachal Pradesh had agreed to refund amount to it, inaction, if any, on the part of RIL to deposit the amount, is arbitrary, unreasonable and cannot be made a ground to deny refund of payment/investment made by it.

27. It also emerges from the record that though offer was given to RIL to go ahead with the project but it expressed its inability vide communications dated 1.7.2016 and 4.8.2016, as a consequence of which, Council of Ministers, in its meeting held on 21.9.2016, decided to allot JangiThopan and Thopan-Powari Projects for execution to any Central Public Sector Undertakings as per provisions of the Policy by imposing the negotiated Upfront Premium and authorized the Administrative Department to negotiate with Central Public Sector Undertakings.

28. Pursuant to aforesaid decision, Central Public Sector Undertakings i.e. NTPC, NHPC and SJVNL involved in the implementation of Hydro-Electric Projects in the State of Himachal Pradesh were requested to submit their proposals/offers for implementation of aforesaid projects on terms and conditions of prevailing Policy. While taking aforesaid decision, Administrative Department i.e. Directorate of Energy expressed its inability vide communication dated 13.7.2017 (Annexure-K, p.161) to refund the upfront premium to the petitioner, as per decision of the Council of Ministers, since RIL backed out from its proposal. However, vide aforesaid communication, Directorate of Energy, Government of Himachal Pradesh observed that since the matter with regard to refund of amount to the petitioner was dealt by the Government, so above issue may be processed at Government level.

29. Since the Public Sector Undertakings expressed their inability to take project on Build, Own, Operate and Transfer (BOOT) basis, matter again came to be placed before Cabinet, as is evident from communication dated 6.10.2017 (Annexure-M, P.181), issued from the office of Additional Chief Secretary (Power) to the Director of Energy, which is reproduced hereunder:

"I am directed to refer to your letter No. HPDOE/CE(Energy)/JTP HEP (960MW)/2017-3326, dated 13.07.2017 on the subject cited above and to say that the proposal regarding implementation of Jangi-Thopan HEP (480 MW) and Thopan-Powari HEP (480MW)(in integrated scheme Jangi Thopan Powari HEP (960MW) in District Kinnaur, H.P. was placed before the CMM in its meeting held on 04.10.2017 and the CMM has approved as under:

"Possibility may be explored to re-bid the project stipulating the condition of a minimum guaranteed deposit of upfront premium to give effect to the decision taken in CMM on 04.09.2015. This would be in addition to the obligations spelt out in the Power Policy of the State and further bidding of premium over and above notified in the policy. This would also be applicable in the case of Central PSUs who have evinced interest in the project."

A copy of memorandum placed before the CMM is enclosed. You are, therefore, requested to take further necessary action and send compliance report to this department immediately."

30. Perusal of the aforesaid communication reveals that the Council of Ministers, while directing the Administrative Department to explore the possibility to rebuild the project as per conditions of earlier tender, and accordingly deposit the upfront premium, to give effect to the decision taken in the meeting of Council of Ministers, dated 4.9.2015, also observed that this condition of depositing Upfront Premium would not be applicable in the case of Central Public Sector Undertakings, who have evinced interest in the project.

31. Simultaneously, vide communication dated 10.10.2017 (Annexure-N, p. 182), Special Secretary (Power) to the Government of Himachal Pradesh, apprised the petitioner that the Council of Ministers on 4.9.2015, after reconsideration of its request for refund of upfront premium deposited by Brakel in respect of the projects in question had decided that the show cause notice issued to Brakel be dropped in view of the fact that the project got embroiled in litigation since 2007 and amount of upfront premium received from Brakel be refunded to the petitioner. Vide aforesaid communication, Government apprised the petitioner that on account of refusal of RIL to execute the project, it has now decided to give effect to decision dated 4.9.2015.

32. After having received aforesaid communication, petitioner vide communication dated 11.10.2017 (Annexure-O, p. 183), addressed to the Special Secretary (Power) to the Government of Himachal Pradesh, requested to issue refund order. While making request to issue refund order, it stated that it is ready to accept Rs.280.06 Crore by post-dated GoHP Bonds or any other phased manner from GoHPs resources. In this communication, petitioner also stated that it is suffering huge loss on account of unforeseen circumstances and it has affected its financial condition of the day to day operations and therefore, until and unless, principal amount of Rs. 280.06 Crore is paid forthwith to it, grave and irreparable loss, harm and injury shall be caused to it. The petitioner also reserved its right to recover damages from Government of Himachal Pradesh, if the request is not acceptable. But, while acknowledging aforesaid communication sent by the petitioner, Special Secretary (Power) to the Government of Himachal Pradesh, vide communication dated 6.10.2007 (Annexure-P, p. 184), conveyed that the State Government through Council of Ministers has decided to implement its decision dated 4.9.2015.

33. After receipt of aforesaid communication, petitioner vide communication dated 27.10.2017 (Annexure-Q, p.186), addressed to the Special Secretary (Power) to the Government of Himachal Pradesh stated that it understands that refund to the petitioner is not linked with awarding the said project to Reliance Energy Ltd., who has declined the LoI and not deposited Upfront Premium to Government of Himachal Pradesh and also not linked with any other receivables to the Government of Himachal Pradesh. It again reiterated its readiness to accept Rs.280.06 Crore in a time bound manner by cheque or GoHP bonds. However, Government of Himachal Pradesh, vide communication dated 7.12.2017 (Annexure-R, p.187), apprised the petitioner that due to various legal intricacies and contractual complications involved in the matter, Council of Ministers has reviewed its decision taken in its meeting held on 4.9.2015 and as such, decided to withdraw its decision, accordingly, letter dated 26.10.2017, may be treated as withdrawn. In the aforesaid background, petitioner has approached this court in the instant proceedings, praying therein for the reliefs, as have been reproduced herein above.

34. Before taking note of the rival contentions of the parties, it would be relevant to take note of the fact that on 19.3.2019, Division Bench of this Court, while issuing notice to respondent-State, specifically asked it to apprise the court, as to what decision has been taken with regard to allotment (by auction or through any other transparent mode) of the Project, so that amount earlier promised to the petitioner can be refunded.

35. On 26.4.2019, learned Advocate General, on instructions, sought some more time to enable the Council of Ministers to reconsider the matter and take appropriate decision. Accordingly, Division Bench of this Court adjourned the matter to 20.6.2019, observing in the order that the matter may be reconsidered by Council of Ministers in terms of the statement made by learned Advocate General for taking appropriate decision, in accordance with law, regardless of the previous consideration by same competent authority.

36. Order passed on 11.7.2019 reveals that as per order dated 20.6.2019, Council of Ministers held its meeting on 3.7.2019 and decided not to grant refund. After passing of the aforesaid order, case came to be adjourned repeatedly and vide order dated 28.9.2020, Division Bench, while admitting the petition, ordered listing of the petition before Single Judge having roster. In the aforesaid background, matter came to be listed before this Court.

37. Though on 25.8.2021, Mr. Vikram Nankani, learned Senior Counsel appearing for the petitioner, concluded his arguments on that day, but matter could not be concluded since learned Advocate General was preoccupied in some other matter before Honble Principal Division Bench.

38. On 6.9.2021, an application under Order I, rule 10 CPC, seeking implement of one Anil Vahal, came to be filed but the same was ultimately withdrawn on 23.11.2021 and thereafter, on 2.12.2021, this court, after having heard learned counsel for the parties, reserved the order, but, while dictating the same, this court felt it necessary to seek clarification on certain points, specifically with regard to subsequent allotment of the Project in question to Central Public Sector Undertaking i.e. SJVNL.

39. On 4.3.2022, the requisite clarification was placed on record in the shape of instructions dated 23.2.2022, issued under the signatures of Special Secretary (Power) to the Government of Himachal Pradesh, stating therein that after refusal of RIL to execute the project, same has been awarded to Sutlej Jal Vidyut Nigam Limited, but no upfront premium has been received from SJVNL. Since no response to the aforesaid communication was intended to be placed on record by the petitioner, this court again reserved its judgment on 14.3.2022.

Submissions on behalf of the petitioner

40. Precise grouse of the petitioner in the case at hand is that since the Council of Ministers having taken note of the fact that, at no point of time, petitioner misrepresented to the State and had bonafidely invested huge amount, expecting itself to be equity partner to the extent of 49% in terms of the Policy and terms and conditions of the PIA, coupled with the fact that the delay in execution of project was on account of pendency of litigation, had taken a decision in its meeting held on 4.9.2015, to refund money, refund could not be linked with deposit, if any, made by RIL pursuant to LoI issued in its favour, after cancellation of tender in favour of Brakel. While making this court to peruse various documents placed on record as well as order dated 7.10.2009 Passed by Division Bench of this Court in CWP No. 2748 of 2008, Mr. Nankani, learned senior counsel, vehemently argued that, at no point of time State of Himachal Pradesh took a plea in the writ petition filed by RIL that Brakel misrepresented facts with regard to its financial capability and technical expertise, rather specific stand of the State before Division Bench and thereafter before Hon'ble Apex Court was that the financial as well as technical capabilities of Brakel were duly evaluated/assessed by the whole- time members of HPSEB on three occasions as well as by HPIDB, as such, at this stage, amount deposited by the petitioner at the behest of Brakel, cannot be forfeited on account of misrepresentation, if any, by Brakel and in terms of the provisions of PIA.

41. Mr. Nankani, learned senior counsel, while making this court peruse the memorandum prepared for approval of the Cabinet on two occasions, made a serious attempt to persuade this court to agree with his contention that repeatedly, Administrative Department as well as Law Department categorically opined that Brakel cannot be held liable for the delay, if any, caused on account of litigation. He also made this court peruse the opinion rendered by Law Department on two occasions to the effect that Brakel cannot be said to have misrepresented with regard to its financial and technical viability, especially when documents furnished by it were duly evaluated and processed by whole-time members of HPSEB on three occasions. Lastly, Mr. Nankani argued that once the Council of Ministers, taking note of the opinion rendered by Law Department, that the State Government cannot retain upfront premium for the same project from two different parties, decided to drop the show cause notice dated 28.3.2014 served upon Brakel and refund the upfront premium to it (petitioner) without interest, there was no reason to change the aforesaid decision subsequently, on the ground that RIL has refused to undertake the project. He argued that otherwise also, order refunding upfront premium paid by the petitioner, could not be connected with payment, if any, by RIL, especially when enquiries conducted by the Committee constituted under the Chairmanship of Chief Secretary, pursuant to direction issued by the Cabinet categorically reported that the suppression of material information by Brakel cannot be established and since the Government is legally construed to be a perpetual entity, irrespective of change in political party, it would be difficult legally to sustain cancellation of allotment made by previous Government. He also argued that the Council of Ministers on 25.11.2008, having taken note of recommendations of the Committee, specifically noted that the previous Government had created infirmity in the bid document, whereby, lead member of consortium was not required to have any substantial financial standing, so it cannot be said that Brakel misrepresented /concealed facts with regard to its financial and technical abilities. Mr. Nankani, learned senior counsel submitted that there is ample material available on record, especially the material collected on record by respondent itself through Police and Income- Tax Department that entire sum paid towards upfront premium was paid by the petitioner, who being a bona fide investor, invested huge sum, legitimately expecting itself to be an equity partner to the extent of 49% in terms of the provisions contained in the Policy and PIA. He argued that when an action of the State is declared to be void by Hon'ble Court, it cannot retain advantage or benefit received under the action, which was declared void, especially when it left no stone unturned to justify its action in awarding tender to Brakel, it cannot retain amount received in terms of Letter of Intent dated 1.12.2006, because such action would be hit by the principle of unjust enrichment as enshrined under S. 65 and 70 of the Contract Act.

Submissions of the respondent-State

42. Per contra, Mr. Ashok Sharma, learned Advocate General, impressed upon his solitary submission that since there is no privity of contract inter se State of Himachal Pradesh and the petitioner, it is not under any obligation to refund the amount, if any, paid on account of upfront premium by the petitioner. When this Court confronted learned Advocate General with the documents available on record suggestive of the fact that repeatedly the State acknowledged receipt of entire sum of money paid towards upfront premium from the petitioner and the decision of the Cabinet dated 4.9.2015, to refund upfront premium to the petitioner, learned Advocate General, argued that it is not estopped from reviewing its earlier decision, if, subsequently, it is found to be incorrect and not in the interest of the State.

43. Learned Advocate General relied upon a judgment of Hon'ble Apex Court in State of Maharashtra v. Swanstone Multiplex Cinema (P) Ltd., (2009) 8 SCC 235, wherein, their lordships have held as under:

"33. We are passing this order keeping in view the peculiar situation as in either event it was cinema-goers who had lost a huge amount. It would be travesty of justice if the owners of the cinema theatre become eligible to appropriate such a huge amount for its own benefit. To the aforementioned extent, doctrine of unjust enrichment may be held to be applicable. A person who unjustly enriches himself cannot be permitted to retain the same for its benefit except enrichment. Where it becomes entitled thereto the doctrine of unjust enrichment can be invoked irrespective of any statutory provisions.

34. In Mafatlal Industries Ltd. (supra), Section 72 of the Contract Act providing for restitution may be taken recourse to. Doctrine of `unjust enrichment' was resorted to, observing :

"(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.

The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched."

(See Union of India & Ors. v. Solar Pesticides Pvt. Ltd. & Ors. [(2000) 2 SCC 703]).

35. In Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs [(2005) 3 SCC 738], this Court has held:

"45. From the above discussion, it is clear that the doctrine of "unjust enrichment" is based on equity and has been accepted and applied in several cases. In our opinion, therefore, irrespective of applicability of Section 11-B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled. Section 11-B of the Act or similar provision merely gives legislative recognition to this doctrine. That, however, does not mean that in the absence of statutory provision, a person can claim or retain undue benefit. Before claiming a relief of refund, it is necessary for the petitioner-appellant to show that he has paid the amount for which relief is sought, he has not passed on the burden on consumers and if such relief is not granted, he would suffer loss."

36. It may be true that hereat we are not concerned with refund of tax but then for enforcement of legal principles, this court may direct a party to divest itself of the money or benefits, which in justice, equity and good conscience belongs to."

Analysis

44. I have heard learned counsel for the parties and perused the records minutely.

45. Since it is not in dispute that the decision of respondent to award two power projects namely Jangi-Thopan and Thopan-Powari Projects (480 MW each), which were subsequently combined into one project, in favour of Brakel was found to be illegal by Division Bench of this Court In CWP No. 2748 of 2008, titled Reliance Infrastructure Limited vs. State of Himachal Pradesh, on account of misrepresentation made by Brakel, especially with regard to its financial and technical capabilities, there is no occasion for this court to go into that aspect of the matter, especially when such finding of Division Bench has attained finality.

46. The question falling for an adjudication by this court in the instant proceedings is that, "whether the action of the respondent-State in reviewing /recalling its earlier decision taken in the meeting of Council of Ministers held on 4.9.2015 to refund Rs. 280.00 Crore invested by petitioner on behalf of Brakel, pursuant to LoI issued in its favour, in respect of JangiThopan and Thopan-Powari Projects, is justifiable or not?"

47. As has been observed herein above, this court has no occasion in the instant proceedings to go into the question of misrepresentation, if any, by Brakel with regard to its financial and technical capabilities in view of specific findings of Division Bench in this regard, but, whether the aforesaid finding with regard to misrepresentation by Brakel, rendered by Division Bench in CWP No. 2748 of 2008 can be made basis by respondent-State to deny refund of sum of Rs.280.06 Crore invested by the petitioner herein on behalf of Brakel, is a question which this court can definitely go into in these proceedings, especially when the respondent-State defended its action in awarding projects in question to Brakel before Division Bench of this Court and thereafter before Hon'ble Apex Court in the SLPs having been filed by RIL and Brakel.

48. As has been noticed herein above, stand of the respondentState from day one before Division Bench of this Court was that it has power to relax the tender conditions and decision to award contract in favour of Brakel has been taken by experts i.e. whole time members of HPSEBL on three occasions and the HPIDB, which was approved by the Cabinet, as such, same should not be set aside.

49. Though the record reveals that after dismissal of SLPs having been filed by Brakel and RIL, respondent-State served Brakel with show cause notice dated 28.3.2014, calling upon it to explain its position qua delay in commissioning of project due to inaction, misdeeds and omission and suppression of facts on the part of company and causing loss of Rs. 2713.73 Crore upon State Exchequer and why this amount be not recovered from the company, but subsequently the respondent-State, after having considered the reply to the show cause filed by Brakel and representation filed by petitioner herein to Hon'ble the Chief Minister, requesting therein to refund the Upfront Premium, decided to drop the aforesaid show cause notice and refund the Upfront Premium of Rs. 280.06 Crore to the petitioner, without any interest thereupon. If it is so, it is not understood that on what basis, order of forfeiture of Upfront Premium could be passed. Perusal of the memorandum prepared for consideration of the Council of Ministers by Department of Multi-Purpose Projects and Power (Annexure-I, p. 133) clearly reveals that Brakel raised following points, while filing reply to the show cause notice dated 28.3.2014:

i) There was due and proper application of mind by GoHP and its officers including officers of HPSEB including technical and commercial personnel over a period of time in Bids evaluation, submission of price bids by qualified bidders, presentation given by Brakel team to HP Infrastructure Board and while issuing Letter of Allotment/PIA"

ii) Board approvals have been obtained. Government approvals through Cabinet were also obtained and it is after following due process of law that GoHP issued Letter of Allotment (LOA). After the LOA also, and between the dates of payment of the first installment of 50% Upfront Premium. GoHP had several occasions to revisit the file.

iii) GoHP took conscious and mindful decisions at each and every stage in not cancelling the LOA and in demanding and accepting the funds and as such the first show cause notice was dropped and the PIA was signed on 09.04.2009.

iv) GoHP defended its own actions and allotment in favour of Brakel before the Hon'ble High Court and justified the correctness of LoA issued to Brakel. After the judgment of Hon'ble High Court, GoHP neither filed SLP nor went for rebid, though the option thereof was available to be exercised by GoHP in November 2009 itself.

v) GoHP has only itself to blame. GoHP has been a party to the decision in the evaluation of the bid and in the grant of the LOA. GoHP has been a party before the Hon'ble High Court which jointly defended the LOA with Brakel GoHP demanded and accepted the money unconditionally and without reserving any rights. GoHP was not prevented after October 2009 to go ahead with the rebid but still choose not to do so.

vi) The basis of alleged loss of Rs. 2700 Crores has not been disclosed and the calculation thereof seems to be based only on assumption and presumption and without proving of actual loss. In fact, the loss is attributed to Reliance who have engaged in continuous litigation after award of project, if at all some loss is duly proved by GoHP. There are many other instances where projects have not been claimed by GoHP

vii) In the Tender Terms and Conditions, there was no requirement of financial capacity of the lead bidder. Brakel did show ability to raise funds through APL. Brakel representation to the GoHP for approval of addition of APL to the consortium was pending from 30-03-2012 GoHP has not rejected this application which deemed to be approval. Neither APL nor Brakel can be responsible for the alleged loss, if any. Brakel have given No Objection for refund to M/s Adani Power Ltd. through. whom they have raised the funds, who were only innocent investors in the project investing only after due diligence conducted by them on documents/ agreements/ POA. (Annexure-III)

viii) Before cancellation of allotment by Hon'ble High Court vide judgment dated 09-10-2009, Brakel was implementing the Project in accordance with the preponed schedule and various milestones were achieved and after cancellation of allotment 09- 10-2009, Brakel cannot held responsible for delay

ix) The decision to impose damages on Brakel is unprecedented and contrary to govt. Policy and the same ahs not been imposed to any developer even after delay in commissioning upto 20 or more years after allotment in some cases.

x) No new documents have been discovered by Hon'ble High Court. It is the same documents and information which have been differently interpreted and reviewed Hon'ble by the Hon'ble High Court but that does not mean that Brakel misrepresented to GoHP.

xi) GoHP has already decided to re-bid the project on same policy and will get the same amount or more as upfront premium from the successful bidder, it cant take upfront premium for the same project from two companies/bidders.

xii) Brakel reserve their rights to avail such legal remedies including arbitration in terms of Clause 50 of the PIA, in the even any adverse view is proposed to be taken as per liberty granted by Hon'ble Supreme Court vide order dated 01-04-2014.

xiii) That the M/S Brakel Corpn. N.V. (Petitioner in SLP No.888 2010) is free to seek such redress as may be legally permissible in accordance with Order passed by Hon'ble Apex Court on 01.04.2014, as reproduced below:

SLP(C) No. 888 of 2010:

Mr. Ranjit Kumar, Learned senior counsel for the petitioner today submits that he has instructions to withdraw this special leave petition. The special leave petition is accordingly dismissed as withdrawn.

Learned el counsel appearing for the applicant in IA No 5 also seeks leave to withdraw this application. IA. No 35 is also dismissed as withdrawn.

Mr. Ranjit Kumar submits that the State Government has during the pendency of these proceedings issued a show cause notice to the petitioner- Brakel Corporation NV dated 28.03 2014 calling upon the petitioner to show cause why the amount mentioned in the said notice be not forfeited and damages recovered from the petitioner. He submits that the petitioner is suitably responding to that show cause notice but should the Government eventually decide to forfeit the amount in question, the petitioner may have the liberty to challenge the said forfeiture or such other redress in a separate writ petition by way of arbitration if otherwise permissible. We see no reason to decline that prayer especially when we find that the judgment impugned in these proceedings does not deal with the question of forfeiture and the show cause notice proposing to forfeit the amount has been issued during the pendency of the special leave petition. We make it clear that in case the Government eventually decide to forfeit any amount or direct recovery of any damages from the petitioner Corporation, the petitioner shall be free to seek such redress as may be legally permissible against any such direction. We express no opinion on the merits of any contention that may be open to the parties in any such proceedings. The parties are left to bear their own costs."

The show cause notice dated 28-03-2014 served to the Company is based on the following grounds:

i) That a fact that pursuance the Cabinet decision dated 25.11.2008 was decided to withdraw Show Cause Notices dated 07.01 2008 and 19.07.2008 issued Brakel. (i) Not to cancel allotment in favour Brakel Corporation MV, (1) Brakul comply with the terms and conditions imposed the Government and accepted by Brakel vide their dated 29.04.2008 and (iv) sign draft PIA. However, Cabinet decision dated 25.11.2008 quashed set aside the Hon'ble Court its judgment dated 09.10.2009 as being arbitrary,

"From aforesaid discussion it is apparent had filed incorrect Registration Certificate with the Bid Document. said certificate contained and erasures we had above were done with view fraudulently mislead the Government. It than that Standard had never committed 45% Equity participation. Joint Venture Agreement was signed by persons who were authorized same We clearly of view that Brakel was guilty of the mis- representation and suppression of facts. itself was ground allotment favour of Brakel."

ii) With regard to imposition or penalty, earlier was opined by the Law 02.08.2013 Govt under clause-48 read with clause 49 of PIA dated 09.04.2009 was competent impose penalty. As clause the PIA, any violations of the issue (i.e. misrepresentation the information supplied by Gary to the first party) concerning policy parameters. IPA/LA /may result into monetary penalty including cancellation of the Project. In view of misrepresentation of facts by the second party, the first party i.e. State: Government is empowered to invoke the provisions of clause 49 of PIA Admittedly, though the allotment of Project stands cancelled, Law Department was of the opinion that still the company is not absolved of it's misdeeds and misrepresentation and is, thus, liable for penalty as per Clause 49 of PIA and it appears that forfeiture of upfront premium is covered under Clause 49 and the State Government is competent to impose penalty under clause 48 read with Clause 49 of the PIA

iii) Ms. Adani Power Limited as consortium, no decision was taken by the State Government and therefore, it can not be construed that Governments approval was deemed approved in this regard. Hon'ble High Court in its judgment dated 07.10.2009 also observed that in the present case there is no prior approval of the State Government and our considered opinion Brakel could not have without prior approval virtually changed the membership of the consortium and later waited for ex-post facto sanction of the change. Resultantly application of M/s Adani Power Limited for refund of upfront premium and interest was rejected on merit vide this department letter No. MPP- F(2)6/2006-X. dated 25.03.2014 (Annexure-IV)

50. Though the aforesaid memorandum for consideration of Council of Ministers reveals that the Administrative Department i.e. Multi-Purpose Projects and Power, after having gone through the record and the reply filed by Brakel to the show cause notice submitted that the petitioner was not in picture when aforesaid sum was received by the Government as Upfront Premium as such, the amount is liable to be forfeited in terms of Clause 48 read with Clause 49 of the PIA dated 9.4.2009, but when said proposal was examined by Law Department, it opined that State Government has allowed equity partnership with prior written approval of Government and petitioner deposited the sum on behalf of Brakel and amount is deposited with State head or enchased as such. Law Department also opined that the project got embroiled in litigation somewhere in 2007 i.e. on 4.12.2007 and an interim order was passed on 1.5.2008. It is thus clear that the project was stalled due to court intervention and it is clear that since 2009 application of the petitioner for changing composition of the consortium is hanging fire for no good reason as such, Brakel cannot be blamed, in any manner, for any impasse, rather the same was on account of intervention of court and inaction on the part of State itself. Relevant portion of opinion rendered by Law Department is reproduced herein below:

"In reply to query of the A.D., the Law Deptt. Opines that in case the State govt. had allowed the partnership of M/s Adani Power Ltd. as the equity partner with the prior written approval of the Govt. and further the M/s Adani Power Ltd. deposited the amount in question on behalf of M/s Adanl Ltd. and said amount has already been deposited in the State head or encashed by the govt., in that event, the A.D. may take an independent decision for refunding the amount on merit of the case, if the entire blame is not attributable to M/s Adani Power Ltd., in the instant controversy and act accordingly.

As is inferable from the record, the project got embroiled in litigation somewhere in the year 2007, precisely 4-12-2007 and an interim order was passed on 1-5-2008. An interim stay also was passed by the Hon'ble High Court and finally on 7.10.2009 PIA with M/s Brakel came to be cancelled. It is thus clear that work on the project was stalled due to court intervention. As it emerges from record, it is also clear that since 2009(4-4-2009) the application of the applicant (Adani Power Ltd.) for changing the composition of consortium is still hanging fire, for no good reason. The applicant, admittedly cannot be blamed for the impasse in any manner, one was the intervention of the court and the others related to inaction on behalf of the state itself.

In any case, looked from another angle the state cannot retain upfront money from two different parties i.e. one from the applicant or Brakel (what so ever the case) or a new company in the process of re-bidding. Once the project again re-tendered the state can only retain the up-front money of the new bidder. In that case the upfront of the earlier bidders will have to be refunded. A.D. may thus, take a conscious decision in this behalf after rebidding, keeping in view the entirety of circumstances discussed above.

51. If the aforesaid opinion of Law Department is perused in its entirety, it is clear that it categorically opined that if project is being re- tendered, State can retain Upfront Premium of new bidder and in that case Upfront Premium of earlier bidder has to be refunded. Memorandum prepared for consideration of the Council of Ministers, as taken note herein above, further reveals that the aforesaid opinion rendered by Law Department was not agreed to by the Finance Department and it opined as under:

From p.147

i. The Power Department needs to first decide finally on the show cause notice dated 28.03.2014 w.r.t. forfeiture of premium and w.r.t. losses assessed by department to the tune of Rs.2713 crore w.r.t. replies of Brakel Company. In fact, Law Department advice does not address this issue and it does not also examine the merits on otherwise of the reply of Brakel Company. Legally, it is evident that Law Department has erred by status at N-52 that AD cannot take upfront money from 2 different parties since the rationale for taking upfront premium from M/s Brakel and imposition of penalty and forfeiture of upfront money are entirely different from the reasons for taking upfront premium/earnest money as per terms of fresh agreement, when Jangi Thopan is fresh advertised and allotted.

ii. M/s Brakel by its action has delayed the project for over 9 years, has misrepresented and has caused loss to exchequer. Thus in view of Clause 49 of PIA, there is strong merit in forfeiture of upfront premium of Rs. 280.969 Crore and also to take action to recover damages of the tune of rs. 2713 crore through due process.

iii. In view of the Clause 39 of PIA and various affidavits filed by AD in Courts, it is evident that Adani Power Ltd. has no legal right to considered as a party to the matter. Thus, AD does not need to accept Adani Power Ltd. claim of refund, for reasons stated, also in Directorate of Energy, letter dated 19.09.2014.

iv. Law Department has erred as state has never allowed the partnership of Adani Power. AD has taken this stand in the court also. Hence, Adani Power has no locus standi in this case. Department is therefore, advised to follow due process to initiate recovery of damages/revenue loss to the State of HP to the tune of Rs.2713 Crore due to misdeeds, misconduct and delay on part of Brakel Company, under Clause 48 & 49 of PIA. Besides steps be also taken to forfeit upfront premium alongwith interest deposited by the company in terms of letter of allotment/PIA.

7. The view of the Finance Department are more or less based on the earlier stand taken by this Department whereas the State Government had taken a different view in the Hon'ble High Court and in Hon'ble Apex Court through various affidavits. While defending the case in the Hon'ble Apex Court and in Hon'ble High Court of Himachal Pradesh, the Government has strongly defended its action of allotment of the Project to M/s Brakel Corporation NV on the following grounds: ...(not relevant)"

52. It would be pertinent to take note of Clause 7 of aforesaid memo prepared for consideration of Council of Ministers, wherein Administrative Department, while recoding that the views of Finance Department are more or less based on earlier stand taken by the Department, also stated that the State Government had taken a different view in the High Court and Hon'ble Apex Court through various affidavits. Administrative Department also recorded in its opinion that, while defending the case in the Hon'ble Apex Court and in the High Court, the Government has strongly defended its action of allotment of the project to Brakel on the ground that the entire bidding process and allotment of the project has been done in a fair, transparent manner and decision making process in accordance with law and that there was inordinate delay in depositing 50% of Upfront Premium by Brakel and the State had time and again asked the company to deposit the same, which was finally deposited in January, 2008, together with interest for the delayed period. It also recorded that the State took stand before courts that Brakel sent some suggestion on 24.1.2007 with regard to draft of Pre-implementation Agreement (introduced by Hydro Power Policy 2006 notified on 11.12.2006), subsequent to which, discussions were held between the representatives of Brakel and officers of the State and finally the State Cabinet decision was conveyed on 11.10.2007 but, by that time, election code of conduct had come into force in the State of Himachal Pradesh. Relevant portion from p.148-149 is reproduced herein below:

"(a) That the entire bidding process and allotment of the Project has been done in a fair, transparent and decision making process in accordance with law.

(b) That there was indeed a delay in depositing of 50% of upfront premium by Brakel Corporation NV and the State had time and again asked the Company to deposit the same which was finally deposited in January, 2008 together with interest for the delayed period.

(c) The Brakel Corporation has sent some suggestion on 24.1.2007 with regard to draft of Pre-implementation Agreement (PIA) (introduced by Himachal Pradesh Police, 2006 notified on 11.12.2006), subsequent to which discussions were held between the representatives of Brakel and the Officers of the State. Finally, the State Cabinet decision for amendment in the PIA was conveyed on 11.10.2007, but by which time Election Code of Conduct had come into force in the State of Himachal Pradesh. moreover, the State was in correspondence with the Reserve Bank of India with regard to formalities required to be completed for inward remittance of the amount towards 50% upfront premium.

(d) In fact the Brakel have in aggregate deposited approximately Rs.280 crores. The time extension granted by the Govt. for deposit of upfront amount etc. was in accordance with law. Thus, the action of the Govt. was just, valid, legal and after proper consideration and nothing arbitrary ahs been found therein by the Hon'ble High Court.

(e) "Brakel Kinnaur Pvt. Ltd.", is the Special Purpose Vehicle (SPV) formed by the Company as per the requirement under the Himachal Pradesh Police. It was intended that the Project is ultimately transferred to an entity which has its domain within the State of Himachal Pradesh under the Himachal Pradesh Police-2006 and the concerned allottee of power projects are under obligation to achieve the milestones strictly in conformity with the provisions of the Himachal Pradesh Police-2006.

(f) Regarding the allegation raised by M/s Reliance, the State Government has immediately issued two show cause notices to M/s Brakel with a view to achieve clarity and transparency in the matters.

Both the show cause notices were adjudicated independently by different authorities at different point of time and were dropped after satisfaction regarding credentials and bonafides of M/s Brakel Corporation. Moreover, independent enquiries/re-verification/re- evaluation was done by the HPSEB under the instructions of the Government in view of complaint received from a Member of Parliament. The Members of HPIDB after considering the matter, took a decision not to recommended setting aside the allotment to M/s Brakel.

(g) As regards allegations of receiving Bonds from Adani Group by way of loan are concerned, Brakel disclosed the details of the same to the State. Immediately, on enquiry, Borrowing of money by an allottee is not prohibited under the bid document or under the Himachal Pradesh Police. However, M/s Brakel had clarified that they have not allotted and or transferred any equity to Adani nor will they do so without the permission of the State. This was considered a satisfactory explanation by the Govt.

(h) The entire matter was examined by High Level Committee of Secretaries chaired by the Chief Secretary. The committee of Secretaries made recommendations based on record, after hearing the affected parties and also seeking legal opinion from the law Department. The relevant part of the recommendations is as under:-

"(8) The committee was thus unanimously of the view that through the evaluation process made by the previous Govt. can be considered to be vitiated on the ground that the lead member (M/s Brakel) of this consortium had no financial strength and the partner of the consortium whose financial strength was used for bidding purpose had made no definite commitment of its equity participation in projects bid for this aspect having been deliberately overlooked by the previous Govt., the blame thereof cannot now at this belated stage be laid on M/s Brakel NV.

(9). In the light of the above chain of events, the committee is therefore of the view that the allotment already made of these projects to M/s Brakel by the previous govt. may not stand the test of legal issues now involved in cancellation at this state, because the blame for infirmity in the financial strength evaluation cannot be attributable to M/s Brakel Corporation NV, based upon records in the notice of this committee. It was decided that the proceedings of this Committees deliberation and conclusion may be placed for further consideration and financial decision of the State Council of Ministers.

(i) The recommendation of the Committee of Secretaries was considered by the Cabinet in its meeting held on 25.11.2008, and on the basis of recommendations of the Committee of Secretaries, it was decided not to cancel the allotment already made in favour of M/s Brakel Corporation NV.

53. Had the allotment of the projects not been quashed by Division Bench of this Court, same would have been made to Brakel. Administrative Department also recorded in the memorandum for consideration of Council of Ministers that insofar as the question of depositing of Upfront Premium by the petitioner is concerned, this fact was brought to the notice of the State Government by Brakel. Further, the Secretary of the Company (petitioner) informed that various sums on different dates have been debited from Axis Bank account of the petitioner.

54. Law Department, in its opinion, as recorded in aforesaid memorandum for consideration of Council of Ministers, categorically opined that the developer is not to be punished as project was delayed due to pending litigation. It also opined that pursuant to cancellation of project by court, no penalty is leviable and no damages are recoverable and action/decision is to be taken independently by Administrative Department after considering all the facts at competent level. It is therefore, for the Administrative Department to take decision qua imposition of penalty and damages.

55. In the aforesaid background, Administrative Department placed the matter before Council of Ministers for taking decision as to whether to forfeit Upfront Premium or drop show cause notice. Precisely, following points came to be placed before Council of Ministers for decision:

"i) Whether the show cause notice dated 28-03-2014 served upon M/s Brakel Corporation NV be dropped in view of the opinion of Law Department based on facts that the project indeed got embroiled in litigation since 2007.

ii) If not, whether reply submitted by M/s Brakel Corporation NV (Annexure-II) forfeit Upfront Premium received from the Company and to initiate process for recovery of damages /revenue loss to the State of HP to the tune of Rs.2713.73 crore worked by DOE for violation fo provision of clauses 48 & 49 of Pre-implementation Agreement, as per decision of CMM, dated 4.9.2015.

OR iii) Whether in view of position stated above in para 12 & 13 of the memorandum the amount of upfront premium received from the M/s Brakel Corporation NV be refunded, without interest an the payment be made on receipt of upfront premium from M/s RIL in view of the opinion rendered by the Law Department as per para 5 and para 11 of the cabinet note.

(see Pp. 157 and 158 of paper-book)

56. Record reveals that the Council of Ministers, after going through the memorandum for consideration placed before it in its meeting held on 4.9.2015, decided that the show cause notice dated 28.3.2014 issued to Brakel be dropped and Upfront Premium be paid to the petitioner, without interest and payment be made on receipt of Upfront Premium from RIL, as is evident from communication dated 9.9.2015 (Annexure-J, p. 159) 57. Though, after withdrawal of SLP by RIL, decision was taken by the State Cabinet to offer project in question to RIL but it (RIL) vide letter dated 1.7.2016 and 4.8.2016, expressed its inability to go ahead with the project and as such, Department of Energy vide communication dated 13.7.2017 (Annexure-K, p. 161) addressed to Special Secretary (Power) to the Government of Himachal Pradesh expressed its inability to refund the Upfront Premium. Thereafter, with the approval of the Cabinet, Directorate of Energy started exploring possibility to get the project executed through Central Public Sector Undertakings i.e. NHPC, NTPC and SJVNL involved in Hydro Electric Project in the State of Himachal Pradesh. Though, as per Cabinet decision, project in question was to be offered to the Central Public Sector Undertaking on same terms and conditions as were offered to Brakel and RIL, but since the Public Sector Undertakings, while submitting their proposals pursuant to the offer made by State of Himachal Pradesh, refused to pay any Upfront Premium, Department of Energy, Himachal Pradesh vide communication dated 13.7.2017 (Annexure-K), while informing Special Secretary (Power) to the Government of Himachal Pradesh, with regard to proposals received from Central Public Sector Undertakings, apprised that since no Upfront Premium has been realized so far and RIL has backed out from its proposal, Upfront Premium cannot be refunded back at present as per decision of Council of Ministers taken on 4.9.2015.

58. In the aforesaid backdrop, matter again came to be placed before Council of Ministers, vide memorandum for consideration by MultiPurpose Projects and Power, Himachal Pradesh dated 3.10.2017 (AnnexureL, p. 163) wherein Administrative Department stated that since RIL has declined the offer of Government of Himachal Pradesh to execute JangiThopan and Thopan-Powari Projects, it may not be tenable to refund Upfront Premium deposited by Brakel, which is liable to be forfeited.

59. On the basis of aforesaid finding /opinion rendered by Law Department, Administrative Department stated in the memorandum for consideration of Council of Ministers that the fact cannot be ignored that the project got embroiled in litigation since 2007 and Brakel cannot be blamed for impasse in any manner and State cannot retain Upfront Premium from two parties as the project is now allotted to RIL. It s also recorded that since the Cabinet on 5.8.2015 decided to award the project to RIL which was second highest bidder on same terms and conditions as were applicable to Brakel.

Council of Ministers in meeting held on 4.10.2017, ordered that the possibility may be explored to re-bid the project stipulating the condition of a minimum guaranteed deposit of upfront premium to give effect to the decision taken in CMM on 04.09.2015. This would be in addition to the obligations spelt out in the Power Policy of the State and further bidding of premium over and above notified in the policy. This would also be applicable in the case of Central PSUs who have evinced interest in the project.60. It appears that no decision with respect to refund of Upfront Premium as was taken on 4.9.2015 by the Council of Ministers could be taken and as such, Special Secretary (Power) to the Government of Himachal Pradesh vide communication dated 10.10.2017 (Annexure-N, p.182), while responding to letter dated 12.5.2017 addressed to Hon'ble Chief Minister by the petitioner, stated that in view of refusal of RIL to execute the projects,

Council of Ministers has directed the Department to explore other alternatives/possibilities to give effect to the decision taken on 4.9.2015, as referred to para 1 of communication, wherein specific reference was given to the decision of Council of Ministers taken on 4.9.2015 with regard to decision of cabinet to drop show cause notice issued against Brakel and to refund Upfront Premium deposited by Brakel to the petitioner, without interest. While responding to aforesaid communication, petitioner on 11.10.2017 (Annexure- O, p.183), requested the Special Secretary (Power) to the Government of Himachal Pradesh to issue refund order clearly mentioning the process Government of Himachal Pradesh proposed to adopt for the same. It also stated in the communication that it understand that its money is lying with State Government in suspense account and it is reedy to accept Rs.280.06 Crore by post-dated GoHP bonds or any other phased manner from GoHPs resources.

61. While responding to the same, Special Secretary (Power) to the Government of Himachal Pradesh, on 26.10.2017 (Annexure-P, p.184) again reminded the petitioner that the Council of Ministers in its meeting held on 4.9,2015 has decided to refund Upfront Premium of Jangi-Thopan and Thopan-Powari Projects to the petitioner.

62. Petitioner while responding to aforesaid communication, vide its communication dated 27.10.2017 (Annexure-Q, p.186) stated that it understands that refund to APL is not linked with awarding the said project to Reliance Energy Ltd. (REL) who has declined the LoI and not deposited Upfront Premium to Government of Himachal Pradesh and also not linked with any other receivables to the Government of Himachal Pradesh. Besides this, it also reiterated that it is ready to accept 280.06 Crore in a time bound manner by cheque or Government of Himachal Pradesh bonds. However, respondent-State vide communication dated 7.12.2017 (Annexure-R, p.187), apprised the petitioner that due to various illegal intricacies and contractual complications involved in the matter, the Council of Ministers has reconsidered the matter and reviewed its decision dated 4.9.2015 and has decided to withdraw the same.

63. Once the Council of Ministers on 4.9.2015, after having taken note of detailed Cabinet note prepared by Administrative Department, had itself decided to refund the sum of Rs. 280.06 Crore to the petitioner, it is not understood that on what basis it reviewed decision taken on 4.9.2015. Though, it has been stated that due to legal intricacies and contractual complications involved in the matter, Council of Ministers has decided to review its decision taken in its meeting held on 4.9.2015 but, what are those legal intricacies and contractual complications, have not been spelt out in the impugned communication, Annexure-R.

64. It is not in dispute that Brakel itself wrote to the Government that sum of Rs. 280.06 Crore paid by it as Upfront Premium may be refunded to the petitioner and it shall have no claim of any kind over the same. Moreover, decision taken by Council of Ministers on 4.9.2015 is/was based upon the fact that the delay in execution of the project in question was not on account of any fault of Brakel, rather due to pending litigation. Cabinet, while taking decision dated 4.9.2015, was also aware of the fact that the entire payment of Upfront Premium was made by the petitioner, which admittedly having taken note of LoA, draft PIA and Hydro Power Policy, wherein there was provision to transfer equity to the extent of 49% to a third party, invested huge sum towards Upfront Premium. Moreover, two show cause notices issued to Brakel on account of delay in depositing Upfront Premium were withdrawn by the Government, which further emboldened the petitioner to invest money in the power projects with a hope to acquire equity of 49%. Record clearly reveals that the respondent-State was aware from the day one that the entire payment of Upfront Premium has come from the accounts of the petitioner, but yet it did not question Brakel that since Adani Power Limited i.e. petitioner is not one of the members of consortium, how it could invest the money in the projects, rather, representative of the petitioner was time and again permitted by respondent to attend the meetings held inter se Brakel and Government to resolve the situation arising out of issuance of show cause notice against Brakel on account of delay in depositing Upfront Premium. It is also not in dispute that Brakel specifically wrote to Hon'ble Chief Minister with regard to its intention to transfer 49% equity in favour of the petitioner and to introduce it as one of the members of the consortium. (p. ) 65. Though, no final decision, if any, could be taken on the aforesaid request made by Brakel, but plethora of communications placed on record by the petitioner itself reveals that repeatedly the Government acknowledged receipt of Upfront Premium from the petitioner. Division Bench in CWP No 2748 of 2008 has categorically recorded in its judgment dated 7.10.2009, that PIA was signed between the Government and Brakel and it is not understood how, without permission of Government, the petitioner was introduced as one of the members of consortium. It has been further recorded by Division Bench in its order (supra) that the discreet enquiry conducted by Government through Police and Income Tax Department clearly reveals that the entire sum deposited as Upfront Premium by Brakel was paid by the petitioner, whom Brakel later on attempted to introduce as member of the consortium, without permission of the Government. True it is that there is no formal order available on record suggestive of the fact that suggestion/proposal made by Brakel for introducing the petitioner as member of consortium was accepted, but there is ample material available on record suggestive of the fact that the respondent- State accepted the petitioner to be one of the members of the consortium.

66. There is another aspect of the matter that though the respondent-State, after dismissal of SLPs having been filed by RIL and Brakel, issued show cause notice on 28.3.2014 to Brakel, calling upon it to show cause that why the amount deposited on account of Upfront Premium be not forfeited but, it cannot be disputed that the aforesaid show cause notice was withdrawn by the Government itself pursuant to the decision taken by the Council of Ministers in its meeting held on 4.9.2015 and as such, as of today, there is no ground otherwise available for the respondent to forfeit the amount deposited by Brakel on account of Upfront Premium. Decision dated 4.9.2015 taken by Council of Ministers in its meeting was very much in force till issuance of communication dated 7.12.2017 (Annexure-R), whereby petitioner was informed that due to various legal intricacies and contractual complications involved in the matter, the Council of Ministers has reviewed its decision taken on 4.9.2015.

67. Record reveals that on 27.11.2017, a fresh memorandum for consideration of the Council of Ministers (Annexure-R/H, p. 361) was prepared by the Additional Chief Secretary (Power) to the Government of Himachal Pradesh, requesting therein to review the whole issue afresh and withdraw the decisions taken in the meetings of the Council of Ministers on 4.9.2015 and 4.10.2017. Vide communication dated 30.11.2017 (p.368), Under Secretary (GAD) to the Government of Himachal Pradesh informed the Additional Chief Secretary (MPP & Power) to the Government of Himachal Pradesh that the proposal regarding implementation of Jangi-Thopan HEP(480 MW) and Thopan-Powari HEP (480 MW) in District Kinnaur was placed before the Cabinet and same stands approved, as a consequence of which, earlier decision taken by the Council of Ministers in its meeting held on 4.9.2015 to refund the amount deposited by the petitioner on account of Upfront Premium has been recalled/reviewed.

68. Once show cause notice dated 28.3.2014 stood withdrawn pursuant to the decision taken by Council of Ministers in its meeting held on 4.9.2015, it is not understood how respondent can retain amount deposited as Upfront Premium, that too, in terms of Clauses 48 and 49 of the PIA.

69. Law Department has already opined that the Government cannot take advantage of decision of Division Bench canceling the projects, while taking decision to retain the Upfront Premium deposited by Brakel. especially when it took a specific stand before Hon'ble Apex Court that the allotment in favour of Brakel was strictly in accordance with law and there was no violation, if any, on the part of Brakel.

70. At this stage, it is apt to take note of Clauses 48 and 49 of PIA (Annexure-R/A annexed with reply of respondent, p.229), which read as under:

From p.229

"48. The Second Party assures the First Party that there is no misrepresentation in the information supplied by it to the First Party as a part of their Bid or during the subsequent selection process. The First Party reserves the right to cancel the Pre-implementation Agreement after giving an opportunity to the Second Party in case it is found that there was some such misrepresentation by the Second Party and/or in the event of breach of any of the provisions of this Pre-implementation Agreement.

49. Any violations of the above mentioned issues concerning policy parameters, PIA/ IA may results into monetary penalty including cancellation of the Project."

71. Bare reading of aforesaid clauses contained in PIA clearly reveals that the second party i.e. State has/had the right to cancel the PIA, if subsequently, it transpires that the first party misrepresented and supplied wrong information to the Department. It further reveals that any violation of the policy parameters /PIA/ IA may result in monetary penalty including cancellation of the project.

72. True it is that the Division Bench of this Court in its judgment dated 7.9.2010 cancelled the projects awarded to Brakel on account of misrepresentation, but such plea is not available to respondent-State, while considering prayer made by petitioner to refund the Upfront Premium. As has been take note herein above, respondent-State vehemently justified its stand in awarding project in question to Brakel before the Division Bench of the Court and Hon'ble Apex Court. If the replies filed by respondent-State in the proceedings decided by Division Bench are perused in their entirety, respondent-State left no stone unturned to prove that the financial and technical viability/capability of Brakel was evaluated by whole-time members of HPSEB and HPIDB and there is no illegality therein. It also set up a stand that otherwise also, it has the power to change the conditions of tender. Once the respondent-State categorically stated before the court of law that there was no illegality committed by Brakel and its financial and technical viabilities/capabilities were assessed by the Department, does it lie in the mouth of the State to claim at this stage that the amount paid by Brakel on account of Upfront Premium deserves to be forfeited in terms of Clauses 48 and 49 on account of the fact that it misrepresented the facts while participating in the tender process initiated for the allotment of projects in question?

73. Solitary argument advanced by respondent-State that since there is no privity of contract between petitioner and the Government, it is not liable to refund amount deposited on account of Upfront Premium by Brakel to the petitioner though appears to be attractive but has no merit. Otherwise also, aforesaid plea set up by the State is not in consonance with the reasons set up by respondent-State in communication dated 7.12.2017 (Annexure-R), while conveying decision of Council of Ministers, to review /recall its decision dated 4.9.2015. In communication dated 7.12.2017. it has been nowhere stated by the respondent-State that since there was no privity of contract between the petitioner and the State Government, it is not liable to refund the money, rather, it has been stated in the communication supra that due to various legal intricacies and contractual complications involved in the matter, Council of Ministers has reconsidered and reviewed decision taken on 4.9.2015.

74. No doubt, petitioner herein was not in picture when Brakel submitted its bid and was awarded LoI pursuant to it being the lowest bidder but, as has been discussed herein above in detail, entire money on account of Upfront Premium was actually paid by the petitioner and such fact was very much in the knowledge of the respondent-State. Though the respondent-State at first instance after filing of writ petition by RIL, issued show cause notice to Brakel, that why LoI be not withdrawn on account of its delay in paying the Upfront Premium but, after receipt of Upfront Premium on behalf of Brakel, it got a discreet enquiry conducted through Police and income Tax Department with regard to source of money, which revealed that the entire sum came from the companies owned and managed by the petitioner, but yet has not cancelled LoI and asked Brakel to pay more sum as interest on delayed payment, which was again paid by the petitioner.

75. Leaving everything aside, material on record, reveals that after issuance of second show cause notice, wherein issue with regard to inclusion of the petitioner as one of the members of consortium was also raised, Brakel made its intention clear to the Government to transfer 49% equity to the petitioner, but yet the respondent-State dropped the show cause notice and permitted Brakel to go ahead with the project. It is only after passing of order dated 7.10.2009, by the Division Bench of this court that the respondent-State changed its tone and held Brakel liable for entire impasse and thereafter, served show cause notice calling upon it to explain that why the loss incurred by State, on account of delay in implementation of the projects, be not recovered from it, in terms of Clauses 48 and 49 of the PIA.

76. At this stage, for the first time, respondent-State asked Brakel that why the Upfront Premium deposited by it be not forfeited, that too on the ground of misrepresentation, which otherwise could not be taken by the respondent-State because of its consistent stand taken before Division Bench of this court and the Hon'ble Apex Court that the financial and technical viabilities/capabilities of Brakel were rightly assessed by whole-time members of HPSEB and HPIDB and there was no illegality in the same.

77. Once, the Council of Ministers, after being satisfied that the delay in implementation of project was on account of pending litigation, decided to withdraw the show cause notice issued to Brakel, it is not understood, how the money paid on account of Upfront Premium can be refused to be refunded to the petitioner, from whose accounts, entire sum towards Upfront Premium was paid. No doubt, as per the decision taken by the Council of Ministers in its meeting held on 4.9.2015, money on account of Upfront Premium was to be paid to the petitioner, after receipt of Upfront Premium from RIL, which otherwise being second lowest bidder was offered project, after its having withdrawn the SLP filed in the Hon'ble Apex Court, but, the decision of RIL to not accept the offer made by respondent-State definitely cannot be a ground to deny legitimate claim of the petitioner, which otherwise, at no point of time, misrepresented to the State of Himachal Pradesh, rather being a bona fide investor with a view to have 49% equity as per PIA and Hydro Power Policy invested huge amount. After having seen the bona fides of the petitioner and the fact that entire money on account of Upfront Premium was paid by it, Council of Ministers took a conscious decision to refund the money invested by it, without payment of any interest thereupon.

78. Once, the Council of Ministers, before taking decision dated 4.9.2015, recorded its satisfaction that there was no fault of the petitioner and delay in implementation of project was on account of pending litigation, subsequent decision taken by Council of Ministers to recall its earlier decision dated 4.9.2015, cannot be said to be justifiable, especially when no specific reason has been assigned in communication dated 7.12.2017 (Annexure-R), whereby decision of Council of Ministers to review/recall its decision dated 4.9.2015 came to be intimated to the petitioner. Loss, if any suffered by respondent-State, on account of delay in implementation of project, is not on account of any act and conduct of Brakel, rather, on account of pending litigation, as has been specifically opined by Law Department and as such, money received on account of Upfront Premium from Brakel/petitioner cannot be withheld.

79. Prior to passing of judgment dated 7.10.2009 by Division Bench of this Court, respondent-State issued show cause notices on 7.1.2008 and 19.7.2008 to Brakel, proposing to cancel LoI, but the same were dropped after detailed representation and recommendations of higher powered committee in the second notice. It is only in this background that the petitioner made investment in the project. Payment made by the petitioner as Upfront Premium was flowing out assurances and promises flowing out of the LoA, which was at that time valid and the covenants in the draft PIA.

80. Otherwise also, petitioner had a legitimate expectation to acquire 49% equity in SPV as per Hydro Power Policy and PIA and as such, action of respondent-State in withholding huge money invested by the petitioner is not sustainable in the eye of law. When action of respondent has been declared to be devoid of merit, it cannot claim benefit of said action which has been declared void, rather, no person can take advantage of its own wrong. State cannot retain amount received by it in terms of LoI dated 1.12.2006 as it would be against principles of unjust enrichment as enshrined under Ss. 65 and 70 of the Contract Act, which are reproduced below:-

Page 174-178

65. Obligation of person who has received advantage under void agreement, or contract that becomes void.When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it."

70. Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. Privity of contract and unjust enrichment

81. In the case at hand, though there is no direct privity of contract between the petitioner and the State but a perusal of the facts narrated herein above, would go to show that at all times, the State was not only aware of participation of the petitioner in the project but it also allowed representative(s) of the petitioner to be present in various meetings, as such, there is deemed privity of contract between the petitioner and the State.

82. To have benefit of S. 70, three conditions must be satisfied i.e. (i) person must do lawfully something for another person (ii) such thing must not be done gratuitously and (iii) and other person must enjoy benefit thereof.

83. High Court of Orissa in Fakir Chand Seth v. Dambarudhar Bania, AIR 1987 Orissa 50, has held that any agreement which is ab initio void may fall under the description "agreement discovered to be void" within the meaning of S.65, if it was not known to the parties that it was void at the time when it was entered into. S. 65 provides for restitution of any advantage received under an agreement, where the agreement is discovered to be void. S. 65 of course cannot be taken advantage of by the parties who knew from the beginning that the agreement was void. If the plaintiff had entered into an agreement under the belief that it was a legally enforceable agreement, without the knowledge that the same was forbidden by law, he can claim restitution of compensation under the Section. High Court of Orissa held as under:

"7. Sections 65 and 70 of the Act, 1872 are in the following words :

Section 65 : When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."

Section 70 : Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."

Section 65 deals both with 'agreement' and 'Contract'. Section 2(e) of the Act defines an 'agreement' as every promise or every set of promises forming the consideration for each other. Clause (h) of the said Section provides that an agreement enforceable by law is a contract. Section 65 of the Act, therefore, deals with (a) agreements which are enforceable by law and (b) agreements not so enforceable.

By Clause (g) of the said Section an agreement not enforceable by law is said to be void. This is not a case where the agreement (Ext. 2) becomes subsequently void. The words "when a contract becomes void" in Section 65 of the Act pre-suppose the enforceability of the contract at the inception on the date of its execution which became illegal thereafter, It is, therefore, required to be seen as to whether Section 65 of the Act would embrace an agreement which was void ab initio. Any agreement which is ab initio void may fall under the description "contract discovered to be void" within the meaning of Section 65of the Act, if it was not known to the parties that it was void at the time when it was entered into. Section 65 provides for restitution of any advantage received under a contract or agreement, where the agreement is discovered to be void, or where the contract becomes void.

8. Section 70 of the Act enables the court to do substantial justice where a person lawfully does anything for another person or delivers anything to him, not intending to do so gratuitously and such other person enjoys the benefit thereof, by directing the latter to make compensation to the former in respect of, or to restore, the thing so done or delivered. In order that Section 70 of the Act would apply, the necessary conditions are that: (1) a person should lawfully do something for another person or deliver something to him, (ii) in doing so he must not act gratuitously, and (iii) the person for whom it is done must have enjoyed the benefit thereof. Section 70 of the Act is not founded on contract but embodies the equitable principles of restitution and prevention of unjust enrichment.

It has, therefore, to be examined in this case as to whether the plaintiff was entitled to restitution of the money which he advanced under the void contract (Ext. 2) applying Section 65 of the Act and if he is entitled to the same relief u/s. 70 of the Act.

9. In the case of Kulu Collieries Ltd. v. Jharkhand Mines Ltd. reported in AIR 1974 SC 1892 the Hon'ble Supreme Court clearly defined the scope of Section 65 of the Act in the following words :

"The section makes a distinction between an agreement and a contract. According to Section 2 of the Contract Act an agreement which is enforceable by law is a contract and an agreement which is not enforceable by law is said to be void.

Therefore, when the earlier part of the section speaks of an agreement being discovered to be void it means that the agreement is not enforceable and is, therefore, not a contract.

It means that it was void. It may be that the parties or one of the parties to the agreement may not have, when they entered into the agreement, known that the agreement was in law not enforceable. They might have come to know later that the agreement was not enforceable. The second part of the section refers to a contract becoming void. That refers to a case where an agreement which, was originally enforceable and was, therefore, a contract becomes void flue to subsequent happenings. In both these cases any person who has received any advantage under such agreement or contract is bound to restore such advantage, or to make compensation for it to the person from whom he received it."

This, however, does not mean that Section 65 of the Act can be taken advantage of by the parties who knew from the beginning that the agreement was void. If the plaintiff had entered into an agreement under the belief that it was a legally enforceable agreement without the knowledge that the same was forbidden by law, he can claim restitution or compensation under the said Section. In this case there has been no pleading or proof that the plaintiff on the date of execution of Ext. 2 was aware that the agreement in question was in violation of law, namely the Orissa Rice and Paddy Control Order, 1965. It would therefore, be a case where the agreement was not known to the plaintiff to be one in violation of law and, which was subsequently discovered to be void."

84. Above law clearly reveals that though a contract may be declared void subsequently but when party has done something lawfully for the other party under the apprehension that the contract is void and legal, other party, for which such work has been done or it has received something in lieu of the contract, is under obligation to return the said benefits, thus, the amount of Upfront Premium received by the respondent is liable to be restituted/recouped to the petitioner, which paid it on behalf of Brakel.

Fairness of Government in contract matters

85. Hon'ble Apex Court in Urban Improvement Trust, Bikaner v. Mohan Lal, (2010) 1 SCC 512 has held that governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. Hon'ble Apex Court held as under:

"5. It is a matter of concern that such frivolous and unjust litigation by governments and statutory authorities are on the increase. Statutory Authorities exist to discharge statutory functions in public interest. They should be responsible litigants. They cannot raise frivolous and unjust objections, nor act in a callous and highhanded manner. They can not behave like some private litigants with profiteering motives. Nor can they resort to unjust enrichment. They are expected to show remorse or regret when their officers act negligently or in an overbearing manner. When glaring wrong acts by their officers is brought to their notice, for which there is no explanation or excuse, the least that is expected is restitution/restoration to the extent possible with appropriate compensation. Their harsh attitude in regard to genuine grievances of the public and their indulgence in unwarranted litigation requires to be corrected.

6. This Court has repeatedly expressed the view that the governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. We may refer to some of the decisions in this behalf."

86. Hon'ble Apex Court in The Vice Chairman & Managing Director v. Shishir Realty Private Limited, Civil Appeal Nos. 3956-3957 of 2017 and connected matter, decided on 29.11.2021, has held

"67. Before we state the conclusions, this Court would like to reiterate certain well established tenets of law pertaining to Government contracts. When we speak of Government contracts, constitutional factors are also in play. Governmental bodies being public authorities are expected to uphold fairness, equality and rule of law even while dealing with contractual matters. It is a settled principle that right to equality under Article 14 abhors arbitrariness.

Public authorities have to ensure that no bias, favouritism or arbitrariness are shown during the bidding process. A transparent bidding process is much favoured by this Court to ensure that constitutional requirements are satisfied.

68. Fairness and the good faith standard ingrained in the contracts entered into by public authorities mandates such public authorities to conduct themselves in a non arbitrary manner during the performance of their contractual obligations.

69. The constitutional guarantee against arbitrariness as provided under Article 14, demands the State to act in a fair and reasonable manner unless public interest demands otherwise. However, the degree of compromise of any private legitimate interest must correspond proportionately to the public interest, so claimed.

70. At this juncture, it is pertinent to remember that, by merely using grounds of public interest or loss to the treasury, the successor public authority cannot undo the work undertaken by the previous authority. Such a claim must be proven using material facts, evidence and figures. If it were otherwise, then there will remain no sanctity in the words and undertaking of the Government. Businessmen will be hesitant to enter Government contract or make any investment in furtherance of the same. Such a practice is counterproductive to the economy and the business environment in general.

87. It is expected from the respondent, which is a State to be fair in contractual matter, as otherwise the private entities would be reluctant to enter into business with the Government. Here, in the present case, the State has received Upfront Premium from the petitioner/Brakel and had the Division Bench of this Court not set aside the allotment of project to Brakel, it would have undertaken the same, but for the decision of the court, it was debarred from completing the same, as such, being a model employer, State is expected to be fair in its dealing.

88. In support of his aforesaid submissions, Mr. Nankani, learned senior counsel placed reliance upon State of West Bengal v. B.K. Mondal & Sons, AIR 1962 SC 779, wherein, Hon'ble Apex Court has held that where a claim for compensation is made by one person against another under S.70, it is not on the basis of any subsisting contract between the parties; it is on the basis of the fact that something as done by the party for another and the said work so done has been voluntarily accepted by the other party. Hon'ble Apex Court has held as under:

"13. Section 70 reads thus:

"Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."

14. It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied s. 70 imposes upon the latter person, the liability to make compensation to the former in respect of or to restore, the thing so done or delivered. In appreciating the scope and effect of the provisions of this section it would be useful to illustrate how this section it would operate. If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case s. 70 would not come in to operation. Similarly, if a person does something for another it would be open to the latter person not to accept what has been done by the former; in that case again s. 70 would not apply. In other words, the person said to be made liable under s. 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under s. 70 arises. Taking the facts in the case before us, after the respondent constructed the warehouse, for instance, it was open to the appellant to refuse to accept the said warehouse and to have the benefit of it. It could have called upon the respondent to demolish the said warehouse and take away the materials used by it in constructing it; but; if the appellant accepted the said warehouse and used it and enjoyed its benefit then different considerations come into play and s. 70 can be invoked. Section 70 occurs in chapter V which deals with certain relations resembling those created by contract. In other words, this chapter does not deal with the rights or liabilities accruing from the contract. It deals with the rights and liabilities accruing from relations which resemble those created by contract. That being so, reverting to the facts of the present case once again after the respondent constructed the warehouse it would not be open to the respondent to compel the appellant to accept it because what the respondent has done is not in pursuance of the terms of any valid contract and the respondent in making the construction took the risk of the rejection of the work by the appellant. Therefore, in cases falling under s. 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract nor ask for damages for the breach of the contract for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delivers something. All that s. 70 provides is that if the goods delivered are accepted or the work done is voluntarily enjoyed then the liability to pay compensation for the enjoyment of the said goods or the acceptance of the said work arises.

Thus, where a claim for compensation is made by one person against another under s. 70, it is not on the basis of any subsisting contract between the parties, it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. That broadly stated is the effect of the conditions prescribed by s. 70.

16. It is true that s. 70 requires that a person should lawfully do something or lawfully deliver something to another. The word "lawfully" is not a surplusage and must be treated as an essential part of the requirement of s. 70. What then does the word "lawfully" in s. 70 denote ? Mr. Sen contends that the word "lawfully" in s. 70 must be read in the light of s. 23 of the said Act; and he argues that a thing cannot be said to have been done lawfully if the doing of it is forbidden by law. However, even if this test is applied it is not possible to hold that the delivery of a thing or a doing of a thing the acceptance and enjoyment of which gives rise to a claim for compensation under s. 70 is forbidden by s. 175(3) of the Act; and so the interpretation of the word "lawfully" suggested by Mr. Sen does not show that s. 70 cannot be applied to the facts in the present case."

89. Hon'ble Apex Court in Mulamchand v. State of M.P., AIR 1968 SC 1218, has held that provisions of S.70 can be invoked by the aggrieved party to the void contract. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied s. 70 imposes upon the latter person, the liability to make compensation to the former in respect of or to restore, the thing so done or delivered. Hon'ble Apex Court has observed in the judgment supra, as under:

"6. In our. opinion,, the reasoning adopted by the trial court and by the High Court for rejecting the claim of the appellant is not correct. It is now well- established that here a contract between the Dominion of India and a private individual is not in the form required by s. 175 (3) of the Government of India Act, 1935, it was void and could not be enforced and therefore the opinion f India cannot be sued by.a private individual breach of such contract (See the decision in Seth Bikhrai Jaipuria v. Union of India(1). It was stated in that case that under.s. 175(3) of the Government. of India Act, 1935, the contracts had (a) to be expressed to be made by the Governor-General, (b) to be executed on behalf of the Governor-General and (c) to be executed by offcers duly appointed in that behalf and in such manner as the Governor- General directed or authorised. The evidence in the case showed that the contracts were not expressed to be made by the Governor-General add were not executed on his behalf. It was held by this Court that the provisions of s. 175 (3) were mandatory and the contracts were therefore void and not binding on the Union of India which was not liable for damages for breach of the contracts. The same principle was reiterated by this Court in a later case-State of West Bengal v. Mls. B. K. Mondal and ,Sons(2). The principle is that the provisions of s. 175(3) of the Government of India Act, 1935 or the corresponding provisions if Art. 299 (1) of the Constitution of India are mandatory in character and the contravention of these provisions nullifies the contracts and makes them void.

There is no question of estoppel Or ratification in such a case. The reason is that the provisions of section 175(3) of the Government of India Act and the corresponding 'provisions of Art. 299 ( 1 ) of the Constitution have not been enacted for the sake of mere form but, they have been enacted or safeguarding the Government against unauthorised contracts. 'he provisions are embodied in s.'175(3) of the Government of India Act and Art. 299(1) of the Constitution on the ground of public policy-on the ground of protection of general public and these formalities cannot be waived- or dispensed with. If the plea of the respondent regarding estoppel or ratification is admitted that would mean in effect the repeal of an important constitutional provision intended for the protection of the general public. that is why the plea of estoppel or ratification cannot be permitted in such a case. But if money is deposited and goods are supplied r if services are rendered in terms of the void contract, the provisions of s. 70 of the Indian Contract Act may be applicable. In other words, if the conditions imposed by s. 70 of the Indian- Con-act Act are satisfied then the provisions of that section can be invoked by the aggrieved party ,to the void contract. The first condition is that a person should lawfully do something for another person or deliver something to him; the second condition is that i doing the said thing or delivering the said thing Ike must, not intend to act gratuitously; and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied, s. 70 imposes upon the latter person the liability to make con sensation to the former in respect of, or to restore, the thing done or delivered. The important point to notice is that in a case falling under s. 70 the person doing something for another delivering something to another cannot sue for the specific performance of the contract, nor ask for damages for the breach the contract, for the simple reason that there is no contract between him and the other person for whom he does something to whom he delivers something. So where a claim for compensation is made by one person against another under s. 70, it is not on the basis of any subsisting contract between the parties but a different kind of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi contract or restitution. 1' Fibrosa v. Fairbairn(1) Lord Wright has stated the legal position as follows " any civilised system of law is bound to provide remedies for cases of that has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. Such remedies in English Law are generally different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasicontract or restitution.""

90. Hon'ble Apex Court in Mahabir Kishore v. State of M.P., AIR 1990 SC 313 has held as under:

"11. The principle of unjust enrichment requires: first, that the defendant has been 'enriched' by the receipt of a "benefit"; secondly, that this enrichment is "at the expense of the plaintiff"; and thirdly, that the retention of the enrichment be unjust. This justifies restitution. Enrichment may take the form of direct advantage to the recipient wealth such as by the receipt of money or indirect one for instance where inevitable expense has been saved.

12. Another analysis of the obligation is of quasi contract. It was said; "if the defendant be under an obligation from the ties of natural justice, to refund; the law implies a debt, and give this action rounded in the equity of the plaintiff's case, as it were, upon a contract (quasi ex contracts) as the Roman law expresses it." As Lord Wright in Fibrosa Spolka v. Fairbairn Lawson, [1943] AC 32--1942 2 All E.R. 122 pointed out, "the obligation is as efficacious as if it were upon a contract. Such remedies are quasi contract or restitution and theory of unjust enrichment has not been closed in English law."

13. Section 72 of the Indian Contract Act deals with liabil- ity of person to whom money is paid or thing delivered, by mistake or under coercion. It says:

"A person to whom money has been paid, or anything delivered, by mistake or under coer- cion, must repay or return it."

Illustration (b) to the section is:

"A Railway Company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage.

The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive."

91. Hon'ble Apex Court in B.L. Sreedhar v. K.M. Munireddy, (2003) 2 SCC 355, has held as under:

"9. First we deal with the stand of the appellant that on re-grant benefit enures to the members of the family. Learned counsel for the respondents fairly accepted this legal position and in our view rightly because of what has been said by this Court in Nagesh Bisto Desai and Ors. v. Khando Tirmal Desai and Ors. (1982 (2) SCC 79), Kalgonda Babgonda Patil v. Balgonda Kalgonda Patil and Ors. (1989 supp.(1) SCC 246), and New Kenilworth Hotels (P) Ltd. v. Ashoka Industires Ltd. and Ors. (1995 (1) SCC 161). Therefore, indisputable legal position is that even if grant is made under the Act to any member of the family, the benefit enures to the whole family. Having cleared this legal position, the contentious issues need to be noted. First comes the question whether rule of estoppel is applicable. The factual background highlighted by the High Court to hold about its applicability is as follows.

Though the plaintiff was not a party to several proceedings referred to by the parties, conduct of the plaintiff clearly shows in the background of evidence tendered that he was conscious of the proceedings. One instance in this regard would suffice. Defendant no.3 filed an application in Form-7 of the Karnataka Land Reforms Act, 1961 claiming occupancy rights in respect of particular items of agricultural land. Defendant nos. 1 and 2 claimed ownership on the land, they were duly notified and after hearing both sides. Tribunal allowed claim of defendant no.3. It was brought to the notice of the High Court when challenge was made to the order of the Tribunal, that plaintiff was one of the members of the Tribunal. He had participated in the proceedings in question though he had retired in the middle. The Tribunal cannot be said to have not been influenced to some extent at least by his presence. High Court in writ petition No.4430 of 1978 referred to orders of the Tribunal and came to hold that on the date of hearing plaintiff was withdrawn from the proceedings. No definite material was placed before it to show as to what was done on the date when the petition had been heard and orders were pronounced. To meet the ends of justice, High Court quashed order passed by the Tribunal and directed further inquiry and further directed to render a decision in accordance with law.

Undisputedly, the Tribunal re-heard the matter and held against the defendant No. 3. Attempts before the High Court did not bring any result.

92. Similarly, Hon'ble Apex Court in Canbank Financial Services Ltd. v. Custodian, (2004) 8 SCC 355, has held that a civilized society furthermore always provides for remedies for cases of what was been called unjust enrichment or unjust benefit derived from another which it is against conscience that he should keep. (See. Paragraph 52).

93. Hon'ble Apex Court in Vikram Cement v. State of M.P., (2015) 11 SCC 708, has held as under:

"15. It is possible, as was sought to be argued by the learned counsel for the State, that while adding this Explanation the Government had kept in mind the principle of unjust enrichment. Presumably because of this reason, the High Court also referred to the judgment in the case of Indian Oil Corporation (supra). However, on such a presumption alone, there cannot be any justification for adding the Explanation of the nature mentioned above. In order to determine as to whether a particular dealer is in fact entitled to refund or not, the Government can go into the issue of unjust enrichment while considering his application for refund. That would depend on the facts of each case. It cannot be presumed that the burden was positively passed on to the buyers by these dealers and, therefore, they are not entitled to refund."

94. Allahabad High Court in Town Area Committee v. Rajendra Kumar and another, AIR 1978 All 103, has held as under:

"6. There is no dispute that the tax in question was imposed as far back as 1933. The right to collect the tax for the year 1962-1963 was auctioned in favour of the defendants who made the highest bid of Rs. 42,000/- and that the defendants started realising the tax claiming to be so entitled under the contract entered into between them and the plaintiff Town Area and they paid to the Town Area a sum of Rs. 21,500/- towards the contract money. The defendants made the realisations throughout the year 1962-1963. On these facts it was contended that even if it be accepted that the contract between the parties was void, the defendants who had received advantage under the contract were bound to pay the balance money due to the plaintiff.

Reliance was placed on Section 65 of the Indian Contract Act which contains the principle of restitution after benefit has been received and the contract is later discovered to be void. The contention appears to be sound. The basis of this principle is the doctrine of restitio in integrum. The section does not make a new contract between the parties but only provides for restitution of the advantage taken by a party under the contract. The obligation to pay compensation under this section is quite different from a claim under the contract itself. The remedy is treated as quasi-contractual. The nature of the remedy has been described by Lord Wright, in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. . 1943 A.C 32. in the following words: "It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep."

95. Allahabad High court in Town Area Committee vs. Rajendra Kumar supra further held that the principle of unjust benefit or unjust enrichment according to the jurist presupposes three things: first, that the defendant has been enriched by the receipt as a benefit, secondly, that he has been so enriched at the plaintiff's expense; and thirdly, that it would be unjust to allow him to retain the benefit. Allahabad High Court held as under:

"7. The principle of unjust benefit or unjust enrichment according to the jurist presupposes three things: first, that the defendant has been enriched by the receipt as a benefit, secondly, that he has been so enriched at the plaintiff's expense; and thirdly, that it would be Unjust to allow him to retain the benefit. The plaintiff may have paid money to the defendants in pursuance of a transaction which he thought to be a valid contract but which in truth, through the operation of some rule of law, is null and void. It appears logical and just that such money should be recoverable in quasi contract. As observed by Lord Mansfield the gist of this kind of action is that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money. Equity also developed, independently of the common law remedy for unjustifiable enrichment, some principles which are aimed at the same result, viz., to force a man to disgorge property in his possession which rightly belongs to the plaintiff. This very principle is contained in Section 65 of the Indian Contract Act."

96. Law taken note herein above, clearly shows that no one can be unjustly enriched at the cost of a party, which is not at fault. In the case at hand, since the projects stood allotted to a Public Sector Undertaking, without payment of Upfront Premium, as such, the amount received by the respondent from the petitioner, on behalf of Brakel, cannot be allowed to be retained by it, as it would amount to unjust enrichment.

97. So far judgment relied upon by learned Advocate General in State of Maharashtra v. Swanstone Multiplex Cinema (P) Ltd. (supra) is concerned, issue before Hon'ble Apex Court in that case was entirely different i.e. with regard to collection of tax/duty from cinema owners, whereas, in the present, question is with regard to refund of upfront premium, qua which already Government has taken a decision on 4.9.2015 to refund the same to the petitioner, as such, judgment relied upon by learned Advocate General is not applicable to the facts of the present case.

98. Hon'ble Apex Court in Hari Bansh Lal v. Sahodar Prasad Mahto, (2010) 9 SCC 655, has held as under:

"35. Curiously, but unfortunately, the State Government which had defended the qualification, service and ultimate appointment of Mr. Lal (appellant herein) as Chairman of the Board before the High Court, changed their stand before this court for the reasons best known to them and supported the order of the High Court.

39. Though the appellant himself has filed a detailed counter affidavit denying all the allegations made by the writ petitioner and highlighted his qualifications and achievements in the State Government, more particularly, in the Electricity Board, there is no need to traverse the same in the light of the specific stand as well as encomium by the State Government and the Electricity Board. In view of the same, we hold that it is impermissible for the State to take a different view in the absence of any change of circumstance.

40. In fact, in spite of several queries from the Bench, Mr. K.K. Rai, who represented the State was unable to apprise this Court for changing their stand than that of the one asserted before the High Court. He is not in a position to put-forth any compelling circumstance to take such a stand except change of Government and persons in power. Accordingly, we reject his present stand which is contrary to their assertion before the High Court. For all these reasons, the impugned order of the High Court is liable to be set aside."

99. Hon'ble Apex Court in Jal Mahal Resorts (P) Ltd. v. K.P. Sharma, (2014) 8 SCC 866 has held as under:

"4. However, in spite of withdrawal of the special leave petitions, if the petitioner State is taking a diametrically opposite stand which it had taken before the High Court as also before this Court when the arguments were concluded, we surely have reservations in permitting the learned Senior Counsel to take an opposite stand now and advance arguments exactly the opposite of what was submitted in the High court as also be

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fore this Court through the earlier counsel being the Attorney General. 6. There is no doubt that the impleaded respondent may advance his arguments before the Court as he has been impleaded as a party- respondent but under the garb of advancing arguments a stand which was taken before the High Court earlier is changed at the stage of special leave petition, cannot be permitted especially when the counsel, as already stated, has withdrawn the Special Leave to Petitions preferred by the State. He may, however, advance submissions as a respondent in other matters, which he is at liberty to make within a period of two weeks, which however, shall be subject to its acceptance." 100. In the case at hand the constant stand of the respondent in the petitions filed by RIl was that it has rightly allotted the projects to Brakel and in light of above law, it is clear that the respondent-State cannot take different stands on same subject, in different courts as such, otherwise also, now the respondent is estopped from taking a contrary stand that the projects were delayed due lapse of Brakel or the petitioner. 101. So far upfront premium is concerned, as per PIA, (Annexure R/A, p.218 onwards), clause 3, 50% of same i.e. Rs. 173,42,4,000/- was to be paid before signing the PIA and 25% i.e. Rs. 86,71,20,000/- at the time of signing of PIA and in the event of non-payment thereof, resultant action would be cancellation of the allotment. Further as per Clause 4, in case of breach of the PIA, upfront premium is to be forfeited. However, it may be noted here that since the respondent-State though issued show cause notice to Brakel, on account of non-payment of upfront premium but it accepted the same from BKPPL on behalf of Brakel that too alongwith interest on delayed payment. It is only after passing of the judgment dated 7.10.2009, when Division Bench of this Court quashed the allotment made in favour of Brakel, the decision was taken to allot the projects in question to Central Public Sector Undertakings, after refusal of RIL to execute the project. Respondent-State has never attributed any violation /breach of the PIA to Brakel, as such, there is no occasion for the respondent-State to forfeit the upfront premium received from Brakel/BKKPL, which was paid by the petitioner. 102. Otherwise also, as per Clause 15 of the PIA, in the event, the Project is not found viable by the Second Party after the submission of DPR and the First Party is satisfied that the Second Party has sufficient ground to establish that the Project is not techno-economically viable, the Company will be permitted to withdraw from the Project without any compensation or liability of First party for the expenditure incurred by the Second Party before the expiry of this period. The 50% amount of the fixed upfront premium deposited at the time of allotment of the project shall be refunded without any interest and the balance 50% of the upfront premium shall be forfeited by the First Party. This will ensure the commitment of the Second Party towards the execution of the project and loss of time for revenues which could have otherwise occurred. 103. Above clause clearly stipulates that in the event of second party finding that the project is not feasible/economically viable, it may withdraw from the same, in which case, 50% of upfront premium shall be refunded to it. Here is a case, where it is not Brakel, which backed out from the project, rather, when Court set aside the allotment made in favour of Project, Brakel had to withdraw from the project, which fault cannot be attributed to it. 104. BKPPL and Brakel are two independent entities with no common directors or promoters, as has been confirmed by the report of the Deputy Director of Income Tax and further as per the provisions of the Policy and the PIA, the project was required to be executed and/or implemented by the SPV, in which, it was proposed that the petitioner would hold shares, as per the structure proposed by Brakel in its written submissions made on 9.10.2008 to the second show cause notice, dated 19.7.2008. 105. It is not in dispute that BKPPL is Indian subsidiary of Brakel and as such, investment made by petitioner through BKPPL is legitimate. Brakel on 31.3.2009 sought change of consortium in terms of PIA. State neither rejected nor conveyed its approval as sought by Brakel on 31.3.2009 and as such, it stands duly established on record that respondent-State had definite knowledge that the petitioner was investor in equity to be invested by BKPPL for project and state tacitly approved the same and as such, it is estopped from challenging the petitioners locus in claiming the refund. 106. Since respondent-State despite having specific knowledge at the time of issuance of second show cause notice that Brakel intends to introduce the petitioner as consortium partner not only dropped show cause notice but also permitted Brakel to go ahead with the work, it can be safely concluded that petitioner was induced by states action which it thought was lawful and as such invested the funds. 107. Though there is no formal order of forfeiture of upfront premium deposited at the behest of Brakel at the time of issuance of LoI but the main ground as is sought to be set up for justifying the claim of the respondent- State for forfeiture of upfront premium is that Brakel made bid qua the projects in question, by misrepresenting the facts, especially with regard to its financial and technical capacity and respondent-State suffered huge loss on account of delay in execution of project but, as has been discussed herein above, aforesaid plea taken by the respondent-State is not available to the respondent-State, as has been repeatedly advised by the Law Department in its opinions, which in fact persuaded the Council of Ministers to take decision in its meeting held on 4.9.2015 to withdraw show cause notice issued to Brakel and refund the upfront premium to Adani Power Limited, petitioner herein. Even if for the sake of arguments, it is presumed and accepted that Brakel misrepresented that it had financial and technical viability to bid for the projects in question, it is not in understood that when such factum with regard to financial and technical incompetence of Brakel had come to the knowledge of the respondent-State in the year 2008, after filing of CWP No. 2748 of 2008 by RIL and it issued show cause notice to Brakel after passing of order dated 3.6.2008 by Division Bench of this Court in the aforesaid writ petition, specifically alleging therein misstatement of facts by Brakel with regard to its incorporation and financial capacity and commitment of equity partners, what prevented it from cancelling allotment made in favour of Brakel, rather, at that stage, respondent-State constituted a committee and on the basis of report submitted by such committee, decided to withdraw the show cause notice against Brakel. While investigations were being made by the Committee, respondent-State also got discreet enquiry made from the Police as well as Income-Tax Department with regard to source of payment made by the petitioner pursuant to the show cause notice issued for payment of upfront premium. If the memorandums for consideration of Council of Ministers, prepared by the Administrative Department and recommendations made by the Committee are perused in their entirety, it clearly reveals that the respondent-State was fully convinced and satisfied that there is no misrepresentation by Brakel and it had the financial and technical capacity to bid for the projects in question. 108. Otherwise also, judgment delivered by the Division Bench of this Court dated 7.10.2019 in CWP No. 2748 of 2009, clearly reveals that the consistent stand of the respondent-State was that there is no misrepresentation by Brakel and all the documents at the time of bid were found to be correct by the whole-time members of HPSEB and HPIDB. Council of Ministers in its meeting held on 4.9.2015, having taken note of the fact that there was no fault of Brakel in delay in execution of the Projects, rather, it happened on account of pendency of litigation and entire sum towards payment of upfront premium was made by Adani Power Limited, which was otherwise being proposed to be one of the members of the Consortium, decided to withdraw show cause notice issued to Brakel for forfeiture of amount deposited by it and refund the same to the petitioner herein. It is ample clear from the material available on record that the respondent-State itself was equally responsible for delay in execution of the projects in question and it was fully satisfied with the documents placed on record by Brakel at the time of making bid, as such, it is estopped at this stage from forfeiting the amount of upfront premium, deposited at the behest of Brakel by the petitioner after issuance of LoI. 109. Though, Mr. Ashok Sharma, learned Advocate General argued that, at no point of time, money, if any, was received from the petitioner herein, but as has been taken note herein above, there are ample documents available on record suggestive of the fact that the entire sum on account of upfront premium was paid by the petitioner and such, fact was very much in the knowledge of the respondent-State, as has been recorded by Division Bench of this Court in judgment dated 7.10.2009. Division Bench of this Court has categorically recorded that it is not understood that how the petitioner herein was made member of consortium but the letter available on record, written by Brakel to Honble Chief Minister expressing its intention to include the petitioner as a member of the consortium, clearly reveals that the Government was in the know of the fact that the entire money towards upfront premium has been paid by the petitioner herein but before the aforesaid prayer made on behalf of Brakel for inclusion of the petitioner in the consortium could be considered, LoI issued in favour of Brakel came to be cancelled on account of judgment rendered by Division Bench of this court in CWP No. 2748 of 2008. 110. Though the submission made on behalf of the respondent-State that there is no privity of contract between the petitioner and the respondent- State appears to be correct, ex facie, but if the material available on record is perused in its entirety, it clearly establishes on record that from day one, respondent-State had impliedly and tacitly approved the participation of the petitioner as one of the member of Consortium in the Project in question . From day one, the respondent-State was aware that the entire amount towards upfront premium has been paid by the petitioner, expecting itself to be an equity partner to the extent of 49% in terms of the Policy and the provisions of the PIA. 111. Leaving everything aside, once the Council of Ministers in its decision taken on 4.9.2015, decided to refund the upfront premium to the petitioner, subsequent decision conveyed vide communication dated 7.12.2017 (Annexure-R), is not at all tenable, especially when no specific reason, if any, has been spelt out in the same with regard to circumstances and reasons, which made Council of Ministers to review its earlier decision dated 4.9.2015. As has been stated herein above, though in the aforesaid communication dated 7.12.2017 (Annexure-R), it has been stated that on account of legal intricacies and contractual complications, respondent-State has decided to withdraw/recall its decision dated 4.9.2015 but, neither such legal intricacies and contractual complications have been explained by respondent in its reply, nor learned Advocate General has been able to point out the same, while advancing his arguments in the court. 112. No party, other than Brakel, can have grouse, if any, for release of upfront premium in favour of the petitioner but, since Brakel has already written to the Government of Himachal Pradesh vide communication dated 24.8.2013 (Annexure-F, p.127) to release such money in favour of the petitioner, it is not understood what are the legal intricacies and contractual complications which the respondent may encounter, in the event of releasing amount to the petitioner, pursuant to the decision taken by the Council of Ministers in its meeting held on 4.9.2015. 113. Viewing the matter from another angle, it may be noted here that ultimately the respondent awarded the project to SJVNL, though without insisting upon payment of Upfront Premium, as such, there is no loss suffered by the respondent-State, especially no loss has been suffered by it, attributable to Brakel or for that matter the petitioner herein. Otherwise also, the State has suffered loss on account of the fact that initially the project got embroiled in litigation and thereafter SJVNL has not been able to commence the work till date on account of the opposition of the general public, as such, it would be totally unjust to pass the burden of loss, if any, suffered by State, to the petitioner, which being bonafide investor had put in the amount, after being satisfied that there is no technical hitch in its investing money in the project. 114. Moreover, retaining the money of the petitioner by the respondent-State, when project has been allotted to SJVNL, amounts to unjust enrichment of the State, which is not permissible in law. It is another aspect of the matter that the said project could never be executed on the ground, in view of the objections raised by the general public. 115. It may also be noted here that after Brakel participated in the bidding process, it was the duty of the State to scrutinize financial and technical capabilities/strength of Brakel and once it was satisfied with the same, no fault can be attributed to Brakel, for the simple reason that if there was some shortcoming in the documents of Brakel, same either was ignored or went unnoticed due to fault of the State, as such, State cannot be allowed to take undue advantage of its own wrongs, by forfeiting the money deposited by the BKPPL, for Brakel, which was in fact provided by the petitioner herein. 116. Consequently, present writ petition is allowed. Communication dated 30.11.2017 (p.368) whereby decision of the Cabinet regarding implementation of Jangi-Thopan HEFP(480 MW) and Thopan-Powari HEP (480 MW) was approved and further the communication dated 7.12.2017 (Annexure-R), whereby decision of Council of Ministers to review decision dated 4.9.2015 was conveyed to the petitioner, are hereby quashed. Respondent-State is directed to pay the amount of Upfront Premium to the petitioner in terms of the decision of the Council of Ministers dated 4.9.2015, within a period of two months from today, failing which, the State shall be liable to pay interest on the amount in question, at the rate of 9% per annum, from today, till realisation. 117. Petition stands disposed of in the afore terms, alongwith all pending applications.
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