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Dismissing the appeals, the Court HELD: 1.1. The High Court rightly held that the Rules of Business of the Government of Goa framed under Article 166(3) of the Constitution of India, including Rules 3, 6, 7 and 9 thereof, are mandatory and not directory, and any decision taken by any individual Minister in violation thereof cannot be termed as the decision of the State Government. The said Rules must be strictly adhered to. Any decision by the Government in breach of these Rules will be a nullity in the eyes of law. The decisions of the State Government have to be in conformity with the mandate of Articles 154 and 166 of the Constitution as also the Rules framed thereunder, otherwise they would not have the form of a Government decision and will be a nullity. The Rules of Business framed under Article 166(3) of the Constitution are for convenient transaction of the business of the Government, which has to be carried out in a just and fit manner in keeping with the Business Rules and as per the requirement of Articles 154 and 166 of the Constitution. [Para 54, 62-63] [1133-G-H; 1134-A; 1139-E-H; 1140-H; 1141-A] State of Kerala vs. A. Lakshmikutty (1987) 1SCR136= (1986) 4 SCC 632; CBI vs. Ravi Shankar Srivastava, (2006) 4 Suppl. SCR450 = (2006) 7 SCC 188; Punjab State Industrial Development Corpn. Ltd. vs. PNFC Karamchari Sangh 2006 (3 ) SCR751 = (2006) 4 SCC 367; State of Bihar vs. Kripalu Shankar, (1987) 3 SCR 1= (1987) 3 SCC 34; Haridwar Singh vs. Bagun Sumbrui, (1973) 3 SCC 889; Gulabrao Keshavrao Patil vs. State of Gujarat, (1995) 6 Suppl. SCR 97= (1996) 2 SCC 26; K.K. Bhalla vs. State of M.P. 2006 (3) SCC 581 and State of U.P. vs. Neeraj Avasthi (2005) 5 Suppl. SCR 906 = 2006 (1) SCC 667, relied on. R. Chitralekha vs. State of Mysore (1964) 6 SCR 368, held inapplicable. Dattatraya Moreshwar vs. State of Bombay (1952) SCR 612; Bachhittar Singh vs. State of Punjab (1962) Supp 3 SCR 713 and State of Sikkim vs. Dorjee Tshering Bhutia (1991) 3 SCR 633= (1991) 4 SCC 243, referred to. Bannari Amman Sugars Ltd. vs. Commercial Tax Office (2004) 6 Suppl. SCR 264 = (2005) 1 SCC 625; and State of U.P. vs. Om Prakash Gupta (1969) 3 SCC 775, cited. Montreal Street Rely Co. vs. Normandin – 1917 A.C. 170; R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999 (3) AER 231; Attorney General’s Reference (No 3 of 1999), 2001(1) AER 577 and R v Sekhon and others, 2003(3) AER 508, referred to. Halsbury’s Laws of England, 4th Edition Re issue Vol. 44(1), referred to. 1.2. Clause (1) of Article 166 of the Constitution says that whenever an executive action is to be taken by way of an order or instrument, it shall be expressed to be taken in the name of the Governor in whom the executive power of the State is vested. Under Clause (2), the orders and instruments made and executed in the name of the Governor shall be authenticated in the manner specified in the rules. All matters, excepting those in which the Governor is required to act in his discretion, have to be allocated to one or the other of the Ministers on the advice of the Chief Minister. [para 52] [1131-C-E] 1.3. Any decision taken by the State Government reflects the collective responsibility of the Council of Ministers and their participation in such decision making process. The Chief Minister as the Head of the Council of Ministers is answerable not only to the Legislature but also to the Governor of the State, who, as the Head of the State, acts with the aid and advice of the Council of Ministers headed by the Chief Minister. The Rules framed under Article 166 (3) of the Constitution are in aid to fulfill the constitutional mandate embodied in Chapter II of Part VI of the Constitution. The decision of the State Government must meet the requirement of these Rules also. Therefore, if the Council of Ministers or Chief Minister has not been a party to a decision taken by an individual Minister, that decision cannot be the decision of the State Government and it would be non-est and void ab initio. [para 61 and 62] [1139-A-C, G-H; 1140-A] 1.4. A decision to be the decision of the Government must satisfy the requirements of the Business Rules framed by the State Government under the provisions of Article 166(3) of the Constitution. In the case on hand, the decisions leading to the notifications dated 15.5.1996 and 1.8.1996 do not comply with the requirements of Business Rules framed by the Government under the provisions of Article 166(3) of the Constitution, and the Notifications are the result of the decision taken by the Power Minister at his level. The decision of the individual Minister cannot be treated as the decision of the State Government and the Notifications issued as a result of such a decision, are in violation of the Business Rules and void ab initio; and all actions consequent thereto are null and void. The fact that the decisions taken by the Minister alone were acted upon by issuance of Notifications dated 15.5.1996 and 1.8.1996 will not render them decisions of the State Government even if it chose to remain silent for a sufficient period of time or the Secretary concerned did not take any action under Rule 46 of the Business Rules. [para 53 and 68] [1133-D-E; 1147-A-D] 1.5. Rule 7 (2) of the Business Rules states that a proposal which requires previous concurrence of Finance Department under the said Rule, but in which Finance Department has not concurred, may not be proceeded with, unless the Council of Ministers has taken a decision to that effect. From a combined reading of the provisions of Rules 7, 3 and 6 of the Business Rules, the conclusion would be irresistible that any proposal which is likely to be converted into a decision of the State Government involving expenditure or abandonment of revenue for which there is no provision made in the Appropriation Act or an issue which involves concession or otherwise has a financial implication on the State, is required to be processed only after the concurrence of the Finance Department and cannot be finalized merely at the level of the Minister in charge. The procedure or process does not stop at this. After the concurrence of the Finance Department the proposal has to be placed before the Council of Ministers and/or the Chief Minister and only after a decision is taken in this regard, it will result in the decision of the State Government. [para 53] [1131-G-H; 1132-A, F-H; 1133-A-B] 1.6. In the instant case, the decisions impugned involve and concern not only the Department of Power but also the Departments of Industries and Finance and in view of the provisions of Rule 20, the decisions by Minister of Power to finalize the Notifications at his level without placing the proposal before the Chief Minister or the Council of Ministers fell out side the purview of the Power Minister. When the rescinding Notification dated 31.03.1995 was issued, the rebate of 25% was available only to Low Tension and High Tension consumers, and the Extra High Tension Consumers got deleted pursuant to the Notification dated 6.12.1993. A decision, therefore, to include a new category of consumers for grant of rebate which necessarily involved extra financial burden on the State’s finances, more so, by creation of a new category, namely, Extra High Tension Consumers retrospectively, was required to be finalized only after it was placed before the Council of Ministers or the Chief Minister in addition to obtaining the previous concurrence of the Finance and Industries Departments. [para 59-60] [1136-H; 1137-A-B, G-H; 1138-A-B] 1.7. The Notification dated 15.5.1996, which was claimed by the appellants to be only clarificatory, imposed an additional burden on the State’s Exchequer by introducing a new class of consumers for grant of rebate retrospectively and it was finalized by the Power Minister at his level. In law, the proposal for the decision leading to the Notification dated 15.5.1996 should have been placed before the Council of Ministers or the Chief Minister and since the same has not been done it is in violation of the Business Rules and hence the decision is non-est. Even assuming that the Notification dated 15.5.1996 was clarificatory in nature, the same violates Rule 19 of the Business Rules and there is nothing on record to show that the department concerned attempted to seek ratification of the decision taken by the Power Minister before the Notification dated 15.5.1996 was issued. The Notification dated 1.8.1996 also cannot be treated as mere clarificatory. It is a notification issued purportedly in terms of a Government decision. It was a decision finalized at the level of the Minister of Power alone and was taken in violation of the Rules of Business framed under Article 166(3) of the Constitution. The decision cannot be called a government decision as understood under Article 154 of the Constitution. Having regard to the figures placed on record, which the High Court has noticed in its judgment, showing the liability likely to be brought on the State by Notification dated 1.8.1996, it cannot be said that the said Notification did not create any additional financial liability on the State Government warranting approval by the Cabinet or the compliance of the Business Rules before it was brought into effect. Therefore, the Notifications dated 15.5.1996 and 1.8.1996 are unsustainable and the High Court has rightly held the same as non-est and void ab initio. [para 60, 64, 69 and 75] [1138-B-E; 1142-B-C; 1147-E-G; 1152-D-E] Royal British Bank v. Turquand, [1856] 6 E. & B. 327, referred to. 2. Suspicion of irregularity has been widely recognized as an exception to the doctrine of indoor management. The protection of the doctrine is not available where the circumstances surrounding the contract are suspicious and, therefore, invite inquiry. Applying the exception to the instant matter, there is sufficient doubt with regard to the conduct of the Minister of Power in issuing the Notifications dated 15.5.1996 and 01.08.1996. Therefore, there is definite suspicion of irregularity which renders the doctrine of indoor management inapplicable to the instant case. [para 71 and 73] [1149-C-D; 1150-E-F] B. Anand Behari Lal v. Dinshaw and Co. (Bankers) Ltd, AIR 1942 Oudh 417; Abdul Rehman Khan & Anr. v. Muffasal Bank Ltd. and Ors, AIR 1926 All 497; Shrisht Dhwan(Smt.) vs. Shaw Bros. (1992) 1 SCC 534; and State of Karnataka vs. All India Manufacturer Organization and Others, (2006) 1 SCC 32, referred to. R. Chitralekha and Others vs. State of Mysore 1964 (6) SCR 368, held inapplicable. J.C Houghton& Co. v. Nothard, Lowe & Wills Ltd, [1927] 1 KB 246 (CA) – referred to. 3.1. The subject matter of earlier writ petitions was completely different and distinct from the public interest litigation filed by respondent no.1. In the earlier litigation, there was no challenge whatsoever to the Notifications dated 15.5.1996 and 1.8.1996 and the declaration sought in writ petition No. 316 of 1998 was not in issue in the earlier batch of petitions. Therefore, it cannot be said that the controversy in the earlier batch of writ petitions and the instant writ petition is the same. The issue regarding the validity or legality of the Notifications dated 15.5.1996 and 1.8.1996 was never raised in the earlier batch of writ petitions before the High Court, which never had an opportunity or occasion to look into, consider and pronounce upon the validity of the same with reference to the Business Rules framed under Article 166 (3) of the Constitution. The principles of res judicata, Doctrine of Estoppel and the principles embodied in Order II Rule 2 of the Code of Civil Procedure pressed into service by the appellants cannot operate against the State Government merely because the State did not agitate either before the High Court or this Court the legality or validity of these notification in the earlier round of litigation when it had an occasion to do so. The State Government cannot be deemed to have accepted the legality of the Notifications and waived its objection or challenge thereto. The doctrine of estoppel, therefore, has no application at all, more so, in view of the illegality the notifications dated 15.05.1996 and 01.08.1996 suffer from in view of the non-compliance with the provisions of the Business Rules. The fact that the State Government did not raise these objections in the earlier batch of writ petitions does not disentitle it to such a stand or prevent it from raising its objections based on legal provisions. Respondent No. 1 was not a party to the earlier batch of writ petitions before the High Court or this Court. Therefore, the principles of res judicata or for that matter even the doctrine of estoppel will not apply to or operate against him. [para 24, 28, 29 and 75] [1109-G-H; 1110- A-B; 1113-A; 1114-A-C; 1151-F-H; 1152-A-D] Madhvi Amma Bhawani Amma and Ors. vs. Kunjikutty Pillai Meenakshi Pillai and Ors. (2000) 3 SCR752= (2000) 6 SCC 301, referred to. 3.2. As regards the objections raised on the basis of concept of merger, the High Court has held that though the appeals challenging the judgment of the High Court dated 21.1.1999 have been dismissed by this Court, and the findings of the High Court on the relevant issues have been impliedly confirmed, the concept of merger will not come in its way in deciding the issues involved in the instant petition for the reason that the said issues were not raised and, therefore, not required to be decided by the High Court in its earlier judgment dated 21.01.1999 inasmuch as legality of Notifications dated 15.5.1996 and 1.8.1996 was not examined therein. The principle of merger has no bearing, since, the issue that was decided by the High Court in the earlier batch of writ petitions and the issue that was raised and considered in the subsequent public interest litigation (W.P. No. 316 of 1998) are entirely different. [para 25, 27-28] [1110-C-F; 1112-F-H; 1113-A] Shankar Ramachandra Abhyankar vs. Krishnaji Dattatreya Bapat (1970) 1SCR 322= (AIR 1970 SC 1), referred to. 4. The appellants have not been able to show any infirmity or illegality in the order of the High Court warranting interference. [para 77] [1152-G-H] Case Law Reference: 1970) 1SCR 322 referred to Para 27 (2000) 3 SCR752 referred to para 28 (1952) SCR 612 referred to para 30 1995 ( 6 ) Suppl. SCR 97relied on para 31 1964 (6) SCR 368 held inapplicable para 32 (1973) 3 SCC 889 relied on para 33 1917 A.C. 170 referred to Para 34 1999 (3) AER 231 referred to Para 35 2001(1) AER 577 referred to Para 36 2003(3) AER 508 referred to Para 37 (1987) 1SCR 136 relied on para 40 (2006) 4 Suppl. SCR450 relied on para 41 2006 (3) SCR751 relied on para 42 1987 ( 3 ) SCR 1 relied on para 43 (1973) 3 S CC 889 relied on para 44 1952 SCR 612 cited para 45 (1962) Supp 3 SCR 713 referred to para 46 1991) 3 SCR 633 referred to para 47 1995 (6) Suppl. SCR97 relied on para 48 2004 (6 ) Suppl. SCR264 cited para 49 (1969) 3 SCC 775 cited para 49 2006 (3) SCC 581 relied on para 55 2005 (5 ) Suppl. SCR906 relied on para 56 (1992) 1 SCC 534 referred to para 70 AIR 1942 Oudh 417 referred to para 73 AIR 1926 All 497 referred to para 73 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4220 of 2002. From the Judgment & Order dated 19/23.04.2001 & 24.04.2001 of the High Court of Bombay at Goa in Writ Petition No. 316 of 1998. WITH C.A. Nos. 4219, 4213, 4214, 4217 & 4218 of 2002. F.S. Nariman, L.N. Rao, K.N. Bhat, Dr. Rajeev Dhawan, Shyam Diwan, Deeptakirth Verma, S. Karpe, Subash Sharma, Binu Tamta, Prashant Kumar, Triveni Poteker, I. Bimola Devi, Punit Jain, Chander Shekhar Ashri, Anu Mohla, A Subhashini, Mohit Abraham, Dhruv Mehta, T.S. Sabasish (for K.L. Mehta & Co.), Santosh Paul, M.J. Paul, K.K. Bhat, Arvind Gupta, Sriharsh N. Bundela, Kavin Gulati, Rohina Nath, Rohan Dhiman, Rashmi Singh, Sharuk Narang, Ashu Kansal, Umesh Kumar Khaitan for the appearing parties.

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 REPORTABLE

 IN THE SUPREME COURT OF INDIA

 CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NO.4220 OF 2002

M/s M.R.F. Ltd. ............Appellant

 Versus

Manohar Parrikar and Ors. ...........Respondents

 WITH

 CIVIL APPEAL NO.4219 OF 2002

M/s M.R.F. Ltd. & Anr. ..........Appellants

 Versus

The State of Goa and Anr. ............Respondents

 WITH

 CIVIL APPEAL NO.4213 OF 2002

Goa Glass Fibre Ltd. & Anr. ..........Appellants

 Versus

Manohar Parrikar and Ors. ..........Respondents

 1
 WITH

 CIVIL APPEAL NO.4214 OF 2002

Goa Glass Fibre Ltd. & Anr. ..........Appellants
 Versus

The State of Goa and Anr. ........ Respondents

 WITH

 CIVIL APPEAL NO.4217 OF 2002

Alcon Cement Company Limited & Anr. ..........Appellants

 Versus
The State of Goa & Anr. ..........Respondents

 WITH

 CIVIL APPEAL NO.4218 OF 2002

Mauvin Godinho ..........Appellant
 Versus

Manohar Parrikar ad Ors. ..........Respondents

 JUDGMENT

H.L. Dattu,J.

 In Civil Appeal Nos. 4220 of 2002, 4213 of 2002 and 4218 of 2002,

the appellants have called in question the correctness of the judgment and

order in Writ Petition No. 316 of 1998 dated 19/24.4.2001, passed by the

 2
High Court of Bombay Panaji Bench, at Goa in a Writ Petition brought in

public interest by one Manohar Parrikar, a Member of Legislative Assembly,

Goa (who later on became the Chief Minister of the State of Goa)

questioning the legality, validity and propriety of two notifications issued by

Government of Goa dated 15.5.1996 and 01.8.1996 in respect of grant of

25% rebate to Low Tension, High Tension and Extra High Tension

Industrial consumers of electricity as a policy of the State Government.

 In Civil Appeal No. 4219 of 2002 (M/s M.R.F. Ltd. & Anr. Vs. State

of Goa & Anr.), the appellant has called in question the judgment and order

passed by the High Court of Bombay Panaji Bench, at Goa in Writ Petition

No. 364 of 1999 dated 24.4.2001, partly allowing the writ petition filed by

the appellant.

 In Civil Appeal No. 4214 of 2002 (Goa Glass Fibre Ltd. & Anr. Vs.

The State of Goa & Anr.), the appellant has called in question the

correctness or otherwise of the judgment and order passed by the High Court

of Bombay Panaji Bench, at Goa in Writ Petition No. 254 of 1999 dated

25.4.2001 dismissing the writ petition filed by the appellant.

 3
 In Civil Appeal No. 4217 of 2002 (Alcon Cement Company Limited

& Anr. Vs. The State of Goa & Anr.), the appellant has called in question

the correctness of the judgment and order passed by the High Court of

Bombay Panaji Bench, at Goa in Writ Petition No. 277 of 1999 dated

24.4.2001 partly allowing the writ petition.

 In Civil Appeal No. 4218 of 2008 (Mauvin Godinho Vs. Manohar

Parrikar & Ors.), the appellant has called in question the correctness of the

judgment and order passed by the High Court of Bombay Panaji Bench, at

Goa in Writ Petition No. 316 of 1998 dated 19/24.4.2001

 The material facts as pleaded by the Appellants in Civil Appeal Nos.

4220 of 2002, 4213 of 2002 and 4218 of 2002 are as under:

1) The Government of Goa, in purported exercise powers conferred

 upon them by Section 23 of the Indian Electricity Act, 1910 (`Electricity

 Act' for short) issued a Notification on 30.09.1991, granting rebate of

 25% in Tariff in respect of the power supply to the Low Tension and

 High Tension Industrial Consumers/appellants who apply for availing

 High Tension or Low Tension Power Supply on or after the 1st of

 October, 1991 for bona fide industrial activities and certified by the

 Industries Department, Government of Goa as eligible for concessional

 4
 tariffs for a period of five years from the date on which electricity supply

 is made available to such units.

2) This Notification was issued by the State Government in the name

 of the Governor of the State as per the Rules of Authentication framed

 under Article 166(2) of the Constitution of India by following the

 procedure prescribed by the Business Rules framed under the Provisions

 of Article 166(3) of the Constitution of India after the State Cabinet had

 approved it. Though the said Notification was in subsistence, except one

 Industrial Unit, none applied to the State Government for the grant of

 benefit of the Notification for a long period or at least till 31.03.1995.

 On 31.03.1995, the said Notification was rescinded by the State

 Government in purported exercise of power conferred on it under Section

 21 of the General Clauses Act read with Sections 23 & 51-A of the

 Electricity Act with effect from 01.04.1995, by issuing a Notification

 dated 31.03.1995 strictly in accordance with the Business Rules and

 Rules of Authentication pursuant to the decision taken by the State

 Cabinet.

3) Though the Government rescinded the Notification dated

 30.09.1991, number of industrial units approached the State Government

 5
 and claimed benefit of 25% rebate in terms of Notification dated

 30.09.1991 for the period between the date of supply of electricity and

 31.03.1995. Some applications were rejected by the Chief Electrical

 Engineer of State of Goa, on the ground, that, they being in the category

 of Extra High Tension did not fall within the category of consumers

 covered by the Notification dated 30.09.1991. On 29.06.1995, a Calling

 Attention Notice in Legislative Assembly was also brought in by Mr.

 Manohar Parrikar, seeking clarification from the State Government as to

 whether these industrial units were entitled for the benefits flowing from

 the Notification dated 30.09.1991 upto 31.03.1995. The Power Minister

 gave a reply to the said Notice which is reproduced in the judgment

 under appeal. In sum and substance the Minister stated, that, the

 Government was committed to honour the concession granted by the

 Notification dated 30.09.1991 to the eligible industrial units who apply

 for High Tension and low tension power on or after 01.10.1991 till the

 date of withdrawal, i.e. 01.04.1995.

4) The Under Secretary to Government of Goa, Department of Power

 issued a clarification dated 01.11.1995 to the Chief Electrical Engineer

 on the lines of the reply given by the Power Minister to the Calling

 Attention Motion and reiterated the same by a communication dated

 6
 12.12.1995. Later, as the Government being satisfied that there were

 certain difficulties in the matter of clearing cases of claim of rebate for

 the period upto 31.03.1995, issued certain clarifications. On 15.05.1996,

 however, the State Government issued another Notification in purported

 exercise of power conferred on it under Sections 23 & 51-A of the

 Electricity Act read with Section 21 of the General Clauses Act, to

 amend the Notification dated 30.09.1991 which had been rescinded as

 per Notification dated 31.03.1995. By the said Notification the

 Government substituted the words "High Tension or Low Tension power

 supply" by the words "High Tension/Extra High Tension or Low Tension

 power supply". The State Government further issued another

 Notification dated 01.08.1996 restoring the facility of giving 25% rebate

 to these three categories of Industrial consumers and made the said rebate

 available from 01.08.1996 to those who had either applied or availed the

 power supply as on that date.

5) By an order dated 31.03.1998, issued by the Chief Electrical

 Engineer of State of Goa, the benefits of rebate granted by the State

 Government were withdrawn, as it appears that the State Government did

 a re-thinking over its power to grant such rebate on the Tariff. This

 action of the State Government led to a spate of litigations by the

 7
 Industrial Units in the High Court of Bombay Panaji Bench, at Goa,

 wherein they contended that the benefits granted by the State

 Government as a policy decision could not be withdrawn by the order

 dated 31.03.1998, which was merely an administrative order and that

 they were entitled to the benefits granted by the Notification dated

 01.03.1996, as long as the said Notification was not withdrawn by due

 process of law.

6) During the pendency of these writ proceedings before the High

 Court, the State Cabinet after addressing itself to the issues raised by the

 industrial units in the writ proceedings, passed a resolution to withdraw

 the benefit of 25% rebate and accordingly issued a Notification dated

 24.07.1998 and withdrew the rebate of 25% with effect from 01.08.1998.

 By an order dated 21.01.1999, the High Court disposed of the batch of

 writ petitions, inter alia holding that the Circular dated 31.03.1998

 mentioned supra as invalid and inoperative and the Notification dated

 24.07.1998 as legal, valid and operative, and that all petitioners therein

 were entitled to 25% rebate in power tariff for the periods as indicated in

 paragraph 56 of the said judgment etc.

 8
7) The judgment of the High Court was taken up in appeal by both

 parties to this Court and this Court by an order dated 13.02.2001 declined

 to interfere with the said order of the High Court and rejected both sets of

 appeals.

8) Mr. Manohar Parrikar, the 1st respondent herein, in the meantime,

 had moved the High Court with a Misc. Civil Application No.637 of

 1999, seeking withdrawal of his writ petition with liberty to challenge the

 legality or otherwise of the Notification after this Court decided the

 above mentioned civil appeals filed before it against the order of the High

 Court dated 21.01.1999. The High Court by its order dated 27.01.2000

 rejected the said application. Mr. Manohar Parrikar had also moved the

 High Court to hear his petition along with earlier set of writ petitions

 disposed of by the High Court on 21.01.1999. Subsequently, the said

 prayer was also withdrawn.

9) Before the High Court, the 1st respondent herein challenged the

 correctness of the Notifications dated 15.05.1996 and 01.08.1996, and

 sought to declare the same as null and void. He also challenged the

 guidelines framed in the letter dated 12.12.1995 and sought to declare the

 said circular was illegal and to quash it to the extent it goes beyond the

 9
 scope of Notification of 1991. He also prayed for certain other reliefs,

 including initiation of recovery of rebates paid by the State Government

 to the beneficiaries.

10) Though the petitioner had sought many reliefs in his writ petition,

 the High Court confined itself to the challenge made to the legality of the

 notifications dated 15.05.1996 and 01.08.1996. Before the High Court

 the 1st respondent herein contended as under:

 7 That the two notifications were not issued in compliance with the
 requirements of Article 154 read with Article 166 of the
 Constitution of India and the Business Rules of the Government of
 Goa framed by the Governor thereunder.

 7 That retrospective benefit of rebate in tariff given by these two
 notifications was not bona fide and is illegal.

 7 That there was no Budgetary Provisions made for these benefits to
 be extended during the relevant financial years.

 7 That the Notifications in question were not issued as is
 contemplated by and under Articles 154 and 166 of the
 Constitution of India and that they were issued only at the instance
 of the Minister of Power at the relevant point of time and, hence,
 Notifications could not be termed as the decisions of the State
 Government.

 7 That the amendment brought by the Notification dated 01.08.1996
 has overridden the very scope of the Notification dated 30.09.1991
 which is impermissible in law.

 7 That the Notification dated 15.05.1996 could not have been issued
 when the Notification dated 30.09.1991 was already rescinded by

 10
 Notification dated 31.03.1995 and no life could have been infused
 into the said notification when it did not exist.

 7 Addition to the said notification of Extra High Tension consumers
 with retrospective effect from 01.10.1991 was beyond the scope of
 the Notification dated 30.09.1991.

11) The said writ petition was contested by the 2nd respondent, who was

 the power Minister at the relevant point of time. He mainly contended

 that there was no illegality in the said Notifications which have been

 issued by following the prescribed procedure in the normal course of

 business of the Government with a view to promote industrial growth of

 the State so as to generate more employment opportunities and, therefore,

 there was nothing improper or illegal about it. It was also contended by

 the 2nd respondent therein that even if the said notifications were held

 to be contrary to the provisions of Article 166 of the Constitution, the

 said Rules are only directory and failure to comply with them did not

 vitiate the Notifications and in any event, if it was realized by the

 State Government that these Notifications were issued contrary to the

 Provisions of Article 166 nothing prevented the State Government

 from withdrawing them and the fact that no such action was taken by

 the State Government for almost two years itself indicated that the

 State Government was satisfied with the legality of the Notifications.

 11
The respondent also raised a preliminary objection regarding the

maintainability of the Writ Proceedings on the ground, that, once the

Notifications impugned have been authenticated as per the Business

Rules, they are immune from any challenge and there cannot be a

situation where respondent No.1, who at the relevant point of time, was

the Chief Minister of Goa, would be contesting against the action of the

State Government. It was also contended that the petition lacked bona

fides and was moved only to settle political scores and to gain political

mileage. The fact that contradictory stands were taken by the State

Government by filing two affidavits of the Chief Electrical Engineer

itself showed that the State Government walked into the shoes of the 1st

respondent herein and that the Government cannot support the challenge

to the Notifications issued by it and even if the petition was pro bono

when filed, it ceased to be so after the respondent No.1 herein took over

as the Chief Minister of the State of Goa. The further contention

advanced was that the High Court, having conclusively upheld the

validity of these two notifications in its judgment dated 21.01.1999,

cannot re-examine the same, more so, in view of confirmation of the said

judgment by this Court in its Order dated 13.01.2001. The 2nd respondent

therefore sought dismissal of the Writ Petition. A number of judgments

 12
 were cited and relied upon by the 2nd respondent in support of his case

 before the High Court. The other parties including the interveners also

 supported the 2nd respondent therein, on the issue of maintainability and

 further addressed arguments based on the principles of res judicata and

 the concept of merger of the judgment of the High Court dated

 21.01.1999 with the judgment of this Court dated 13.01.2001. On these

 premise the respondents sought dismissal of the Writ Petition. It appears

 from the pleadings before us, that, the High Court had permitted certain

 Companies including the M.R.F Ltd, to come on record as interveners

 and oppose the reliefs sought in the Writ Petition.

12) The High Court by its judgment dated 19/24.04.2001 impugned

 herein allowed the writ petition in part by holding that the Notifications

 dated 15.05.1996 & 01.08.1996 could not be termed as Notifications

 issued by the State Government on account of Non Compliance of the

 Rules of Business framed under Article 166 (3) of the Constitution of

 India and therefore non-est and void-ab-initio and that the consequential

 actions based on these two notifications are null and void.

 13
13) Aggrieved by the said judgment of the High Court, the Appellant

 [M.R.F. Ltd.] and others are before us in Civil Appeal Nos. 4220 of

 2002, 4213 of 2002 and 4218 of 2002.

14) In Civil Appeal Nos. 4219 of 2002, 4214 of 2002 and 4217 of

 2002, the appellants - M/s M.R.F. Limited, Goa Glass Fibre Limited and

 Alcon Cement Company Limited are questioning the correctness of

 judgment of the High Court in partly allowing the Writ Petition Nos. 364

 of 1999 and 277 of 1999 and dismissing the Writ Petition No. 254 of

 1999 respectively.

15) The facts in Civil Appeal No. 4219 of 2002 are :- Appellant

 applied for power supply connection for setting up a factory in the State

 of Goa on 03.10.1991. On 02.09.1992, appellant was supplied electricity

 for the first time. Sometime in October 1996, the Executive Engineer

 had acknowledged that the appellant is entitled for 25% rebate as

 provided in the notification. The amount of rebate was computed at Rs.

 1,04,70,762 for the period from 02.09.1992 to 01.09.1996 and it was

 further stated that the amount of arrears be credited in 60 installments

 w.e.f. September, 1996 and each installment was of Rs. 1,74,513. The

 respondent had adjusted an amount of Rs. 53,78,594 as against the bills

 14
 from September, 1996 to August, 1997 and further adjustment of Rs.

 31,41,234 was also done subsequently thus leaving a balance of Rs.

 73,29,528. The benefit of rebate was denied to the appellant for the

 remaining period on the basis of the notification dated 31.3.1998,

 whereby the extension of rebate in tariff was suspended. Pursuant to the

 judgment dated 21.1.1999, the appellant raised a fresh demand for rebate

 before the respondent no. 2 and as they failed to succeed, they

 approached the High Court for directions to seek implementation of the

 said judgment.

16) The present appeal is filed against the High Court's order dated

 24.04.2001 and the letter issued on 25.05.2001 by the Department of

 Power to the appellant herein asking for refund of the rebate of Rs.

 1,11,35,738 in one installment on or before 15.6.2001 pursuant to the

 order dated 24.4.2001.

17) The facts in Civil Appeal No.4214 of 2002 are :- The appellant -

 Goa Glass Fibre Ltd. - has set up a manufacturing plant at Colvale,

 Bardez Goa and it had applied for electric power connection on

 18.7.1994. Pursuant to the agreement signed on 7.12.1995 between

 the appellant and the respondent no. 2, the appellant's factory was

 15
 given power supply for the first time on 16.3.1996. The appellant

 made a representation to respondent no. 2 on or about 3.7.1996 for the

 benefit of 25% rebate in tariff and another reminder was sent in that

 regard on 27.11.1996. The claim for rebate was made on the basis of

 the government notification dated 30.09.1991, 15.05.1996 and

 01.08.1996. Pursuant to the Notification dated 01.08.1996, 25%

 rebate to this industry was granted w.e.f. February, 1997 along with

 the arrears of installment @ Rs. 1,24,520. Such rebate was adjusted in

 the monthly bill. This rebate was withdrawn by issuing a circular

 dated 31.3.1998. This circular was challenged in the High Court. The

 High Court in its judgment dated 21.01.1999, held the circular dated

 31.3.1998 as invalid and inoperative. The appellant filed a Writ

 Petition No. 254 of 1999 in the High Court praying for the restoration

 of the 25% rebate.

18) The facts in Civil Appeal No.4217 of 2002 are :- The Alcon

 Cement Company Limited applied for power supply on 17.9.1992 and

 entered into an agreement with the respondent no.2 for supply of power

 on 29.9.1993. The appellant's factory at Surla in the State of Goa was

 given electricity supply for the first time on 1.3.1994. Sometime in

 October 1996, the Executive Engineer acknowledged the entitlement of

 16
 25% rebate and rebate in energy consumption was granted. The

 appellant was given adjustment of 13 installments quantified in sum of

 Rs. 2,90,342/- leaving a balance of 47 installments. In addition, the

 balance of subsidy for the months of March 1998 to July 1998 was

 worked out at the rate of Rs.4,24,671 thus making a total sum of Rs.

 14,74,755. The benefit of rebate was denied to the appellant for the

 remaining period on the basis of the notification dated 31.3.1998,

 whereby the extension of rebate in tariff was suspended. Pursuant to the

 judgment dated 21.1.1999, the appellant raised a fresh demand for rebate

 before the respondent no. 2 and as they failed to succeed, they

 approached the High Court seeking directions to implement the said

 judgment.

19) Before us the appellants urged various contentions and supported

 them with various grounds and the case laws. The questions of law

 according to the appellants are as under:

 7 Whether there is any breach of judicial discipline by the High

 Court in not following it's own Judgment rendered by a Full

 Bench in the Case of Kharkanis wherein the Business Rules

 framed under Article 166 (3) were held to be directory in nature,

 but in holding that the Rules of Business are mandatory?

 17
 7 Whether the High Court by the judgment impugned herein has

 set at naught the judgment dated 21.01.1999 rendered by the

 other Division Bench with reference to the same notifications

 impugned in Writ Petition No. 316 of 1999, the former of which

 has been affirmed by this Court by its order dated 13.02.2001 in

 Civil Appeal No. 3206-07 of 1999 and others?

 7 Whether the appellants as consumers of power seeking rebate in

 terms of the Notifications issued in the name of the Governor

 which have been duly gazetted, can be estopped from seeking

 relief of rebate under them on the ground that the said

 Notifications were void ab initio as they were not issued in

 compliance of Business Rules?

7 Whether the High Court, in the writ petition filed by Manohar

 Parrikar, on the basis of the files produced before it by the State

 Government with Manohar Parrikar as the Chief Minister of the State

 at the time of such production, erred in concluding that the impugned

 notifications are non-est on the basis of such files which had also been

 examined by the earlier Division bench of the High Court?

7 Whether the High Court by issuing directions to effect recovery of

 rebate granted on the basis of Notifications in issue has over ruled the

 18
 decision of the earlier Division Bench which had held that relief under

 the notifications would be granted up to the date of rescission of the

 Notification by the Gazette dated 27.07.1998?

7 Whether the High Court erred in allowing the Writ Petition of

 Manohar Parrikar based on the changed stance of the State

 Government contained in its affidavit dated 12.04.2001 which was

 different from that which was taken by the State in the Court before

 the 1st respondent herein became the Chief Minister of the State of

 Goa?

7 Whether the High Court was justified in allowing the Writ Petition of

 Manohar Parrikar on the ground of Notifications being null and void

 for want of compliance with the Business Rules while its stand before

 the High Court in the present writ petition and earlier batch of writ

 petitions was that the notifications impugned had been rescinded due

 to financial crunch and in public interest which was upheld by the

 High Court and by this Court?

7 Whether the judgment impugned has been rendered in a case where

 the petitioner on his becoming Chief Minister of the State drew

 support of the State Government through his own Advocate General

 to settle scores with his political rival the 3rd respondent herein?

 19
 7 Is there any judicial indiscipline in the High Court in not following the

 judgment of this Court dated 13.02.2001 confirming the High Court

 judgment dated 21.01.1999, more so in view of the consistent stand

 taken by the State Government in Parrikar's case that the judgment of

 the High Court, dated 21.01.1999 covered the issues therein and that

 the High Court should await the order of this Court in Appeals

 pending and which was eventually disposed by order dated

 13.02.2001?

 7 Did the High Court erred in not permitting Manohar Parrikar [1st

 respondent herein] to withdraw his writ petition, when he himself had

 submitted that the issues in his writ petition were covered by the

 judgment of the High Court dated 21.01.1999 and that the appeals

 there against were pending in this Court?

20) These civil appeals are opposed by the State Government by filing

 a detailed Counter Affidavit. The contentions of the State Government in

 support of the impugned judgment can be summarized as under:

 7 That the State has a vital interest in the outcome of the proceedings

 before this Court which have a bearing on the State's Finances as

 an order of this Court setting aside the judgment impugned will

 result in a loss of Rs. 50 Crores to the State's Exchequer.

 20
7 That the State has already paid an amount of about 16 crores as

 rebate and it cannot afford to pay any more on account of financial

 crunch faced by it and also on account of the Notifications not

 being Government decision in the eyes of law, in as much as the

 matter was neither placed before the State Cabinet in terms of the

 Business Rules nor was the mandatory concurrence of the Finance

 Department under the Business Rules obtained and the High Court

 has rightly held that the Notifications cannot be termed as State

 Government's decisions for want of non-compliance of mandatory

 Business Rules and the decision and actions based on the

 notification are therefore non-est.

7 That there is no truth in the contention that the State Government

 has taken stand which is inconsistent with and contradictory to the

 one taken in the earlier affidavits filed in the proceedings.

7 That the earlier affidavits for and on behalf of the State were filed

 by Chief Electrical Engineer Nagarajan in virtual support of the

 Notifications impugned. However, the said Nagarajan himself was

 party to the entire matter including moving of the file, initiating the

 process and that his appointment was on ad-hoc basis overlooking

 the just and reasonable claims of various other senior, eligible and

 21
 qualified candidates and that he had given benefit of rebate to an

 applicant whose application had been rejected by his predecessor.

7 That investigation on a police complaint lodged by the petitioner in

 W.P 316 of 1999 disclosed that there was a conspiracy hatched

 between the said Nagarajan and the then Power Minister at whose

 instance the Notifications impugned were issued and that a charge

 sheet was laid before the Special Court set up under the Prevention

 of Corruption Act for offences under Section 120B of the Indian

 Penal Code and other provisions of the Prevention of Corruption

 Act and the said Nagarajan who filed the earlier affidavits was an

 accused in the said proceedings.

7 That when it comes to the involvement of public revenue and the

 effect on the State's Exchequer to the tune of Rs.50 Crores, one has

 to be bold enough to place the correct facts and law before the

 Court and the earlier affidavits filed on behalf of the State

 Government did not place before the Court correct facts of the

 matter and that the affidavit of Nagarajan which did not reflect

 correct position of law and did not place correct facts before the

 Court should be discarded and the one filed subsequently should

 not be considered as contradictory or inconsistent as correct facts

 22
borne out from the Government files were placed before the Court

by the said affidavits. The said affidavits also reflected the fact that

there was neither financial sanction nor was there a budgetary

provision nor was there a Cabinet approval as mandatorily required

under the provisions of Article 166 (3) of the Constitution and the

said Notifications therefore could not be said to be the decision of

the State Government in the eye of law. The affidavit dated

12.04.2001 was filed before the High Court after the State

re-examined the entire matter at the highest level and after

examining the legal aspects and as it was found that certain matters

which go to the root of the matter and as the earlier affidavits filed

before the High Court did not place all the facts emanating from

Government files and records. The said affidavit was filed

explaining the severe financial implications which the said

Notifications incurred on the State in the form of rebate which

could not be borne by the State's interest and which was

detrimental to the State's Interest, more so in view of lack or

absence of legal sanctity for the said notification. The affidavit was

filed further to disclose that there was breach of mandatory

Business Rules and to show that neither cabinet approval for the

 23
 decision as required under law was obtained nor any budgetary

 allocation made for the rebate. The affidavit was filed to explain

 that the State Government could not bear liability of such

 magnitude.

21) The counter-affidavit of the respondent - State herein further

 reiterates the position of law flowing from various provisions of the

 Constitution and the Business Rules made there under and states that the

 impugned notifications did not comply with the requirements of the

 Business Rule 7 and were therefore totally vitiated and did not have any

 binding effect on the State Government. The decision contained in the

 said Notifications could not be the decision of the State Government in

 the strict and true sense of law. With these contentions the State

 Government seeks to support and sustain the judgment of the High Court

 against which appeal is filed in this Court.

22) A rejoinder is filed by the appellant - M.R.F Ltd. to counter

 various statements made by the State Government' in its Counter

 Affidavit filed in the appeal.

23) We have heard Shri F.S. Nariman, Dr. Rajeev Dhavan, Shri

 L. Nageshwar Rao, Shri K.N. Bhatt and Shri Shyam Divan, the learned

 24
 senior counsel for the parties who have advanced elaborate arguments in

 support of the issues respectively raised by them in the pleadings.

24) The High Court by its judgment impugned herein has elaborately

 dealt with each of the contentions of the parties before it. Before the

 High Court the Writ Petition filed in public interest was opposed on

 various grounds. It was preliminarily objected to and opposed on the

 ground of maintainability which was dealt with by the High Court

 holding as under:-

 " We have no hesitation to hold that the Petition is not
 required to be dismissed on the ground of merger of
 the earlier decision dated 21st January, 1999 with the
 order of the Apex court or on the ground of res
 judicata. There is no dispute that the illegality of these
 Notifications were not challenged in the Petitions
 which came to be decided on 21st January, 1999 and,
 in fact, the said challenge could not have been raised
 for the simple reason that the Petitioners' claim was
 entirely based on the existence of these two
 Notifications. When the Petitioner moved
 Miscellaneous Civil Application No.637 of 1999 with
 the prayer to allow him to withdraw the Petition for
 the reasons stated therein, this court while rejecting
 the said application by order dated 27th January,
 2000, gave the following reasoning:-

 "It appears that at one stage the applicant had prayed
 for taking up the Writ Petition No. 316/98 along with
 the other batch of Writ Petitions, but the said prayer
 was withdrawn. In the said batch of Writ Petitions,
 challenge had been thrown to the decision of

 25
 government of Goa communicated by the Chief
 Electrical Engineer vide Circular dated 31st March,
 1998 to suspend the release of 25% rebate of power
 tariff to the industrial consumers. There was no
 challenge whatsoever to Notification dated 15th May,
 1996, or Notification dated 1st August, 1996, or that
 the said Notifications were null and void and to
 nullify any effect given to them in the earlier batch of
 Writ Petitions which declaration is now sought by the
 Writ Petition No. 316/98. There was also no challenge
 to the guidelines framed by letter dated 12th
 December, 1995, which is sought to be challenged in
 the Writ Petition No. 316/98 on the ground that it is
 illegal to the extent it goes beyond the scope of 1991
 Notification. No direction had been sought in the
 earlier batch of Writ Petitions for investigation into
 the grant of rebate, or for initiation of recovery
 proceedings against those units to whom 25% rebate
 had actually been paid, or adjusted, or to fix
 accountability of the concerned public servant, or
 authorities for causing loss to the State exchequer.
 After taking us through the Judgment, learned
 advocate for the applicant himself admitted that none
 of the declarations or directions claimed in Writ
 Petition No.316/98 had been sought in the earlier
 batch of Writ Petitions. Therefore, it cannot prima
 facie be said that the controversy in the earlier batch
 of Writ Petitions and the Writ Petition in question is
 the same.

 In the circumstances, in our opinion, there is no case
 made out for permitting the applicant to withdraw the
 Writ Petition No.316/98. Accordingly, the application is
 hereby dismissed."

 There was no challenge whatsoever to the Notifications dated 15th

May, 1996 and 1st August, 1996 and the declaration now sought in the

 26
 instant Writ Petition was not in issue in the earlier batch of Petitions.

 After taking us through the judgment, the learned senior counsel

 admitted that none of the declarations or directions in Writ Petition

 No.316/98 had been sought in the earlier batch of Writ Petitions.

 Therefore, it cannot be said that the controversy in the earlier batch of

 Writ Petitions and the present Writ Petition in question are the same.

 This Order dated 17th January, 2000 has now become final, though it

 was an interlocutory order rejecting Miscellaneous Civil Application

 No. 637 of 1999. This Court was more than convinced that the

 challenge raised in Writ Petition No. 316 of 1998 was not an issue for

 consideration before it while handing down the judgment dated 21st

 January, 1999, It is for these reasons, the principle of res judicata will

 not be applicable in the instant case.

25) As regards the objections raised by the respondents on the basis

 of concept of merger, the High Court has held that though the appeals

 challenging the judgment of the High Court dated 21.01.1999 have been

 dismissed by this Court, and the findings of the High Court on the

 relevant issues have been impliedly confirmed and though the principle

 laid down by this Court in the case of Kunhayammed Vs. State of

 Kerala, [(2000) 6 SCC 359], is squarely applicable on the issue of

 27
merger and the judgment dated 21.01.1999 of the High Court merged

with the order of this Court dated 13.02.2001, the concept of merger will

not come in its way in deciding the issues involved in this petition for the

reasons, that, these issues were not raised and therefore not required to

be decided by the High Court in its earlier judgment dated 21.01.1999 as

was clear from the order passed by it on 27.01.2000 in Misc. Civil

Application No. 637 of 1999. The High Court held, that, it had no

occasion to address itself on the challenge raised to the notification

impugned in the Writ Petition of Manohar Parrikar and the earlier batch

of Writ Petitions proceeded solely against the order dated 31.03.1998,

and subsequent Notification issued by the State Government on

24.07.1998. It is observed by the High Court, that, the State Government

opposed those Writ Petitions without examining the legality of the

Notifications dated 15.05.1996 and 01.08.1996 and it had contended that

the benefit of rebate was withdrawn as the State Government was facing

financial crunch and that the said benefit had been introduced as a policy

of the State Government and when it was realized by the State that it was

facing financial difficulties in extending the benefit of rebate it decided

to withdraw the same which has been upheld by the High Court in the

earlier batch of writ proceedings. The High Court therefore has

 28
 concluded that it cannot now be said that State Government cannot take

 a stand that the Notifications impugned were issued without following

 the mandatory provisions of Rules of Business or that they were not

 Notifications issued by the State Government in the eyes of law. The

 High Court has also observed, that if the State had no occasion to

 address itself on the legality of these Notifications, it is not estopped

 either from raising a challenge or supporting the challenge at an

 appropriate time. It is also held by the High Court that as the 1st

 respondent herein was not a party to the earlier batch of Writ Petitions

 before the High Court and as his application for hearing his petition with

 that batch of petitions was withdrawn, he is not estopped from

 continuing with his challenge against the Notifications dated 15.05.1996

 and 01.08.1996.

26) Arguments were also advanced to the effect that the State

 Government should not be allowed to take contradictory stand as the

 stand taken by the State Government in its two affidavits filed through

 the Chief Electrical Engineer in the earlier batch of writ petitions was

 conflicting with each other. The said contention was sought to be raised

 by the respondents in view of the change of the Government during the

 intervening period and the 1st respondent herein was the Chief

 29
Minister at the relevant point of time. The High Court has repelled

these contentions by stating that the challenge to the notifications

impugned before by the 1st respondent herein in his petition cannot be

decided on the touch stone of affidavits filed even if they are

contradictory in nature and the challenge had to be decided on its own

merits, on the basis of records and the Constitutional Mandate. The

High Court has observed that in a democratic set up the decisions of

the Governments decide the destiny of the people and therefore the

validity of such decisions should be decided not on the basis of

affidavits filed by the Officers of the Governments or on incomplete

or inadequate information made available by them, but on the basis of

Constitutional provisions and Business Rules framed thereunder. The

High Court further felt that it was duty bound to examine the records

to reassure itself that the decisions purported to have been taken by

the Government are, in fact and in law, the decision of the

Government and they are in conformity with the mandate of the

Constitution. Thus the High Court has rejected the preliminary

objection as to the maintainability of the Writ Petition and proceeded

to decide the challenge made to the above mentioned two

notifications on its merits.

 30
27) In our view, the principle of merger essentially refers to the

 merging of the orders passed by the superior courts with that of the

 orders passed by a subordinate court. This Court in the case of

 Shankar Ramachandra Abhyankar Vs. Krishnaji Dattatreya Bapat

 (AIR 1970 SC 1) has laid down the condition as to when there can be

 a merger of the orders of the superior court with that of the orders

 passed by the lower court. This Court stated, that, if any judgment

 pronounced by the superior court in the exercise of its appellate or

 revisional jurisdiction after issue of a notice and a full hearing in the

 presence of both the parties, then it would replace the judgment of the

 lower court. Thus, constituting the judgment of the superior court the

 only final judgment to be executed in accordance with law by the

 Court below. The merger is essentially of the operative part of the

 order and the principle of merger of the order of the subordinate Court

 with the order of the superior Court cannot be applied when there is

 no order made by the superior Court on merits and the controversy

 between the parties has not been looked into by the superior Court.

28) The issue of merger has no bearing in the facts and

 circumstances of the present petitions, since, the issue that was

 31
decided by the High Court in the earlier batch of Writ Petitions and

the issue that was raised and considered in the subsequent public

interest litigation is entirely different. Secondly, in our view, the

principles of res judicata is also not attracted since the issue raised

and considered in the subsequent public interest litigation had not

been raised and considered in the earlier round of litigation. It would

be worthwhile to recall the observations made by this Court in the

case of Madhvi Amma Bhawani Amma and Ors. Vs. Kunjikutty Pillai

Meenakshi Pillai and Ors. (2000) 6 SCC 301, wherein the Court has

observed that in order to apply general principle of res judicata, Court

must find, whether an issue in a subsequent suit, was directly and

substantially in issue in the earlier suit or proceedings, was it between

the same parties, and was it decided by such Court. Thus, there

should be an issue raised and decided, not merely a finding on any

incidental question for reaching such a decision. So, if such issue is

not raised and if on any other issue, if, incidentally any finding is

recorded, it would not come within the periphery of principle of res

judicata. However, Shri K.N. Bhatt, learned Senior Counsel

appearing for the former Power Minister, would submit that the

principles of res judicata and constructive res judicata bars the

 32
 exercise of jurisdiction by the High Court as there is a bar not only on

 issues directly raised in a previous lis but the issue that ought to have

 been raised. It is further submitted that the record of decision

 culminating in notification dated 24.03.1998 was available and

 produced before the High Court in previous writ petitions and the

 same Finance Secretary who had opined in his cabinet note that Rules

 of Business stood violated due to non-consultation with Finance

 department had filed affidavit in previous Writ Petitions on the

 decision to issue notification dated 24.07.1998. Therefore, the

 learned senior counsel would contend that the High Court has erred in

 deciding this issue against this respondent. In aid of this submission,

 the learned senior counsel has pressed into service the observations

 made by this Court in the case of State of Karnataka vs. All India

 Manufacturer Organization and Others, [(2006) 1 SCC 32].

29) We are not impressed by the submission of the learned senior

 counsel Shri K.N. Bhatt. In our view, the subject matter of earlier

 Writ Petitions was completely different and distinct from the public

 interest litigation filed by Mr. Manohar Parrikar. In the earlier Writ

 Petitions, the challenge was against notification and the circulars

 issued by the State Government and in the present Writ Petitions the

 33
 High Court was primarily concerned with validity or otherwise of the

 notifications dated 15.5.1996 and 01.08.1996. Therefore, we are of

 the view that the reasoning and conclusions reached by the High

 Court, on the aforesaid issue is in accordance with law and in

 accordance with the principles laid down by this Court. Therefore,

 we agree with the conclusion reached by the High Court.

30) The appellants herein have raised an issue with regard to the

 nature of Business Rules framed by the Government of Goa i.e.

 whether these Rules are directory or mandatory. Indeed it is their

 principal contention. Before the High Court also, their contention

 was that the Rules of Business of the State of Goa were directory and

 not mandatory and failure to comply with such Rules will not nullify

 the decision taken by the State Government. Shri F.S. Nariman,

 learned senior counsel submitted that it is now settled law, that,

 violation of conduct of Business Rules does not vitiate the decision or

 order, since the Rules of Business are only directory and not

 mandatory. The learned senior counsel has invited our attention to the

 decision of this court in the case of Dattatreya Moreshwar Pangarkar

 vs. State of Bombay - [(1952) SCR 612]. In the said decision, the

 court has observed :

 34
"It is well settled that generally speaking the provisions
of a statute creating public duties are directory and those
conferring private rights are imperative. When the
provisions of a statute relate to the performance of a
public duty and the case is such that to hold null and void
acts done in neglect of this duty would work serious
general inconvenience or injustice to persons who have
no control over those entrusted with the duty and at the
same time would not promote the main object of the
legislature, it has been the practice of the courts to hold
such provisions to be directory only, the neglect of them
not affecting the validity of the acts done. The
considerations which weighed with Their Lordships of
the Federal Court in the case referred to above in the
matter of interpretation of Section 40(1)of the 9th
Schedule to the Government of India Act, 1935, appear
to me to apply with equal cogency to Article 166 of the
Constitution. The fact that the old provisions have been
split up into two clauses in Article 166 does not appear to
me to make any difference in the meaning of the article.
Strict compliance with the requirements of Article 166
gives an immunity to the order in that it cannot be
challenged on the ground that it is not an order made by
the Governor. If, therefore, the requirements of that
article are not complied with, the resulting immunity
cannot be claimed by the State. This, however, does not
vitiate the order itself. The position, therefore, is that
while the Preventive Detention Act requires an executive
decision, call it an order or an executive action, for the
confirmation of an order of detention under Section 11(1)
that Act does not itself prescribe any particular form of
expression of that executive decision. Article 166 directs
all executive action to be expressed and authenticated in
the manner therein laid down but an omission to comply
with those provisions does not render the executive
action a nullity.

 35
31) Reference is also made to the decision of this Court in Gulabrao

 Keshavrao Patil and Ors. Vs. State of Gujarat (1996) 2 SCC 26. It was

 noted as follows:

 "Article 166(1) and (2) expressly envisage authentication
 of all the executive action and shall be expressed to be
 taken in the name of the Governor and shall be
 authenticated in such manner specified in the rules made
 by the Governor. Under Article 166(3), the Governor is
 authorised to make the rules for the more convenient
 transaction of the business of the Government of the
 State, and for the allocation among Ministers of the said
 business insofar as it is not a business with respect to
 which the Governor is by or under the Constitution
 required to act in his discretion. In other words, except in
 cases when the Governor in his individual discretion
 exercises his constitutional functions, the other business
 of the Government is required to be conveniently
 transacted as per the Business Rules made by Article
 166(3) of the Constitution. If the action of the
 Government and the order is duly authenticated as per
 Article 166(2) and the Business Rule 12, it is conclusive
 and irrebuttable presumption arises that decision was
 duly taken according to Rules."

32) Mr. F.S. Nariman next relied upon the decision of this Court in R.

 Chitralekha and Others vs. State of Mysore, [1964 (6) SCR 368],

 wherein this Court has stated that it is "settled law" that provisions of

 Article 166 of the Constitution are only directory and not mandatory in

 character. And if they are not complied with it can be established as a

 36
 question of fact that the impugned order was in fact issued by the

 Governor."

33) In Haridwar Singh Vs. Bagun Sumburui, [(1973) 3 SCC 889], it

 was noted as follows.

 "Several tests have been propounded in decided
 cases for determining the question whether a
 provision in a statute, or a rule is mandatory or
 directory. No universal rule can be laid down on
 this matter. In each case one must look to the
 subject-matter and consider the importance of the
 provision disregarded and the relation of that
 provision to the general object intended to be
 secured. Prohibitive or negative words can rarely be
 directory and are indicative of the intent that the
 provision is to be mandatory.
 Where a prescription relates to performance of a
 public duty and to invalidate acts done in neglect of
 them would work serious general inconvenience or
 injustice to persons who have to control over those
 entrusted with the duty, such prescription is
 generally understood as mere instruction for the
 guidance of those upon whom the duty is imposed."

34) In Montreal Street Rely Co. vs. Normandin - 1917 A.C. 170, it is

 held :

 "The statutes contain no enactment as to what is
 to be the consequence of nonobservance of these
 provisions. It is contended for the appellants that
 the consequence is that the trial was coram non
 judice and must be treated as a nullity.

 37
 It is necessary to consider the principles which
 have been adopted in construing statutes of this
 character, and the authorities so far as there are
 any on the particular question arising here. The
 question whether provisions in a statute are
 directory or imperative has very frequently arisen
 in this country, but it has been said that no general
 rule can be laid down, and that in every case the
 object of the statute must be looked at. The cases
 on the subject will be found collected in Maxwell
 on Statutes, 5th ed. P. 596 and following pages.
 When the provisions of a statute relate to the
 performance of a public duty and the case is such
 that to hold null and void acts done in neglect of
 this duty would work serious general
 inconvenience, or injustice to persons who have
 no control over those entrusted with the duty,
 and at the same time would not promote the
 main object of the Legislature, it has been the
 practice to hold such provisions to be directory
 only, the neglect of them, though punishable not
 effecting the validity of the acts done."
 (emphasis supplied)

35) In R v Immigration Appeal Tribunal Ex parte Jeyeanthan 1999 (3)

 AER 231, it is observed :

 "The issue is of general importance and has
 implications for the failure to observe procedural
 requirements outside the field of immigration.
 The conventional approach when there has been
 non-compliance with a procedural requirement
 laid down by a statute or regulation is to consider
 whether the requirement which was not complied
 with should be categorised as directory or
 mandatory. If it is categorised as directory it is
 usually assumed it can be safely ignored. If it is
 categorised as mandatory then it is usually

 38
assumed the defect cannot be remedied and has
the effect of rendering subsequent events
dependent on the requirement a nullity or void or
as being made without jurisdiction and of no
effect. The position is more complex than this
and this approach distracts attention from the
important question of what the legislator should
be judged to have intended should be the
consequence of the non-compliance. This has to
be assessed on a consideration of the language of
the legislation against the factual circumstances
of the non-compliance. In the majority of cases it
provides limited, if any, assistance to inquire
whether the requirement is mandatory or
directory. The requirement is never intended to
be optional if a word such as 'shall' or 'must' is
used.
A requirement to use a form is more likely to be
treated as a mandatory requirement where the
form contains a notice designed to ensure that a
member of the public is informed of his or her
rights, such as a notice of a right to appeal. In the
case of a right to appeal, if, notwithstanding the
absence of the notice, the member of the public
exercises his or her right of appeal, the failure to
use the form usually ceases to be of any
significance irrespective of the outcome of the
appeal. This can confidently be said to accord
with the intention of the author of the
requirement.
There are cases where it has been held that even
if there has been no prejudice to the recipient
because, for example, the recipient was aware of
the right of appeal but did not do so, the non-
compliance is still fatal. The explanation for
these decisions is that the draconian consequence
is imposed as a deterrent against not observing
the requirement. However even where this is the

 39
situation the consequences may differ if this
would not be in the interests of the person who
was to be informed of his rights.

Because of what can be the very undesirable
consequences of a procedural requirement which
is made so fundamental that any departure from
the requirement makes everything that happens
thereafter irreversibly a nullity it is to be hoped
that provisions intended to have this effect will
be few and far between. In the majority of cases,
whether the requirement is categorised as
directory or mandatory, the tribunal before
whom the defect is properly raised has the task
of determining what are to be the consequences
of failing to comply with the requirement in the
context of all the facts and circumstances of the
case in which the issue arises. In such a situation
that tribunal's task will be to seek to do what is
just in all the circumstances (see Brayhead (Ascot)
Ltd v Berkshire CC [1964] 1 All ER 149, [1964] 2
QB 303 applied by the House of Lords in London
and a Clydesidc Estates Ltd v Aberdeen DC [1979]
3 All ER 876, [1980] lWLR 182).

By contrast, a requirement may be clearly directory
because it lays down a time limit but a tribunal is
given an express power to extend the time for
compliance. If the tribunal grants or refuses an
extension of time the position is clear. If the time
limit is extended the requirement is of no
Significance. If an extension is refused the
requirement becomes critical. It may, for example,
deprive a member of the public of a right to appeal
which if exercised in time would have been bound to
succeed. In the latter situation a directory
requirement has consequences which are as
significant as any mandatory requirement.

 40
 A far from straightforward situation is where there is
 a need for permission to appeal to a tribunal but this
 is not appreciated at the time. The requirement is
 mandatory in the sense that the tribunal or the party
 against whom the appeal was being brought would
 have been entitled to object to the appeal proceeding
 without the permission and if they had done so the
 appeal would not have been accepted. However,
 what is the position if because they were unaware of
 the existence of the requirement no objection is
 made and the appeal is heard and allowed? Is the
 appellant, when the mistake is learnt of, to be
 deprived of the benefits of the appeal? If the answer
 is Yes the result could be very unjust. This would be
 especially so, if in fact the tribunal in error had told
 the appellant that permission is not needed and he
 would have been in time to make the application if
 he had not been misinformed. Could it have been the
 intention of the author of the requirement that the
 requirement should have the effect of depriving the
 appellant of the benefit of his appeal? Clearly not. In
 such a situation the non-compliance would almost
 inevitably be regarded as being without
 significance. It must be remembered that procedural
 requirements are designed to further the interests of
 justice and any consequence which would achieve a
 result contrary to those interests should be treated
 with considerable reservation."

36) In Attorney General's Reference (No 3 of 1999), 2001(1) AER

 577, it is held :

 "My Lords, I acknowledge at once that
 reasonable minds may differ as to the correct
 interpretation of a subsection which has no
 parallel in the 1984 Act or any other statute.
 Nevertheless, there do seem to be secure footholds
 which may lead to a tolerably clear answer. It is

 41
 not along the route adopted by the prosecution of
 asking whether the relevant provision is
 mandatory or directory. In London and Clydeside
 Estates Ltd. Vs. Aberdeen DC [1979] 3 All ER 876 at 882-
 884, [1980] 1 WLR 182 at 188-190, Lord Hailsham of
 St Marylebone L.C. considered this dichotomy
 and warned against the approach 'of fitting a
 particular case into one or other of mutually
 exclusive and starkly contrasted compartments'. In
 R v Immigration Appeal Tribunal, ex p Jeycanthan
 [1999J 3 All ER 231 at 237, [2000] 1 WLR 354 at
 360, Lord Woolf MR, now Lord Chief Justice,
 echoed this warning and held that it is 'Much more
 important ... to focus on the consequences of non-
 compliance'. This is how I will approach the
 matter."

37) In R v Sekhon and others, 2003(3) AER 508, it is observed :

 "25. There is no doubt that difficulties for courts
 exist in applying the distinction between mandatory
 requirements on the one hand, and directory
 requirements on the other. Even if the terms
 `directory' and `mandatory' are not used the
 problem remains of answering the question : what is
 the effect of non-compliance with procedural
 requirements? What is necessary as indicated by
 Lord Campbell LC in Liverpool Borough Bank v.
 Turner (1861) 30 LJ Ch 379 at 381, 45 ER 715 at
 718, is `to try to get at the real intention of the
 legislature, by carefully attending to the whole scope
 of the statute to be construed."

38) Reference can be made to certain passages from HALSBURY'S

 Laws of England, 4th Edition Re issue Vol. 44(1) at para 1237 and 1238 :

 42
1237. Substantive and procedural enactments. A
distinction is drawn between enactments that have
substantive effect and those that are merely
procedural. Here 'substantive' means having to do
with the substance of the law, in particular the
nature and existence of legal rights, powers or
duties, whereas procedure is concerned with
formalities and technicalities, rather than substance.
A procedural change is expected to improve matters
for everyone concerned (or at least to improve
matters for some, without inflicting detriment on
anyone else who uses ordinary care, vigilance and
promptness).

The distinction governs such questions as whether
a statutory requirement is mandatory or merely
directory", whether the effect of an enactment is
retrospective' and when a limitation period begins
to run.

The question may be whether, on the facts of the
instant case, the enactment is substantive or merely
procedural, bearing in mind that an enactment may
be substantive in the light of some facts but merely
procedural on others. Another use of the term
'substantive' is to indicate a 'permanent' provision of
an Act, in contrast to merely temporary or
transitional provisions.

1238. Mandatory and directory enactments. The
distinction between mandatory and directory
enactments concerns statutory requirements and may
have to be drawn where the consequence off ailing
to implement the requirement is not spelt out in the
legislation. The requirement may arise in one of two
ways. A duty to implement it may be imposed
directly on a person; or legislation may govern the
doing of an act or the carrying on of an activity, and
compel the person doing the act or carrying on the
activity to implement the requirement as part of a

 43
specified procedure. The requirement may be
imposed merely by implication.

To remedy the deficiency of the legislature in failing
to specify the intended legal consequence of non-
compliance with such a requirement, it has been
necessary for the courts to devise rules. These lay
down that it must be decided from the wording of
the relevant enactment whether the requirement is
intended to be mandatory or merely directory. The
same requirement may be mandatory as to some
aspects and directory as to the rest. The court will be
more willing to hold that a statutory requirement is
merely directory if any breach of the requirement is
necessarily followed by an opportunity to exercise
some judicial or official discretion in a way which
can adequately compensate for that breach.
Provisions relating to the steps to be taken by the
parties to legal proceedings (using the term in the
widest sense) are often construed as mandatory.
Where, however, a requirement, even if in
mandatory terms, is purely procedural and is
imposed for the benefit of one party alone, that party
can waive the requirement. Provisions requiring a
public authority to comply with formalities in order
to render a private individual liable to a levy have
generally been held to be mandatory.

Requirements are construed as directory if they
relate to the performance of a public duty, and the
case is such that to hold void acts done in neglect of
them would work serious general inconvenience or
injustice to persons who have no control over those
entrusted with the duty, without at the same time
promoting the main object of the legislature. This is
illustrated by many decisions relating to the
performance of public functions out of time, and by
many relating to the failure of public officers to
comply with formal requirements. On the other
hand, the view that provisions conferring private

 44
 rights have been generally treated as mandatory is
 less easy to support; the decisions on provisions of
 this type appear, in fact, to show no really marked
 leaning either way.

 If the requirement is found to be mandatory, then in
 a case where a duty to implement it is imposed
 directly on a person, non-compliance will normally
 constitute the tort of breach of statutory duty, while
 in a case where it is to be implemented as a part of a
 specified procedure, non-compliance will normally
 render the act done invalid. If the requirement is
 found to be directory only then in either case the
 non-compliance will be without direct legal effect,
 though there might be indirect consequences such as
 an award of costs against the offender. It has been
 said that mandatory provisions must be fulfilled
 exactly, whereas it is sufficient if directory
 provisions are substantially fulfilled.

 Where the requirement is complied with at the
 relevant time, the act done is not vitiated by later
 developments which, had they occurred before that
 time, would have meant that the duty should have
 been performed in a different way."

39) Per contra, Dr. Rajeev Dhavan and Shri Shyam Divan, learned

 Senior Counsel for respondents, apart from others, submitted that there

 can be no universal rule with regard to the violation of the Rules of

 Business and each case must be decided on facts; where the Rules of

 Business contain prohibitive or negative words, they are indicative of the

 intent that the provision is mandatory; in matters concerning revenue or

 finance rigorous observance of the rules is essential; when the cabinet

 45
 alone is competent to take a decision or where the finance department

 has conveyed its disagreement or where there is no prior consultation

 with the finance department, the decision of the individual minister is

 liable to be quashed; where the Rules of Business have not been

 complied with, then the decision/communication cannot be termed as a

 Government decision; and an individual functionary cannot by-pass the

 Rules of Business and the requirement for certain matters to be placed

 before the Council of Ministers. It is further submitted that the decision

 on which reliance is placed by learned senior counsel Shri F.S. Nariman

 does not specifically answer the issue whether the Rules of Business

 framed under Article 166(3) of the Constitution is mandatory or directory

 and in fact all those decisions are rendered in the context of Article

 166(1) and (2) of the Constitution and the Courts have held that, the form

 of expression and authentication are only directory, and not mandatory.

 In aid of their submission, the learned senior counsel relies on the

 observations made in the following decisions : -

40) In State of Kerala vs. A. Lakshmikutty, [(1986) 4 SCC 632], it is

 held :

 "It must therefore follow that unless and until the
 decision taken by the Council of Ministers on
 January 30, 1985 was translated into action by the

 46
 issue of a notification expressed in the name of the
 Governor as required by Article 166(1), it could
 not be said to be an order of the State Government.
 Until then, the earlier decision of the Council of
 Ministers was only a tentative one and it was
 therefore fully competent for the High Court (sic
 State Government) to reconsider the matter and
 come to a fresh decision." (pr. 41, pp. 659)

41) In CBI vs. Ravi Shankar Srivastava, [(2006) 7 SCC 188], it is

 observed :

 "13.....has been rightly submitted by learned
 counsel for the appellant, there is no notification
 revoking the earlier notification. The letter on
 which great emphasis has been laid by Respondent
 1 and highlighted by the High Court, the authority
 to write the letter has not been indicated. It has
 also not been established that the person was
 authorised to take a decision. In any event, the
 same does not meet the requirements of Article
 166 of the Constitution. The letter is not even
 conceptually a notification. The High Court was,
 therefore, not justified in holding that there was a
 notification rescinding the earlier notification." (pr.
 13, pp. 200)

42) In Punjab State Industrial Development Corpn. Ltd. vs. PNFC

 Karamchari Sangh, [(2006) 4 SCC 367], it is held :

 "11. Reliance was placed on the so-called order of
 the Chief Minister permitting PSIDC to raise funds
 in order to meet the liability of PNFC towards
 salary of its workers for at least six months. We
 have carefully perused the note of the Chief
 Minister dated 25-8-2001. The said note cannot be
 said to be an order of the State Government and
 therefore is not binding on PSIDC. The orders of
 the State Government are issued in a prescribed

 47
 manner and the note dated 25-8-2001 cannot be
 treated as one." (pr.11, pp. 371)

43) In State of Bihar vs. Kripalu Shankar, [(1987) 3 SCC 34], it is stated

 :

 "15. Article 166(1) requires that all executive
 action of the State Government shall be expressed
 to be taken in the name of the Governor. This
 clause relates to cases where the executive action
 has to be expressed in the shape of a formal order
 or notification. It prescribes the mode in which an
 executive action has to be expressed. Noting by an
 official in the departmental file will not, therefore,
 come within this article nor even noting by a
 Minister. Every executive decision need not be as
 laid down under Article 166(1) but when it takes
 the form of an order it has to comply with Article
 166(1). Article 166(2) states that orders and other
 instruments made and executed under Article
 166(1), shall be authenticated in the manner
 prescribed. While clause (1) relates to the mode of
 expression, clause (2) lays down the manner in
 which the order is to be authenticated and clause
 (3) relates to the making of the rules by the
 Governor for the more convenient transaction of
 the business of the Government. A study of this
 article, therefore, makes it clear that the notings in
 a file get culminated into an order affecting right
 of parties only when it reaches the head of the
 department and is expressed in the name of the
 Governor, authenticated in the manner provided in
 Article 166(2)." (pr. 15, pp. 43)

44) In Haridwar Singh vs. Bagun Sumbrui, [(1973) 3 SCC 889], Rule

 10 had been formulated under Article 166(3), it is observed :

 "16. In this case, we think that a power has been
 given to the Minister in charge of the Forest
 Department to do an act which concerns the

 48
 revenue of the State and also the rights of
 individuals. The negative or prohibitive language
 of rule 10(1) is a strong indication of the intent to
 make the Rule mandatory. Further, rule 10(2)
 makes it clear that where prior consultation with
 the Finance Department is required for a proposal,
 and the department on consultation, does not agree
 to the proposal, the department originating the
 proposal can take no further action on the
 proposal. The cabinet alone would be competent to
 take a decision. When we see that the
 disagreement of the Finance Department with a
 proposal on consultation, deprives the department
 originating the proposal of the power to take
 further action on it, the only conclusion possible is
 that prior consultation is an essential pre-requisite
 to the exercise of the power." (pr. 16, pp. 896)

45) In Dattatraya Moreshwar vs. State of Bombay, [1952 SCR 612] at

 pp. 624-65, per Das, J. :

 "The fact that the old provisions have been split up
 into two clauses in Article 166 does not appear to
 me to make any difference in the meaning of the
 article. Strict compliance with the requirements of
 Article 166 gives an immunity to the order in that
 it cannot be challenged on the ground that it is not
 an order made by the Governor. If, therefore, the
 requirements of that article are not complied with,
 the resulting immunity cannot be claimed by the
 State. This, however, does not vitiate the order
 itself. The position, therefore, is that while the
 Preventive Detention Act requires an executive
 decision, call it an order or an executive action, for
 the confirmation of an order of detention under
 Section 11(1) that Act does not itself prescribe any
 particular form of expression of that executive
 decision. Article 166 directs all executive action to
 be expressed and authenticated in the manner
 therein laid down but an omission to comply with

 49
 those provisions does not render the executive
 action a nullity. Therefore, all that the procedure
 established by law requires is that the appropriate
 Government must take a decision as to whether the
 detention order should be confirmed or not under
 Section 11(1). That such a decision has been in
 fact taken by the appropriate Government is amply
 proved on the record."

 Evidence can be led to show that these actions are attributable to the

government. But Article 166(3) is not verificatory and has to be followed.

Even in this case at pp. 632-633, as per Mukherjea, J., it is held :

 "I agree with the learned Attorney General that
 non-compliance with the provisions of either of the
 clauses would lead to this result that the order in
 question would lose the protection which it would
 otherwise enjoy, had the proper mode for
 expression and authentication been adopted."

46) In Bachhittar Singh vs. State of Punjab, [1962 Supp (3) SCR 713] :

 "Rules of business under Article 166(3) required
 Revenue Minister to make the order against the
 petitioner, but the same was done by the Chief
 Minister. The said order of the CM was rescued
 by another rule of business which allowed him to
 call any fine before him. No mention of Article
 166(3) being directory or mandatory."

47) In State of Sikkim vs. Dorjee Tshering Bhutia, [(1991) 4 SCC 243],

 it is observed :

 "14.....The government business is conducted
 under Article 166(3) of the Constitution in
 accordance with the Rules of Business made by the

 50
 Governor. Under the said Rules the government
 business is divided amongst the ministers and
 specific functions are allocated to different
 ministries. Each ministry can, therefore, issue
 orders or notifications in respect of the functions
 which have been allocated to it under the Rules of
 Business."

48) In Gulabrao Keshavrao Patil vs. State of Gujarat, [(1996) 2 SCC

 26], it is held :

 "14....It would, therefore, be clear that the
 decision of a Minister under the Business Rules is
 not final or conclusive until the requirements in
 terms of clauses (1) and (2) of Article 166 are
 complied with. Before the action or the decision is
 expressed in the name of the Governor in the
 manner prescribed under the Business Rules and
 communicated to the party concerned it would
 always be open by necessary implication, to the
 Chief Minister to send for the file and have it
 examined by himself and to take a decision,
 though the subject was allotted to a particular
 Minister for convenient transaction of the business
 of the Government. The subject, though
 exclusively allotted to the Minister, by reason of
 the responsibility of the Chief Minister to the
 Governor and accountability to the people, has
 implied power to call for the file relating to a
 decision taken by a Minister. The object of
 allotment of the subject to a Minister is for the
 convenient transaction of the business at various
 levels through designated officers." (pr. 14, pp.35)

49) Dr. Rajeev Dhavan, learned senior counsel fairly submits, that, even

 if Article 166(3) were to be held directory, substantial compliance of the

 51
 same would be required. In support of this contention, the learned senior

 counsel relies on the following decisions of this Court :

 7 Bannari Amman Sugars Ltd. vs. Commercial Tax Office (2005)
 1 SCC 625.
 7 R. Chitralekha vs. State of Mysore (1964) 6 SCR 368

 7 State of U.P. vs. Om Prakash Gupta (1969) 3 SCC 775

 7 Dattatraya Moreshwar vs. State of Bombay 1952 SCR 612

50) The summary of the arguments canvassed by learned senior

 counsel Shri F.S. Nariman is that, the Rules of Business framed under

 Article 166(3) of the Constitution is only directory and by no stretch of

 imagination, it can be said to be mandatory and, therefore, non

 compliance of the Rules of Business cannot be declared as illegal or void

 ab-initio. In justification of the judgment of the Bombay High Court, it is

 the stand of Dr. Rajeev Dhawan, learned senior counsel that at-least

 some of the provisions of Rules of Business framed by Govt. of Goa are

 mandatory and non-observation of the same would vitiate the

 circulars/orders/notifications etc.

51) In order to appreciate the rival contentions canvassed by learned

 senior counsels, it would be appropriate, to extract Article 166 of the

 Constitution of India and the same is as under:

 52
 "Article 166 Conduct of business of the
 Government of a State - (1) All executive action
 of the Government of a State shall be expressed to
 be taken in the name of the Governor.

 (2) Orders and other instruments made and
 executed in the name of the Governor shall be
 authenticated in such manner as may be specified
 in rules to be made by the Governor, and the
 validity of an order or instrument which is so
 authenticated shall not be called in question on the
 ground that it is not an order or instrument made
 on executed by the Governor.

 (3) The Governor shall make rules for the more
 convenient transaction of the business of the
 Government of the State, and for the allocation
 among Ministers of the said business insofar as it
 is not business with respect to which the Governor
 is by or under this Constitution to act in his
 discretion."

52) Clause (1) of Article 166 of the Constitution says, that, whenever

 executive action is to be taken by way of an order or instrument, it shall

 be expressed to be taken in the name of the Governor in whom the

 executive power of the State is vested. Under Clause (2), the orders and

 instruments made and executed in the name of the Governor shall be

 authenticated in the manner specified in the rules. Under Clause (3) of

 Article 166 of the Constitution, the Governor is authorized to make rules

 for the more convenient transaction of business of the Government of the

 State and for the allocation among its Ministers of the business of

 53
 Government. All matters excepting those in which the Governor is

 required to act in his discretion have to be allocated to one or the other of

 the Ministers on the advice of the Chief Minister. Apart from allocating

 business amongst Ministers, the Governor can also make rules on the

 advice of the Council of Ministers for more convenient transaction of

 business.

53) In the case on hand, we are required to examine the contentions of

 the appellants on this issue with reference to the Business Rules framed

 by Governor of Goa under Article 166 (3) of the Constitution of India.

 Rule 7 (2) of the Business Rules of the Government of Goa states, that,

 a proposal which requires previous concurrence of Finance Department

 under the said Rule, but in which Finance Department has not concurred,

 may not be proceeded with, unless the Council of Ministers has taken a

 decision to that effect. The wordings of this Rule are different from the

 provisions of Rule 9 of the Business Rules of Maharashtra and have to

 be read in context with the provisions of Rule 3 of the Business Rules of

 Government of Goa which states that the business of the Government

 shall be transacted in accordance with the Business Rules. Under Rule 7

 (2) thereof, the concurrence of the Finance Department is a condition

 precedent. Likewise Rule 6 of the Business Rules states, that, the

 54
Council of Minister shall be collectively responsible for all executive

orders passed by any Department in the name of the Governor or

contract made in exercise of the power conferred on the Governor or any

other officer subordinate to him in accordance with the Rules, whether

such orders or contracts are authorized by an individual minister on a

matter pertaining to the Department under his charge or as the result of

discussion at a meeting of the Council of Minister or otherwise. This

Rule requires that an executive order issued from any department in

the name of the Governor of the State should be known to the Council

of Ministers so as to fulfill the collective responsibility of the Council

of Ministers. Further Rule 7 of the Business Rules requires that no

Department shall without the concurrence of the Finance Department

issue any order which may involve any abandonment of revenue or

involve expenditure for which no provisions have been made in the

Appropriation Act or involve any grant of land or assignment of

revenue or concession, grant, lease or licence in respect of minerals or

forest rights or rights to water, power or any easement or privilege or

otherwise have a financial implications whether involving

expenditure or not. From a combined reading of the provisions of

Rules 7, 3 and 6 of the Business Rules of the Government of Goa the

 55
conclusion would be irresistible that any proposal which is likely to

be converted into a decision of the State Government involving

expenditure or abandonment of revenue for which there is no

provision made in the Appropriation Act or an issue which involves

concession or otherwise has a financial implication on the State is

required to be processed only after the concurrence of the Finance

Department and cannot be finalized merely at the level of the Minister

in charge. The procedure or process does not stop at this. After the

concurrence of the Finance Department the proposal has to be placed

before the Council of Ministers and/or the Chief Minister and only

after a decision is taken in this regard that it will result in the Decision

of the State Government. Therefore the High Court has rightly

rejected the arguments of the appellants herein based on the judgment

of the Full Bench of the High Court. The High Court has observed,

that the Rules of Business are framed in such a manner that the

mandate of the provisions of Articles 154, 163 and 166 of the

Constitution are fulfilled. Therefore, if it is held that the non-

compliance of these Rules does not vitiate the decisions taken by an

individual Minister concerned alone the result would be disastrous. In

a democratic set up the decision of the State Government must reflect

 56
 the collective wisdom of the Council of Ministers or at least that of

 the Chief Minister who heads the Council. The fact that the decisions

 taken by the Minister alone were acted upon by issuance of

 Notification will not render them decisions of the State Government

 even if the State Government chose to remain silent for a sufficient

 period of time or the Secretary concerned to the State Government did

 not take any action under Rule 46 of the Business Rules. If every

 decision of an individual Minister taken in breach of Rules are treated

 to be those of the State Government within the meaning of Article

 154 of the Constitution, the result would be chaotic. The Chief

 Minister would remain a mere figure head and every Minister will be

 free to act on his own by keeping the Business Rules at bay. Further it

 would make it impossible to discharge the Constitutional

 responsibility of the Chief Minister of advising the Governor under

 Article 163. Therefore, it is difficult to accept the contentions of the

 appellants that Business Rules are directory.

54) We also subscribe to and uphold the view of the High Court that

 the Business Rules 3,6,7 and 9 are Mandatory and not Directory and

 any decision taken by any individual Minister in violation of them

 cannot be termed as the decision of the State Government.

 57
55) We are fortified in our view by several decisions of this Court.

 In K.K. Bhalla vs. State of M.P., [2006 (3) SCC 581], the facts were

 that the State of M.P. had allotted certain land under the Jabalpur

 Development Authority (JDA) to a person at concessional rates to set

 up a newspaper printing press, though the land was earmarked for

 commercial use. The Court held :

 "The purported policy decision adopted by the
 State as regards allotment of land to the
 newspaper industries or other societies was not a
 decision taken by the appropriate Ministry. If a
 direction was to be issued by the State to the
 JDA, it was necessary to be done on proper
 application of mind by the cabinet, the
 concerned Minister or by an authority who is
 empowered in that behalf in terms of the Rules
 of the Executive Business framed under Article
 166 of the Constitution of India. Such a
 direction could not have been issued at the
 instance of the Chief Minister or at the instance
 of any other officer alone unless it is shown that
 they had such authority in terms of the Rules of
 the Executive Business of the State. We have
 not been shown that the Chief Minister was the
 appropriate authority to take a decision in this
 behalf."

 (emphasis supplied)

56) In State of U.P. vs. Neeraj Avasthi, [2006 (1) SCC 667], this

 Court held that the power of the State Government was confined to

 58
 issuing directions to State Agricultural Produce Market Board on the

 question of policy and observed :

 "Such a decision on the part of the State
 Government must be taken in terms of the
 Constitutional scheme, i.e., upon compliance of
 the requirement of Article 162 read with Article
 166 of the Constitution of India. In the instant
 case, the directions were purported to have been
 issued by an officer of the State. Such directions
 were not shown to have been issued pursuant to
 any decision taken by a competent authority in
 terms of the Rules of Executive Business of the
 State framed under Article 166 of the
 Constitution of India. .... We are therefore of
 the opinion that the direction by the State was
 not strictly in accordance with law."

57) In Gulabrao Keshavrao Patil (supra), this Court held that a

 decision of a Minister was not an order of the Government in view of

 non-compliance with Article 166.

58) The decision of the Constitution Bench in Chitralekha has been

 misinterpreted. In that case this Court was considering a controversy

 in regard to an order which was not expressed in the name of the

 Governor in terms of Article 166(1) and (2). In that context, this

 Court observed that it is a settled law that the provisions of Article

 166 of the Constitution are only directory and not mandatory in

 character. The context clearly shows that the observation that the

 59
 provisions of Article 166 of the Constitution are only directory and

 not mandatory, referred only to clauses (1) and (2) of Article 166 and

 did not refer to clause (3) which was not under consideration at all.

 Chitralekha, therefore, cannot be relied upon to support the

 contention that Business Rules made under clause (3) of Article 166

 are directory. We have earlier referred to all the decisions on which

 reliance was placed by learned senior counsel Shri F.S. Nariman. In

 our view, those decisions would not assist the appellant, since they

 were all rendered in the context of interpretation of Article 166(1) and

 (2) of the Constitution.

59) It is appropriate to further consider some of the Business Rules to

 deal with the issue brought before us. Though the High Court in the

 judgment impugned has referred to various Rules, we deem it necessary

 to refer to only those which are relevant for our purpose. Rule 10 of the

 Business Rule requires submission of all cases referred to in the

 Schedule to the Chief Minister after consideration by the Minister in

 charge so as to obtain the Chief Ministers' orders for circulation of the

 case or to bring it up for consideration at a meeting of the Council of

 Ministers. Rule 13 provides that when it is decided to bring the case

 before the Council, the department concerned should, unless otherwise

 60
directed by the Chief Minister, prepare a memorandum indicating

precisely the salient facts of the case and points for decision and copies

thereof circulated to the Council by the Secretary. Rule 14 requires in a

case which involves or concerns more than one Department, the Minister

by previous discussion to arrive at an agreement and if such agreement is

reached the memorandum referred to in Rule 13 supra should contain the

joint recommendations of the Ministers and if no agreement is reached

the points of differences and views of each of the Minister should be

stated in the memorandum. Items No.5,9 & 30 in the Schedule to the

Rules relate to proposal which have a bearing on the Finances of the

State and which do not have the concurrence or consent of the Finance

Minister's proposal involving important change in the policy and

practice; proposals to vary or reverse a decision previously taken by the

Council. Under Rule 16 the decisions of the Council in each case should

be recorded and placed with the records of the case after their approval

by the Chief Minister. Extracts of the decision should be sent to the

Secretary of the Department who should take necessary action

thereon. Rule 17 enables a Minister in Charge of a Department on the

basis of standing orders to give such directions as he thinks fit for

disposal of cases in his department and further requires the Secretary

 61
 of the Department concerned to simultaneously submit to the Chief

 Minister and the Governor the statement showing the particulars of

 any important cases disposed of by the Minister. Rule 20 stipulates,

 that, when the subject involves or relates to more than one

 Department, no order should be issued or the case be laid before the

 council until the case has been considered by all the departments

 involved or concerned, unless the case is one of extreme urgency. In

 the case on hand, the decisions impugned involve and concern not

 only the department of power but also the departments of Industries

 and Finance and in view of the provisions of Rule 20, the decisions

 to finalize the Notifications at his level without placing the proposal

 before the Chief Minister or the Council of Minister fell out side the

 purview of the Power Minister.

60) The State Government in exercise of its power conferred on it

 under Section 23 read with Section 51-A of the Electricity Act issued

 a Notification dated 29.06.1993, published in the Official Gazette

 dated 30.06.1993, framing the revised electricity tariff for the State as

 specified in the Schedule appended to the Notification. By another

 Notification dated 6.12.1993, the State Government for the first time

 created a new and separate category viz. Extra High Tension Supply

 62
Consumers and was included as item No. 10 in the revised tariff

framed under Notification dated 29.06.1993. Pursuant to the

Notification dated 6.12.1993, the power department took a stand that

as the Notification dated 30.09.1991 had covered only the Low

Tension and High Tension Consumers of electricity and not the Extra

High Tension Consumers and the claims of the Extra High tension

consumers were rejected by specific orders passed in October 1995

i.e. after the Notification dated 31.03.1995, rescinding Notification

dated 30.09.1991 was issued and the orders rejecting their claims had

become final having not been challenged by the units. The State

Government therefore felt a need to issue certain clarifications to

process the claims of the units for grant of rebate of 25% for the

period between 1.10.1991 to 31.03.1995. While issuing such

clarification involving additional financial burden on the exchequer,

the Government was required to process them in keeping with the

requirements of the Business Rules. When the Rescinding

Notification dated 31.03.1995 was issued the rebate of 25% was

available only to Low Tension and High Tension consumers and the

Extra High Tension Consumers got deleted pursuant to the

Notification dated 6.12.1993. A decision, therefore, to include a new

 63
category of consumers for grant of rebate which necessarily involved

extra financial burden on the State's finances more so by creation of a

new category retrospectively was required to be finalized only after it

was placed before the Council of Ministers or the Chief Minister in

addition to obtaining the previous concurrence of the Finance and

Industries Departments. The Notification dated 15.5.1996 which was

argued by the appellants herein to be only clarificatory had imposed

an additional burden on the State's Exchequer by introducing a new

class of consumers for grant of rebate retrospectively and it was

finalized by the Power Minister at his level. In law the proposal for

the decision leading to the Notification dated 15.5.1996 should have

been placed before the Council of Ministers or the Chief Minister and

since the same has not been done it is in violation of the Business

Rules and hence the decision is non est. Even for the sake of

arguments if it is assumed that the Notification dated 15.5.1996 was

c1arificatory in nature the same violates Rule 19 of the Business

Rules and there is nothing on record, as observed by the High Court

to show that the department concerned attempted to seek ratification

of the decision taken by the Power Minister before the Notification

dated 15.5.1996 was issued.

 64
61) At this stage, we find it necessary to refer to some of the

 Constitutional provisions to deal with the issue raised by the

 appellants. Under Article 154 of the Constitution of India, the

 Governor is vested with the Executive Power of the State and he shall

 exercise them either directly or through Officers subordinate to him in

 accordance with the provisions of the Constitution. The Governor is

 advised by the Council of Ministers with the Chief Minister at its

 head in exercise of his functions except those specifically stated in

 discharge of his functions as the head of the State. The Council of

 Minister is collectively responsible to the Legislative Assembly of the

 State. The Rules of business framed under Article 166(3) of the

 Constitution are for convenient transaction of the business of the

 Government and for allocation of the business among the Ministers.

 Article 166(2) of the Constitution requires the decision of the State

 Government to be authenticated as per the Rules framed thereunder.

 Any decision taken by the State Government therefore, reflects the

 collective responsibility of the Council of Ministers and their

 participation in such decision making process. The Chief Minister as

 the Head of the Council of Ministers is answerable not only to the

 Legislature but also to the Governor of the State. The Governor of the

 65
 State as the Head of the State acts with the aid and advice of the

 Council of Ministers headed by the Chief Minister. The Rules framed

 under Article 166 (3) of the Constitution are in aid to fulfill the

 Constitutional Mandate embodied in Chapter II of Part VI of the

 Constitution. Therefore, the decision of the State Government must

 meet the requirement of these Rules also.

62) Before the High Court as also before us it was contended by the

 appellants herein, that, the Rules framed under Article 166(3) are only

 directory in character and failure to comply with them does not vitiate

 the decision taken by the State Government. The High Court after

 considering the various judgments cited before it has repelled the said

 contention to hold that the said Rules are mandatory and non-

 compliance thereof would be disastrous. The reasoning adopted by

 the High Court to arrive at such a conclusion is sound and in

 accordance with the constitutional mandate. The decisions of the State

 Government have to be in conformity with the mandate of Article 154

 an 166 of the Constitution as also the Rules framed thereunder as

 otherwise such decision would not have the form of a Government

 decision and will be a nullity. The Rules of Business framed under

 Article 166(3) of the Constitution are for convenient transaction of the

 66
business of the Government and the said business has to be transacted in

a just and fit manner in keeping with the said Business Rules and as per

the requirement of Article 154 of the Constitution. Therefore, if the

Council of Ministers or Chief Minister has not been a party to a decision

taken by an Individual Minister, that decision cannot be the decision of

the State Government and it would be non-est and void ab initio. This

conclusion draws support from the Judgment of this Court in the case of

Haridwar Singh Vs. Bagun Sambrui & ors (1973) 3 SCC 889. This Court

in the said case was dealing with the Business Rules of the State Of

Bihar framed under Article 166 (3) of the Constitution of India and the

observations of this Court on the issue apply to the case on hand in all

force. This Court observed:

 " 14. Where a prescription relates to performance
 of a public duty and invalidate acts done in neglect
 of them would work serious general inconvenience
 or injustice to persons who have no control over
 those entrusted with the duty, such prescription is
 generally understood as mere instruction for the
 guidance of those upon whom the duty is imposed.

 15. Where however, a power of authority is
 conferred with a direction that certain regulation or
 formality shall be complied with, it seems neither
 unjust nor incorrect to exact a rigorous observance
 of it as essential to the acquisition of the right or
 authority.

 67
 16. Further, Rule 10(2) makes it clear that where
 prior consultation with the Finance Department is
 required for a proposal, and the department on
 consultation does not agree to the proposal, the
 department originating the proposal can take no
 further action on the proposal. The Cabinet alone
 would be competent to take a decision. When we
 see that the disagreement of the Finance
 Department with a proposal on consultation,
 deprives the Department originating the proposal
 of the power to take further action on it, the only
 conclusion possible is that prior consultation is an
 essential prerequisite to the exercise of power".

63) As observed by us earlier, these observations apply equally to the

 case on hand and in light of this view, we have no difficulty in holding

 that the Business Rules framed under the Provisions of Article 166 (3) of

 the Constitution are mandatory and must be strictly adhered. Any

 decision by the Government in breach of these Rules will be a nullity in

 the eyes of law.

64) It is in this legal background that the issues raised before us have

 to be dealt with. The High Court has examined the files placed before it

 by the State Government and noted the facts reflected by the said

 records. As recorded by the High Court, the rebate of 25% in power

 tariff was sought to be withdrawn by the State Government with effect

 from 1.4.1995 pursuant to a Cabinet meeting held on 21.07.1994 and a

 68
Notification dated 31.03.1995 was issued therefor. The 1st respondent's

motion in the State Assembly for a Calling Attention Notice evidently

moved the State Government to evolve a Scheme for grant of rebate of

25% for the period between 1.10.1991 to 31.03.1995. The Power

Minister therefore, on 08.07.1995 called upon the Chief Electrical

Engineer to formulate such a scheme who prepared accordingly a note

regarding the proposed scheme. Since the earlier Notification was

rescinded by the Notification dated 31.03.1995, a clarification was

sought from the Law Department on the extension of the period of rebate

of 25%. On 25.08.1995, a note was put up by the Law Department

indicating that the 25% rebate would be available only for the period

between 01.10.1991 to 31.03.1995 and industrial units supplied with

power on/or after 31.03.1995 would not be entitled for the same. On

14.02.1996, the Chief Electrical Engineer submitted a note containing a

proposal to amend the rebate notification requesting to extend the

benefit of the rebate of 25% to Extra High Tension consumers and

sought approval thereof. The said draft when referred to the Law

Department for its opinion, it was opined thereon that it was legally

impermissible to give retrospective effect to the proposed

Notification. However, though the said amendment was approved by

 69
 the then power minister, the same was not given effect to in view of

 the elections scheduled on 02.05.1996. On 03.05.1996, the Power

 Minister passed an order to issue the amendment Notification as by

 then the elections were over and the notification dated 15.05.1996 was

 accordingly issued, though the subject matter was never placed before

 the Council of Ministers or the Chief Minister. The Notification was

 issued solely on the directions of the Power Minister despite the

 opinion of the Law Secretary that retrospective effect to the proposed

 amendment could not be given as it involved additional class of

 consumers of power, which is in violation of the Business Rules of

 Government of Goa. Therefore the said Notification is unsustainable

 and the High Court has rightly held it be non-est and as void ab initio.

65) The Power Department once again took up the subject of re-

 introduction of 25% of rebate in power tariff at the instance of the

 Industries Department and in view of the continued demands from the

 Industrial Units for such a rebate. This was considered by the Power

 department and proposal therefor was called from the Chief Electrical

 Engineer. A query was also raised regarding the role of the Industries

 and Electricity Departments in issuing the eligibility certificates. A note

 dated 25.07.1996 submitted by the Chief Electrical Engineer indicated

 70
 that such certificates shall be issued by the Electricity Department as it

 was that Department which was giving the subsidy. Thereafter the

 Commissioner and Secretary (Power) submitted a detailed note on

 30.07.1996 to the Minister of Power and the latter conveyed his approval

 with the substitution of words "all industrial units who apply for availing

 power on or after 1.10.1991" with the words "all industrial units who

 apply or avail on or after 10.01.1991" and the rebate was to be given on

 the energy charges on the prevailing tariff from time to time as against

 the earlier Notification where the rebate of 25% was to be given on tariff

 as per Notification dated 27.06.1988. As per the decision/approval of the

 Power Minister, the Notification dated 1.08.1996 came to be issued

 without there being any consultation with the Council of Ministers or

 without the proposal being placed before it or the Chief Minister or

 without the consultation with the Finance Department, though the draft

 of the notification was referred to the Law Department before its

 issuance.

66) It is also to be noted that by the Notification dated 01.08.1996 the

 State Government intended to re-introduce the benefit of 25% rebate in

 power tariff. If the State Government as a policy decision desired to re-

 introduce the said rebate, it was imperative that the said decision

 71
complied with the requirement of a Government decision and that it did

not remain a Departmental Order or Instruction. The High Court has

recorded after verifying the notes on record that the re-introduction of

rebate was initiated at the instance of Industries Department and that the

proposal for re-introduction attracted the provisions of Rules 9 & 10 of

the Business Rules and it did not seek the concurrence of the Finance

Department. From the file produced before it the High Court has found

that the decision was finalized by the Power Minister at his level without

any reference to the Council of Ministers or the Chief Minister. The

High Court has also referred to the Statement in writing given by the

Chief Minister to the Investigating Officer during the course of

investigation launched pursuant to the complaint given by the 1st

respondent, that the Power Minister at no point of time had placed the

proposal regarding decisions dated 15.5.1996 and 1.8.1996. This apart,

from the records the High Court finds that the agency to certify the

eligibility of industrial units for concessional tariff was yet to be

identified and the issue whether the rebate for the period between

01.10.1991 to 31.03.1995 was to be made available as per the

Notification dated 27.6.1988 or with reference to the tariff prevailing

from time to time. The Note dated 8.7.1996 is referred to by the High

 72
Court. The High Court also refers to the reply of the Electrical Engineer

dated 10.7.1996 wherein it was clarified that only the prospective

industrial consumers who has applied and availed power supply on or

after 1.10.1991 were eligible for concession. From the note of the

Commissioner and Secretary, Department of Power dated 30.7.1996 the

High Court records that the certification/ verification of the industrial

units could be done by the Electricity Department as the concession was

to be extended by the said department to the consumers. The said note

refers to the meetings held in the chamber of Minister of Power. The

Note also mentions about a constitution of a Screening Committee

consisting of the Secretary of Ministry of Power, the Chief Electrical

Engineer, Director of Industries and Joint Secretary, Finance, to ensure

that only genuine and bona fide claims are entertained and paid the

rebate and also examine and verify all doubtful claims. The Note also

refers to a decision taken in one of such meetings to the effect that rebate

should be given to units on energy charges only as per the prevailing

tariff in force from time to time on which they are billed for a period of

five years on the recommendations made by the Chief Electrical

Engineer. The recommendations and/or the decisions did have bearing

on the finances of the State Government and also amounted to change in

 73
 policy decisions. Even then neither did the Minister of Power think it is

 proper and appropriate to place the proposals before the Council of

 Ministers or the Chief Minister, nor did the Secretary concerned deemed

 it appropriate to do so. The proposals were finalized by the Power

 Minister at his level as per the modifications suggested by him on

 30.7.1996 which in our opinion are in violation of the Business Rules.

67) The High Court has perused the files relating to the issue and from

 them it has noticed that the file was forwarded to the Development

 Commissioner on or about 17.03.1998 as they were required for

 preparation of reply to a question in the Assembly and the Commissioner

 on 25.03.1998 submitted a note referring to the complaint filed by 1st

 respondent herein alleging illegalities and corruption in the matter of

 grant of rebate. The complaint of the 1st respondent was about the

 amendment of the Notification dated 31.09.1991 which had been

 rescinded by the Notification dated 31.3.1995 and he had alleged that

 the amendment was made with a mala fide intention of including a

 specific category of consumer and the amending notification had led

 to manipulation of records to the extent that some people had

 attempted to become beneficiaries of the Scheme within the notified

 period of 01.10.1991 and 31.03.1995. The note of the Commissioner

 74
raised certain issues relating to grant of rebate to industrial units after

31.03.1995. As per the objections raised in the note the cases of units

which had applied for power but could not be supplied with power by

31.03.1995 were to be referred to the State Government. However, it

was later decided to leave it to the Chief Electrical Engineer to allow

release of said subsidy to all such units. The Note of the

Commissioner had also raised an issue touching upon the number of

industrial units entitled to subsidy and the liability per month on that

count and fixed the same at Rs 80 lakhs per month and opined that the

total amount of the subsidy by way of adjustment of bills would be in

excess of Rs. 50 Crores. Having regard to these aspects the note

suggested suspension of the rebate scheme immediately until the legal

issues were sorted out. On 03.04.1998, the Joint Law Secretary gave

his clarification after examining the matter in the light of the

provisions of the Electricity Act and opined that a Cabinet Decision

was necessary for suspension of the rebate scheme and that before the

notification dated 01.08.1996 was issued it required a decision of the

cabinet and the concurrence of the Finance Department as it fell

within the meaning of a policy decision involving financial

implications. The note in conclusion said that the Notification dated

 75
01.08.1996 was not in accordance with law and this conclusion was

agreed to by the Law Secretary. The Development Commissioner further

felt that the in view of this lacuna in the Notification dated 1.08.1996,

the matter required a review by the Cabinet and that it should be taken to

the Cabinet for its ratification or otherwise. The note of the

Commissioner was placed before the Power Minister as the Chief

Secretary was away on tour and the Power Minister directed the matter

to be placed before the Cabinet and also directed the files of the Finance

& Industries Department on the subject to be placed before the Chief

Minister for his perusal. The file was placed before the Chief Minister on

27.05.1998 for his perusal who thereafter called for the opinion of the

Finance Department and on the same day the Finance Secretary

submitted the opinion of the Finance Department and the next day the

matter was placed before the Cabinet. Ultimately the State Government

took a decision to withdraw the benefit of rebate and issued the

Notification dated 24.07.1998. This apart the material placed by the 1st

respondent herein also indicated that there was an attempt to ratify the

notification date 1.08.1996 and the same could have been done but for

the legal hurdle and the State Government realized the legal hurdles in

continuing with the rebate scheme on the basis of the Notification dated

 76
01.08.1996. We fail to understand as to why the State Government did

not bring these facts before this Court or the High Court in the earlier

round of litigation where its power to withdraw the subsidy in exercise

of its power under Section 21 of the General Clauses Act was upheld.

Instead it chose to plead financial crunch faced by the State Government

as the reason for withdrawal of rebate. It is further to be noted with

regard to the Notification dated 01.08.1996, that it re-introduced the

benefit of rebate on tariff and made it available to units on the prevailing

tariff in force from time to time at which the units were billed for a

period of five years from the date of supply of power was made available

to them and who had applied or availed power supply on or after

01.10.1991. The notification dated 30.09.1991 on the other hand made

available the rebate on the basis of tariff set out in the Notification dated

27.06.19888 and to Low and High Tension Power consumers who had

applied for supply of power and were given power supply on or after

01.10.1991. The Notification dated 01.08.1996, it is seen, extended the

scope of benefit of rebate as compared to the Notification dated

30.09.1991 which had been rescinded by the Notification dated

31.03.1995. It is on record and we notice from the judgment of the High

Court that the State Government had paid as a result of the Notification

 77
 dated 01.08.1996 a sum or Rs. 8 crores in excess as compared to the

 benefit available under the Notification of 1991 and the total amount of

 rebate would have been more than 30 crores had the benefit as made

 available by the 1996 Notification been continued.

68) Thus from the foregoing, it is clear that a decision to be the decision

 of the Government must satisfy the requirements of the Business Rules

 framed by the State Government under the provisions of Article 166(3)

 of the Constitution of India. In the case on hand, as have been noticed by

 us and the High Court, the decisions leading to the notifications do not

 comply with the requirements of Business Rules framed by the

 Government of Goa under the provisions of Article 166(3) of the

 Constitution and the Notifications are the result of the decision taken

 by the Power Minister at his level. The decision of the individual

 Minister cannot be treated as the decision of the State Government

 and the Notifications issued as a result of the decision of the

 individual Minister which are in violation of the Business Rules are

 void ab initio and all actions consequent thereto are null and void.

69) The appellants contended before this court that another

 Division Bench of the High Court in its earlier judgment of 21.1.1999

 78
 had held that the Notification dated 1.8.1996 was clarificatory and

 that it did not create any extra financial liability on the State

 Government requiring approval of the Cabinet in compliance with

 the Business Rules before it was brought into force. In our opinion

 the said Notification cannot be treated as mere c1arificatory. It is a

 notification issued purportedly in terms of a Government decision. It

 was a decision finalized at the level of the Minister of Power alone

 and was taken in violation of the Rules of Business framed under

 Article 166(3) of the Constitution of India. The decision cannot be

 called a government decision as understood under Article 154 of the

 Constitution, though it may satisfy the requirements of

 authentication. Nevertheless mere authentication as required under

 Article 166(2) of the Constitution did not make it a government decision

 in law nor would it validate a decision which is void ab initio. The

 validity of the notification will have to be tested with reference to the

 constitutional provisions and Business rules and not by their form or

 substance. Therefore, this contention of the appellants is liable to be

 rejected.

70) The learned senior counsel Shri F.S. Nariman submitted that the

 doctrine of indoor management drawn from private law would apply

 79
 analogously in the facts and circumstances of this case. In response to

 this submission, the learned senior counsel Dr. Rajeev Dhavan would

 submit that the concept of private law is not readily applicable in public

 law. It is further submitted that often private law and public law

 concepts are similar in name and text but needs to be differentiated.

 Reference is made to the observations of this Court in Shrisht Dhawan

 (Smt.) Vs. Shaw Bros. (1992) 1 SCC 534, wherein it is observed:

 "20.....But fraud in public law is not the same
 as fraud in private law. Nor can the ingredients
 which establish fraud in commercial transaction
 be of assistance in determining fraud in
 Administrative Law. It has been aptly observed
 by Lord Bridge in Khawaja that it is dangerous
 to introduce maxims of common law as to
 effect of fraud while determining fraud in
 relation to statutory law."

71) The doctrine of indoor management is also known as the Turquand

 rule after the case of Royal British Bank v. Turquand, [1856] 6 E. & B.

 327. In this case, the directors of a company had issued a bond to

 Turquand. They had the power under the articles to issue such bond

 provided they were authorized by a resolution passed by the shareholders

 at a general meeting of the company. But no such resolution was passed

 by the company. It was held that Turquand could recover the amount of

 the bond from the company on the ground that he was entitled to assume

 80
 that the resolution was passed. The doctrine of indoor management is in

 direct contrast to the doctrine or rule of constructive notice, which is

 essentially a presumption operating in favour of the company against the

 outsider. It prevents the outsider from alleging that he did not know that

 the constitution of the company rendered a particular act or a particular

 delegation of authority ultra vires. The doctrine of indoor management is

 an exception to the rule of constructive notice. It imposes an important

 limitation on the doctrine of constructive notice. According to this

 doctrine, persons dealing with the company are entitled to presume that

 internal requirements prescribed in memorandum and articles have been

 properly observed. Therefore doctrine of indoor management protects

 outsiders dealing or contracting with a company, whereas doctrine of

 constructive notice protects the insiders of a company or corporation

 against dealings with the outsiders. However suspicion of irregularity has

 been widely recognized as an exception to the doctrine of indoor

 management. The protection of the doctrine is not available where the

 circumstances surrounding the contract are suspicious and therefore

 invite inquiry.

72) This exception was highlighted in the English case of J.C

 Houghton& Co. v. Nothard, Lowe & Wills Ltd, [1927] 1 KB 246 (CA)

 81
where the case involved an agreement between fruit brokers and fruit

importing company. There was an allegation that the agreement was

entered into by the company's directors without authority. It was held

that the nature of transaction was found to have been such as to put the

plaintiffs on inquiry. To this effect Lord Justice Sargant held:-

 "Cases where the question has been as to the exact
 formalities observed when the seal of a company
 has been affixed, such as Royal British Bank v.
 Turquand, 6 E. & B. 327, or the County of
 Gloucester Blank v. Rudry Merthyr, &c., Co.,
 [1895] 1 Ch 629, are quite distinguishable from the
 present case. In re Fireproof Doors, Ltd., sup.,
 tends rather against than in favour of the plaintiffs,
 since if a single director has as towards third
 parties the authority now contended for, the whole
 of the elaborate investigation of the facts in that
 case was entirely unnecessary. Perhaps the nearest
 approach to the present case is to be found in
 Biggerstaff v. Rowlatt's Wharf, [1896] 2 Ch. 93.
 But there the agent whose authority was relied on
 had been acting to the knowledge of the company
 as a managing director, and the act done was one
 within the ordinary ambit of the powers of a
 managing director in the transaction of the
 company's affairs. It is, I think, clear that the
 transaction there would not have been supported
 had it not been in this ordinary course or had the
 agent been acting merely as one of the ordinary
 directors of the company. I know of no case in
 which an ordinary director, acting without
 authority in fact, has been held capable of binding
 a company by a contract with a third party, merely
 on the ground that that third party assumed that the
 director had been given authority by the Board to
 make the contract. A limitation of the right to

 82
 make such an assumption is expressed in Buckley
 on the Companies Acts, 10th Edition, at p. 175, in
 the following concise words: -- And the principle
 does not apply to the case where an agent of the
 company has done something beyond any
 authority which was given to him, or which he was
 held out as having."

73) This exception to the doctrine of indoor management has been

 subsequently adopted in many Indian cases. They are B. Anand Behari

 Lal v. Dinshaw and Co. (Bankers) Ltd, AIR 1942 Oudh 417 and Abdul

 Rehman Khan & Anr. v. Muffasal Bank Ltd. and Ors, AIR 1926 All 497.

 Applying the exception to the present scenario, there is sufficient doubt

 with regard to the conduct of the Power Minister in issuing the

 Notifications dated 15.5.1996 and 01.08.1996. Therefore there is definite

 suspicion of irregularity which renders the doctrine of indoor

 management inapplicable to the present case.

74) It was also argued by the learned senior counsel for the appellant,

 that the Notification dated 01.08.1996 was rescinded by Notification

 dated 24.07.1998 and, therefore, there was no need for the High Court to

 adjudicate upon the impugned Notification dated 01.08.1996 and, should

 have dismissed the writ petition filed by way of public interest as having

 become infructuous. This issue need not detain us for long in view of

 83
 our answer to the issue of "Doctrine of Merger" canvassed by learned

 senior counsel.

75) Arguments have been advanced before us based on the principles

 of res judicata, Doctrine of Estoppel and the principles underlining the

 provisions of Order II Rule 2 of the Code of Civil Procedure that the

 High Court in earlier batch of writ petitions has gone into and given

 findings with regard to the Notifications dated 30.9.1991; 31.3.1995;

 15.5.1996; 1.8.1996 and 24.7.1998 and the judgment of the High Court

 dated 21.1.1999 rendered therein had merged with the order of the

 Supreme Court dated 13.2.2001 and the Notifications questioned in the

 present round of litigation are Notifications dated 15.5.1996 and

 1.8.1996 and the State at no point of time before any Court having raised

 the issue of these two Notifications being void ab initio for want of

 compliance with the provisions of the Business Rules framed under

 Article 166(3) of the Constitution of India, the High Court ought to have

 rejected the plea of the State Government that the Notifications were

 illegal or were in violation of the Rules of Business and dismissed the

 Writ Petition on the principles of res judicata, Doctrine of Estoppel and

 the principles embodied in Order II Rule 2 of the Code of Civil

 84
Procedure. It was urged that the State not having raised this at any point

of time before any court should not be allowed to do so. We do not find

any merit in these contentions. As noticed by us earlier in the judgment,

the issue regarding the validity or legality of the Notifications dated

15.5.1996 and 1.8.1996 was never raised in the earlier batch of writ

petitions before the High Court and the High Court never had an

opportunity or occasion to look into, consider and pronounce upon the

validity of the same with reference to the Business Rules framed under

Article 166 (3) of the Constitution. These principles pressed into service

by the appellants cannot operate against the State Government merely

because the State did not agitate either before the High Court or this

Court the legality or validity of these notification in the earlier round of

litigation when it had an occasion to do so and the State Government

cannot be deemed to have accepted the legality of the Notification and

waived its objection or challenge thereto. The Doctrine of Estoppel

therefore has no application at all more so, in view of the illegality the

notifications dated 15.05.1996 and 01.08.1996 suffer from in view of

their non-compliance with the provisions of the Business Rules. In our

opinion the fact that the State Government did not raise these objections

in the earlier batch of Writ Ptitions does not disentitle it to such a stand

 85
 or prevents it from raising its objections based on legal provisions. This

 contention of the appellants requires to be turned down for yet another

 reason in that the 1st respondent herein was not a party to the earlier

 batch of Writ Petitions before the High Court or this Court. Therefore the

 principles of res judicata or for that matter even the Doctrine of Estoppel

 will not apply to or operate against him. Further the contention that the

 Notification dated 1.8.1996 did not create any additional financial

 liability on the State Government warranting approval by the Cabinet or

 the compliance of the Business Rules before it was brought into effect

 deserves to be rejected having regard to the figures placed on record

 which the High Court has noticed in its judgment. These figures of

 additional liability likely to be brought on the State by Notification dated

 1.8.1996 falsify the statement of the appellants. Therefore the same

 deserves to be rejected.

76) Before parting with these appeals, we make it clear that the

 observations made by us in the course of our judgment is only for the

 purpose of disposing of these appeals and shall not be treated as an

 expression on the conduct of the then the Power Minister.

 86
77) The Appellants have not been able to show any infirmity or

 illegality in the order of the High Court warranting our interference. In

 the result, civil appeals are dismissed. Parties are directed to bear their

 own costs.

 ....................................J.
 [ R.V. RAVEENDRAN ]

 ....................................J.
 [ H.L. DATTU ]
New Delhi,
May 03, 2010.

 87
 REPORTABLE

 IN THE SUPREME COURT OF INDIA

 CIVIL ORIGINAL JURISDICTION

 WRIT PETITION ) NO.200 OF 2002

Goa Glass Fibre Ltd. ........ Petitioner

 Versus

State of Goa and Anr. ........ Respondents

 WITH

 WRIT PETITION ) NO.199 OF 2002

M.R.F. Ltd. ........ Petitioner

 Versus

State of Goa and Anr. ........ Respondents

 JUDGMENT

H.L. Dattu,J.

 The above writ petitions are filed under Article 32 of the

 Constitution of India, inter alia calling in question the vires and

 88
 Constitutional validity of "The Goa (Prohibition of Further Payment

 and Recovery of Rebate Benefits) Act, 2002 (hereinafter referred to as

 `the Act') enacted by the Legislature of the State of Goa. The

 petitioners seek a declaration from this court that the Act is ultra vires

 of the Constitution of India and in the alternative seek a limited

 declaration that Sections 2,3,5 and 6 of the Act are unconstitutional and

 liable to be struck down.

2) The Act is attacked as unconstitutional mainly on the following

grounds:

 7 That it seeks to nullify a judgment of this Court dated

 13.02.2001 affirming the view taken by High Court of Bombay

 Goa Bench, in its judgment dated 21.01.1999.

 7 That it seeks to give effect to the decision of the High Court of

 Bombay dated 19/24th April 2001, which judgment has the

 effect of over ruling the judgment of this Court dated

 13.02.2001.

 7 That it seeks to give effect to the judgment of High Court of

 Bombay Panaji Bench, dated 19/24th April 2001, when the said

 judgment is the subject matter of appeal before this Court in

 several Special Leave Petitions and thus seeks to frustrate the

 89
 rights of the petitioners herein under Article 136 of the

 Constitution of India.

7 That it seeks to take away the fundamental rights guaranteed to

 the petitioners under Article 14 and 19(1)(g) of the Constitution

 of India.

7 That it is contrary to plethora of judgments of this Court.

7 That as an Explanatory Memorandum and the Statement of

 Objects and Reasons of the Act relies upon the decision of the

 High Court of Bombay Panaji Bench, rendered on 19/24th

 April 2001 which held the Notifications dated 15.5.1996 and

 1.8.1996 were issued without complying with the requirements

 of Article 166 (3) of the Constitution of India, when the very

 judgment is under appeal before this Court and the State

 without getting a Judgment rendered by this Court and

 frustrating adjudication by this Court has passed the Act

 impugned.

7 That the Act does not seek to validate any action which has

 been held to be invalid by any Court of Law, but only seeks to

 nullify the judgment of this Court [under Section 2 of the Act].

 90
7 That the Act under Section 3 gives power to the State to recover

 rebate already given to consumer like petitioners, which grant

 has already been upheld by the High Court by its judgment

 dated 21.1.1999 and affirmed by this Court by its judgment

 dated 13.2.2001.

7 That the Act is unconstitutional because of non-application of

 mind, as Section 5 thereof speaks of consequences of non-

 refund and Section 2 which prohibits further payments.

7 That the Act seeks to nullify a judgment of this Court and to

 give effect to judgment of High Court which has the effect of

 overruling the judgment of this Court, inasmuch as, the law of

 validation as settled by this Court in a catena of decisions

 stipulates that the Legislature is not competent to nullify a

 judgment of a Court of competent jurisdiction except where the

 judgment is rendered by a Court of law on the basis of any

 invalidity or illegality in the Act because of which the Statute or

 Act is declared invalid, in which event the Legislature is

 Competent to enact a validating Act by removing the basis of

 that invalidity or illegality in the earlier Statute. If the

 91
 Legislature chooses to enact a law only for the purpose of

 nullifying a judgment that the same is impermissible.

3) The respondent - State of Goa has joined issues with petitioners

and has filed a detailed Counter-Affidavit, inter alia, in support of the

constitutionality of the impugned Act.

4) The State in its Counter-Affidavit after setting out the factual

background leading to the issue of the Notifications dated 15.05.1996 and

01.08.1996 and the filing of Writ Petition No. 316 of 1998 and the

judgment of the High Court of Bombay Panaji Bench therein, has

contended, that, the State deemed it expedient not only to prohibit any

further payment under the said Notification, but also deemed it expedient

to recover the benefits already availed of by certain consumers including

the petitioners in terms of the earlier Notifications, having regard to the

fact that the action in issuing the notifications was unauthorized and

wholly illegal and that the parties could not be allowed to reap the

benefits of an illegal act. It is stated by the respondent State, that, with

this intent and object, the State Assembly passed the Bill known as Goa

(Prohibition of Further Payments and Recovery of Rebate Benefits) Bill

2002, which was introduced in the House on 16.01.2002.

 92
5) With reference to the principal contention of the petitioners that the

Act impugned is unconstitutional and it seeks to nullify the judgment of

this Court in G.R. Ispat's case, the State contends that the Act impugned

is constitutionally valid and has been passed by the Legislature keeping

in view the objects behind the Bill; that even assuming but not admitting

in any manner that the impugned Act nullifies the judgment of this Court,

the Legislature under the Constitution of India has the power to enact a

law which may result in nullifying the Judgment or Order passed by the

Courts, if the public interest and public welfare demands the Legislature

to exercise its legislative power within the constitutional parameters as

held by this Court in various pronouncements on the issue.

6) It is further stated that what is sought to be achieved by the

impugned Act is to declare that the two notifications dated 15.05.1996

and 01.08.1996 as illegal, unauthorized, and to prohibit any further

payments thereunder, in order to save public exchequer from getting

denuded of its coffers. It is further stated, that, the decision of the State

Government to issue Notifications mentioned above was not authorized

by law in as much as the Council of Ministers had rescinded the

Notification and despite this, the Power Minister himself had issued a

Notification at his own level without making a reference to either the

 93
Chief Minster or the Council of Ministers or consulting the Finance

Department as mandatorily required under the Rules of Business. The

decision of the then Minister for Power to issue the Notifications was

wholly unauthorized as he had no authority in law to issue them at his

level and as the subject matter was required to be placed before the

Cabinet in view of the huge financial implication involved therein and in

view of the fact that the Cabinet had earlier rescinded the Notification

giving rebate and any modification or variation of such decision of the

Council of Ministers, it had to place it before the Council of Ministers in

view of the Business Rules framed under Article 166 (3) of the

Constitution of India. The two notifications had imposed a heavy burden

on the State Exchequer and under the Rules Of Business, concurrence of

Finance Department of the State Government was mandatory and there

was neither concurrence of the said Department nor was there any

reference of the said Notifications to the said Department. The then

Power Minister had made a note on the file concerned that he had

consulted the Chief Minister which was found to be false as per the

police investigation conducted and that the then Chief Minister had

clearly stated that neither he was ever consulted by the Power Minister

nor was the file ever shown to him and that this fact was taken note of by

 94
the High Court of Bombay Panaji Bench in its Judgment dated

19/24.04.2001 in Writ Petition No. 316 of 1998, which is appealed

against and pending in SLP (Civil) No. 4233 of 2001 before this Court.

7) The State also contends, that, the impugned Act is not aimed at

giving effect to the Order of the High Court of Bombay dated

19/24.04.2001 in W.P No.316 of 1998 nor is it passed because the

abovementioned Special Leave Petition is pending before this Court, but

has been passed and aimed to save the coffers of the State and to prevent

further abuse and payment out of the State Funds which the State can ill

afford. The State had lost almost an amount of about Rs.16 Crores and a

further sum of Rs.50 Crores of public money might have to be paid and

there was neither any budgetary allocation nor any provision made for

such payments and therefore instead of the monies coming into the State

Exchequer by way of receipts by Government in accordance with Article

266 (1) of the Constitution of India, these payments were sought to be

diverted to the private industrialists by virtue of the two notifications

mentioned above and with a view to put an end to this illegality the

impugned Act has been enacted in the larger public interest to safe the

Public Exchequer from being drained off.

 95
8) The State also contends, that, this Court and the High Court in the

earlier round of litigation have dealt with and interpreted the rights of the

Consumer to be paid the rebate on electricity tariff in view of the two

notification being in force and not their validity and that such benefits

could not be withdrawn by a mere administrative circular. In fact what

was challenged in those writ petitions was the administrative order of the

Chief Electrical Engineer dated 31.03.1998 and that the High Court held

in those writ petitions that the two notifications could not be withdrawn

by a mere administrative Order and it was on that basis, the High Court

had sustained those two notifications. Now what is sought to be done by

the present legislation, it is contended by the State, to cure the defect of

any kind and thereby to ensure that public funds are not drained by

resorting to dubious methods and it is in larger public interest that this

Act is enacted.

9) It is reiterated by the State, that, the State of Goa is facing financial

crunch and it is not possible for the State Government to bear such

financial burden and therefore it is imperative that the amounts paid are

recovered and further loss of public funds avoided and its payment

prohibited and that it is on this ground that the legislation impugned has

been enacted.

 96
10) The State reiterates that there is nothing illegal about the impugned

legislation and that the same has been passed in the larger public interest

and with a view to sub serve the pubic cause and to prevent abuse of

public exchequer and to remedy the fraud played by an individual

Minister on the public exchequer. It is further urged by the State

Government that the balance of interest is in favour of the State as the

petitioners on their own showing have become the beneficiaries of an

illegal act of an individual Minister which cannot be allowed.

11) The State further asserts in response to the challenge made by the

petitioners to the validity of the Act, that, it is a well settled law that the

legislature can render the judicial decision ineffective by enacting a valid

law on the subject within its legislative field by removing the base on

which the decision was rendered and that the impugned Act squarely

meets and satisfies the Constitutional Test and parameters laid down by

this Court in various judgments and as illustration have referred to the

Judgments of this Court in the case of S.S Bola Vs. B.D. Saldhana

reported in AIR 1997 Supreme Court 3127 and Indian Aluminium &

Others Vs. State Of Kerala reported in 1996(1) SCC 637. It is reiterated

by the State, that, the State Legislature is competent to enact the Act

 97
impugned under Entry 38 of List III to the VIIth Schedule of the

Constitution of India.

12) The petitioner has filed a rejoinder which reiterates more or less

what is stated in the Writ Petition. In short, in the rejoinder the petitioner

seeks to counter the reason and other grounds offered by the State

Government in support of the Legislation impugned. It also disputes the

correctness of certain statements made by the State Government in its

affidavit in reply to the Writ Petition.

13) We have heard learned senior counsel Shri F.S. Nariman for the

petitioners and Dr. Rajeev Dhavan and Shri Shyam Diwan, learned senior

counsel for State of Goa. We also had the advantage of going through

several rulings of this court cited by the learned counsels.

14) The Act impugned is attacked principally on the ground, that, it

seeks to nullify a judgment of this Court dated 13.02.2001, affirming the

view taken by High Court of Bombay Panaji Bench, in its judgment dated

21.01.1999 and that it seeks to give effect to the decision of the High

Court of Bombay dated 19/24th April 2001, which judgment has the effect

of over ruling the judgment of this Court dated 13.02.2001, more so when

the said judgment is the subject matter of appeal before this Court in

 98
several Special Leave Petitions and thus seeks to frustrate the rights of

the petitioners herein under Article 136 of the Constitution of India.

15) It is well settled that a Statute can be invalidated or held

unconstitutional on limited grounds viz., on the ground of the

incompetence of the Legislature which enacts it and on the ground that it

breaches or violates any of the fundamental rights or other Constitutional

Rights and on no other grounds. (See State of A.P. vs. McDowell and

Co., [(1996) 3 SCC 709], Kuldip Nayar vs. Union of India and Ors.,

[(2006) 7 SCC 1].

16) The scheme of the Act appears to be simple. The Act imposes a

Prohibition [under Section 2], requires recovery [under Section 3] and

"extinguishes" all liabilities of the State that accrue or arise from the

Notifications dated 15.05.1996 and 01.08.1996.

17) From the language of the Act it becomes clear that the Act is not

influenced by the out come of the Judgment of the High Court in

Manohar Parrikar's case. By the enactment, the Legislature has imposed

prohibition of further payments under the Notifications, provides for

recovery of rebate benefits from the beneficiaries and extinguishes the

State's Liability under the Notifications mentioned supra. This exercise

by the Legislature is independent of and de hors the results of the PIL of

 99
Manohar Parrikar and can be said to be uninfluenced by the said

judgment. It was well within the Legislative power of the State to

respond to the undisputed and disturbing facts which had enormous

financial implication on the State's Finances to enact the Law with an

object of remedying the unsatisfactory state of affairs which were known

to the Legislature.

18) That the object of the Act is not to undo or reverse the judgments

of either this Court or that of the High Court. On a reading of the Act as a

whole, it does not appear that the Legislature seeks to undo any judgment

or any directions contained therein. As observed earlier the Act imposes

a Prohibition [under Section 2], requires recovery [under Section 3] and

"extinguishes" all liabilities of the State that accrue or arise from the

Notifications dated 15.05.1996 and 01.08.1996. Therefore, no exception

can be taken to the constitutionality of the Act impugned, on the ground,

that it seeks to undo or reverse any judgment. The Legislature in its

competence has enacted the Act to achieve the purposes indicated therein

and not to frustrate any judgment of any court including that of this

Court. It is to be noted that State Legislature was competent to enact the

Act in its present form even before the judgment of the High Court in the

PIL and the fact that it has come after the judgment in PIL does not

 10
render it unconstitutional on the ground that it seeks to nullify the

judgment of this Court in the earlier proceedings.

19) The State, in the factual background leading to the issue of the

Notifications dated 15.5.1996 and 01.08.1996 and the filing of Writ

Petition No. 316 of 1998 and the judgment of the High Court of Bombay

Panaji Bench therein, thought it fit and expedient to prohibit any further

payment under the said Notifications and to recover the benefits already

availed of by certain consumers including the petitioners towards the

rebate in terms of these two notifications and having regard to the fact

that the action in issuing the notifications was unauthorized and wholly

illegal and that the parties could not be allowed to reap the benefits of an

illegal act enacted the Act impugned. Thus the intent and object of the

State Legislature in enacting the Act impugned is clear and unassailable.

Therefore, the contention of the petitioners that the Act impugned is

unconstitutional and it seeks to nullify the judgment of this Court

requires to be rejected.

20) The impugned Act is not aimed at giving effect to the Order of the

High Court of Bombay dated 19/24.04.2001 in W.P No.316 of 1998 nor

is it passed because the abovementioned Special Leave Petition is

pending before this Court, but has been passed with an object or aim to

 10
sustain the State Coffers and to prevent further abuse and payment out of

the State Funds. It has been enacted in the larger public interest to save

the Public Exchequer from being drained off. These amounts always

belonged to the State and, therefore, it has every right to recover the

same, by resorting to legislative measures within the parameters of the

Constitutional provision from the beneficiaries who cannot be permitted

to retain the benefits.

21) The impugned Act is not aimed at giving effect to the order of the

High Court of Bombay dated 19/24.04.2001 in W.P No.316 of 1998 as

has been argued by the learned senior counsel for the petitioner. It is not

passed because the abovementioned Special Leave Petition is pending

before this Court. It has been passed with an aim to sustain the State

Coffers and to prevent further abuse and payment out of the State's

Exchequer. It is placed on record by the State Government, that, the

coffers of the State had already lost an amount of almost 16 Crores which

the State could not afford and a further sum of Rs. 50 Crores of public

money would have been lost, had it not been checked and prevented by

the Act impugned. In this regard it is necessary take notice of the

reiteration of the State in its affidavit that the earlier affidavits filed for

and on behalf of the State Government before the High Court in the

 10
earlier round of litigations did not reflect correct and true factual position,

It is stated by the State Government that there was neither financial

sanction nor budgetary provision nor cabinet approval as required under

Article 166(3) of the Constitution of India and therefore the two

notifications dated 15.05.1996 and 01.08.1996 in issue could not be said

to be the decision of the State Government in the strict sense of law and

the claims for rebate under these Notifications which run into several

Crores of Rupees could not be borne by the exchequer, more so when

they are devoid of any legal sanctity and that it was impossible for the

State to meet or bear such an enormous liability of such a magnitude. The

respondent State in its affidavit draws support from certain observations

from the Judgment of the High Court of Bombay dated 19/24.04.2001, to

say that the Notifications mentioned above were non-est and action taken

thereunder was null and void. It is the stand of the State, that, the High

Court in W.P. No. 316 of 1998 has also dealt with the issue as to why the

State had failed to bring before the High Court in the earlier batch of Writ

Petition decided on 21.01.1999, wherein the High Court upheld the

power of the State Government to withdraw the rebate by invoking

provisions of Section 21 of the General Clauses Act. According to the

State, the High Court in the earlier round of litigation gave a decision as

 10
regards the financial crunch faced by the Court and that the affidavits

filed for and on behalf of the State Government therein by the then Chief

Electrical Engineer of Goa Mr. T. Nagarajan, who as disclosed from the

police investigations was himself a supporter of the illegal act of abuse of

power and he could not be expected to place all facts before the High

Court. The State further contends that the High Court in its judgment in

W.P No. 316 of 1998, has noted that even the attempts to have the

Notifications ratified by the cabinet failed and there being legal dissent,

the Cabinet refused to ratify the decision and withdrew the same.

Therefore, it cannot be said that the State had enacted the Act impugned

to give effect to the judgment of the High Court in Writ Petition No. 316

of 1998.

22) It is also placed on record that there was neither any budgetary

allocation nor any provision made for such payments and these payments

were sought to be diverted to the private industrialists by virtue of the

two notifications mentioned above and with a view to put an end to this

illegality, the impugned Act has been enacted in the larger public interest

to save the Public Exchequer from being drained off. These amounts

always belonged to the State Government and the State had every right to

recover the same, by resorting to legislative measures from the

 10
beneficiaries of an illegal Act, who cannot be allowed to retain the

benefits. In the earlier round of litigation before the High Court, the State

had taken the stand that there was financial crunch being faced by the

State Government and that it was the primary reason for the State

Government to withdraw the rebate. This Court and the High Court in the

earlier round of litigation merely dealt with and interpreted the rights of

the Consumer to recover and be paid the rebate on electricity tariff in

view of the two notifications being in force. This Court and the High

Court in those proceedings did not deal with or decide their validity. The

question there was, whether the benefits granted by the Notifications

could be withdrawn by a mere administrative circular of the Chief

Electrical Engineer dated 31.03.1998 and the High Court held in those

writ petitions that the two notifications could not be withdrawn by a mere

administrative Order and on that premise the High Court had directed the

State to pay the amounts and this Court confirmed the same in its Order.

What the Legislature seeks to do by the Act impugned is to cure the

defect of any kind and thereby to ensure that public funds are not drained

and it is in larger public interest that this Act is enacted. The Act which

has been passed in the larger public interest and with a view to sub serve

the public cause and to prevent abuse of public exchequer and to remedy

 10
the fraud played by an individual on the public exchequer and to recover

the amounts paid under these two Notifications and to prevent further

loss of pubic funds cannot be termed as unconstitutional. It cannot

therefore be said that the Act impugned is aimed at nullifying a judgment

of this Court dated 13.02.2001, affirming the view taken by High Court

of Bombay Panaji Bench, in its judgment dated 21.01.1999. It can not

also be said that the Act impugned seeks to give effect to the decision of

the High Court of Bombay dated 19/24th April 2001, in Writ Petition No

316 of 1998.

23) The Act stands totally on a different footing and the judgment of

the High Court dated 19/24.04.2001 has no bearing on it. The Act stands

independent of the judgment of the High Court and its validity cannot be

tested on these grounds. The petitioners have strongly relied upon the

different stands allegedly taken by the State in the earlier proceedings

and the present proceedings in support of their challenge to the

constitutionality of the Act. This Court in Sanjeev Coke Manufacturing

Company Vs. MIs. Bharat Coking Cool Ltd & Anr, [(1983) 1 SCC 147

(172)], has held that the validity of the Legislation is not to be judged by

what is stated in an affidavit filed on behalf of the State and that it should

fall or stand on the strength of its provisions.

 10
24) It is no doubt true that the Judgment dated 19/24.04.2001 is in

appeal before this Court in a batch of Special Leave Petitions and the

validity of the impugned Act does not depend upon the result of the said

Special Leave Petitions. In our opinion, the Act must stand or fall on its

own strength. It cannot also be said that the Act seeks to give effect to the

judgment dated 19/24.04.2001 of the High Court having regard what the

State aims at or seeks to achieve by it. It is a well settled law that the

legislature can render the judicial decision ineffective by enacting a valid

law on the subject within its legislative field by removing the base on

which the decision was rendered. The impugned Act meets and satisfies

the Constitutional Test completely. The Act also satisfies parameters laid

down by this Court in various judgments. Further the competence of the

State Legislature to enact the Act impugned is traceable to Entry No. 38

in List III to the VII Schedule of the Constitution of India. The petitioners

have not challenged the competence of the State Legislature to enact the

Act impugned. Therefore, the challenge made by the petitioners to the

constitutionality of the Act on this ground must fall.

25) The next contention urged by the petitioners is that, the Act does

not seek to validate any action which has been held to be invalid by any

Court of Law, but only seeks to nullify the judgment of this Court. This

 10
contention should also fail for the reasons already explained in the

preceding paragraphs.

26) The next contention of the petitioners is that the impugned Act is

unconstitutional, because it seeks to take away the fundamental rights

guaranteed to the petitioners under Article 14 and 19(1)(g) of the

Constitution of India. While the argument based on Article 19(1)(g) of

the Constitution of India was not urged seriously by the petitioners and

rightly so, as no citizen is before this Court with a complaint that his

fundamental rights guaranteed under this Article of the Constitution is

violated by the State under the Act impugned. As regards the challenge to

the validity of the Act on the allegations of violation of Article 14 of the

Constitution of India, the petitioners have laid no basis thereof. There is

nothing in the Act which suggests invidious discrimination, unreasonable

classification or manifest violation of equality clause. In the absence of

any valid ground under Article 14 of the Constitution of India, the Writ

Petition under Article 32 itself is not maintainable and liable to be

dismissed.

27) In view of the above discussion, we are of the opinion that the Act

impugned does not suffer from any invalidity and the challenge made

 10
by the petitioners to its constitutionality fails. Accordingly, the Writ

Petitions are dismissed without any order as to costs.

 ....................................J.
 [ R.V. RAVEENDRAN ]

 ....................................J.
 [ H.L. DATTU ]
New Delhi,
May 03, 2010.

 10

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