GOA GLASS FIBRE LTD. & ANR. v.

STATE OF GOA AND ANR. (Writ Petition (c) No. 200 OF 2002 Etc.)

MAY 3, 2010 [R.V. RAVEENDRAN and H.L. DATTU, JJ.]

2010(5) SCR 970

The Judgment of the Court was delivered by

H.L. DATTU, J.  1. The above writ petitions are filed under Article 32 of the  

Constitution  of  India,  inter  alia  calling  in  question  the  vires  and  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:

. 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.

. 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.

. 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  rights  of  the  petitioners  herein  

under Article 136 of the Constitution of India.

. 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.

. That it is contrary to plethora of judgments of this Court.

. 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.  

. 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].

. 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.  

. 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.  

. 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 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.  

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  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 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.  

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.  

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 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 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  

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 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 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 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 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 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 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.

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 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 by the petitioners to its  

constitutionality fails. Accordingly, the Writ Petitions are dismissed without any  

order as to costs.