PUNJAB STATE POWER CORPORATION LIMITED AND ANOTHERversusEMTA COAL LIMITED

772                      [2021]REPORTS
               SUPREME COURT   11 S.C.R. 772                 [2021] 11 S.C.R.


A        PUNJAB STATE POWER CORPORATION LIMITED AND
                          ANOTHER
                                          v.
                             EMTA COAL LIMITED

B                     (Civil Appeal Nos. 5823-5824 of 2021)
                              SEPTEMBER 21, 2021
                 [L. NAGESWARA RAO, B. R. GAVAI AND
                        B. V. NAGARATHNA, JJ.]
              Coal Mines (Special Provisions) Act, 2015 – s.11 – In Manohar
C     Lal Sharma v. Principal Secretary and Others reported as [2014] 8
      SCR 446, Supreme Court held that the allotment of Coal Blocks
      between 1993 and 2011 was arbitrary and illegal – All such Coal
      Block allocations were quashed – Respondent-prior contractor if
      had the first right of refusal in the matter of lending of Mining
D     Lease, as held by High Court – On appeal, held: s.11 provides that
      a successful bidder or allottee, as the case may be, in respect of
      Schedule I coal mines, may elect, to adopt and continue such
      contracts which may be existing with any of the prior allottees in
      relation to coal mining operations – In the event the successful bidder
E
      or allottee elects not to adopt or continue with the existing contracts,
      all such contracts shall cease to be enforceable against the successful
      bidder or allottee in relation to Schedule I coal mine and the only
      remedy of such contracting parties shall be against the prior allottees
F     – If it is held that u/s.11, a prior contractor is entitled to continue if
      his performance is found to be satisfactory and if there is nothing
      against him, then it will be providing something in s.11 which the
      Statute has not provided for – High Court erred in observing that
      respondent had a legitimate expectation – Merely because the Coal
G     Mine Block was again allotted to the appellant, the same could not
      give any vested right in favour of respondent – High Court erred in
      forcing the appellant to continue the contract with respondent,
      though it was not willing to do so – Decision of the appellant dtd.
      06.04.18 was taken in accordance with s.11 and after following
H     the principle of natural justice – Impugned judgment set aside –
                                         772
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                    773


Interpretation of Statutes – Literal Interpretation – Doctrine of        A
Legitimate Expectation – Principle of Natural Justice – Judicial
review.
       Interpretation of Statutes – Literal Interpretation – Plain and
literal meaning – Held: When upon a plain and literal interpretation
of the words used in a Statute, the legislative intent could be          B
gathered, it is not permissible to add words to the Statute – Coal
Mines (Special Provisions) Act, 2015 – s.11.
      Administrative Law:
      Exercise of power of judicial review – Scope of – Discussed.       C
      Judicial review – Wednesbury Principle – Held: While
applying the Wednesbury principle, the Court will examine as to
whether the decision of an authority is such that no authority
properly directing itself on the relevant law and acting reasonably
could have reached it.                                                   D
      Words and Phrases – “may elect” in s.11, 2015 Act – Meaning
of – Discussed – Coal Mines (Special Provisions) Act, 2015 – s.11.
      Allowing the appeals, this Court
       HELD: 1.1 The Coal Mines (Special Provisions) Act, 2015
came to be enacted in pursuance of the decision of this Court in         E
the case of Manohar Lal Sharma-I, wherein this Court held that
the allotment of Coal Blocks between 1993 and 2011 was arbitrary,
illegal and violative of Article 14 of the Constitution. A plain
reading of Section 11 of the said Act would reveal that it begins
with a non-obstante clause. It provides that a successful bidder         F
or allottee, as the case may be, in respect of Schedule I coal
mines, may elect, to adopt and continue such contracts which
may be existing with any of the prior allottees in relation to coal
mining operations and the same shall constitute a novation for
the residual term or residual performance of such contract. The
words “may elect” would clearly show that the legislature has            G
given complete discretion to a successful bidder or allottee to
elect. The words “may elect” would also mean a discretion not
to elect. Only in the event, a successful bidder or allottee decides
to adopt and continue such contract, which may be existing with
                                                                         H
774            SUPREME COURT REPORTS                      [2021] 11 S.C.R.


A     any of the prior allottees in relation to coal mining operations,
      the same shall constitute a novation for residual term or residual
      performance of such contract. In the event, the successful allottee
      does not elect to adopt or continue such contract, there is no
      question of novation for residual term or residual performance of
      such contract. Perusal of sub- section (2) of Section 11 of the said
B
      Act would also make it clear that, it provides that in the event a
      successful bidder or allottee elects not to adopt or continue with
      the existing contract which had been entered into by the prior
      allottees with third parties, all such contracts which have not been
      adopted or continued shall cease to be enforceable against the
C     successful bidder or allottee in relation to Schedule I coal mines
      and the remedy of such contracting parties shall be against the
      prior allottees. It could thus be seen that on a plain reading of
      sub-sections (1) and (2) of Section 11 of the said Act, it is clear
      that the successful allottee or bidder has complete freedom to
      decide as to whether he desires to continue or adopt any such
D
      existing contracts in relation to coal mining operation. Only in
      the event he elects to adopt or continue with existing contracts,
      it shall constitute novation for residual term or residual
      performance of such contracts. In the event the successful bidder
      or allottee elects not to adopt or continue with the existing
E     contracts, all such contracts shall cease to be enforceable against
      the successful bidder or allottee in relation to Schedule I coal
      mines. The only remedy of such contracting parties shall be
      against the prior allottees. [Paras 20, 21][784-E-H; 785-A-E]
            Manohar Lal Sharma v. Principal Secretary and Others
F           (2014) 9 SCC 516 : [2014] 8 SCR 446; Manohar Lal
            Sharma v. Principal Secretary and Others (2014) 9 SCC
            614 : [2014] 12 SCR 110 – referred to.
             1.2 If the words used in Section 11 of the said Act are
      construed in plain and literal term, they do not lead to an absurdity
G     and as such, the rule of plain and literal interpretation will have
      to be followed. If it is held that under Section 11 of the said Act, a
      prior contractor is entitled to continue if his performance is found
      to be satisfactory and if there is nothing against him, then it will
      be providing something in Section 11 of the said Act which the
      Statute has not provided for. It will also lead to making the words
H
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                 775


“may elect, to adopt and continue” redundant and otiose. When,        A
upon a plain and literal interpretation of the words used in a
Statute, the legislative intent could be gathered, it is not
permissible to add words to the Statute. Equally, such an
interpretation which would make some terms used in a Statute
otiose or meaningless, has to be avoided. [Para 22][785-G-H;
                                                                      B
786-A, B-C]
      Jugalkishore Saraf v. Raw Cotton Company Limited
      [1955] 1 SCR 1369; Ajit Mohan and Others v.
      Legislative Assembly National Capital Territory of Delhi
      and Others 2021 SCC OnLine SC 456 – relied on.
                                                                      C
      1.3 When considering Section 62 of the Contract Act, 1872
read with Section 11 of the said Act, High Court has observed
that the parties to a contract may willingly agree to substitute a
new contract or to rescind it or alter it. Having observed this,
the High Court has, however, erred in observing that EMTA had
a legitimate expectation. The reasoning adopted by the High           D
Court is totally wrong. Merely because the Coal Mine Block
was allotted to PSPCL, the same could not give any vested right
in favour of EMTA, particularly in view of the language used in
Section 11 of the said Act. Having observed in earlier para that in
view of Section 11 of the said Act read with Section 62 of the        E
Contract Act, 1872, the parties to a contract may willingly agree
to substitute a new contract or to rescind it or alter it, the High
Court has erred in forcing PSPCL to continue with the contract
with EMTA, though it was not willing to do so. [Paras 23-25]
[786-F-G; 787-B, C-D]
                                                                      F
      Kerala State Beverages (M and M) Corporation Limited
      v. P.P. Suresh and Others (2019) 9 SCC 710 : [2019]
      17 SCR 164 – relied on.
       1.4 There can be no doubt that between Section 11 of the
said Act and Clause 12.4.1 of the Allotment Agreement, Section        G
11 of the said Act would prevail. The question is, whether, Section
11 of the said Act mandates the successful allottee to continue
with the existing contract. The answer is no. In any case, the
claim of EMTA is not rejected by PSPCL solely on the ground of
Clause 12.4.1 of the Allotment Agreement. [Para 28][788-B-C]
                                                                      H
776            SUPREME COURT REPORTS                     [2021] 11 S.C.R.


A            1.5 The order passed by PSPCL dated 6th April 2018, is an
      order passed by an authority of the State in exercise of its
      executive functions. While exercising powers of judicial review,
      the Court is not concerned with the ultimate decision but the
      decision-making process. The limited areas in which the court
      can enquire are as to whether a decision making authority has
B
      exceeded its powers, committed an error of law or committed
      breach of principle of natural justice. It can examine as to whether
      an authority has reached a decision which no reasonable Tribunal
      would have reached or has abused its powers. It is not for the
      court to determine whether a particular policy or a particular
C     decision taken in the fulfilment of that policy is fair. The court
      will examine as to whether the decision of an authority is vitiated
      by illegality, irrationality or procedural impropriety. While
      examining the question of irrationality, the court will be guided
      by the principle of Wednesbury. While applying the Wednesbury
      principle, the court will examine as to whether the decision of an
D
      authority is such that no authority properly directing itself on
      the relevant law and acting reasonably could have reached it.
      [Paras 30, 31][788-D-E; 795-F-H; 796-A-B]
            Tata Cellular v. Union of India (1994) 6 SCC 651 :
            [1994] 2 Suppl. SCR 122 Rashmi Metaliks Limited and
E           Another v. Kolkata Metropolitan Development Authority
            and Others (2013) 10 SCC 95 : [2013] 17 SCR 345 –
            relied on.
             1.6 Applying the aforesaid principle, it can clearly be seen
      that the decision of PSPCL dated 6th April 2018, cannot be
F     questioned on the ground of illegality or procedural impropriety.
      The decision is taken in accordance with Section 11 of the said
      Act and after following the principle of Natural Justice. The limited
      area that would be available for attack is as to whether the decision
      is hit by the Wednesbury principle. Can it be said that the decision
G     taken by the authority is such that no reasonable person would
      have taken it? No doubt, that the authority has also relied on
      Clause 12.4.1 of the Allotment Agreement, however, that is not
      the only ground on which the representation of EMTA is rejected.
      No doubt, that while considering EMTA’s representation, PSPCL

H
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                    777


has referred to Clause 12.4.1 of the Allotment Agreement which           A
requires the coal mines to be developed through contractors who
were selected through a competitive bidding process, however,
that is not the only ground on which the representation of EMTA
is rejected. PSPCL decided to go in for competitive bidding
process for the purpose of eliciting the best operator. It has further
                                                                         B
noticed that the composition with respect to capital/revenue
investment is altogether different. Hence, the bidding parameters
have entirely changed. A policy decision to get the best operator
at the best price, cannot be said to be a decision which no
reasonable person would take in his affairs. In that view of the
matter, the attack on the order/letter dated 6th April 2018, is          C
without merit. The impugned judgment and order passed by the
High Court is quashed and set aside. [Paras 32, 33 and 35]
[796-B-D, F-H; 797-B]
      KPCL v. EMTA Coal Limited and Others ILR 2016 Kar
      4301; EMTA Coal Limited and Another v. West Bengal                 D
      Power Development Corporation (2016) 2 Cal LJ 424
      – referred to.
                       Case Law Reference
[2014] 8 SCR 446               referred to              Para 2
                                                                         E
[2014] 12 SCR 110              referred to              Para 6
[2019] 17 SCR 164              relied on                Para 11
[1955] 1 SCR 1369              relied on                Para 22
[1994] 2 Suppl. SCR 122        relied on                Para 30
                                                                         F
[2013] 17 SCR 345              relied on                Para 30
      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.5823-
5824 of 2021.
      From the Judgment and Order dated 25.01.2019 of the High Court
of Punjab and Haryana at Chandigarh in CWP No.10055 of 2018 and          G
CWP No.16245 of 2018 (O&M).
       Sanjay Jain, Ms. Aishwarya Bhati, ASGs, Salman Khurshid, K.
V. Vishvanathan, Abhishek Manu Singhvi, Dhruv Mehta, Mukul Rohatgi,
Sr. Advs., Atul Nanda, Karan Bharihoke, Venkataraman R., Siddhant
                                                                         H
778                SUPREME COURT REPORTS                      [2021] 11 S.C.R.


A     Sharma, Ms. Sakshi Kotiyal, Zafar Khurshid, Asif Rashida, Ms. Vanshaja
      Shukla, Ms. Gunjan Chowksey, Shantanu Shrivastava, Abhishek Singh,
      Abhimanyu Bhandari, Sangram S. Saron, Ms. Roohe Hina Dua, Ejaz
      Maqbool, Ms. Akriti Chaubey, Ms. Neha Sahai Bharihoke, Gurmeet Singh
      Makkar, Ms. Ruchi Kohli, Ms. Archana Pathak Dave, Mohd. Akhil,
      Advs. for the Appearing parties.
B
               The Judgment of the Court was delivered by
               B. R. GAVAI, J.
               1. Leave granted.

C            2. A short question relating to interpretation of Section 11 of the
      Coal Mines (Special Provisions) Act, 2015 (hereinafter referred to as
      the “said Act”) which is an outcome of the judgment of this Court in the
      case of Manohar Lal Sharma v. Principal Secretary and Others1
      (hereinafter referred to as “Manohar Lal Sharma-I”) and an ancillary
      question pertaining to scope of judicial review of an administrative action
D     of the State Authority arise for consideration in these appeals.
            3. These appeals challenge the judgment and order passed by the
      Division Bench of the High Court of Punjab and Haryana dated 25th
      January 2019, thereby allowing the civil writ petitions being CWP Nos.
      10055 and 16245 of 2018, filed by the respondent herein-EMTA Coal
E     Limited (hereinafter referred to as “EMTA”) and holding that the
      respondent herein will have the first right of refusal in the matter of
      lending of Mining Lease.
            4. The facts in the present case are not in dispute, which are
      taken from appeals arising out of SLP(C) Nos. 9924-25 of 2019.
F
             5. The Punjab State Electricity Board (hereinafter referred to as
      the “PSEB”) which is now known as Punjab State Power Corporation
      Limited (hereinafter referred to as the “PSPCL”), was proposed to be
      allotted Captive Coal Mines by the Union of India. On 16th February
      1999, PSEB issued a tender, thereby inviting bids for the purpose of
G     development of Captive Coal Mines. In the said bid, opened on 9th
      February 2000, the respondent-EMTA emerged successful. Accordingly,
      an agreement was entered into between PSEB and EMTA on 5 th May
      2000, thereby creating a Joint Venture Company called Panem Coal
      Mines Limited (hereinafter referred to as “Panem”). The said agreement
      1
H         (2014) 9 SCC 516
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                          779
                   [B. R. GAVAI, J. ]

provided the rights for mining of coal from the Coal Mines, transporting       A
and delivery of it, wholly and exclusively to PSEB. Since EMTA being a
partnership firm could not have been a shareholder of the Joint Venture
Company, a follow up Joint Venture Agreement was entered into on 21st
March 2001 between PSEB, EMTA and the three partners of EMTA,
incorporating the same terms and conditions as were found in the earlier
                                                                               B
agreement dated 5th May 2000. The same was intimated to the Union of
India by PSEB. Thereafter on 26th December 2001, Union of India allotted
a Captive Coal Block being Pachhwara (Central Block) Coal Mine
(hereinafter referred to as “Pachhwara Coal Block”) in the State of
Jharkhand to PSEB. On 22nd February 2002, Union of India notified the
supply of coal from the Pachhwara Coal Block by the Joint Venture              C
Company (Panem) to the power stations of PSEB on an exclusive basis
as an end use under Section 3(3)(a)(iii) of the Coal Mines (Nationalization)
Act, 1973, in the official gazette. On 25th November 2004, a Mining
Lease was executed between the Government of Jharkhand and Panem
for mining coal from the non-forest areas of Pachhwara Coal Block.             D
Subsequently on 30th August 2006, a Coal Purchase Agreement was
executed between Panem and PSEB, for the purpose of supply and
delivery of the coal from Pachhwara Coal Block to the power stations
of PSEB. On 6 th January 2007, Mining Lease was issued by the
Government of Jharkhand in favour of Panem, for mining coal even
from the forest areas of the Coal Block.                                       E
       6. Till 2014, there was no problem. However, on 25th August 2014,
this Court in the case of Manohar Lal Sharma-I, held that the entire
allocation of Coal Blocks made between 1993 and 2011, except those
which were made through competitive bidding, were invalid, unfair,
arbitrary and violative of Article 14 of the Constitution of India. On 24th    F
September 2014, vide further orders passed in the case of Manohar
Lal Sharma v. Principal Secretary and Others2, this Court quashed
all Coal Block allocations made by the Central Government between
1993 and 2011. This Court also accepted the submission of the learned
Attorney General that the allottees of the Coal Blocks other than those        G
covered by the judgment and the four Coal Blocks covered by the
subsequent order, must pay an amount of Rs.295/- per metric ton of coal
extracted as an additional levy. In pursuance of the judgment of this
Court in the case of Manohar Lal Sharma-I, the Coal Mines (Special
2
    (2014) 9 SCC 614                                                           H
780            SUPREME COURT REPORTS                         [2021] 11 S.C.R.


A     Provisions) Ordinance, 2014 (“First Ordinance”) came to be promulgated
      on 21st October 2014. The Second Ordinance came to be promulgated
      on 26th December 2014. Vide further orders passed by this Court in
      February 2015 in contempt proceedings in the case of Manohar Lal
      Sharma-I, an additional levy at the rate of Rs.295/- per metric ton was
      directed to be paid by the prior allottees. Subsequently on 30th March
B
      2015, the said Act was notified, repealing the Second Ordinance.
             7. The Central Government vide Allotment Order dated 31st March
      2015, again allocated Pachhwara Captive Coal Block in favour of PSPCL.
      As PSPCL was facing acute shortage of coal for paddy season, and
      closure of Coal Block had resulted in sudden loss of employment, it
C     entered into a Transitory Agreement with EMTA on 30th June 2015. As
      per Clause 1.1.20 of the Transitory Agreement, the said contract was
      for a period of nine months or till Mine Developer-cum-Operator was
      appointed by PSPCL through competitive bidding. On 23rd July 2015,
      PSPCL informed Union of India about the Transitory Agreement. On
D     31st August 2015, PSPCL published Notice inviting Global Tender
      (hereinafter referred to as the “NIT”), inviting bids for the appointment
      of Mine Developer-cum-Operator, for supply of coal.
             8. EMTA filed a civil writ petition being CWP No. 26180 of 2015
      before the High Court of Punjab and Haryana, thereby challenging the
E     said NIT. On 10th February 2016, the High Court passed a direction
      restraining PSPCL from opening the financial bids till 29th February 2016.
      On 1st February 2018, CWP No. 26180 of 2015 was dismissed as
      withdrawn by the High Court on the basis of the statement made by
      PSPCL that it shall consider the representation-cum-claims made by
      EMTA and it shall take a decision thereon before finalizing the fresh
F     tender process for allotment of Coal Mines at Pachhwara. Accordingly,
      a representation was made by EMTA on 20th February 2018, which
      came to be rejected by PSPCL on 6 th April 2018. The same was
      challenged by EMTA by filing a civil writ petition being CWP No. 10055
      of 2018 before the High Court of Punjab and Haryana.
G            9. It is to be noted that in the meantime, since the tender process
      was held up due to various writ petitions, PSPCL passed a Resolution on
      30th June 2017, to drop the Global Tender dated 31st August 2015. During
      the pendency of CWP No. 10055 of 2018, on 30th April 2018, PSPCL
      issued a fresh Request For Proposal (RFP), to invite Global Bids for the
H     selection of Mine Developer-cum-Operator for Pachhwara Coal Block
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                          781
                   [B. R. GAVAI, J. ]

through competitive reverse bidding process. The same was challenged           A
by EMTA by filing another civil writ petition being CWP No. 16245 of
2018 before the High Court of Punjab and Haryana. PSPCL contested
the same by filing a written statement. Pursuant to RFP dated 30th April
2018, the bids were opened on 10th August 2018. The lowest bid was
submitted by DBL-VPR Consortium who is the appellant in appeal arising
                                                                               B
out of SLP(C) Nos. 14384-14385 of 2021. Letter of Award was issued
in favour of the said DBL-VPR Consortium and a Coal Mining
Agreement was signed on 11 th September 2018. By the impugned
judgment and order dated 25th January 2019, the High Court allowed the
civil writ petitions as aforesaid. Being aggrieved thereby, the present
appeals.                                                                       C
       10. Shri K.V. Viswanathan, learned Senior Counsel appearing on
behalf of appellant-PSPCL submitted that the High Court has grossly
erred in holding that EMTA had a first right of refusal. The learned
Senior Counsel submitted that the prior allotment of the Coal Blocks
between 1993 and 2011 was cancelled, since this Court had held in              D
Manohar Lal Sharma-I, that the said allotments were arbitrary, illegal
and violative of Article 14 of the Constitution. He submitted that Section
11 of the said Act clearly provides that it was the discretion of PSPCL to
allow a successful allottee to continue or not to continue with the existing
contracts, which were in existence prior to the fresh allotment in relation
to coal mining operation. Shri Viswanathan submitted that only when the        E
allottee decides to continue with the old contracts, the question of
constitution of novation for residual term would arise. The learned Senior
Counsel submitted that in view of sub-section (2) of Section 11 of the
said Act, when an allottee decides not to continue with the existing
contracts entered into by the prior allottees with third parties, all such     F
contracts shall cease to be enforceable against the successful bidder or
allottee in relation to Schedule I coal mines and the remedy of such
contracting parties shall be against the prior allottees. The learned Senior
Counsel submitted that Section 16 of the said Act provides for
compensation for land as well as for mining infrastructure.
                                                                               G
        11. The learned Senior Counsel further submitted that in pursuance
of the directions issued by this Court for payment of Rs.295/- per metric
ton, it was the liability of EMTA to make the said payment amounting to
Rs.1400 crore. He submitted that however, EMTA had failed to make
the said payment resulting in a huge loss to the public exchequer. The
learned Senior Counsel further submitted that the findings of the High         H
782                SUPREME COURT REPORTS                      [2021] 11 S.C.R.


A     Court with regard to the legitimate expectation of EMTA, are totally
      unsustainable. The learned Senior Counsel submitted that the legitimate
      expectation would not be applicable against the Statute. He further
      submitted that PSPCL has taken a policy decision to appoint Mine
      Developer-cum-Operator by competitive bidding process. He submitted
      that the policy is reasonable and as such, the legitimate expectation would
B     not be applicable as against such a reasonable policy. The learned Senior
      Counsel relied on the judgment of this Court in the case of Kerala State
      Beverages (M and M) Corporation Limited v. P.P. Suresh and
      Others 3.
              12. Shri Viswanathan further submitted that in view of Clause
C     12.4 of the Allotment Agreement, PSPCL was bound to appoint a Mine
      Developer-cum-Operator only through a competitive bidding process.
      He submitted that due to certain exigencies, PSPCL had entered into a
      transitory arrangement with EMTA for a limited period of nine months.
      However, the same was disapproved by Union of India and a Show-
      Cause Notice came to be issued to PSPCL. He therefore submitted that
D
      understanding the Clause 12.4 of the Allotment Agreement in correct
      perspective, PSPCL had decided to issue RFP, inviting Global Tenders
      for appointing Mine Developer-cum-Operator.
              13. Dr. A.M. Singhvi, learned Senior Counsel appearing on behalf
      of appellant-DBL-VPR Consortium, also supports the submissions made
E     by Shri Viswanathan. He submitted that DBL-VPR Consortium had
      participated in the Global Tender and is the lowest bidder. He submitted
      that the High Court has grossly erred in holding that EMTA had a right
      of first refusal after the bidding process was complete and DBL-VPR’s
      offer was known to all. He therefore submitted that the impugned
      judgment and order passed by the High Court needs to be set aside.
F
              14. Shri Mukul Rohatgi, learned Senior Counsel appearing on
      behalf of respondent-EMTA vehemently opposed the submissions made
      on behalf of PSPCL. The learned Senior Counsel submitted that EMTA
      has made huge investment by deploying specialized machinery for the
      purpose of mining, construction of roads to the Mining Blocks and other
G     infrastructural developments. He submitted that since the contract was
      entered into for a period of 30 years, EMTA has a legitimate expectation
      to continue till completion of the said period of 30 years. He therefore
      submitted that the High Court has rightly held that EMTA had a legitimate
      right of first refusal.
H     3
          (2019) 9 SCC 710
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                          783
                   [B. R. GAVAI, J. ]

       15. Shri Rohatgi submitted that the legislative intent behind Section   A
11(1) of the said Act is to permit an existing contractor to continue if his
performance is found to be satisfactory, and nothing adverse against
EMTA has been found. The learned Senior Counsel submitted that
however, PSPCL, in an arbitrary and irrational manner, has denied the
claim of EMTA. He submitted that only when the performance of the
                                                                               B
existing contractor is found to be unsatisfactory or there is something
against him, the allottee would be entitled to take recourse to the
competitive bidding.
       16. Shri Rohatgi would further submit that a similar view has been
taken by the Karnataka High Court in the case of KPCL v. EMTA Coal
Limited and Others4. He submitted that aggrieved by the judgment of            C
the Karnataka High Court, KPCL had approached this Court. This Court
appointed a Committee of Experts to determine the price and EMTA,
who was also a Mine Developer in the said matter, was permitted to
continue with the operations at the rates fixed by the Experts Committee.
He further submitted that from the letter dated 9th June 2020, addressed       D
by the Joint Secretary, Ministry of Coal, Government of India, it would
be clear that it is also the stand of Union of India that Section 11 of the
said Act prevails over Clause 12 of the Allotment Agreement. The learned
Senior Counsel submitted that the contention on behalf of PSPCL that
on account of Clause 12.4 of the Allotment Agreement, PSPCL was
bound to appoint a Mine Developer-cum-Operator by competitive bidding,         E
is unsustainable.
       17. He further submitted that no prejudice is caused to PSPCL by
the impugned judgment and order. He submitted that the price is now
known and what has been done by the High Court is only granting a
right of first refusal. If EMTA is desirous to continue, it will have to       F
continue at the same rate and therefore, no financial loss would be caused
to PSPCL.
        18. Shri Rohatgi further submitted that in the earlier round of
litigation, the High Court had recorded the statement of PSPCL that if a
representation is made by EMTA, the same would be considered by                G
PSPCL and a decision would be taken on merits. He however submitted
that, a perusal of the order passed by PSPCL dated 6th April 2018, would
show that the representation of EMTA has been decided in a perfunctory
manner without giving any valid reasons.
4
    ILR 2016 Kar 4301                                                          H
784             SUPREME COURT REPORTS                          [2021] 11 S.C.R.


A            19. For appreciating the rival submissions, it will be necessary to
      refer to Section 11 of the said Act:-
            “11. Discharge or adoption of third party contracts with prior
            allottees.—(1) Notwithstanding anything contained in any other
            law for the time being in force, a successful bidder or allottee, as
B           the case may be, in respect of Schedule I coal mines, may elect,
            to adopt and continue such contracts which may be existing with
            any of the prior allottees in relation to coal mining operations and
            the same shall constitute a novation for the residual term or residual
            performance of such contract:
C           Provided that in such an event, the successful bidder or allottee or
            the prior allottee shall notify the nominated authority to include
            the vesting of any contracts adopted by the successful bidder.
            (2) In the event that a successful bidder or allottee elects not to
            adopt or continue with existing contracts which had been entered
D           into by the prior allottees with third parties, in that case all such
            contracts which have not been adopted or continued shall cease
            to be enforceable against the successful bidder or allottee in
            relation to the Schedule I coal mine and the remedy of such
            contracting parties shall be against the prior allottees.”

E            20. It will not be out of place to mention that the said Act came to
      be enacted in pursuance of the decision of this Court in the case of
      Manohar Lal Sharma-I, wherein this Court held that the allotment of
      Coal Blocks between 1993 and 2011 was arbitrary, illegal and violative
      of Article 14 of the Constitution. A plain reading of Section 11 of the said
      Act would reveal that it begins with a non-obstante clause. It provides
F     that a successful bidder or allottee, as the case may be, in respect of
      Schedule I coal mines, may elect, to adopt and continue such contracts
      which may be existing with any of the prior allottees in relation to coal
      mining operations and the same shall constitute a novation for the residual
      term or residual performance of such contract.
G             21. The words “may elect” would clearly show that the legislature
      has given complete discretion to a successful bidder or allottee to elect.
      The words “may elect” would also mean a discretion not to elect. Only
      in the event, a successful bidder or allottee decides to adopt and continue
      such contract, which may be existing with any of the prior allottees in
      relation to coal mining operations, the same shall constitute a novation
H
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                              785
                   [B. R. GAVAI, J. ]

for residual term or residual performance of such contract. In the event,          A
the successful allottee does not elect to adopt or continue such contract,
there is no question of novation for residual term or residual performance
of such contract. Perusal of sub-section (2) of Section 11 of the said Act
would also make it clear that, it provides that in the event a successful
bidder or allottee elects not to adopt or continue with the existing contract
                                                                                   B
which had been entered into by the prior allottees with third parties, all
such contracts which have not been adopted or continued shall cease to
be enforceable against the successful bidder or allottee in relation to
Schedule I coal mines and the remedy of such contracting parties shall
be against the prior allottees. It could thus be seen that on a plain reading
of sub-sections (1) and (2) of Section 11 of the said Act, it is clear that        C
the successful allottee or bidder has complete freedom to decide as to
whether he desires to continue or adopt any such existing contracts in
relation to coal mining operation. Only in the event he elects to adopt or
continue with existing contracts, it shall constitute novation for residual
term or residual performance of such contracts. In the event the
successful bidder or allottee elects not to adopt or continue with the             D
existing contracts, all such contracts shall cease to be enforceable against
the successful bidder or allottee in relation to Schedule I coal mines. The
only remedy of such contracting parties shall be against the prior allottees.
       22. The principle of giving a plain and literal meaning to the words
in a Statute is well recognized for ages. Though there are a number of             E
judgments, we may gainfully refer to the judgment of this Court delivered
by Das, J. as early as 1955 in the case of Jugalkishore Saraf v. Raw
Cotton Company Limited5:-
         “The cardinal rule of construction of statutes is to read the statute
         literally, that is by giving to the words used by the legislature their   F
         ordinary, natural and grammatical meaning. If, however, such a
         reading leads to absurdity and the words are susceptible of another
         meaning the Court may adopt the same. But if no such alternative
         construction is possible, the Court must adopt the ordinary rule of
         literal interpretation.”
                                                                                   G
      Though there are various authorities on the said subject, we do
not wish to burden the present judgment by reproducing those. In our
considered view, if the words used in Section 11 of the said Act are
construed in plain and literal term, they do not lead to an absurdity and as
5
    [1955] 1 SCR 1369                                                              H
786               SUPREME COURT REPORTS                          [2021] 11 S.C.R.


A     such, the rule of plain and literal interpretation will have to be followed.
      We find that in case the interpretation as sought to be placed by Shri
      Rohatgi is to be accepted, it will do complete violence to the language of
      Section 11 of the said Act. If it is held that under Section 11 of the said
      Act, a prior contractor is entitled to continue if his performance is found
      to be satisfactory and if there is nothing against him, then it will be
B
      providing something in Section 11 of the said Act which the Statute has
      not provided for. It will also lead to making the words “may elect, to
      adopt and continue” redundant and otiose. It is a settled principle of law
      that when, upon a plain and literal interpretation of the words used in a
      Statute, the legislative intent could be gathered, it is not permissible to
C     add words to the Statute. Equally, such an interpretation which would
      make some terms used in a Statute otiose or meaningless, has to be
      avoided. We therefore find that if an interpretation as sought to be placed
      by EMTA is to be accepted, the same would be wholly contrary to the
      principle of literal interpretation. There are number of authorities in support
D     of the said proposition. However, we refrain from referring to them in
      view of the following observations made by this Court in a recent judgment
      in the case of Ajit Mohan and Others v. Legislative Assembly National
      Capital Territory of Delhi and Others6:-
               “239. …..In our view if the proposition of law is not doubted by
               the Court, it does not need a precedent unless asked for. If a
E
               question is raised about a legal proposition, the judgment must be
               relatable to that proposition - and not multiple judgments…..”
               As such, the contention in that regard is found to be without merit.
             23. We find that the High Court has also clearly understood the
F     said legal position with regard to language used in Section 11 of the said
      Act. When considering Section 62 of the Contract Act, 1872 read with
      Section 11 of the said Act, it has observed that the parties to a contract
      may willingly agree to substitute a new contract or to rescind it or alter
      it. Having observed this, the High Court has, however, erred in observing
      that EMTA had a legitimate expectation. The High Court has observed
G
      thus:-
               “It could not therefore, have been left in the lurch particularly
               when the same mine was re-allocated to the Corporation suggestive
               of continuity. Indeed, the respondents were very well within their
      6
H         2021 SCC OnLine SC 456
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                            787
                   [B. R. GAVAI, J. ]

          rights to reject the arrangement while granting a consideration        A
          under Section 11 if the performance of the petitioner was
          unsatisfactory or if there was any other factor which the
          Corporation found relevant enough to discard the arrangement
          altogether.”
       24. We find that the reasoning adopted by the High Court is totally       B
wrong. Merely because the Coal Mine Block was allotted to PSPCL,
the same could not give any vested right in favour of EMTA, particularly
in view of the language used in Section 11 of the said Act. The reasoning
given by the High Court that PSPCL was within its right to reject the
arrangement if the performance of EMTA was unsatisfactory or if there
was any other factor which the Corporation found relevant enough to              C
discard the arrangement altogether, in our view, are totally erroneous.
        25. Having observed in earlier para that in view of Section 11 of
the said Act read with Section 62 of the Contract Act, 1872, the parties
to a contract may willingly agree to substitute a new contract or to rescind
it or alter it, the High Court has erred in forcing PSPCL to continue with       D
the contract with EMTA, though it was not willing to do so.
      26. The issue with regard to legitimate expectation has been
recently considered by a bench of this Court to which one of us (L.
Nageswara Rao, J.) was a member. After considering various authorities
on the issue, in the case of Kerala State Beverages (M and M)                    E
Corporation Limtied (supra), it was observed thus:-
          “20. The decision-makers’ freedom to change the policy in public
          interest cannot be fettered by applying the principle of substantive
          legitimate expectation. [Findlay, In re, 1985 AC 318 : (1984) 3
          WLR 1159 : (1984) 3 All ER 801 (HL)] So long as the Government         F
          does not act in an arbitrary or in an unreasonable manner, the
          change in policy does not call for interference by judicial review
          on the ground of a legitimate expectation of an individual or a
          group of individuals being defeated.”
      27. Shri Viswanathan has relied on the judgment of the Calcutta            G
High Court in the case of EMTA Coal Limited and Another v. West
Bengal Power Development Corporation7. Per contra, Shri Rohatgi
has relied on the judgment of the Karnataka High Court in KPCL v.
EMTA Coal Limited (supra). We do not desire to go into the issue of
7
    (2016) 2 Cal LJ 424                                                          H
788                SUPREME COURT REPORTS                        [2021] 11 S.C.R.


A     correctness of either of the judgments inasmuch as we are independently
      considering the issue and examining the correctness of the judgment
      impugned before us.
             28. Insofar as the reliance placed by Shri Rohatgi on the letter of
      Union of India dated 9th January 2020 is concerned, there can be no
B     doubt that between Section 11 of the said Act and Clause 12.4.1 of the
      Allotment Agreement, Section 11 of the said Act would prevail. The
      question is, whether, Section 11 of the said Act mandates the successful
      allottee to continue with the existing contract. The answer, obviously, is
      no. In any case, the claim of EMTA is not rejected by PSPCL solely on
C     the ground of Clause 12.4.1 of the Allotment Agreement.
             29. That leaves us with the last submission of Shri Rohatgi. It is
      his submission that as per the statement made by PSPCL before the
      High Court in first round of litigation, it was to consider the representation
      of EMTA in a reasonable and just manner. He however submitted that
D     the order dated 6th April 2018, was passed by PSPCL in a totally arbitrary
      and irrational manner.
             30. The order passed by PSPCL dated 6th April 2018, is an order
      passed by an authority of the State in exercise of its executive functions.
      The scope of judicial review of administrative action has been well
E     crystalised by this Court in the judgment of Tata Cellular v. Union of
      India8. The judgment in the case of Tata Cellular (supra), has been
      subsequently followed in a number of judgments of this Court. This Court
      in the case of Rashmi Metaliks Limited and Another v. Kolkata
      Metropolitan Development Authority and Others9, has observed that
      the decision which holds the field with regard to issue of judicial review
F     of an administrative action, is the judgment in the case of Tata Cellular
      (supra), by a three-Judge Bench. The Court has held that the rule of
      precedent mandates that this exposition of law be followed and applied
      by coordinate or co-equal Benches and certainly by all smaller Benches
      and subordinate courts. This Court has further deprecated the practice
G     of referring to catena of judgments following the said pronouncement of
      law. We therefore refrain from referring to the subsequent judgment,
      and reproduce the relevant observations in Tata Cellular (supra), which
      read thus:-
      8
          (1994) 6 SCC 651
      9
H         (2013) 10 SCC 95
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                        789
                   [B. R. GAVAI, J. ]

    “70. It cannot be denied that the principles of judicial review would    A
    apply to the exercise of contractual powers by Government bodies
    in order to prevent arbitrariness or favouritism. However, it must
    be clearly stated that there are inherent limitations in exercise of
    that power of judicial review. Government is the guardian of
    the finances of the State. It is expected to protect the financial
                                                                             B
    interest of the State. The right to refuse the lowest or any other
    tender is always available to the Government. But, the principles
    laid down in Article 14 of the Constitution have to be kept in view
    while accepting or refusing a tender. There can be no question of
    infringement of Article 14 if the Government tries to get the best
    person or the best quotation. The right to choose cannot be              C
    considered to be an arbitrary power. Of course, if the said power
    is exercised for any collateral purpose the exercise of that power
    will be struck down.
    71. Judicial quest in administrative matters has been to find the
    right balance between the administrative discretion to decide            D
    matters whether contractual or political in nature or issues of social
    policy; thus they are not essentially justiciable and the need to
    remedy any unfairness. Such an unfairness is set right by judicial
    review.
    72. Lord Scarman in Nottinghamshire County Council v.
    Secretary of State for the Environment [1986 AC 240, 251 :               E
    (1986) 1 All ER 199] proclaimed:
        “ ‘Judicial review’ is a great weapon in the hands of the judges;
        but the judges must observe the constitutional limits set by our
        parliamentary system upon the exercise of this beneficial
        power.”                                                              F
    Commenting upon this Michael Supperstone and James Goudie in
    their work Judicial Review (1992 Edn.) at p. 16 say:
        “If anyone were prompted to dismiss this sage warning as a
        mere obiter dictum from the most radical member of the higher
        judiciary of recent times, and therefore to be treated as an         G
        idiosyncratic aberration, it has received the endorsement of
        the Law Lords generally. The words of Lord Scarman were
        echoed by Lord Bridge of Harwich, speaking on behalf of the
        Board when reversing an interventionist decision of the New
        Zealand Court of Appeal in Butcher v. Petrocorp Exploration
        Ltd. 18-3-1991.”                                                     H
790      SUPREME COURT REPORTS                         [2021] 11 S.C.R.


A     73. Observance of judicial restraint is currently the mood in
      England. The judicial power of review is exercised to rein in any
      unbridled executive functioning. The restraint has two
      contemporary manifestations. One is the ambit of judicial
      intervention; the other covers the scope of the court’s ability to
      quash an administrative decision on its merits. These restraints
B
      bear the hallmarks of judicial control over administrative action.
      74. Judicial review is concerned with reviewing not the merits of
      the decision in support of which the application for judicial review
      is made, but the decision-making process itself.
C     75. In Chief      Constable      of    the    North     Wales
      Police v. Evans [(1982) 3 All ER 141, 154] Lord Brightman said:
         “Judicial review, as the words imply, is not an appeal from a
         decision, but a review of the manner in which the decision was
         made.
D
                                      ***
         Judicial review is concerned, not with the decision, but with
         the decision-making process. Unless that restriction on the
         power of the court is observed, the court will in my view, under
E        the guise of preventing the abuse of power, be itself guilty of
         usurping power.”
      In the same case Lord Hailsham commented on the purpose of
      the remedy by way of judicial review under RSC, Ord. 53 in the
      following terms:
F        “This remedy, vastly increased in extent, and rendered, over a
         long period in recent years, of infinitely more convenient access
         than that provided by the old prerogative writs and actions for
         a declaration, is intended to protect the individual against the
         abuse of power by a wide range of authorities, judicial, quasi-
G        judicial, and, as would originally have been thought when I first
         practised at the Bar, administrative. It is not intended to take
         away from those authorities the powers and discretions properly
         vested in them by law and to substitute the courts as the bodies
         making the decisions. It is intended to see that the relevant
         authorities use their powers in a proper manner (p. 1160).”
H
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                         791
                   [B. R. GAVAI, J. ]

    In R. v. Panel on Take-overs and Mergers, ex p Datafin                    A
    plc [(1987) 1 All ER 564] , Sir John Donaldson, M.R. commented:
       “An application for judicial review is not an appeal.”
    In Lonrho plc v. Secretary of State for Trade and
    Industry [(1989) 2 All ER 609], Lord Keith said:
                                                                              B
       “Judicial review is a protection and not a weapon.”
    It is thus different from an appeal. When hearing an appeal the
    Court is concerned with the merits of the decision under appeal.
    In Amin, Re [Amin v. Entry Clearance Officer, (1983) 2 All ER
    864] , Lord Fraser observed that:                                         C
       “Judicial review is concerned not with the merits of a decision
       but with the manner in which the decision was made…. Judicial
       review is entirely different from an ordinary appeal. It is made
       effective by the court quashing the administrative decision
       without substituting its own decision, and is to be contrasted         D
       with an appeal where the appellate tribunal substitutes its own
       decision on the merits for that of the administrative officer.”
    76. In R. v. Panel on Take-overs and Mergers, ex p in Guinness
    plc [(1990) 1 QB 146 : (1989) 1 All ER 509] , Lord Donaldson,
    M.R. referred to the judicial review jurisdiction as being supervisory
                                                                              E
    or ‘longstop’ jurisdiction. Unless that restriction on the power of
    the court is observed, the court will, under the guise of preventing
    the abuse of power, be itself guilty of usurping power.
    77. The duty of the court is to confine itself to the question of
    legality. Its concern should be:
                                                                              F
       1. Whether a decision-making authority exceeded its powers?
       2. Committed an error of law,
       3. committed a breach of the rules of natural justice,
       4. reached a decision which no reasonable tribunal would have
       reached or,                                                            G
       5. abused its powers.
    Therefore, it is not for the court to determine whether a particular
    policy or particular decision taken in the fulfilment of that policy is
    fair. It is only concerned with the manner in which those decisions
    have been taken. The extent of the duty to act fairly will vary           H
792      SUPREME COURT REPORTS                            [2021] 11 S.C.R.


A     from case to case. Shortly put, the grounds upon which an
      administrative action is subject to control by judicial review can
      be classified as under:
         (i) Illegality : This means the decision-maker must understand
         correctly the law that regulates his decision-making power and
B        must give effect to it.
         (ii) Irrationality, namely, Wednesbury unreasonableness.
         (iii) Procedural impropriety.
      The above are only the broad grounds but it does not rule out
      addition of further grounds in course of time. As a matter of fact,
C     in R. v. Secretary of State for the Home Department, ex
      Brind [(1991) 1 AC 696], Lord Diplock refers specifically to one
      development, namely, the possible recognition of the principle of
      proportionality. In all these cases the test to be adopted is that the
      court should, “consider whether something has gone wrong of a
D     nature and degree which requires its intervention”.
      78. What is this charming principle of Wednesbury
      unreasonableness? Is it a magical formula? In R. v. Askew [(1768)
      4 Burr 2186 : 98 ER 139] , Lord Mansfield considered the question
      whether mandamus should be granted against the College of
      Physicians. He expressed the relevant principles in two eloquent
E
      sentences. They gained greater value two centuries later:
         “It is true, that the judgment and discretion of determining upon
         this skill, ability, learning and sufficiency to exercise and practise
         this profession is trusted to the College of Physicians and this
         Court will not take it from them, nor interrupt them in the due
F        and proper exercise of it. But their conduct in the exercise of
         this trust thus committed to them ought to be fair, candid and
         unprejudiced; not arbitrary, capricious, or biased; much less,
         warped by resentment, or personal dislike.”
      79. To quote again, Michael Supperstone and James Goudie; in
G     their work Judicial Review (1992 Edn.) it is observed at pp. 119
      to 121 as under:
         “The assertion of a claim to examine the reasonableness been
         done by a public authority inevitably led to differences of judicial
         opinion as to the circumstances in which the court should
H        intervene. These differences of opinion were resolved in two
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                       793
                   [B. R. GAVAI, J. ]

       landmark cases which confined the circumstances for                  A
       intervention to narrow limits. In Kruse v. Johnson [(1898) 2
       QB 91 : (1895-9) All ER Rep 105] a specially constituted
       divisional court had to consider the validity of a bye-law made
       by a local authority. In the leading judgment of Lord Russell of
       Killowen, C.J., the approach to be adopted by the court was
                                                                            B
       set out. Such bye-laws ought to be ‘benevolently’ interpreted,
       and credit ought to be given to those who have to administer
       them that they would be reasonably administered. They could
       be held invalid if unreasonable : Where for instance bye-laws
       were found to be partial and unequal in their operation as
       between different classes, if they were manifestly unjust, if        C
       they disclosed bad faith, or if they involved such oppressive or
       gratuitous interference with the rights of citizens as could find
       no justification in the minds of reasonable men. Lord Russell
       emphasised that a bye-law is not unreasonable just because
       particular judges might think it went further than was prudent
                                                                            D
       or necessary or convenient.
    In 1947 the Court of Appeal confirmed a similar approach for the
    review of executive discretion generally in Associated Provincial
    Picture Houses Ltd. v. Wednesbury Corpn [(1948) 1 KB 223 :
    (1947) 2 All ER 680] . This case was concerned with a complaint
    by the owners of a cinema in Wednesbury that it was unreasonable        E
    of the local authority to licence performances on Sunday only
    subject to a condition that ‘no children under the age of 15 years
    shall be admitted to any entertainment whether accompanied by
    an adult or not’. In an extempore judgment, Lord Greene, M.R.
    drew attention to the fact that the word ‘unreasonable’ had often       F
    been used in a sense which comprehended different grounds of
    review. (At p. 229, where it was said that the dismissal of a teacher
    for having red hair (cited by Warrington, L.J. in Short v. Poole
    Corpn. [(1926) 1 Ch 66, 91 : 1925 All ER Rep 74] , as an example
    of a ‘frivolous and foolish reason’) was, in another sense, taking
    into consideration extraneous matters, and might be so                  G
    unreasonable that it could almost be described as being done in
    bad faith; see also R. v. Tower Hamlets London Borough
    Council, ex p Chetnik Developments Ltd. [1988 AC 858, 873 :
    (1988) 2 WLR 654 : (1988) 1 All ER 961] (Chapter 4, p. 73,
    supra). He summarised the principles as follows:                        H
794     SUPREME COURT REPORTS                           [2021] 11 S.C.R.


A        ‘The Court is entitled to investigate the action of the local
         authority with a view to seeing whether or not they have taken
         into account matters which they ought not to have taken into
         account, or, conversely, have refused to take into account or
         neglected to take into account matter which they ought to take
         into account. Once that question is answered in favour of the
B
         local authority, it may still be possible to say that, although the
         local authority had kept within the four corners of the matters
         which they ought to consider, they have nevertheless come to
         a conclusion so unreasonable that no reasonable authority could
         ever have come to it. In such a case, again, I think the court
C        can interfere. The power of the court to interfere in each case
         is not as an appellate authority to override a decision of the
         local authority, but as a judicial authority which is concerned,
         and concerned only, to see whether the local authority has
         contravened the law by acting in excess of the power which
         Parliament has confided in them.’
D
      This summary by Lord Greene has been applied in countless
      subsequent cases.
         “The modern statement of the principle is found in a passage
         in the speech of Lord Diplock in Council of Civil Service
E        Unions v. Minister for Civil Service [(1985) 1 AC 374 : (1984)
         3 All ER 935 : (1984) 3 WLR 1174] :
         ‘By “irrationality” I mean what can now be succinctly referred
         to as “Wednesbury unreasonableness”. (Associated
         Provincial Picture Houses Ltd. v. Wednesbury Corpn.
F        [(1948) 1 KB 223 : (1947) 2 All ER 680]) It applies to a decision
         which is so outrageous in its defiance of logic or of accepted
         moral standards that no sensible person who had applied his
         mind to the question to be decided could have arrived at.’”
      80. At this stage, The Supreme Court Practice, 1993, Vol. 1, pp.
G     849-850, may be quoted:
         “4. Wednesbury principle.— A decision of a public authority
         will be liable to be quashed or otherwise dealt with by an
         appropriate order in judicial review proceedings where the court
         concludes that the decision is such that no authority properly
         directing itself on the relevant law and acting reasonably could
H
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                         795
                   [B. R. GAVAI, J. ]

          have reached it. (Associated Provincial Picture Houses              A
          Ltd. v. Wednesbury Corpn. [(1948) 1 KB 223 : (1947) 2 All
          ER 680] , per Lord Greene, M.R.)”
      81. Two other facets of irrationality may be mentioned.
          (1) It is open to the court to review the decision-maker’s
          evaluation of the facts. The court will intervene where the         B
          facts taken as a whole could not logically warrant the conclusion
          of the decision-maker. If the weight of facts pointing to one
          course of action is overwhelming, then a decision the other
          way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary
          of State for Environment [(1980) 41 P & CR 255] , the               C
          Secretary of State referred to a number of factors which led
          him to the conclusion that a non-resident’s bar in a hotel was
          operated in such a way that the bar was not an incident of the
          hotel use for planning purposes, but constituted a separate use.
          The Divisional Court analysed the factors which led the
          Secretary of State to that conclusion and, having done so, set it   D
          aside. Donaldson, L.J. said that he could not see on what basis
          the Secretary of State had reached his conclusion.
          (2) A decision would be regarded as unreasonable if it is
          impartial and unequal in its operation as between different
          classes. On this basis in R. v. Barnet London Borough               E
          Council, ex p Johnson [(1989) 88 LGR 73] the condition
          imposed by a local authority prohibiting participation by those
          affiliated with political parties at events to be held in the
          authority’s parks was struck down.”
       31. It could thus be seen that while exercising powers of judicial     F
review, the Court is not concerned with the ultimate decision but the
decision-making process. The limited areas in which the court can enquire
are as to whether a decision-making authority has exceeded its powers,
committed an error of law or committed breach of principle of natural
justice. It can examine as to whether an authority has reached a decision     G
which no reasonable Tribunal would have reached or has abused its
powers. It is not for the court to determine whether a particular policy or
a particular decision taken in the fulfilment of that policy is fair. The
court will examine as to whether the decision of an authority is vitiated
by illegality, irrationality or procedural impropriety. While examining the
question of irrationality, the court will be guided by the principle of       H
796             SUPREME COURT REPORTS                          [2021] 11 S.C.R.


A     Wednesbury. While applying the Wednesbury principle, the court will
      examine as to whether the decision of an authority is such that no authority
      properly directing itself on the relevant law and acting reasonably could
      have reached it.
              32. Applying the aforesaid principle, it can clearly be seen that the
B     decision of PSPCL dated 6th April 2018, cannot be questioned on the
      ground of illegality or procedural impropriety. The decision is taken in
      accordance with Section 11 of the said Act and after following the
      principle of Natural Justice. The limited area that would be available for
      attack is as to whether the decision is hit by the Wednesbury principle.
      Can it be said that the decision taken by the authority is such that no
C     reasonable person would have taken it? No doubt, that the authority has
      also relied on Clause 12.4.1 of the Allotment Agreement, however, that
      is not the only ground on which the representation of EMTA is rejected.
      No doubt, that while considering EMTA’s representation, PSPCL has
      referred to Clause 12.4.1 of the Allotment Agreement which requires
D     the coal mines to be developed through contractors who were selected
      through a competitive bidding process, however, that is not the only ground
      on which the representation of EMTA is rejected. It will be relevant to
      refer to the following observations in the order passed by PSPCL dated
      6th April 2018:-
E           “Moreover, there is no reason why competitive bidding process
            for the purposes of eliciting the best operator be not preferred.
            Needless to mention that as the composition with respect to capital/
            revenue investment is altogether different, hence the bidding
            parameters have entirely changed.”

F             33. It could thus be seen that PSPCL has decided to go in for
      competitive bidding process for the purpose of eliciting the best operator.
      It has further noticed that the composition with respect to capital/revenue
      investment is altogether different. Hence, the bidding parameters have
      entirely changed. It has further referred to the decision of this Court
      wherein it has been held that the allotment should be through competitive
G     bidding process. We ask a question to ourselves, as to whether the said
      reasoning can be said to be irrational or arbitrary. A policy decision to
      get the best operator at the best price, cannot be said to be a decision
      which no reasonable person would take in his affairs. In that view of the
      matter, the attack on the order/letter dated 6th April 2018, is without
H     merit.
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.                          797
                   [B. R. GAVAI, J. ]

       34. Insofar as the contention of Shri Rohatgi with regard to the        A
huge investment being made by EMTA is concerned, the said Act itself
provides remedy for seeking compensation apart from the other remedies
that are available in law. In that view of the matter, we are not impressed
with the arguments advanced in that behalf.
       35. In the result, the impugned judgment and order passed by the        B
High Court of Punjab and Haryana is unsustainable in law. The appeals
are therefore allowed and the judgment and order passed by the High
Court of Punjab and Haryana dated 25th January 2019, is quashed and
set aside. Pending I.A (s), if any, shall stand disposed of accordingly.
                                                                               C
Divya Pandey                                                Appeals allowed.




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