APHC010772032013 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WRIT APPEAL NO: 584 of 2013 [3483] The A.P. Mineral Development Corporation Ltd. ...Appellant Vs. M/s. IBC Limited ...Respondent ********** Advocate for Appellant: Smt. S. Pranathi - Special Government Pleader appearing vice Mr. D. Srinivas, Ld. Advocate General Advocate for Respondent: Mr. O. Manoher Reddy, Ld. Senior Counsel appearing vice Mr. N. Mohan Krishna CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE : 31.12.2025 Per DHIRAJ SINGH THAKUR, CJ: The present Writ Appeal has been preferred against the judgment and order, dated 04.01.2013, passed in W.P. No.375 of 2012. The writ petitioner had challenged the proceedings, dated 09.11.2011, of the appellant herein, whereby it had rejected the request of the petitioner for supply of low grade (C + D + waste) varieties of Baryte in accordance with the 2 HCJ & RC, J W.A. No.584 of 2013 rates fixed under the Agreement, dated 18.06.2008. The learned single Judge, by virtue of judgment and order impugned, allowed the petition by invoking the doctrine of promissory estoppel and held that the appellant had to honour the promise to supply low grade Barytes at the rate of Rs.221/- per MT subject to increase in price at the rate of 4% over the price of the previous year in accordance with the Agreement, dated 18.06.2008. With a view to understand the background in the context of which the present controversy has arisen, it would be appropriate to refer briefly to some of the material facts: 2. Barytes is a mineral composed of barium sulphate, which on account of its properties finds application in a lot of industries. The Barytes ore is found in abundance in two villages i.e., Mangampet and Anantharajupet in the State of Andhra Pradesh, and keeping in view the value of its mineral and its utility and its export market, the Government of Andhra Pradesh constituted an expert group to study all relevant aspects of productions, sale and export of Barytes by taking into consideration the global trends and long term sustainability of mineral resources. Apart from the expert group, the Government of Andhra Pradesh also constituted a Cabinet Sub-Committee to make recommendations in regard to integration of mining beneficiation and marketing in the long term. 3 HCJ & RC, J W.A. No.584 of 2013 One of the recommendations made by the Committee was to setup a Beneficiation Plant. 3. The issue was also placed before the Board of Directors of the Andhra Pradesh Mineral Development Corporation Limited (APMDCL) at its 330th meeting held on 10.04.2006 where it was resolved to invite Expression of Interest (EoI) for establishment of Beneficiation Plant to beneficiate low grade Barytes as a joint venture. The eligibility criteria were to be fixed by the Vice Chairman and Managing Director of APMDCL. Expression of Interest was invited by the Vice Chairman and Managing Director of APMDCL under joint venture vide notification, dated 28.07.2006. Four companies namely M/s Gimpex Limited, Chennai, M/s IBC Limited, Chennai (writ petitioner), M/s Trimex Industries, Chennai and M/s SICAL Logistics Limited, Chennai, responded to the notification. The Government, after careful consideration of the matter, accorded permission to three companies, which included the petitioner IBC Limited, Chennai, to establish the Beneficiation Plants not exceeding Two Lakh tones capacity per annum in joint venture with APMDCL. 4. At this stage, it would be pertinent to mention that in the Expression of Interest floated by the APMDCL, 11% free equity had to be allotted by the investor to APMDCL in the JVC in consideration of supply of low grade Barytes on priority basis on payment of the sale price as mentioned in clause 4 HCJ & RC, J W.A. No.584 of 2013 ‗9‘ of the said notification. Clause 9 envisaged sale price of Rs.210 per MT loose on ex-Mangampet mine basis, exclusive of statutory levies with a further condition that there would be increase in price every year by 4% over the price of the previous year. According to clause 8 of the notification issued by the APMDCL, the investor had to complete the establishment of Barytes beneficiation plant within two years from the date of Agreement with APMDCL. For purposes of clarity and reference, clauses 5 to 9 are reproduced hereunder: “5. Formation of Joint Venture Company (JVC): The AMDC and selected investor shall form a Joint Venture Company for establishment of Barytes beneficiation plant. The Investor shall sign a detailed agreement with the APMDC within 15 days from the date of receipt of LOI and shall take all necessary steps required for formation of JVC within 30 days thereafter. 6. Allocation of free-equity: The free-equity of 11% shall be allotted by Investor to APMDC in the JVC in consideration of supply of low grade Barytes on priority basis on payment of sale price as mentioned in clause 9 herein as long as JVC exists. The free equity of 11% shall be maintained at all times. 7. Constitution of Board of Directors: AMDC and Investor shall appoint the Directors on the Board of JVC in proportion to the share capital held by them subject to a minimum of one Director from APMDC. 8. Time frame for establishment of beneficiation plant: The Investor shall complete establishment of Barytes beneficiation plant within 2 years from the date of agreement with APMDC. The amenities by him at his cost. APMDC shall consider extension of the period only on valid grounds to its satisfaction. The decision of the APMDC is binding on the Investor. 9. Supply of low grade Barytes: 5 HCJ & RC, J W.A. No.584 of 2013 i. AMDC shall supply required quantity of low grade Barytes (C+D+Waste grade) to the JVC on Ex-Mangampeta Barytes mine and on as is where is basis as per the usual sale terms and conditions of APMDC. AMDC shall not give any guarantee with regard to the quality. The supplies are subject to availability of production. ii. The sale price is Rs.210 per MT loose on ex-Mangampet mine basis exclusive of statutory levies etc. There shall be increase in the sale price every year by 4% over the price of the previous year. iii. All the statutory levies like Royalty, Cess and Sales Tax etc shall be extra at actuals. In the event of imposition of fresh levies, duties, taxes, cesses etc by the State Government/Central Government the same shall be borne by the JVC.” Clause 11 of the notification inviting Expression of Interest envisaged that the investor would make a Performance Security Deposit (PSD) of Rs.50 lakhs at the time of signing the agreement, and Earnest Money Deposit of Rs.10 lakhs was envisaged to be adjusted against the PSD. According to clause 11(iii), APMDCL reserved its right to forfeit the PSD including invocation of Performance Bank Guarantee (PBG) in case the investor failed to implement the project within the time prescribed. 5. An Agreement came to be executed between APMDCL and the petitioner on 18.06.2008. According to clause 2(i), the investor/JVC had to complete the establishment of the Beneficiation Plant within a period of two years from the date of agreement. Clause 2(ii) envisaged grant of extension on valid grounds to the satisfaction of the Corporation. 6 HCJ & RC, J W.A. No.584 of 2013 Apart from inclusion of some of the conditions which were otherwise reflected in the notification of Expression of Interest, clause 9(ii) prescribed the sale price of Rs.221/- per MT loose on ex-Mangampet mine basis exclusive of statutory levies etc., with an increase in the sale price every year by 4% over the price of the previous year. The Corporation was obliged to supply a quantity not exceeding Two Lakh MT per annum of low grade Barytes (C + D + Waste grade) to the JVC. Clause 11 of the Agreement dealt with the issue of termination of the Agreement in the event the JVC did not allot 11% of free-equity shares to the Corporation or that the plant was not established within the prescribed period of two years or the extension as agreed to by the Corporation. 6. Even when the Agreement was executed on 18.06.2008, since timelines were not met by the petitioner for establishing the plant, a letter, dated 19.02.2010, came to be issued by the APMDCL seeking information from the petitioner in that regard inasmuch as the Plant had to be completed by 17.06.2010. This communication was responded to by the petitioner vide their communication, dated 25.02.2010, wherein it was urged that survey of the land allotted had been conducted by the petitioner and that the plot had been levelled for commencement of civil works and in that context, sought an extension of one year from 17.06.2010. 7 HCJ & RC, J W.A. No.584 of 2013 The request of extension of time was considered and communication, dated 15.04.2010 was addressed by the appellant – Corporation, informing the petitioner that as per clause 11(ii)(b), although the Corporation could terminate the Agreement, however, considering the longstanding relationship between the parties and in view of the difficulties explained, till the commissioning of the Beneficiation Plant and commencement of commercial production, the petitioner was informed that it should continue to purchase Two Lakh MTs of Barytes (C + D + W) grade, as per Agreement, with effect from 01.07.2010 to 30.06.2011 in monthly lots of 16,667 MTs/quarterly lots of 50,000 MTs. However, the communication specifically informed the petitioner that till the Beneficiation Plant was commissioned, the petitioner would be liable to pay at the existing sale price at the rate of Rs.394/- per MT exclusive of statutory levies and Rs.10 per MT towards development of infrastructure in local areas. This correspondence reads as under: “6. As per clause 11.2.b. the Corporation can terminate the agreement in the event Investor/JVC does not establish Barytes Beneficiation Plant within a period of 2 years or extension thereof agreed to by the Corporation. Further as per clause 7.vi. of the agreement the Corporation reserves the right to forfeit the said PSD including invocation of PBG in case Investor/JC fails to implement the project of establishment of Beneficiation Plant within the stipulated time or any extension thereof. 7.i. Considering the longstanding relationship between us and also the difficulties explained by you, the Corporation restrained from terminating the agreement and forfeiting the Performance Security Deposit as above. However, till commissioning of the Beneficiation Plant and commencement of commercial production, you shall continue to purchase 2 lakh MTs of Barytes, C+D+W grade, as per the agreement with effect from 01.07.2010. The first year period shall be from 01.07.2010 upto 30.06.2011. You shall purchase in monthly lots of 16,667 MTs/quarterly lots of 50,000 MTs. 7.ii. Till such time the Beneficiation plant was commissioned you shall pay at the existing sale price of Rs.394/- per MT (Rupees Three Hundred 8 HCJ & RC, J W.A. No.584 of 2013 Ninety Four only per MT) loose ex-Mangampet mine/stockyard basis excusive of statutory levies like Royalty and Sales Tax etc. You shall also pay Rs.10/- per MT towards development of infrastructure in local areas.” 7. Another communication, dated 26.06.2010, was addressed by the appellant Corporation to the petitioner calling upon the petitioner to purchase Two Lakh MT of Barytes C+D+W grade with effect from 01.07.2010 ―at the prevailing prices”. The relevant portion of the communication, dated 26.06.2010, is reproduced herein below: “1. As per the agreement Investor/JVC shall complete establishment of Barytes Beneficiation Plant in a period of 2 years from the date of the agreement and shall obtain all clearances and infrastructure amenities at their cost. You have however failed to establish Beneficiation Plant within the time frame in the agreement. The Corporation as per the provisions of the agreement can terminate the agreement in the event Investor/JVC does not establish Barytes Beneficiation Plant within a period of 2 years and also forfeit the Performance Security Deposit. The Corporation vide its letter at ref (4) informed you that it restrained from terminating the Agreement and forfeiting Performance Security Deposit as above. However, till commissioning of the Barytes Beneficiation Plant and commencement of commercial production you are called upon to purchase 2 lakh MTs of Barytes C+D+W grade w.e.f. 01.07.2010 at the prevailing prices. The existing sale price is Rs. 394 per MT exclusive of all statutory levies, taxes etc. The sale price gets increased by 5% w.e.f. 08.08.2010. You shall comply with the same. 2. Further we request you to ensure completion of establishment of Barytes Beneficiation plant in all respects to commence commercial production by 30.06.2011 failing which we will be constrained to terminate the agreement at ref (1) above forfeiting the PSD amount without any further notice. We also request you to keep us informed of the progress every month, particularly, procurement technology, procurement of land and preparation; procurement of machinery and equipment and commissioning etc.” 8. It appears that failure on the part of the petitioner to purchase the monthly/quarterly lots at the rates prescribed by the appellant in their communications mentioned supra, forced the appellant to address a communication, dated 28.07.2010, informing the petitioner that since the petitioner had failed to remit the amount of Rs.65,66,798/- for purchase of the 9 HCJ & RC, J W.A. No.584 of 2013 mineral for the month of July, 2010, they were adjusting the Performance Bank Guarantee and further that the balance amount of Rs.15,66,798/- would be recovered from the available Bank guarantees. Immediately thereafter, vide communication, dated 28.07.2010, the petitioner informed the appellant that they were arranging for immediate payment, for the material cost of July, representing an amount of Rs.65,66,798/- and further that they would arrange the payment during the month of August, 2010, for purchases made in the month of August, 2010, and pleaded with the appellant not to invoke the Bank Guarantee. The amount was, however, stated to have been paid subsequently. 9. The Board of Directors of the Corporation in its 356th meeting held in July, 2011, formally gave approval for extension of time up to 31.10.2011 for establishment of the plant, which was communicated to the petitioner vide communication, dated 06.08.2011. The extension was subject to the following conditions: “a) .. to lift the quantity pertaining to the period from 01.10.2010 to 30.06.2011 at the rate of Rs. 394/ - per MT. b) This quantity should be lifted in 6 months period at the rate of 25,553 MTs per month. c) … pay the cost of the material during 1st week of every month. d) The 2nd year quantity for the period from 01.07.2011 to till commissioning of plant is to be lifted at the rate of Rs. 414/- per MT. e) The above arrangement will be upto 31.10.2011 or upto the date of commissioning of the Beneficiation Plant which is earlier. 10 HCJ & RC, J W.A. No.584 of 2013 f) The Board also decided to re-negotiate the sale price with you/JV Partner after commissioning of the plant.” 10. The petitioner, however, protested vide its communication, dated 20.09.2011, that the revision in prices and other terms and conditions sought to be enforced against the petitioner were in violation of the Agreement, dated 18.06.2008, and further offered to pay a maximum revised price of Rs.325/- per MT with an annual increase of 4% as long as the unit remained in operation. 11. The appellant, in response to the communication supra, on 09.11.2011, decided not to supply the mineral until fixation of price, after which negotiation was to be undertaken as was directed by the Board of Directors of APMDCL. The petitioner was also informed that there had been a sharp increase in the price of A & B Grade of the mineral to Rs.800/- per MT from 08.08.2011 and that supply of the said Barytes at a lesser price would cause loss to the Corporation and hence, negotiation was suggested to increase the fair value of C + D + W grade of Barytes. Option was, however, given to the petitioner to lift the mineral at the then prevailing market rate. 12. It is at that stage that the petitioner approached the learned single Judge challenging the communication, dated 09.11.2011. By virtue of the judgment and order impugned, the learned Single Judge allowed the petition by invoking the principle of promissory estoppel. It was 11 HCJ & RC, J W.A. No.584 of 2013 held that there was an unequivocal promise made by the appellant to supply the low-grade Barytes at the agreed price and that it was only on the basis of the said promise that the unit had been established by the petitioner, who had altered its position to its detriment. It was held that the appellant could not be permitted to wriggle out of the promise it had made to the petitioner. 13. It was also held that the Agreement, dated 18.06.2008, between the parties did not empower the appellant to fix a higher price for the mineral in lieu of termination of the agreement as a condition for extension of the period of completion of the project, inasmuch as, being a State-owned Corporation, it was incumbent upon it to act fairly and strictly in accordance with the terms of the Agreement. 14. The learned Single Judge also held that extension had been granted twice and that it would be reasonable to presume that the Corporation was satisfied as to the existence of valid grounds for extension of the period stipulated for completion of the plant by the petitioner. It was further held that if the Corporation was not satisfied with the reasons given by the petitioner for seeking extension, it would have been open to the Corporation to terminate the Agreement and forfeit the PSD, and that the Corporation had no right to increase the sale price in lieu of termination of the contract. 12 HCJ & RC, J W.A. No.584 of 2013 15. While placing reliance upon the judgment of the Apex Court in Ramana Dayaram Shetty v. International Airport Authority of India,1 the learned Single Judge held that the Corporation had acted in an arbitrary and whimsical manner by ignoring the specific terms of the contract and that the Agreement, dated 18.06.2008, between the parties, did not empower the Corporation to fix a higher price for the mineral in lieu of termination of the Agreement as a condition for extension of the period of completion of the project. 16. Learned Special Government Pleader, Mrs. S. Pranathi, appearing for the appellant Corporation would submit that the view expressed by the learned Single Judge was unsustainable in law, primarily for the reason that the basis for allowing the Writ Petition was on the principle of promissory estoppel which was not at all applicable, according to the settled legal position in law, to concluded contracts. Reference in this regard was made to Ester Industries Ltd. v. U.P. SEB 2 to buttress the argument that promissory estoppel would apply only in a case where there was no contract executed between the parties. 17. It was further urged that, as per the agreement, the Beneficiation Plant ought to have been commissioned within two years as was otherwise required under Clause 2 of the Agreement and that failure on the part of the 1 (1979) 3 SCC 489 2 (1996) 11 SCC 199 13 HCJ & RC, J W.A. No.584 of 2013 respondent/M/s.IBC Limited to commission the plant would have entitled the appellant Corporation to terminate the Agreement as per the contract. 18. It is stated that the respondent did pay for the ore at the rate of Rs.394/- per MT, when the performance security was sought to be invoked, which demonstrated acquiescence to the modified terms. In those circumstances, even otherwise, it was urged that the earlier clause in the Agreement for the supply of the ore @ Rs.221/- per MT with a 4% annual increase in price, was no longer available. It was also urged that the 4% increase as envisaged in the initial contract, ought to be calculated on the market value of each year and not merely compounded on the basis of Rs.221/- per MT. 19. It was also urged that the price of the mineral had increased considerably and supplying the valuable natural resource at grossly inadequate rates would be against public policy and void under Section 23 of the Indian Contract Act, 1872. 20. Per contra, learned Senior Counsel for the respondent/M/s.IBC Limited, Mr. O. Manoher Reddy, would submit that the price fixation clause (Clause 9) and the clause pertaining to time extension (Clause 2) of the Agreement were separate and independent clauses and could not be clubbed together. 21. It was urged that, having agreed to a condition in the contract that the sale price was Rs.221/- per MT with an increase of only 4% every year over 14 HCJ & RC, J W.A. No.584 of 2013 the said price, it was impermissible for the Corporation to demand a higher price for the mineral contrary to the agreed terms. 22. It was also urged that, Clause 2 of the Agreement envisaged granting of an extension, on valid grounds, to the satisfaction of the Corporation and that extension having been granted, it would presuppose that reasons for delay were found to be justified and once the reasons were found to be justified, Clause 2 did not permit the Corporation to demand higher price for the ore than what was agreed to between the parties. 23. It was also urged that the conditional extension was only envisaged till the commissioning of the plant and once the plant was commissioned, i.e., in October 2011, the original contractual rate of Rs.221/- with 4% annual increase would automatically apply. Reference in this regard was made to the communication dated 06.08.2011, to say that the arrangement @ Rs.441/- per MT would be up to 31.10.2011 or up to date of the commissioning of the Beneficiation Plant, whichever was earlier. 24. Learned counsel for the respondent/petitioner further urged that delay in commissioning of the Plant was attributed only to the petitioner, whereas the Plant was in fact a Joint Venture between APMDCL and the appellant, and both parties were equally responsible under Clause 12 for various obligations. and, that in no case could the contract be terminated in terms of the agreed 15 HCJ & RC, J W.A. No.584 of 2013 clauses and that was perhaps the reason why the contract was not so terminated. 25. It was also urged that the reason for fixing a rate of the mineral @ Rs.221/- per MT with 4% annual increase was due to the fact that there was a huge inventory of (C + D + W) grade Barytes which was lying idle at the site, which was causing environmental issues, and therefore, with a view to overcome those issues, the petitioner was setting up the Beneficiation Plant, which would solve the Corporation‘s problem of timely disposal of barytes. 26. At the very outset, we have no hesitation in holding that the very basis on which the learned Single Judge allowed the writ petition by invoking the principle of promissory estoppel, in the instant case, is untenable in law. It is no longer res integra that the principle of promissory estoppel would apply only in a case where there is no contract executed between the parties. Reference in this regard can be made to the judgment rendered in Ester Industries Ltd.(supra), wherein the Apex Court held: "5. The learned counsel for the petitioner has brought to our notice that this Court has granted leave against the judgment of another Division Bench on the question of applicability of the promissory estoppel. In this case, that question does not arise for the reason that the promissory estoppel would apply only in a case where there was no contract executed between the parties. In this case, since there exists a contract duly executed under law between the petitioner and the Board which binds them, unless it is revised, the question of promissory estoppel does not arise. Considered from this perspective, we are of the view that 16 HCJ & RC, J W.A. No.584 of 2013 the High Court has not committed any manifest error of law warranting interference." 27. In A.P. Transco v. Sai Renewable Power (P) Ltd.,3 the Apex Court held that when a matter primarily falls in the realm of contract, the parties would be governed by the agreements that they had signed, and once the agreements are signed and enforceable in law, then the contractual obligations cannot be frustrated by the aid of promissory estoppel. 28. In the instant case, in view of the fact that there was a formal contract which the parties had entered into, the principle of promissory estoppel would have no application, and therefore, to hold that the Corporation would be bound by the terms and conditions in the Agreement dated 18.06.2008, which envisaged supply of the ore @ Rs.221/- per MT, in our opinion, is clearly unsustainable in law, as the principle of promissory estoppel had absolutely no application in the facts and circumstances of the case. 29. Apart from the above, it can also be seen from the material on record, and it is the admitted position too, that there was a time frame fixed for establishment of the Beneficiation Plant, which was two years from the date of the Agreement dated 18.06.2008, as fixed under Clause 8 thereof. The appellant-Corporation was entitled to consider the issue of grant of extension, in the aforementioned period, only on valid grounds to its satisfaction. 3 (2011) 11 SCC 34 17 HCJ & RC, J W.A. No.584 of 2013 30. The timelines, however, could not be adhered to by the petitioner, as can be seen from the communication dated 19.02.2010, issued by the Corporation seeking information from the petitioner in that regard, which was responded to by the petitioner vide communication dated 25.02.2010, whereby one year extension was sought from 17.06.2010, the date on which the Plant, in the ordinary course, as per the Agreement, had to be commissioned. 31. It would not be out of place here to mention that in the communication dated 25.02.2010, the petitioner had sought extension of one year by stating that survey of the land allotted had been conducted and that the plot had been levelled for commencement of civil works. While the Corporation could have terminated the contract, instead of doing so and binding itself to the earlier conditions, as regards the price of the mineral, a condition was imposed that the petitioner would continue to purchase Two Lakh MT of Barytes (C+D+W) grade at a price of Rs.394/- per MT. Not only this, in the subsequent communication dated 26.06.2010 also, the Corporation called upon the petitioner to purchase Two Lakh MT of Barytes (C+D+W) grade with effect from 01.07.2010 ―at the prevailing prices‖. 32. It is also noticed that upon failure on the part of the petitioner to lift the mineral in terms of the modified conditions, communication dated 28.07.2010 was issued threatening adjustment of the Performance Bank Guarantee and 18 HCJ & RC, J W.A. No.584 of 2013 recovery of the balance amount from the available bank guarantees. It is in that backdrop that the petitioner undertook to arrange payment immediately on the terms and conditions specified in the aforesaid communications and deposited an amount of Rs.65,66,798/- and lifted the mineral at the rates prescribed therein. 33. It will not be out of place here to lay stress on the communication dated 26.06.2010, wherein the appellant called upon the petitioner to purchase the ore ―at the prevailing rates‖. This clearly was not the condition which was prescribed in the original Agreement dated 18.06.2008, where the price fixed was Rs.221/- per MT. The petitioner, having lifted the mineral at the rates and conditions prescribed in the communication dated 26.06.2010, read with communication dated 28.07.2010, is deemed to have acquiesced to the fresh terms and conditions fixed for supply of the ore in supersession of the earlier terms relating to price. 34. It is also not out of place to mention that the price of Rs.394/-, as mandated by the appellant in its communication dated 26.06.2010, also had clearly suggested that the sale price would get increased by 5% with effect from 08.08.2010. The 5% increase over the sale price of Rs.394/- per MT was not an annual increase but an increase which was to come into effect from 08.08.2010. 19 HCJ & RC, J W.A. No.584 of 2013 The communications dated 26.06.2010 read with 28.07.2010 would therefore suggest that the price being charged was not static but dynamic, subject to market forces and market price, which condition was readily accepted by the petitioner by making payment with a view to avoid termination of the contract. 35. Acquiescence, according to Black‘s Law Dictionary (8th Edition), means to accept tacitly or passively; to give implied consent. Acquiescence in law can either be direct, with full knowledge and express approbation, or indirect, where, despite infringement of a right, no action is taken. In SBI v. M.J. James4, the Apex Court held: “40. … acquiescence implies active assent and is based A upon the rule of estoppel in pais. As a form of estoppel, it bars a party afterwards from complaining of the violation of the right. Even indirect acquiescence implies almost active consent, which is not to be inferred by mere silence or inaction which is involved in laches. Acquiescence in this manner is quite distinct from delay. Acquiescence virtually destroys the right of the person.” In Union of India v. N. Murugesan5, it was held that acquiescence introduces a new implied agreement between the parties, and once a party acquiesces, it is not open to it to insist upon compliance of the original terms. It was held thus: 4 (2022) 2 SCC 301 5 (2022) 2 SCC 25 20 HCJ & RC, J W.A. No.584 of 2013 “25. Acquiescence would mean a tacit or passive acceptance. It is implied and reluctant consent to an act. In other words, such an action would qualify a passive assent. Thus, when acquiescence takes place, it presupposes knowledge against a particular act. From the knowledge comes passive acceptance, therefore instead of taking any action against any alleged refusal to perform the original contract, despite adequate knowledge of its terms, and instead being allowed to continue by consciously ignoring it and thereafter proceeding further, acquiescence does take place. As a consequence, it reintroduces a new implied agreement between the parties. Once such a situation arises, it is not open to the party that acquiesced itself to insist upon the compliance of the original terms.” 36. Another fact which can be deduced on a reading of the communications hereinabove is that the price that was being sought to be charged from the petitioner only till the establishment and commissioning of the Plant in question. Does it mean that the price at which the Corporation had decided to supply the mineral was fixed at Rs.394/- per MT forever or should it be presumed that the price was relevant only till the Beneficiation Plant was commissioned and production commenced where after the Corporation would supply Barytes ore at the old rate of Rs.221/- per MT. Although learned counsel for the petitioner as also the learned Single Judge appeared to have taken that line of reasoning yet, in our opinion, once the principle of promissory estoppel was held not applicable, in the instant case, and once we hold that the contract stood modified in regard to the rate 21 HCJ & RC, J W.A. No.584 of 2013 at which the ore had to be supplied on account of acquiescence of the petitioner to pick up supplies at the rate of Rs.394/- per MT from 01.10.2010 and thereafter @ Rs.414/- per MT from 01.07.2011, till commissioning of the Plant, as was fixed in terms of the communication, we have no hesitation in holding that the rates were to hold good only till the commencement of production of the Beneficiation Plant, where after the rates ought to have been renegotiated between the appellant and petitioner, who are partners in the Beneficiation Plant, which is a joint venture. It also needs to be stated that the grant of extension was not an extension simpliciter but an extension accompanied by a condition of enhancement of rate which was to hold good only till the Plant in question became operational. 37. Reversion to the old rate of Rs.221/- per MT, in our opinion, was never intended by the Corporation nor was it ever suggested in such terms. The reason why the rates were being suggested and increased in the interregnum by the Corporation from time to time initially at Rs.394/- and subsequently at Rs.414/- were that it was not known to the appellant as to when actually the Beneficiation Plant would be completed and become operational, but it was to their knowledge that the rate of Barytes, in the meantime, was increasing in the open market. 22 HCJ & RC, J W.A. No.584 of 2013 38. The rate of (C+D+W) grade Barytes in the open market today is stated to be anything close to Rs.1600/- per MT, as was the stand of the Corporation. In any case, it would be against public interest to allow the supply to the petitioner at Rs.221/- per MT when the market price was substantially higher. 39. It is a settled principle of law that insofar as the power of the State to distribute natural resources are concerned, it is incumbent upon the State or its instrumentalities that no action is taken which is detrimental to public interest and that the action which it takes is only for public good. What is in public good and public interest cannot be said to be opposed to public policy and vice versa, as was held by the Apex Court in BCCI v. Cricket Assn. of Bihar6. 40. Scope of the powers exercisable by Courts in contractual matters under Article 226 of the Constitution of India has been a subject matter of consideration of Courts from time to time. In one of the earlier cases, the Apex Court in Radhakrishna Agarwal v. State of Bihar7 the view expressed was that there would arise no question of violation of Article 14 or any other constitutional provision when the State or its agents, purporting to act within the field, could only claim rights conferred by the contract and are bound by the terms of the contract only unless some statute 6 (2015) 3 SCC 251 7 (1977) 3 SCC 457 23 HCJ & RC, J W.A. No.584 of 2013 steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract. With reference to the judgment of the Apex Court in the case of Radhakrishna Agarwal (supra) which involved discrimination at the very threshold or at the time of entering into the field of consideration or persons with whom the Government could contract, it was held that after the State or its agents enter into the field of ordinary contract, the relations are not governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se. 41. However, in Kumari Shrilekha Vidyarthi v. State of UP8, the scope of applicability of Article 14 was expanded beyond the threshold of making a contract and it was held that even after entering into the contract, Article 14 requires the State to adhere to the requirements of Article 14. 42. In Verigamto Naveen v. Govt. of A.P9., it was held: 21……. In cases where the decision making authority exceeded its statutory power or committed breach of rules or principles of natural justice in exercise of such power or its decision is perverse or passed an irrational order, this Court has interceded even after the contract was entered into between the parties and the Government and its agencies. We may advert to three decisions of this Court in Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of Bombay; Mahabir Auto Stores v. Indian Oil Corporation; and Srilekha 8 (1991) 1 SCC 212 9 (2001) 8 SCC 344 24 HCJ & RC, J W.A. No.584 of 2013 Vidyarthi v. State of U.P. Where the breach of contract involves breach of statutory obligation when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action arises out of or pertains to contract, brings within the sphere of public law because the power exercised is apart from contract.” In Praga Tools Corporation v. Shri C.A. Imanual10 , it was held that if the challenged action did not have any public element, writ of mandamus could not be issued as the action would essentially be of a private character. 43. The issue was also considered at length in ABL International Limited v. Export Credit Guarantee Corporation of India Limited 11 , and after noticing the various judgments on the point, the following legal principles were crystallized regarding maintainability of the writ petition:— “a. In an appropriate case, a writ petition as against the State or an instrumentality of the State arising out of the contractual obligations is maintainable. b. Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases, as a matter of rule. c. A writ petition involving the consequential benefit of monetary claims is also maintainable.” 44. In Joshi Technologies International Inc. v. Union of India12, the Apex Court held inter alia that the State in its executive capacity even in the 10 1969 1 SCC 585 = 1969 AIR SC 1306 11 (2004) 3 SCC 553 12 (2015) 7 SCC 728 25 HCJ & RC, J W.A. No.584 of 2013 contractual field is under obligation to act fairly and cannot practice any discrimination. It was also held that if the contract between the parties and the State/instrumentality and/or agency of State is under the realm of a private law and there was no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India for invoking its extraordinary jurisdiction. The Apex Court further held that the distinction between public law and private law element in the contract with State was getting blurred but had not been totally obliterated and that once it is found that nature of the activity or controversy involved public law element, then the matter could be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State or instrumentality or agency of the State was fair and just, or that its decision was not arbitrary. 45. In K.K. Saksena v. International Commission on Irrigation & Drainage 13, the Court held that even when a body was performing a public duty and was amenable to writ jurisdiction, its decisions would not be subject to judicial review except those which had a public law element therein. While elucidating as to what constituted a public function amenable to judicial 13 (2015) 4 SCC 670 26 HCJ & RC, J W.A. No.584 of 2013 review, reliance was placed upon R. (Hopley) v. Liverpool Health Authority14 and held: “50. ...In R. (Hopley) v. Liverpool Health Authority [2002 EWHC 1723 (Admin) : 2002 Lloyd's Med Rep 494] (unreported)(30-7-2002), Justice Pitchford helpfully set out three things that had to be identified when considering whether a public body with statutory powers was exercising a public function amenable to judicial review or a private function. They are : (i) whether the defendant was a public body exercising statutory powers; (ii) whether the function being performed in the exercise of those powers was a public or a private one; and (iii) whether the defendant was performing a public duty owed to the claimant in the particular circumstances under consideration.” 46. In M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited and Others15, the Supreme Court held that even if a contract was non-statutory in character, it would not entitle the State to ward off scrutiny of its action or inaction under the contract if it was established that such action or inaction, per se, was arbitrary even after the contract was entered into by the State. 47. Testing the facts of the present case on the touchstone of the ratio of the judgments referred to hereinabove, it can be seen that the decision of the Board of Directors taken in its 356th meeting held in July, 2011, where the Board has decided to re-negotiate the sale price after the commissioning of the plant cannot be said to be one which could be said to be arbitrary or 14 [2002 EWHC 1723 (Admin) : 2002 Lloyd's Med Rep 494] (unreported)(30-7-2002) 15 (2023) 2 SCC 703 27 HCJ & RC, J W.A. No.584 of 2013 perverse when tested on the Wednesbury principle. This we say on the basis of the reasoning based upon the communications exchanged inter se the parties reference whereto has been made in the preceding paragraphs. We cannot take away the right of any of the parties to the Agreement to make an attempt at renegotiation of the sale price, which in the eventuality of the attempt failing, may also result in termination of the contract in question. In our opinion, the appellant Corporation cannot be bound to the same conditions relating to price, despite the failure on the part of the petitioner to follow the timelines for completion and commencement of the Beneficiation Plant. 48. Having considered the issue at hand, we cannot persuade ourselves to uphold the judgment and order impugned, which is accordingly set aside. The Writ Appeal is allowed. It shall be open to the parties to negotiate with each other as regards the price of the mineral in question. No costs. Pending miscellaneous applications, if any, shall stand closed. DHIRAJ SINGH THAKUR, CJ. RAVI CHEEMALAPATI, J. akn/ssn 28 HCJ & RC, J W.A. No.584 of 2013 HON’BLE MR.JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE & HON’BLE MR. JUSTICE RAVI CHEEMALAPATI Writ Appeal No: 584 of 2013 DATE : 31.12.2025 AKN/SSN