Andhra HC (Pre-Telangana)
Suravaram Sudhakar Reddy vs Transmission Corporation Of A.P. ... on 25 April, 2003
Equivalent citations: 2003(4)ALD827, 2003(4)ALT314
Author: Bilal Nazki
Bench: Bilal Nazki
JUDGMENT Bilal Nazki, J.
1. When this writ petition came up for hearing on admission the learned Senior Counsel appearing for respondent No. 11 Mr. P. Chidambaram raised a preliminary objection that the writ petition is not maintainable and respondent No. 11 has filed counter taking objections to the maintainability of the writ petition therefore he would like to argue the matter on the maintainability in the first instance and if the petition is admitted as maintainable then he would file an additional counter so that the case is contested on merits. In these circumstances the case has been heard only on the question of maintainability of the writ petition.
2. Now coming to the facts, this writ petition has been filed in public interest by the petitioner who claims to be Secretary of the Communist Party of India for Andhra Pradesh unit. He had been in public life for several years and had been a Member of Parliament. As he was interested as a consumer and as a representative of consumers he petitioned Regulatory Commission which passed an enhanced Tariff order for 2002-2003 at the instance of A.P. TRANSCO on 24th March, 2002 in terms of provisions of A.P. Electricity Reforms Act, 1998 (hereinafter referred as 'the Act'). The objections he had taken and the pleas he had advanced before the Regulatory Commission were not accepted and primarily he was aggrieved of the Regulatory Commission's refusal to go into the question of legality of Power Purchase Agreements (PPAs) entered into by the respondents with private power generators. He sought the following directions from this Court:
"Under the circumstances, it is just and necessary that this Court may be pleased to issue a writ, order or direction more in the nature of Mandamus directing the official -respondents to review all the Power Purchasing Agreements that were entered between the A.P. TRANSCO or the erstwhile APSEB and the Government of Andhra Pradesh insofar as all independent Power producers are concerned with particular reference to Spectrum since the same are unconstitutional, illegal and are detrimental to the consumers of electricity in Andhra Pradesh and consequently set aside the tariff order dated 24-3-2002 for the year 2002-2003 of the Regulatory Commission by declaring the same as unconstitutional and illegal and pass such other orders as this Hon'ble Court may deem tit and proper in the circumstances of the case."
It appears that the petitioner himself was conscious that there was an alternative remedy available to him under the Act because in para-3 of the writ petition he had referred to Section 39 of the A.P. Electricity Reforms Act, 1998.
3. In the counters and also the arguments which were made by the learned Counsel for the respondents, except for respondent No. 12, it was submitted that the writ petition was not maintainable in view of Section 39 of the Act. It is also submitted that the writ petition was not maintainable because it was not a litigation in public interest but it was basically a dispute between respondent No. 11 and respondent No. 12 and by this writ petition the disputes between respondents 11 and 12 are being tried to be agitated in the guise of public interest litigation. Thirdly it is contended that the Government entering into agreements was a policy matter and was beyond the scope of judicial review.
4. Before coming to the rival arguments of the learned Counsel for the parties, a brief history of the Power Purchase Agreements and in the context in which they had been made will have to be gone into. According to the petitioner, Power Purchase Agreements were made by the official respondents with independent power purchasers and under these agreements power is purchased from the producers by the A.P. TRANSCO and then it is being used for distribution amongst the consumers. The petitioner feels aggrieved of the whole system of purchasing the power from private generators as it would have the effect of burdening the consumers with exorbitant rates in which no way was related to the cost of production of power. When this objection was raised by the petitioner before the Regulatory Commission the Regulatory Commission refused to go into the matter on the ground that the agreements had been entered into before 1999 i.e., before the creation of the Commission. Mr. S. Ramachandra Rao, learned Senior Advocate appearing for the petitioner contended that the Power Purchase Agreements were bad and conditions were created where the power producers get benefited at the cost of consumer and a huge profit was ensured for the power producers/generators. He submitted that he could not get redressal of his grievance under Section 39 of the Act by filing an appeal. He could also, not go to Civil Court because of the bar created under Section 50 of the Act. Section 39 of the Act lays down that, a pefson aggrieved by any decision or order of the Commission passed under the Act may file an appeal to the High Court of Andhra Pradesh within sixty days from the date of communication of the decision or order of the Commission to him, on questions of law arising out of such order. " The High Court has also the power to condone the delay of further period of thirty days if there was sufficient cause shown for not filing the appeal within the sixty days time prescribed. Section 50 creates a bar from challenging order of the Commission made under the Act, in a Civil Court. Mr. S. Ramqchandra Rao submitted that the appeal, if any, would be limited to the questions of law arising out of such order therefore the -Power Purchase Agreements which have been challenged in this writ petition could not be successfully challenged in an appeal where it has been alleged that these agreements were handy work of manipulation and also of kickbacks, those questions could only be gone into by the High Court in a writ petition. Therefore, he submits that there was no bar for this Court to entertain the writ petition in the factual matrix of the present case. He also contended that, where public interest was involved and the scope of the appeal was limited by the statute, the High Court's power to grant justice is not fettered on the ground that there was an insufficient alternate remedy available. The consequences of refusal to entertain this writ petition would be that the order of the Tribunal would become Una! and would be detrimental to the interests of the consumers who are paying exorbitant price for the electricity they are consuming.
5. Before appreciating this argument of Mr. Ramachandra Rao it will be profitable to refer to the arguments made by learned Counsel for the respondents led by Mr. P. Chidambaram, Senior Advocate who appeared for respondent No. 11 because the Counsels for other respondents, except respondent No. 12, have also taken the objection to the maintainability of the writ petition. Mr. Chidambaram submitted that the writ petition was not maintainable on the grounds which have been mentioned herein above. He submitted that, all along the petitioner knew that there were number of companies with which the State had entered into agreements but he only made respondents 11 and 12 a party but left all others. He submits that respondents 11 and 12 had a long history of litigation between themselves. There are matters pending in the Supreme Court, there were matters pending in the Delhi High Court, there were matters pending in a London Court and it is at the instance of respondent No. 12 that this Writ petition has been filed by the petitioner so that another forum is created for the benefit of respondent No. 12. In this connection the learned Senior Counsel referred to Annexure-B of his counter-affidavit in which a comparative table has been given to show that some of the allegations levelled against respondent No. 11 in the present Writ petition had been levelled by respondent No. 12 against respondent No. 11 in different Courts. Some of the allegations which are levelled in this Writ petition had been levelled by respondent No. 12 against respondent No. 11 in a proceedings before a Division Bench of Delhi High Court which was dismissed against which an SLP is pending before the Supreme Court. Some of the allegations levelled by the petitioner against respondent No. 11 are similar allegations which were levelled by respondent No. 12 against respondent No. 11 in C.C. 953, 1506, 1507 of 2001 pending before the XI Metropolitan Court, Secunderabad. These allegations were also levelled in SLP No. 10768-69 of 2000 pending before the Supreme Court. Similarly, some of the allegations levelled by the petitioner are same as were alleged by respondent No. 12 against respondent No. 11 in a derivative claim action before the Chancery Division of High Court of London which was dismissed for lack of jurisdiction on 20-12-2001, appeal pending before the Court of Appeals, London. The learned Counsel submits that, it is not coincidence that all those allegations which were levelled by respondent No. 12 against respondent No. 11 have been levelled by the petitioner against respondent No. 11 in the present writ petition. He submits that, the doubt that the writ petition has not been filed genuinely in public interest has been further enhanced by the fact that though in the writ petition a specific prayer has been made that all Power Purchase Agreements entered into by the State Government with the manufacturers/generators should be quashed, all the manufacturers generators have not been made parties, only respondent No. 11 who is an agreement holder has been made a party in the writ petition. While analysing the prayer made by the writ petitioner the learned Senior Counsel submitted that, in fact three prayers have been made by the petitioner (1) a mandamus was sought directing the official respondents to review all the Power Purchase agreements that were entered between A.P. TRANSCO or the erstwhile APSEB and the Government of Andhra Pradesh insofar as all independent power producers are concerned, (2) to review Power Purchase Agreements with particular reference to Spectrum, and (3) to declare the order of the Regulatory Commission dated 24-3-2002 as unconstitutional and illegal. The learned Counsel submits that the prayer also shows that the petitioner was particularly interested in seeing that the agreement entered into by the A.P. TRANSCO and the State of Andhra Pradesh with Spectrum is reviewed. He submits that all those who had entered into agreements were not made parties in the writ petition, only Spectrum i.e., respondent No. 11 was made party. A specific relief was claimed against Spectrum whereas a general relief was claimed against others which could not otherwise be granted because of the absence of those parties. He further fortified his argument by submitting that all the allegations which have been levelled in the writ petition from para 17 to 26 have been made only against Spectrum i.e., respondent No. 11 and no allegations have been made against any other enerator/manufacturer. We need not reproduce all those paragraphs but para-17 which is introductory in nature may be reproduced. Para-17 of the writ petition reads as under:
"17. A typical case study of Spectrum Power Generation reveals the misappropriation of Funds Management and any escalation of the cost would be a burden on the consumer, detrimental to His interests and beneficial to the company as well as the people who are in Management of the power plants. The Saga of Spectrum is narrated below:
(a) On 9th March, 1992 Government of Andhra Pradesh issued a letter selecting Spectrum Technologies, USA for setting up second gas based power project in Andhra Pradesh and requests Central Government to allot gas.
(b) At the same time NTPC has land and gas allocation at Kakinada. It was decided by the Power Ministry, Government of India to execute the Power project as joint venture between NTPC and Spectrum.
(c) Pursuant to the said decision of Government of India on 19-6-1992 a Memorandum of Understanding was signed between NTPC and Spectrum.
(d) A new company was incorporated by the name Spectrum Power Generation Limited on 26-10-1992 and a Power Purchase Agreement was signed between SPSEB and SPGL in June, 1993 and modified in July, 1994.
(e) From August, 1993 to 1995 an amount of 9.3 million US Dollars was invested by STUSA (Respondent No. 12) i.e., 29.13 crores of rupees and SPGL (Respondent No. 11) signed a loan agreement with IDBI (Respondent No. 8) and other financial institutions on 21-11-1994 for an estimated loan of Rs. 544.6 crores with an equity of 237.4 crores for a total project cost estimate of 778 crores.
(f) SPGL signed engineering, procurement and construction (EPC) contract with Rolls Royce on a turnkey fixed price and timely completion (December, 1994) ensuring EPC contract delivery with a ten year operation and maintenance contract signed on March, 1995.
(g) The IDBI appointed S.B. Billimoria and Co., to investigate the affairs of Spectrum and as per the investigation of S.B. Billimoria and Co., the following discrepancies are revealed about bogus contracts awarded and siphoning of the funds.
Name of the contractor Agreement date
1. MA Razack 15-7-1994 3.36.12 crores
2. Reel Builders 5-10-1993 10.0.00 crores
3. Blue Star Construction 5-11-1993 10.5.00 crores
4. Kris Engineers 5-11-1993 3.30 crores
5. GM Constmction Co.
14-11-1993 1.50 crores Total Rs.28.66 crores The agreements entered above were on forged stamp papers according to reports published in newspapers regarding C.C.No. 1506 of 2001 in Hon'ble XI Metropolitan Magistrate Court of Secunderabd.
(h) It is also revealed by the investigation made by the Economic Times that the SPGL Managing Director has received Rs. 102 crores of money towards commission charges (Kickbacks) paid by Rolls Royce for obtaining O&M contract in SPGL through a company solely owned by him. Towando Services Inc. Due to the escalation of the project cost above the real cost, the consumer is burdened by high tariff unbearable, unreasonable and unjustified.
Violation of Debt Equity Ratio.
Though the original' project cost was 778 crores.
With debt equity ratio 544.6 : 233.40 crores. The debt in real terms is Rs. 840.04 crores.
With the out cost settlement with NTPC it is now Rs. 890.04 crores. The authorized capital of the company is Rs. 235 crores and the paid up is 117.93 crores with the following break up.
STUSA 29.19, JFI : 32.07, R.R. Godavari : 56.04 crores.
Money was siphoned with bogus contracts Rs. 25.66 crores and amount realized towards commission charges 102 crores and the various irregularities are clearly established.
Because of the above irregularities the project cost is escalated at the estimate level itself and further escalation reveals the burden on common man because he is levied additional charges in terms of fixed cost at the rate of several hundreds of crores.
The fixed charges being high, A.P. TRANSCO seems to have had no alternative than to purchase its power requirements only from Independent Power Purchase Agreements rather than A.P. Genco and accordingly Merit Order dispatch is given.
Table of Fixed Charges Capacity in Megawatts Amount in Rs. Crores Variable per unit Total paid (crores) GUIL 216 195 0.84 348.9 Specturm 208 183 0.84 321.2 Kondapur 355 336.9 1.00 601,5 BSES 220 164.5 0.79 292.2 Public Sector Undertakings Capacity in Megawatts Amount in Rs. Crores Variable per unit Total paid (crores) AP Genco 2953 2150 1.08 4093 APGPCLI 100 4.8 0.83 136 APGPCLII 172 25.5 0.86 51.6 Variation Spectrum: 87.98 lakhs PMW as fixed charges.
APGPCL : 60.71 lakhs PMW as fixed cost inspite of 42% only purchased by A.P. TRANSCO.
In the light of the above facts, the petitioner has requested APERC to review the Power Purchase Agreements, because due to the non-compliance of the debt-equity ratio agreed upon, the debt has increased and the debt servicing would be horribly burdensome on consumers."
Thirdly he also contended that the order was appealable and the matters which were raised could have been considered in appeal also. Lastly he contended that entering into agreements by the State Government and A.P. TRANSCO is a matter of policy. He referred to paragraphs 3 to 12 of the Writ petition to show that this is the policy of the State Government which has been challenged and the policy of the State Government would not be subject to judicial review of the Court as is settled by the Supreme Court. In this connection reference may be made to some of the paragraphs in the Writ petition. Para-4 reads:
"It is further submitted that all the Power Purchase Agreements entered by the respondents, by virtue of which the power consumers throughout the State are burdened with ever escalating costs of power are totally one sided and loaded in favour of the private parties called independent power producers to the utter detriment of all the electricity consumers in the State. They have the effect of burdening the power consumers with exorbitant rates and are no way related to the real cost of production of power. In reality they are loaded heavily in favour of promoters and the cost is ever escalated beyond all accepted norms of either commercial viability or legal norms. What has happened in reality, being the respondent authorities be it State Government or Central Government virtually were taken for a ride by the private independent power producing companies throughout the country with particular reference to Andhra Pradesh in the name of reforms. The shortage of power was made an excuse for ushering the reforms and the entire process of the so-called reforms has resulted in extinction of one of the most profitable and efficient State Electricity Board i.e., APSEB. The erstwhile APSEB was run by eminent engineers like Sri Narla Tata Rao. The various power projects in our State in the Public sector either Central or State were run remarkably well and they were planned and created by great men like Dr. K.L.Rao, Jalagam Vengala Rao, former Chief Minister and Narla Tata Rao and they were adjudged as most efficient and good and cheap power producers."
In para-5 it is stated:
"Now in the name of reforms, firstly the entire Andhra Pradesh State Electricity Board is demolished, secondly the whole of that glorious structure was vivisected into various meaningless companies either, meant for generation or for the so-called distribution apart from the fact that there is no co-ordination between various wings in the present electrical set up. In Andhra Pradesh they have become more and more top heavy in administration and they are having huge and continuous losses to the tune of several thousands of crores of rupees per year and the losses are mounting up."
6. These arguments were also reiterated by the learned Additional Advocate-General and also the Advocates appearing for other respondents. Respondent No. 16 has also filed a counter stating therein that - they are in no way connected with either respondent No. 11 or respondent No. 12. The learned Counsel appearing for respondent No. 16 submitted that Rolls Royce had about 1000 companies throughout the world and may be one of the company had some business connection with respondent No. 11 or 12 or both, but respondent No. 16 has never been agent for respondent No. 11 or 12.
7. Respondent No. 12 submitted that he had no knowledge about most of the issues raised in the writ petition and his knowledge is confined to the affairs of respondent No. 11 as set out in the writ petition. He stated in para-6 of this counter;
"It is respectfully submitted that the only remedy available to the set right of the ills is to allow the matter to be proceeded in the Court at London against Rolls Royce Group of companies so that the monies call be recovered for the benefit of SPGL, which can be thereafter repaid to the institutions. This will also result in scaling down the project cost, which would result in the diminution of burden for A.P. TRANSCO in terms of tariff. The Hon'ble Court may consider the aforesaid facts and pass appropriate orders."
Respondent No. 1 has also raised same objections which have been raised by other respondents and contested the petition on merits as well.
8. Now, the learned Senior Counsel Mr. S. Ramachandra Rao, while replying to the arguments advanced by the learned Counsel for respondents, submitted that, it is true that the knowledge the petitioner had with regard to illegalities committed by respondent No. 11 had been derived by him from respondent No. 12. He submits that such matters do not see the light of the day and are always done behind the curtain, but since there were disputes between respondents 11 and 12 the matters became known to the public at large. Since the matters are pending in various Courts therefore this was easy to acquire the knowledge with respect to Spectrum i.e., respondent No. 11 and the petitioner could have no knowledge with respect to other generators. He submitted that, whenever a petitioner in a public interest case comes to the Court he has always to face an objection that the writ petition is not in public interest but is motivated for some other interests and whenever a petitioner comes without sufficient material an objection is raised that sufficient material is not available and when sufficient material is available objections of the present kind as raised by Mr. Chidambaram are raised. Mr. Ramachandra Rao, in this connection has referred to many judgments but it will be suffice to refer to one of the latest judgments of the Supreme Court reported in Balco Employees Union v. Union of India, (2000) 2 SCC 333, which also dealt with power of the Court to review policy matters. While dealing with the scope of Public Interest Litigation the Supreme Court said:
"What public interest litigation is meant to be has been explained at length in S.P. Gupta v. Union of India (1981 Supp. SCC 87). Public interest litigation in that case was filed relating to the appointment and transfer of Judges and it is in this connection that the question arose with regard to the locus standi of the petitioner to file the writ petition. While deciding this aspect, this Court examined as to what is the nature of the public interest litigation and who can initiate the same. At p.215 Bhagwati, J. observed as follows: (SCC para 20) "It is for this reason that in public interest litigation - litigation undertaken for the purpose of redressing public injury, enforcing public duty, protecting social, collective, 'diffused' rights and interests or vindicating public interest, any citizen who is acting bona fide and who has sufficient interest has to be accorded standing."
82. The limitation within which the Court must act, and the caution against the abuse of the same is referred to by Bhagwati, J., at p.219-20 as follows: (SCC para 24) "24. But we must be careful to see that the member of the public, who approaches the Court in cases of this kind, is acting bona fide and not for personal gain or private profit or political motivation or other oblique consideration. The Court must not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain a political objective. Andre Rabie has warned that 'political pressure groups who could not achieve their aims through the administrative process' and we might add, through the political process, 'may try to use the Courts to further their aims'. These are some of the dangers in public interest litigation which the Court has to be careful to avoid. It is also necessary for the Court to bear in mind that there is a vital distinction between locus standi and justiciability and it is not every default on the part of the State or a public authority that is justiciable. The Court must take care to see that it does not overstep 'the limits of its judicial function and trespass into areas which are reserved to the executive and the Legislature by the Constitution. It is a fascinating exercise for the Court to deal with public interest litigation because it is a new jurisprudence which the Court is evolving, a jurisprudence which demands judicial statesmanship and high creative ability. The frontiers of public law are expanding far and wide and new concepts and doctrines which will change the complexion of the law and which were so far as embedded in the womb of the future, are beginning to be born.
25. Before we part with this general discussion in regard to locus standi, there is one point we would like to emphasise and it is, that cases may arise where there is undoubtedly public injury by the act or omission of the State or a public authority but such act or omission also causes a specific legal injury to an individual or to a specific class or group of individuals. In such cases, a member of the public having sufficient interest can certainly maintain an action challenging the legality of such act or omission, but if the person or specific class or group of persons who are primarily injured as a result of such act or omission, do not wish to claim any relief and accept such act or omission willingly and without protest, the member of the public who complains of a secondary public injury cannot maintain the action, for the effect of entertaining the action at the instance of such member of the public would be to foist a relief on the person or specific class or group of persons primarily injured, which they do not want.
Then it referred to many other judgments and finally coming to the decision which had been challenged before the Court, it said;
"It will be seen that whenever the Court has interfered and given directions while entertaining PIL it has mainly been where there has been an element of violation of Article 21 or of human rights or where the litigation has been initiated for the benefit of the poor and the underprivileged who are unable to come to Court due to some disadvantage. In those cases also it is the legal rights which are secured by the Courts. We may, however, add that public interest litigation was not meant to be a weapon to challenge the financial or economic decisions which are taken by the Government in exercise of their administrative power. No doubt a person personally aggrieved by any such decision, which he regards as illegal, can impugn the same in a Court of law, but, a public interest litigation at the behest of a stranger ought not to be entertained. Such a litigation cannot per se be on behalf of the poor and the downtrodden, unless the Court is satisfied that there has been violation of Article 21 and the persons adversely affected are unable to approach the Court."
One of the petitions before the Supreme Court filed by one of the Advocates Sri B.L. Wadhera in public interest was not entertained by the Supreme Court.
9. We are not convinced of the pleas of Mr. Ramachandra Rao for the following reasons. If the petitioner had public interest that all Power Purchase Agreements were to the detriment of the people of Andhra Pradesh he would have atleast taken care of making all generators/manufacturers as parties to the Writ petition. The learned Counsel for the petitioner submitted that, it was not known to him as to who were the manufacturers besides Spectrum. But, that is not correct. In the Writ petition itself the petitioner has given reference even to the pages of the Regulatory Commission's order and the Tariff Order for 2002-2003 clearly mentions the names of all with whom the agreements were entered into. The learned Counsel submitted that the Tariff Order 2002-2003 was not in his possession and it was given to him by the respondents during the hearing of these proceedings. This is belied by the Writ petition itself. In para-14 of the Writ petition reference has been made to the Regulatory Commission's Tariff Order dated 24th March, 2002. In sub-para (a) it is stated:
"At paragraphsr216 and 219 of the order the finding that the overall systems loss is 28.4% which is to say the lest is deplorable. The Commission says at paragraph 219..................
In paragraph 311 the losses are 17.01% (East), 21.25% (South), 25.01% (Central and 21.25 (North). These losses have been accepted by the Commission."
Then in sub-para (e) it is stated:
"The So called efficiency gains dealt in para 105 at page 43 .....
At para 219, the Commission has preferred.............."
So, it cannot be believed that the report of the "Regulatory Commission was not available with the petitioner at the time of drafting the writ petition. Specific references have been made to specific paras in the report. We are further fortified in our view by the fact that, an interim prayer was also made pending disposal of the writ petition which reads as under:
"Pending disposal of the writ petition, it is prayed that this Hon'ble Court may be pleased to direct the Government of Andhra Pradesh and Government of India to take steps to review the Power Purchase Agreements with reference to Spectrum after conducting an independent investigation by CBI with reference to the charges made against the said respondent by this petitioner in this writ petition and pass such other orders."
The petitioner wanted an independent investigation by CBI in case of respondent No. 11 alone and not the other respondents.
10. Coming to the objection raised with regard to the maintainability of the writ petition on the ground that there was an alternative remedy available, the learned Counsels appearing for the respondents have submitted that all questions raised in this writ petition could have been gone into in the appeal therefore the petitioner cannot claim a right of getting the matters decided in a writ petition. They have also contended that limitation is prescribed and the petitioner had to file appeal within sixty days of the order having been passed. The order was passed on 24th March, 2002, the High Court could have condoned delay of further 30 days, but beyond 90 days of the publication of the order no appeal could be entertained. Since the order was passed on 24th March, 2002 and the writ petition was filed in September, 2002 i.e., after about six months, therefore the writ petition could not be entertained. It is also contended that the Tariff Order is passed every year in terms of the Act and the year 2002-2003 for which Tariff order had been passed on 24th March, 2002 has already come to an end, a fresh Tariff Order has also been passed by the Commission therefore any challenge to Tariff Order 2002-2003 would be academic in nature. We agree with the learned Counsel for the respondents in this regard.
11. In support of the argument that this Court cannot review the policy of the State to enter into Power Purchase Agreements the learned Senior Advocate Mr. Chidambaram relied on various judgments of Supreme Court including Sterling Computers Ltd. v. M&N Publications Ltd., , Delhi Science Forum v. Union of India, and Balco Employees Union v. Union of India (supra) to which a reference has been made herein above. In Sterling Computers case, (supra), the Supreme Court in para-17 held:
"It is true that by way of judicial review the Court is not expected to act as a Court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case."
Then the Supreme Court quoted from the book of Prof. Wade titled Administrative Law. Then in para-18 while referring to an England judgment the Supreme Court held:
"While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans (1982 (3) All ER 141) where it was said that:
"The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorized or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court."
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans the Courts can certainly examine whether "decision making process" was reasonable, rational, nor arbitrary and violative of Article 14 of the Constitution."
The matter appears to have been concluded by the judgment in Balco Employees' Union case (supra). In this judgment, all the earlier judgments were considered and it was ultimately held that a policy decision would not be subject to I judicial review unless the decision is contrary to any statutory power or the Constitution. Court cannot examine relative merits of different economic policies and cannot strike down a policy merely on the ground that another policy would have been fairer and better. The Supreme Court, in this case, was considering the policy relating to disinvestments in public sector. The Court refused to go into the question of desirability of disinvestments in public sector.
12. Similar questions have been raised in this writ petition that private party agreements could not be made and A.P. TRANSCO should not be allowed to purchase power from the private sector. A detailed reference has been given to the paragraphs in the writ petition in this connection and the petitioners have tried to show that the policy with regard to power generation earlier was better, power was available at a cheaper rate and the State of Andhra Pradesh was surplus in power sector.
13. Mr. Ramachandra Rao, however, referred to a judgment of Supreme Court in Chaitanya Kumar v. State of Karhataka, . He submitted that, if grant of contract was arbitrary, the High Court could not refuse to set aside the contract. There is not sufficient material before us to come to a conclusion, whether Power Purchase Agreements were arbitrary. There are dozens of Power Purchase Agreements, one of them has been made a party to this writ petition and material whatever is available it is with respect to respondent No. 11 alone and it is also on record that respondent No. 11 is the cheapest supplier of power to the A.P. TRANSCO. It was also contended at the Bar that respondent No. 11 was cheapest in the country. Therefore, this judgment could not come to the rescue of the writ petitioner.
14. For these reasons, we uphold the argument made by the learned Counsel for the respondents that the writ petition is not maintainable. The writ petition is accordingly dismissed.