IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No. 6880 of 2010 alongwith CWP Nos. 6537 and 7361 of 2010 Judgment reserved on: 9.8.2011 Date of decision: 13.9.2011. 1. CWP No. 6880 of 2010 Aleo Manali Hydro Power Pvt. Ltd. …Petitioner. Versus State of H.P. and others ....Respondents. 2. CWP No. 6537 of 2010 Starsilver Mercantile Company Pvt. Ltd. …Petitioner. Versus State of H.P. and others ....Respondents. 3. CWP No. 7361 of 2010 Sinner Engineering File Works Pvt. Ltd. …Petitioner. Versus State of H.P. and others ....Respondents. Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting ?1 Yes For the Petitioner(s) : Mr. R.L.Sood, Senior Advocate with Mr. Arjun Lall, Advocate (in CWP No. 6880 of 2010) and Ms. Jyotsna Rewal Dua, Advocate (in CWP Nos. 6537 and 7361 of 2010) For the Respondent(s) : Mr. R.K.Bawa, A.G. with Ms. Ruma Kaushik, Addl. A.G. and Mr. J.S.Rana, Asstt. A.G. for respondent No.1 in CWP No. 6880 of 2010, for respondents No.1 & 2 in CWP No. 6537 of 2010 and in CWP No. 7361 of 2010.) 1 Whether reporters of Local Papers may be allowed to see the Judgment ? yes 2 Mr. Trilok Jamwal, Advocate for respondents No.2 and 3 (in CWP No. 6880 of 2011) Mr. Vikrant Thakur, Advocate for respondent No.4 ( in CWP No. 6880 of 2010) Mr. Ajay Mohan Goel, Advocate for respondent No.5 (in CWP No. 6880 of 2010). Mr. Neil Hildreth, Advocate with Mr. Sanjeev Bhushan, Advocate for respondent No.3 (in CWP No. 6537 of 2010). Kuldip Singh, Judge This judgment shall dispose of CWP No. 6880 of 2010, CWP No. 6537 of 2010 and CWP No. 7361 of 2010. 2. The petitioner in CWP No. 6880 of 2010 has prayed for quashing of guidelines contained in letter dated 10.2.2009 Annexure PR, amended guidelines Annexure PT dated 10.11.2010 being inoperative against petitioner for allotment of Jobrie Hydro Electric Project. The prayer has also been made for quashing notice inviting proposals dated 5.8.2010 Annexure PS. The direction has also been sought against respondents No.1 and 2 to allot the Jobrie Hydro Electric Project in favour of the petitioner, execute Memorandum of Understanding as well as pre implementation agreement in terms of the original Hydro Power Policy, 2006. In alternative, prayer has been made to permit the petitioner to participate in the bidding process, in case the petitioner is not declared the highest bidder then the petitioner be reserved the right of first refusal, in case it decides not to match the bid of the highest bidder. 3 3. The petitioner in CWP No. 6537 of 2010 has prayed for quashing of NIT Annexure P-15 in so far as it includes Nesang 10 MW Hydro Power Project in District Kinnaur with direction to the respondents to allot the said project to petitioner in terms of 2006 Hydro Power Policy and in accordance with the terms and conditions in advertisement dated 7.1.2006. 4. The petitioner in CWP No. 7361 of 2010 has prayed for quashing of communication Annexure P-10 dated 21.7.2010 and Annexure P-15 with respect to 12 MW Ropa Small Hydro Electric Power Project in District Kinnaur with further direction to respondent to allot the said project to the petitioner in terms of 2006 Hydro Power Policy and in terms of advertisement dated 7.1.2006. CWP No. 6880 of 2010: 5. The case of the petitioner is that as per Hydro Power Policy, 2006 (for short 2006 Policy) of respondent No.1, Power Projects above 5 MW capacity were categorized as follows:- CATEGORY-I: Projects above 5MW-100 MW installed capacity Projects to be allotted through MoU route. CATEGORY-II: Projects above 100 MW installed capacity Projects to be allotted through ICB route The respondent No.1 as per 2006 Policy issued a Global Notice Inviting Proposals (NIPs) for 28 projects and self Identified projects on 7.1.2006 and on 19.4.2006. The last date for submission of bids with respect to self identified project was 30.6.2006. In NIP, the projects were categorized into three parts. Part-III is of self identified projects (above 5MW). The Jobrie Hydro Electric Project which petitioner intended to execute and commission falls in Category-I of 4 Part-III of NIP. The petitioner self identified Jobrie project in the year 2004-05 with tentative installed capacity of 5.5. MW. The tentative installed capacity was subject to the Techno Economic Clearance (TEC) to be accorded by the competent authority after carrying out the inspection. 6. The petitioner in April, 2006 approached a Technical Consultant i.e. Small Hydro Engineers Consultants Private Ltd. and entrusted to it the work of investigations of proposed Jobrie Hydro Electric Project, Manali. The Consultant was called upon to prepare the Pre Feasibility Report (PFR)/Detailed Project Report (DPR) and other necessary reports and documents connected with the Jobrie Project. The petitioner submitted tender with respect to Jobrie Project on 29.6.2006. The petitioner spent considerable amount on preliminary investigation in order to become eligible for staking claim for the allotment of Jobrie Hydro Electric Project as a self identified project. Thus, definite identifiable positive Intellectual Property Rights (IPR) accrued in favour of the petitioner in Jobrie Hydro Electric Project. 7. On the basis of investigations carried out by the technical consultants of the petitioner, a brief project proposal was prepared. The petitioner applied to respondent No.3 on 19.6.2006 requesting for the issuance of bid document. The petitioner in terms of NIP submitted its bid on 29.6.2006 for self identified Jobrie Hydro Electric Project having 5.5. MW as per preliminary estimates. The petitioner deposited requisite fees in the sum of Rs. 2,00,000/- for tender purchase and Rs. 5,50,000 (Rs.1,00,000/- per MW) as security as per NIP towards non-refundable process fee. 5 8. The petitioner on 22.5.2007, 16.6.2007 and 9.7.2007 gave some clarifications to respondents, they were called upon to allot the project to the petitioner and to sign the Memorandum of Understanding (MoU) as per 2006 Policy. Some correspondence was exchanged in between petitioner and respondents No.1 to 4 for joint inspection of the site. The petitioner legitimately expected that in terms of 2006 Policy, they would be allotted the project as the petitioner had spent huge amount, time, efforts and completely displaced itself on account of 2006 Policy. A legitimate expectation had lawfully arisen in favour of the petitioner that Jobrie self identified project would be allotted to the petitioner as the petitioner had identified IPR in the project. 9. In the meantime, the joint inspection of the site was carried out. The technical team of respondents No.2 and 3 cleared the site and approved the project proposal. The petitioner believed that technical team of respondents No.2 and 3 submitted positive report to the respondents. However, the petitioner was not invited to sign the MoU nor Jobrie project was allotted to the petitioner, although, the petitioner satisfied all requisite parameters. 10. In the meantime the petitioner came to know that respondent No.1 was contemplating to allot power project of capacity of more than 5 MW, through the competitive bid route. The petitioner immediately addressed letter dated 15.12.2009 to the Chief Minister and requested for allotment of Jobrie project to petitioner. This request was repeated on 14.3.2010. 11. The petitioner some time in August, 2010 learnt that respondent No.1 through Principal Secretary (MPP & Power) had 6 issued communication dated 10.2.2009. The petitioner was also shocked to read NIP which had been got published by respondent No.1 in several newspapers on 5.8.2010. The guidelines dated 10.2.2009 were stated to have been communicated by respondent No.1 to respondents No.2 and 4 in respect of the allotment of self identified category above 5 MW projects. The guidelines dated 10.2.2009 are not applicable to petitioner for allotment of self identified Jobrie power project to petitioner. The respondents are under obligation to execute MoU and other connected documents in favour of the petitioner regarding Jobrie project. 12. The guidelines dated 10.2.2009 are arbitrary, discriminatory and same cannot be permitted to take away the Intellectual Property Rights of the petitioner in the Jobrie power project. The respondents are estopped by their acts, deeds and acquiescence from denying the allotment of the Jobrie project to the petitioner. The respondent No.1 has discriminated the petitioner by adopting a discriminatory and arbitrary policy of pick and choose as the project of the petitioner is one of the only three projects out of a minimum of 16 to 20 self identified projects which were advertised and qua which open bids were invited by the State Government for allotment through bidding. 13. The guidelines dated 10.2.2009 have drastically changed 2006 policy regarding self identified projects above 5 MW. As per guidelines dated 10.2.2009 self identified projects such as Jobrie project are also now to be allotted through bidding as opposed to the earlier notified policy guidelines where the process 7 of bidding was neither declared or specified or required to be followed for self identified projects. 14. The acquired IPR of petitioner in Jobrie project cannot be permitted to be taken away by the guidelines dated 10.2.2009. The respondents have no right to advertise the Jobrie power project of petitioner and to notify the bids qua the same and allot the same in favour of any person other than the petitioner through bid process. 15. The guidelines dated 10.2.2009 have not been notified nor advertised or posted on the relevant websites of the respondents. According to the guidelines dated 10.2.2009 the petitioner will be only given a 30% leverage in matching the free power to be given to the Government from the project. The guidelines are vague, ambiguous and arbitrary. The respondent No.1 has put the petitioner in an absolute no win situation. It shall now be possible for any other Independent Power Producer (IPP) to outbid the petitioner-company who has invested amount, time, energy and effort on the project in identifying the Jobrie project. 16. The respondent No.1 has amended guidelines dated 10.2.2009 by further guidelines dated 10.11.2010. The guidelines dated 10.11.2010 for the same reasons are highly discriminatory, arbitrary, ambiguous and not operative against the petitioner and its vested interest in the matter of allotment of Jobrie Hydro Electric Power Project to petitioner under 2006 Policy. The petitioner is entitled to allotment of Jobrie project under 2006 policy without its right being affected in any manner by further guidelines dated 10.2.2009 and 10.11.2010. 8 17. In alternative, the petitioner has submitted that petitioner be afforded the first right of refusal and it should be allowed to match the highest bid. Only in case the petitioner does not match the highest bid then alone the Jobrie project should be permitted to be allotted to other higher bidder. It has also been submitted that in case the higher bidder surrenders its rights in the Jobrie power project at any later stage, then the petitioner should again be afforded the first right of refusal qua the Jobrie power project. The respondent No.1 cannot be allowed to gift away the project by giving an elusive non-existent alleged 30% incentive so as to allegedly match the highest bidder. Jobrie power project being self identified project should be allotted to the petitioner in terms of 2006 Policy and original advertisement. 18. The respondent No.1 in the reply by way of preliminary submissions has stated that the Government has formulated 2006 Policy and allotment of the Hydro projects in the State is done in consonance with the State Hydro Policy and also keeps in view National Hydro Policy, 2008. The Government took policy decision to allot the Hydro Projects in Himachal Pradesh through International Competitive Bidding Route (ICB) keeping in view the financial future of the State which is dependent on revenue to larger extent from harnessing of its power resources. The power policy is in public interest and is binding on the petitioner. It is not open for the petitioner to challenge the same. The policy cannot be termed as final at any time in view of frequent changes in the economic, social and technical area which changes the policy parameters to the best benefit of the State. The petitioner’s right in the allotment of the 9 project is subject to specified conditions. The State Government has given preferential rights to self identified project developers in which they will be given right of refusal as specified in the policy. The petition is not maintainable in larger public interest. 19. On merits, it has been stated that policy stipulates that projects will be allotted on the basis of tentative installed capacity as mentioned in NIP. However, in case the capacity of the projects increases/decreases upon firming up of the potential as per TEC accorded by the competent authority, the Company shall be required to sign the fresh/revised MoU/IA with the Government as the case may be. In all such cases, the royalty, upfront premium and other charges shall be levied according to the approved norms of the Government for the revised capacity. 20. No allotment has been made by the Government in respect of any proposal received from the interested parties for the sites initially identified/cleared by the erstwhile HPSEB, who was a nodal agency of the State Government for the allotment of projects. In fact, 22 proposals were received in response to NIP for self identified and 28 identified projects. The proposals were examined by respondent No.3, conducted site visits to all the above sites out of which respondent No.3 has initially cleared only three projects for allotment through Competitive Bidding Process in line with the policy issued on 10.2.2009. Accordingly, the Government on 5.8.2010 invited Global Bids for three projects namely Nesang, Jobrie and Malana-III. The current policy decision of the government is not in conflict with any law nor it is malafide. 10 21. The policy guidelines regarding processing and self identified projects were issued by the government in larger public interest. The interest of the State is supreme. The policy decision of the Government is not illegal or arbitrary. It has been denied that petitioner has acquired any IPR in the project. The State is within its jurisdiction to frame policy in the larger public interest. The petitioner has no locus standi to challenge the current policy decision/guidelines to regulate the allotment of the project. The right of the petitioner has not been infringed by issuing policy guidelines by the State Government. 22. The evaluation of the offer shall be done as per the evaluation criteria set up by the Government and being applied by the HPSEB for allotment of the project under ICB. The identifier will be allowed to participate in the bidding and no processing fee shall be charged from him for the self identified project. The bid document shall be issued free of cost against the cost of bid document/processing fees deposited by the bidder. In case the identifier is not able to quote the highest bid in its offer applied under ICB, he will be offered the project at the highest bid received if his offer is short of the highest bid by 30% of the highest bid. In case it is short by more than 30%, his right on the project shall be forfeited and the project shall go to the highest bidder. The amount to be reimbursed for PFR/DPR can be decided on project to project basis, based on the details of such expenditure to be submitted by the self identifier. However, it shall be restricted to the maximum limit of Rs. 25,00,000/-. Before the self identified projects are offered for allotment on ICB, the potential proposed by the Companies shall be 11 re-assessed by the HPSEB/HPPCL, so the optimal value of potential is put to bidding and claims for different potential are avoided. The project shall be offered for bidding on the amended potential. Upfront premium at the rate of Rs.20,00,000/- per MW shall be charged from all the self identified projects above 5 MW as per prevailing policy provisions for allotment of projects on ICB basis. It has been reiterated that policy provisions have been issued in larger public interest. 23. The respondent No.2 has adopted the reply of respondent No.1. The respondent No.4 in the reply has stated that the petition relates to the project above 5 MW which is not in the purview of respondent No.4. The respondent No.5 in the reply has submitted that government of H.P. has notified proposals from eligible bidders vide NIP dated 5.8.2010 for 5 MW Jobrie project etc. Jobrie project is to be governed as per the policy guidelines dated 10.2.2009 for allotment of self identified project. The respondent No.5 has submitted its bid on 21.1.2011. The technical/financial bid were opened on the same day. The petitioner in fact also participated in the bid. After the completion of scrutiny, the date for opening of price bid was kept on 16.3.2011. The price bids were made by all the three bidders including the petitioner and respondent No.5 for Jobrie 12 MW Hydro Electric Project. The respondent No.5 was declared highest bidder. The bid process makes the allotment process transparent and the same offers maximum advantage to the State Government. 2006 Policy nowhere contemplated that a project of installed capacity of above 5 MW will be allotted to IPP which identifies the same on first come first serve basis. 2006 Policy 12 provides that all potential projects/sites shall be advertised through NIP in various newspapers for global invitation of bids. The NIP dated 7.1.2006 is not in consonance with 2006 Policy which came into force on 11.12.2006. 24. It has been denied that petitioner has incurred any expenditure on the project. The project was never allotted to the petitioner. The act of the respondent No.1 is in accordance with law as State largesse’s cannot be distributed arbitrary. The policy decision of the State is in accordance with law. The petitioner has filed rejoinder to the reply of respondent No.1 and has reiterated the stand of legitimate expectation, promissory estoppel etc. CWP No. 6537 of 2010 25. The petitioner has stated that respondent No.1 in order to explore and utilize its vast hydro power potential, framed 2006 Policy which was notified on 11.12.2006. 2006 Policy provided two ways of participation for private sector in small hydro development programme (i) Projects identified by the IPPs as self identified (ii) Projects identified by HIMURJA. The applications for new projects were to be received after every six months on the basis of the advertisements which will also be for self identified projects. In terms of Chapter IV of 2006 Policy, the IPPs under self identified scheme were required to complete a lot of formalities before allotment of projects such as clearances from different departments, securities, fees and most important of all PFR of the proposed project. After the allotment of the project, the IPP was required to deposit by way of security, an amount of `1,00,000/- per MW of installed capacity subject to a maximum of `.50,00,000/-. 13 26. The respondent No.1 on 7.1.2006 and 19.4.2006 got published advertisements globally inviting bids for setting up of Hydro Power Projects for some already identified and rest for IPPs to identify. It was also notified that on ‘first come first serve’ basis, the projects would be allotted provided the new projects would not overlap with the already identified projects and are not in wild life sanctuary, reserved area. The bids were to be opened on 30.6.2006. 27. The petitioner after lot of exercise identified Nesang project in District Kinnaur. A preliminary study was initially done by the petitioner with its technical team, which gave the clearance for the possibility for setting up of the project. The petitioner appointed technical expert for preparing PFR. The study was positive which confirmed generation of about 10 MW power from Nesang (Tagla) Khad Hydro Electric Project, which is a tributary of Satluj River in District Kinnaur. It was also verified that the project would be viable. 28. The petitioner after paying Rs. 2,00,000/- purchased tender documents on 1.6.2006; the petitioner submitted its bid on 21.6.2006 along with requisite documents including PFR. The process fee of Rs. 10,00,000/- was also deposited along with the bid. The bid was opened on 30.6.2006. The petitioner was only bidder for the site identified by it. 29. The site was inspected by HPSEB (Board) on 4.10.2007 and gave a go ahead for the project as identified by the petitioner. The petitioner in turn informed the clearance so granted by the Board to respondent No.1 vide letter dated 15.1.2008. The petitioner had been waiting for the report to be submitted by the Board. The 14 petitioner visited the concerned office of respondent No.1 for moving the case of the petitioner and even made a representation on 29.12.2009. 30. In July 2010, the petitioner came to know through newspaper report that Nesang 10 MW project identified by the petitioner has been advertised afresh by respondent No.1 under new terms and conditions. The petitioner represented against the decision of the re-advertisement to respondent No.1 on 20.7.2010 but without any response. The new advertisement imposed fresh terms and conditions for Nesang 10 MW project which has been challenged in the writ petition. 31. It has been stated that the petitioner has spent huge time, money and identified and applied for Nesang Power Project as per the advertisement dated 7.1.2006. The petitioner was the only bidder for the project and the bid was opened on 30.6.2006. The formalities were being completed by the respondents for implementation of the project with the petitioner. There was no delay on the part of the petitioner for allotment of the project in its favour. Therefore, the project identified by the petitioner cannot be put up for inviting fresh bids. The action of the respondents is highly arbitrary and capricious. 32. The respondent No.1 is bound to allot the project to the petitioner in accordance with the terms and conditions which were applicable as on the date of advertisement dated 7.1.2006 under which the project was advertised. No new policy guidelines, terms and conditions can be imposed upon the petitioner for the project in question. The acceptance of process fee in terms of policy under 15 which Nesang project was advertised on 7.1.2006 was sine qua non for allotment of project. The respondents have accepted process fee amounting to `10,00,000/- from petitioner for the project. In these circumstances, the respondents have erred in re-advertising Nesang project. The new terms and conditions cannot be imposed upon the petitioner. It has been stated that in terms of the new terms and conditions, a fixed upfront charge of `.20,00,000/- per MW capacity of the project has been imposed. This condition was not there in 2006 Policy when fixed premium of `1,00,000/- per MW was paid. There are other drastic changes in the new terms and conditions which will adversely affect the petitioner. The respondents are bound to allot the project to petitioner in terms of notification dated 7.1.2006 under which Nesang project was advertised. 33. The respondent No.1 as a welfare State can change its policies but cannot apply the same arbitrarily as has been done in the present case. The project was advertised in terms of the earlier existing policy, the petitioner participated in accordance with the terms and conditions as laid down in the advertisement and in the policy. In terms of the provisions of the policy, the project stood allotted to the petitioner. It cannot be included in the list of fresh projects and put up for inviting fresh bids. The respondent No.1 in an attempt to get revenue cannot defeat the vested rights of the petitioner and cannot act illegally. The entire action of the respondent No.1 is unconstitutional. 34. The respondents No.1 and 2 filed reply and in preliminary submissions have stated that the Government has formulated 2006 Policy as amended from time to time. The allotment 16 of Hydro Projects in Himachal Pradesh is done in consonance with the State Hydro Policy and also keeps in view the National Hydro Policy, 2008. The current policy governing