SHIVASHANKAR BHAT, J. ( 1 ) THESE writ petitions were referred to division Bench by a learned single Judge of this Court. The petitions are filed by Indian aluminium Company Ltd. , (referred hereinafter as 'the petitioner') and one of its shareholders. The substance of the several reliefs sought, is, to restrain the enforcement of revised rates of electricity tax with effect from 18-8-1981 and/or, for a direction to the first respondent to reimburse the petitioner of the amounts paid which is in excess of the rate of 3% of the invoice amount as specified in clause 6 (c) of the Agreement between the parties. The other prayers are all incidental or ancillary to the basic relief sought, by the petitioner. ( 2 ) THE plea of the petitioner is as follows : in the year 1966 the Government of mysore had undertaken the Sharavathi Valley Hydro Electric Project in the State and had plans for the construction of a hydroelectric generating system to generate a large quantity of electric power. At this point of time the respondent State was anticipating a large surplus of power. In view of the fact that aluminium requires large amount of power for its manufacture, the 2nd respondent Board and the state invited and/or encouraged the petitioner to establish the said factory at Belgaum. At all material times Karnataka electricity (Taxation on Consumption) Act 1959 (hereinafter referred as 'the Taxation act') was and is in force. This law imposed a tax on the units of electricity consumed every month. The tax was calculated, as per Sec- tion-3, at a rate not exceeding six paise per unit of energy as may, by notification, be specified by the State Government and different rates may be specified in respect of different classes of consumers. Other provisions of this Taxation Act relating to certain formulas, to determine the units of consumption, payment of tax etc. , need not be referred here. In March 1966, a tripartite agreement was entered into between the petitioner, the State government and the Board, terms of which provide for the supply of electricity to the petitioner's factory at Belgaum, the rate to be applied for the price of electricity supplied and the other matters. Clause 6 (c) of this agreement provided for the levy and payment of electricity tax. Clause 6 (c) of this agreement provided for the levy and payment of electricity tax. It limited the tax or duty liability of the petitioner to 3% of the invoice amount during the first 25 years period and thereafter to 6% of such invoice amount during the next 25 years period. The clause, further stated that,". . . . . IF the consumer is required to bear or pay during the said first 25 years period and the second 25 years period on account of electricity tax or duty any amount in excess of the said three per cent or six per cent as the case may be, of such invoice amount by reason of the provisions of any existing statute or as a result of amendment of any subsisting electricity tax or duty or on account of any additional imposition, on the consumers of electricity in the State of Mysore, of any tax, duty, fee, surcharge, levy, toll, cess or any other imposition on their electricity power consumption then the Government shall reimburse the consumer in respect of all such excess payments and shall also keep the consumer indemnified against all claims and demands of any authority for such excess payment. "the supply of power to the petitioner commenced as per this agreement, on 23rd october 1969. Requirement of large units of electricity for the Smelter plant in the process of manufacturing aluminium and the unique features of aluminium production and its complete dependence on the continuous supply of electricity, the high rate of consumption of electricity in the smelter plant, etc. , are the circumstances which made the parties to agree in respect of the several clauses in the tripartite agreement referred above. The Government of India, having realised the importance of supply of electric power to the aluminium industry, announced its aluminium policy on 15th July 1975, under which guidelines were issued as to how the price of electricity supplied to a smelter plant should be fixed. After the announcement of the aluminium policy of the Government of India and in pursuance of the directions of the government of India, fresh tripartite agreement was entered into between the petitioner, the State Government and the board, on 7th August, 1976 (hereinafter referred as 'the agreement' ). After the announcement of the aluminium policy of the Government of India and in pursuance of the directions of the government of India, fresh tripartite agreement was entered into between the petitioner, the State Government and the board, on 7th August, 1976 (hereinafter referred as 'the agreement' ). The background for this agreement was the same as the one which led to the first agreement; the additional factor, being the aluminium policy of Government of India and its directions to the State Government regarding the formula, to fix the price of electricity supplied to smelter plants. Clause 6 (c) of the agreement reads as follows :-"the consumer shall bear or pay, on the invoice amount payable by it to the supplier in terms of this agreement, electricity tax or duty at the rate of 3% of such invoice amount during the first 25 year period commencing from the start up date, that is, upto and including the 21st day of October 1994 PROVIDED THAT during the second 25 year period (i. e. , on and from the 22nd day of October 1994 and until the expiry of this agreement) the rates for power prevailing on the 21st day of October 1994 in accordance with the provisions of clause 6 (a) or 6 (b) hereof shall be adjusted by multiplying each such rate by a factor of 0. 9717 (zero point nine seven one seven) and the said electricity tax or duty shall be raised to six per cent of the invoice amount calculated on the basis of such adjusted rates PROVIDED further that if the consumer is required to bear or pay during the said first 25 year period and/or the second 25 year period on account of electricity tax or duty any amount in excess of the said three per cent or six per cent, as the case may be, of the invoice amount by reason of the provisions of any existing Statute or as a result of amendment of any subsisting electricity tax or duty or on account of any additional imposition, on the consumers of electricity in the State of Kamataka of any tax, duty, fee surcharge, levy, toll, cess or any other imposition their electric power consumption then the Government shall reimburse the consumer in respect of all such excess payments and shall also keep the consumer indemnified against all claims and demands of any authority for such excess payments. "this clause pegs the rate of electricity tax on the electricity supplied to it, at 3% of the invoice amount for the first 25 years (the period ending on 21-10-1994) and thereafter to a rate not exceeding 6% of the invoice amount, during the further period of 25 years. The State Government has undertaken to reimburse the petitioner in respect of all excess payments to be made by the petitioner towards any tax, duty, cess etc. (which is in excess of the 3% of the invoice amount during the first 25 years and thereafter which is in excess of 6% of the invoice amount, for a further period of 25 years ). Thus, a right to have the reimbursement from the State, in respect of the excess tax and to be indemnified for the same, was created by this clause in the agreement and a corresponding duty was accepted by the state Government to reimburse and to indemnify the petitioner. All these years, till August 1981, there was no problem. The Board, while collecting the price of electricity supplied to the petitioner, calculated the tax levied on it, confining the rate of tax so that it never exceeded the rate agreed upon under clause 6 (c) of the agreement. All these years, till August 1981, there was no problem. The Board, while collecting the price of electricity supplied to the petitioner, calculated the tax levied on it, confining the rate of tax so that it never exceeded the rate agreed upon under clause 6 (c) of the agreement. The practice throughout, was, to limit the collection of tax from the petitioner to this rate, so that, the process of reimbursement or indemnification need not be resorted to. This position was altered by the respondents with the promulgation of Electricity (Supply) (Karnataka Amendment) Ordinance 1980, followed by Karnataka Act 33 of 1981 (referred hereinafter as the Ordinance and the Amendment Act, respectively ). Section 49 of the Electricity Supply act 1948 (referred hereinafter as the 'supply act") was amended by this Ordinance which was replaced by the Amendment Act, with effect from 21-11-1980. The amendment to Section 49, directed a consumer of electricity to pay the price towards the electricity supplied calculated in accordance with the Uniform Tariff framed or modified from time to time and applicable to the category to which such consumer belongs. On 18-8-1981, in exercise of powers conferred by Section 3 of the Taxation Act, the state Government issued a notification revising the rate of the electricity tax on units of energy consumed by different classes of consumers. Thereafter, the Board demanded the tax from the petitioner at the revised rate. The petitioner protested against this higher taxation and pointed out that clause 6 (c) of the agreement confined the tax to be cillected only at the rate of 3% of the invoice amount. To this, petitioner was told that the agreement in question stood invalidated by the amendments made to the Supply Act, by the Ordinance and the Karnataka Amendment Act. The tripartite agreement is still in force and as per clause 6 (c) thereof, imposition of tax at a rate higher than 3% of the invoice amount was impermissible or at any rate, if the tax is collected at a higher rate, the excess thus collected shall have to be reimbursed to it by the State Government by way of restitution. ( 3 ) IT is unnecessary to refer to the statement of objections filed on behalf of respondents 2 to 5 (the Board and its Officers ). ( 3 ) IT is unnecessary to refer to the statement of objections filed on behalf of respondents 2 to 5 (the Board and its Officers ). It was in fact admitted by the counsel for the board that the Board is not affected by the reliefs sought by the petitioner in the writ petitions. ( 4 ) THE State Government in its statement of objections has raised the following pleas among other things:- (I) The petitioner is actually seeking to enforce a contractual right by invoking the writ jurisdiction and therefore writ petition is not maintainable. The dispute raised by the petitioner is of civil nature. (ii) Various averments in the writ petition regarding the assertion of the petitioner that the State Government invited the petitioner to start its industry in Karnataka and to attract the petitioner, concessions were held out as per the two agreements etc. , were incorrect. (iii) After the Ordinance and the Amendment Act, amending Section 49 of the supply Act "all agreements or other instruments entered into, came to be unenforceable since, the said agreements or instruments were superseded by the above said Amendment act". Hence, petitioner cannot rely on any of the terms in the agreement against the rate of tax levied, nor can it seek reimbursement of the same. (iv) By the amendment of Section 49, uniform power tariff is to be payable by a consumer and therefore the tax rate also should be uniform. (v) Tax is collected for the public benefit. The clause in the agreement regarding reimbursement of the tax paid is therefore opposed to the public policy and hence void under Section 23 of the Contract Act. (vi) Exemption from or reduction of, the tax under the Taxation Act can only be by a notification under Section 8 and therefore, the provisions of Section 8 cannot be defeated by a clause in an agreement which in effect reduces the tax rate. Such an agreement is illegal as opposed to Section 8 of the Taxation Act. (vii) The plea of the petitioner based on principles of promissory estoppel do not stand to any reason and there is no promissory or equitable estoppel against law or statute. Such an agreement is illegal as opposed to Section 8 of the Taxation Act. (vii) The plea of the petitioner based on principles of promissory estoppel do not stand to any reason and there is no promissory or equitable estoppel against law or statute. ( 5 ) FROM the respective pleadings and the contentions urged before us by the learned counsel for both sets of parties, the following points arise for our consideration : (A) : Whether this writ petition is maintainable to enforce the terms of clause 6 (c) of the agreement? (B) : Whether the agreement in question is in force or stood superseded by virtue of the amendment made to Section 49 of the Supply Act, by the ordinance and the Amendment Act ? (C) : Whether clause 6 (c) of the agreement is illegal and contrary to the provisions of the Taxation Act and hence void? (D) : Whether the said clause 6 (c) is void, as opposed to public policy? (E) : Whether, the grant of relief sought by the petitioner will result in an unjust enrichment of the petitioner and therefore, the writ jurisdiction should not be exercised in favour of the petitioner? (F) : Was clause 6 (c) of the agreement never acted upon, as urged by the learned Advocate General? (G) : Is the State bound to reimburse or indemnify the petitioner as per clause 6 (c) of the agreement, by the application of the principle of promissory estoppel? (H) : Whether the petitioner is entitled to any relief in this writ petition? re. POINT (A): ( 6 ) IT is true that to enforce a right which is purely a contractual one, normally the writ jurisdiction of this court cannot be invoked. The court has to see the nature of the right, not only from the immediate source from which the right flows, but also from the circumstances and statutes governing the relationship between the contracting parties, the public interest involved and several other similar matters. If the contract can be termed as statutory, normally, court will not refuse to exercise the writ jurisdiction to grant the relief based on such a contract. The inclination to decline the writ jurisdiction is only when the contract is purely of civil nature without any statutory flavour in it. If the contract can be termed as statutory, normally, court will not refuse to exercise the writ jurisdiction to grant the relief based on such a contract. The inclination to decline the writ jurisdiction is only when the contract is purely of civil nature without any statutory flavour in it. ( 7 ) D. F. O. South Klieri and Others v Ram sanehi Singh ( AIR 1973 SC 205 ) had an occasion to deal with an aspect of this principle. Para-4 of the decision points out the principle and the reasoning of Supreme court which reads : "counsel for the appellants contends that since the dispute arose out of the terms of the contract and the Divisional Forest Officer under the terms of the contract had authority to modify any action taken by a subordinate forest authority, the remedy of the respondent was of institute an action in the civil court and that the writ petition was not maintainable. But in the present case the order is passed by a public authority modifying the order or proceeding of a subordinate forest authority. By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K. N. Guruswamy's case ( AIR 1954 SC 592 ) there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power". ( 8 ) IN the decision reported in Hindustan sugar Mills v The Slate of Rajasthan and others ( AIR 1978 SC 1496 ) the questio for consideration was whether in the case of sales of cement the amount of freight formed part of the 'sale price' so as to be assessable to sales tax. It was held by the Supreme court, to be part of the sale price and includible in the taxable turnover of the asses- see. It was held by the Supreme court, to be part of the sale price and includible in the taxable turnover of the asses- see. However, on facts, it was revealed that the assessee had entered into a large number of transactions of sale of cement with the central Government and when the assessee claimed sales tax in respect of these transactions, the Department of Central Government refused to pay the sales tax on that part of the price which comprised of the freight amount, based on the opinion it received from the Law Department, hence the assessee did not press the Central Government for the payment of sales tax on that part of the sale price. While holding that, freight amount should form the taxable turnover and rejecting the assessee's claim to the contra against the State Government's demand for sales tax, Supreme Court observed at p. 1506:-". . . . . . . . WE think that, in the circumstances, fairness and justice demand that the central Government should pay to the assessee the amount of sales tax on the freight component of the price in respect of transactions of sale of cement entered into by the assessee with them under the provisions of the Control Order. It is true and we are aware that there is no legal liability on the Central Government to do so, but it must be remembered that we are living in a democratic society governed by the rule of law and every Government which claims to be inspired by ethical and moral values must do what is fair and just to the citizen, regardless of legal technicalities. We hope and trust that the central Government will not seek to defeat the legitimate claim of the assessee for reimbursement of sales tax on the amount of freight by adopting a legalistic attitude but will do what fairness and justice demand. After all, the motto of every civilized State must be : 'let right be done". (emphasis supplied here) realising that there was a clause in the relevant contract entered into between the assessee (as the seller of cement) and the central Government (as the buyer), providing for the Central Government to "pay the sales tax if legally leviable", the said decision of the Supreme Court was sought to be reviewed. (emphasis supplied here) realising that there was a clause in the relevant contract entered into between the assessee (as the seller of cement) and the central Government (as the buyer), providing for the Central Government to "pay the sales tax if legally leviable", the said decision of the Supreme Court was sought to be reviewed. Referring to this clause, while considering the review application in the decision reported in Mis. Hindustan Sugar mills v The State of Rajasthan and Others ( AIR 1981 SC 1681 ) it was held, at p. 1682 :". . . . . THIS clause clearly stipulates that whatever is the amount of sales tax legally leviable from the appellant would be reimbursed by the Central Government to the applicant. The Central Government is plainly under a liability to pay to the appellant the amount of sales tax in respect of freight component of the price since that is held to be chargeable to the appellant both under the Central Sales tax Act, 1956 and the Rajasthan Sales Tax act, 1954. The assumption on which. we made the above observations has been shown to be unfounded and these observations must, therefore, stand deleted from the judgment, in so far as they relate to contracts with the Director general of Supplies and disposals which contained clause 8 (1) or any other similar clause providing for payment by the central Government of the amount of sales tax legally leviable from the appellant. Where there is such a clause, the central Government is bound to pay the amount of sales tax on the freight component of the price and we hope and trust that the Central Government will honour its legal obligation and not drive the appellant to file a suit for recovery of the amount of such sales tax. We hopefully expect that the Central Government will not try to shirk its legal obligation by resorting to any legal technicalities, for we maintain that in a democratic society governed by the rule of law, it is the duty of the State to do what is fair and just to the citizen, and the State should not seek to defeat the legitimate claim of the citizen by adopting a legalistic attitude but should do what fairness and justice demand". (emphasis supplied here ). (emphasis supplied here ). ( 9 ) ANOTHER decision which is relevant here, is The Gujarat State Financial Corporation v M/s. Lotus Hotels Pvt. Ltd. ( AIR 1983 sc 848 ). The claim of the petitioner for relief was upheld by the application of the doctrine of promissory estoppel, and the requirement of reasonableness and unarbitrariness in the State action read with the statutory duty involved in the said case. The second reasoning is found at paras 11 and 12:"viewing the matter from a slightly different angle altogether, it would appear that the appellant is acting in a very unreasonable manner",after a few sentences, again,"now if appellant entered into a solemn contract in discharge and performance of its statutory duty and the respondent acted upon it, the statutory corporation cannot be allowed to act arbitrarily so as to cause harm and injury, flowing from its unreasonable conduct, to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. A petition under Article 226 of the Constitution would certainly lie to direct performance of a statutory duty by other authority as envisaged by Article 12. " ( 10 ) THEREFORE, the defence of the State resting on technicalities, cannot be countenanced, if its action in refusing to discharge its obligations, is plainly arbitrary, unreasonable and inequitable. The basic right sought to be enforced by the petitioner, may flow out of a contract. But the status of the contracting parties and the circumstances under which the contract was entered into, the statutory nature of the obligation are some of the factors governing the consideration of the question as to whether writ petition is maintainable or not. The justice of the situation may require whittling down the rigour of technicalities governing the selection of the forum to seek the relief. ( 11 ) THE relevant clause 6 (c) has already been extracted. In unequivocal terms the state Government has undertaken to reimburse the petitioner in respect of all payments of tax, duty, fee, surcharge, levy etc. , on the power consumption, which is in excess of 3% of the invoice amount (during the first 25 years), if the petitioner is required to bear excess burden and pay the tax. In unequivocal terms the state Government has undertaken to reimburse the petitioner in respect of all payments of tax, duty, fee, surcharge, levy etc. , on the power consumption, which is in excess of 3% of the invoice amount (during the first 25 years), if the petitioner is required to bear excess burden and pay the tax. Even if the liability is increased by any amendment of the law, the State has promised to reimburse the petitioner and keep the petitioner indemnified against all claims and demands of any authority for such excess payments. Under our constitutional set up, a tax can be levied and its rate can be increased only by law or by an exercise of -valid statutory power. Thus, the reimbursement and the indemnification, undertaken by the State, is against the statutory consequences of enhancing the rate of tax. The agreement also contains other terms governing the power tariff applicable to the petitioner and these terms were clearly covered by the provisions of the supply Act. The terms of the agreement, thus has a statutory flavour, the obligees are the State Government and the Board; the latter being the obligee regarding power tariff. ( 12 ) PETITIONER is one of the largest con- sumers of power and the industry established by it is essentially power-based. The product of the petitioner's industry is recognised as an essential commodity ; and its price is controlled by the Aluminium (Control) Order, issued by the Central Government under section 3 of the Essential Commodities Act. ( 13 ) A promise was held out by the State and the Board, that the power tariff applicable to the petitioner would be on the basis of the agreed formula, stated in clause (5) of the' agreement. The rate applicable to the petitioner, has been a lower rate when compared to the power tariff applied to other industries, obviously because of the requirement of huge quantity of electricity and the special features of the smelter plant. But the State legislature by enacting the Amendment Act, has nullified this clause in the agreement by making it mandatory that every consumer has to pay for the electricity supplied at the uniform rate applicable to the class of consumers to which the particular consumer belongs. Section 49 of the Supply act has thus been amended. But the State legislature by enacting the Amendment Act, has nullified this clause in the agreement by making it mandatory that every consumer has to pay for the electricity supplied at the uniform rate applicable to the class of consumers to which the particular consumer belongs. Section 49 of the Supply act has thus been amended. The result is, the petitioner has to loose the benefit of the terms in the agreement regarding the power tariff. ( 14 ) AGAINST the claim of the petitioner for reimbursement of the higher rate of tax which has been hiked by a notification by the state Government, the State Government is relying on the Amendment Act and contends that the entire agreement stood superseded by the Amendment Act. If, on the face of it, this contention has no force, the stand taken by the State Government against the claim under clause 6 (c) of the agreement has to be termed as unreasonable and arbitrary. State government is taking shelter behind a nonexistent law - (in the sense, the law has no application to the particular facts) - for its untenable inaction. Assuming it is a contractual obligation that is sought to be enforced by the petitioner, refusal of the State government to abide by its promise, is entirely based on a non-existent law. Thus, the petitioner has, in effect, seeks, to restrain the state Government from enforcing a non-existent law, by this process of writ petition. ( 15 ) BY the increase of power tariff, the in- voice amount of the Bills for the consumption of electricity by the petitioner certainly goes up to a large extent. The tax-base has thus got enlarged by the amendment of Section 49 of Supply Act. Even at the existing maximum rate of 3% on the tax-base (invoice amount), the quantum of tax payable by the petitioner would go up, thus, increasing the public revenue. Not being satisfied with this, the State Government is trying to retain the amount collected by demanding a higher rate of tax. ( 16 ) THE enforcement of the duty sought by the petitioner, has a statutory complexion in- the facts and circumstances of the case. The defence of the State that its obligation to reimburse the petitioner stood obliterated by virtue of the Amendment Act, is again, a statutory defence. ( 16 ) THE enforcement of the duty sought by the petitioner, has a statutory complexion in- the facts and circumstances of the case. The defence of the State that its obligation to reimburse the petitioner stood obliterated by virtue of the Amendment Act, is again, a statutory defence. Therefore, we cannot accept the preliminary objection raised by the learned Advocate General against the maintainability of the writ petition. RE. POINT (B): ( 17 ) WHETHER the Amendment Act supersedes the agreement entirely: - the Board is a statutory Corporation. The petitioner, the Board and the State entered into a tripartite agreement, first in the year 1966 and thereafter in 1976. The second agreement was substantially in the same terms as the first one. The agreement inter alia provided for a formula to charge the price of electricity supplied to the petitioner. The relevant clause provided for revision of the rate for power every five years, subject to the express provisions in the agreement regarding the formula to fix the rate. This formula was the subject matter of w. P. No. 6257/1981, decided by us on 19-4-1988. The agreement was to be in force for a period of 50 years from the start-up date i. e. , from 22nd October, 1969 (the date when petitioner's factory went into operation ). After the formula to fix the price, comes the clause governing the tax, duty, cess etc. , that may be imposed on the units of electricity consumed. The State Government cannot bind the legislature from levying the tax, nor can it agree to limit the tax rate. But, there is no bar against the State Government agreeing to reimburse the tax payable by the tax payer, like the petitioner. Therefore, clause 6 (c) provides for the reimbursement of the petitioner and its indemnification, towards the enhanced tax, in excess of the agreed percentage of the invoice amount. But, there is no bar against the State Government agreeing to reimburse the tax payable by the tax payer, like the petitioner. Therefore, clause 6 (c) provides for the reimbursement of the petitioner and its indemnification, towards the enhanced tax, in excess of the agreed percentage of the invoice amount. There are several other clauses in the agreement touching various matters, such as: providing for the supply of electricity to the petitioner, the 'firm power' to be supplied to the petitioner which, the petitioner has to purchase, provision for additional requirements of the petitioner, minimum monthly charges payable by the petititioner, time for payment, parity of rate to be maintained for the supply of power with other similar industries, in case, such other similar industries are to be supplied power at still a lower price, as to what should be done in case the petitioner is unable to use the power supplied to it, provisions governing interruptions in the supply of electricity, point of delivery, the maintenance of power factor of the load, obligations of the supplier to maintain its apparatus etc. ( 18 ) THE prescription of the price for the electricity supplied to a consumer, is governed by the Supply Act, specially Section 49 thereof. The said Section 49 permitted the price to be fixed, either through appropriate Regulations or under an agreement between the Board and the consumer. But the Karnataka legislature stepped in, to amend Section 49. Initially the Ordinance was promulgated which came into force on 1-11-1980. This was replaced by the Amendment Act. Section 49 was amended by insertion of sub-sections (5), (6) and (7) to the said Section 49. These sub-sections made it mandatory for a consumer to pay for the electricity consumed at a price calculated in accordance with the uniform tariff framed or modified from time to time under Section 49 (1), which is applicable to the category to which the particular consumer belongs. This amendment operates on all agreements or any other arrangement entered into prior to 1-11-1980. It does not declare the agreement to be a nullity or unenforceable. But it charges the consumer to pay, notwithstanding anything contained in the instrument of agreement or other arrangement or in any other law, the price for the electricity consumed in the manner directed by Section 49 (5 ). It does not declare the agreement to be a nullity or unenforceable. But it charges the consumer to pay, notwithstanding anything contained in the instrument of agreement or other arrangement or in any other law, the price for the electricity consumed in the manner directed by Section 49 (5 ). Section 49 (6) directs the consumer, in similar terms as in Section 49 (5) to pay the price notwithstanding anything contained in an agreement or arrangement, even if the agreement or arrangement is entered into after 1-11-1980. ( 19 ) THUS these sub-sections operate or take the field of fixation of price for the electricity supplied to a consumer. These amendments override any agreement, arrangement or law on the particular subject of price for the electricity. They have nothing to do with the levy or collection of tax, duty, cess etc. , on the electricity consumed. ( 20 ) LEVY of tax on the electricity consumed is an independent subject. The topic of tax on consumption of electricity falls within the exclusive legislative field of the state as per Entry 53 of List II of Schedule vii of the Constitution. This subject has nothing to do with the subject covered by the supply Act (a subject falling under the ' concurrent List - vide Entry 38 of List III of schedule VII ). ( 21 ) SINCE the State Legislature has an exclusive power to legislate imposing a tax on the consumption of electricity, it is possible for it to exercise this power of taxation simultaneously with the exercise of power in respect of another subject falling within its competence. But such exercise of power should be borne out an express language, warranting an inference that the subject of taxation also has been touched upon, in the process of legislation. ( 22 ) NOWHERE in the Amendment Act, the law purports to touch the Taxation Act and the terms governing the reimbursement of and indemnification towards, a hike in the rate of tax. The law, does not nullify the solemn undertaking given by the State government in this regard. If the contention of the respondents is accepted, to hold, that the entire agreement stood superseded by the Amendment Act, several clauses in the agreement governing various other aspects of the supply and purchase of electricity for the petitioner's factory will be nullified, which may lead to unexpected results. If the contention of the respondents is accepted, to hold, that the entire agreement stood superseded by the Amendment Act, several clauses in the agreement governing various other aspects of the supply and purchase of electricity for the petitioner's factory will be nullified, which may lead to unexpected results. It is not possible to accept this contention of the State and the Board. The tripartite agreement is still in operation except to the extent modified by the Amendment Act regarding the price payable by the petitioner to the board for the electricity consumed by the petitioner. ( 23 ) IT is also necessary to note that the tax levied here, is on the consumer of electricity. It is an independent impost. The Board collects it from the petitioner on behalf of the state as a tax to facilitate the collection of tax. It is not a levy on the Board, which it passes on to the petitioner as part of the price charged for the electricity. Consequently, this plea of the respondents is rejected. RE. POINTS 'c' and 'd': ( 24 ) IT was contended by the learned Advocate General that the levy of the tax is under the Taxation Act and any exemption from or reduction of rate, in the tax payable can be effected only by a notification issued by the Government under Section 8 of the said Act. According to this contention, the effect of clause 6 (c) is to reduce the rate of tax to 3% of the invoice amount, and therefore, this clause 6 (c) will be contrary to Section 8 of the Taxation Act. Every notification issued under Section 8 has to be placed before the State legislature as per section 11 and any House of the Legislature may direct modification in such a Notification or direct that it shall not have effect. On such a direction, the Notification will be effective only as directed, or if so directed to be ineffective, the Notification will cease to be in-effective. As per Section 3 of the Taxation Act, the tax rate is to be notified by the government not exceeding the rate stated therein. By virtue of Section 11, this Notification also is subject to the legislative control. Therefore, it was argued that terms of clause 6 (c) of the agreement, circumvent these provisions of the Taxation Act and hence illegal. By virtue of Section 11, this Notification also is subject to the legislative control. Therefore, it was argued that terms of clause 6 (c) of the agreement, circumvent these provisions of the Taxation Act and hence illegal. ( 25 ) THE argument is, quite attractive. But, it fails to note the difference between the prescription of the rate of tax, its reduction or exemption from its liability on one hand, and the terms of clause 6 (c) of the agreement on the other. Clause 6 (c) of the agreement in no way reduces the rate of tax. Operation of clause (c) on its plain language is wider and covers a wide range of tax, duty or any additional imposition of 'tax, duty, fee, surcharge, levy toll, cess or any other impositions' (all of which are referred as the tax hereinafter) on the consumption of electricity. Clause 6 (c), however, does not restrict the liability of the petitioner to pay the tax, cess, fee etc. , to a particular rate. It in no way diverts the operation of a tax law like the Taxation Act. The law would operate fully, and directly on the petitioner and the petitioner is bound to pay the tax, fee etc. , levied. ( 26 ) BUT, on account of the imposition of such tax, if the petitioner had to pay an amount towards the tax, which exceeds 3% of the invoice amount (during the current period) the State agreed to reimburse the petitioner; State also has under-taken to indemnify the petitioner against any claim or demand for such excess payments. This promise to reimburse the petitioner and the undertaking to indemnify it, by the State, is entirely an executive function which has nothing to do with the enforcement of the legislative mandate to levy and collect the tax. The object behind this clause 6 (c) obviously, is to off-set any raise in the cost of production of the aluminium, due to hike in tax-rate. It is not unusual for the State to dole out monies, or confer other benefits, depending on the circumstances of a particular case. The reimbursement or the compensation would come from the funds of the State and not only from the amounts collected as tax under the Taxation Act. ( 27 ) ALL these years, (since the year 1969) none raised the plea that clause 6 (c) was illegal. The reimbursement or the compensation would come from the funds of the State and not only from the amounts collected as tax under the Taxation Act. ( 27 ) ALL these years, (since the year 1969) none raised the plea that clause 6 (c) was illegal. In fact, bills were being prepared and amounts collected from the petitioner, bearing in mind, the terms of clause 6 (c ). Instead of collecting the tax at a higher rate and then reimburse the petitioner, the respondents evolved the practice of collecting the tax amount so that it may not exceed 3% of the invoice amount. In case, the respondents had adopted the usual procedure of collecting the tax at the normal rate and then proceeded to reimburse the petitioner towards the excess impost, the petitioner could not have made any grievance of the procedure. ( 28 ) TERMS of clause 6 (c) under which the state Government agreed to reimburse and indemnify the petitioner is a different subject altogether, from an act of reducing the tax rate under a particular taxation law. The plea now advanced in the statement of objections, by the State Government in this regard, is an afterthought. Its conduct, in trying to circumvent its obligations under clause 6 (c) is certainly unfair. It is unreasonable on the part of the State to set up the invalidity of the terms of a contract solemnly entered into by it in the absence of an express bar against the terms of the agreement. ( 29 ) STATE has also pleaded public policy as the cause for such a contention. But public policy also requires that the State should not endeavour to loose its credibility. If assurances held out by the State are to be ignored by it, and it can declare the same as illegal, any dealing with the State would become a hazardous venture. The contention of the State is based on its theory that any amount collected by way of tax will be spent by the Government for the general public; therefore, the tax amount collected by the levy under the Taxation Act should not be dwindled by way of reimbursement to the petitioner. Thus, it was contended that any agreement entered into with regard to the reimbursement of tax paid, will be opposed to public policy. Thus, it was contended that any agreement entered into with regard to the reimbursement of tax paid, will be opposed to public policy. This is another face of the same argument setting up the illegality of the clause in the agreement. ( 30 ) THE concept of public policy is not easy to define. It certainly does not depend on the convenience of the executive Government. In Ghenilal Parakh v Mahadeodas Maiya and Others (AIR 1958 SC 781), the Supreme court observes at p. 795 :". . . . . . . . . . . THE doctrine of public policy may be summarised thus: Public policy or the policy of the law is an illusive concept; it has been described as 'untrustworthy guide', 'variable quality', 'uncertain one', 'unruly horse' etc; the primary duty of a court of Law is to enforce a promise which the parties have made and to uphold the sanctity of contracts which form the basis of society, but in certain cases, the Court may relieve them of their duty on a rule founded on what is called the public policy; for want of better words lord Atkin describes that something done contrary to public policy is a harmful thing, but the - doctrine is extended not only to harmful cases but also to harmful tendencies; this doctrine of public policy is only a branch of common law, and, just like any other branch of common law, it is governed by precedents; the principles have been crystallized under different heads and though it is permissible for courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days. "therefore, the contentions of the State are liable to be rejected. RE. CONTENTION 'e': ( 31 ) PLEA of unjust enrichment, is to be a plea based on facts. Its roots are in equity. There cannot be any equity in vaccum. These observations are compelled by the fact that, this plea urged by the learned Advocate general has no foundation in the statement of objections filed by the State. RE. CONTENTION 'e': ( 31 ) PLEA of unjust enrichment, is to be a plea based on facts. Its roots are in equity. There cannot be any equity in vaccum. These observations are compelled by the fact that, this plea urged by the learned Advocate general has no foundation in the statement of objections filed by the State. The plea has been urged as a question of law which is impermissible. On this ground alone, the plea is liable to be rejected. ( 32 ) ACCORDING to the learned Advocate general, whenever the price of electricity or rate of tax on it, is increased, the petitioner moves the Central Government to re-fix the price of the aluminium and invariably, the central Government has acceded to such a request of the petitioner to enhance the price of aluminium, under the provisions of the aluminium Control Order. Therefore, the increased burden on the petitioner, consequent on the increase in the tax, is duly compensated, by the Central Government when the price of aluminium is increased. The tax burden is thus passed on to the consumer of aluminium. The petitioner, thus, in no way suffers any loss requiring any compensation by way of restitution. If the petitioner, is to be compensated once again by resort to clause 6 (c) of the agreement, it will result in an unjust enrichment of the petitioner. ( 33 ) THE reply of Sri Ashok Desai, the learned counsel for the petitioner, may be generally summarised as follows:- the relevant clause in the agreement does not in any way restrict its operation, depending on the fixation of price for aluminium by the Central Government. There is no dispute that the Aluminium Control Order was in force when the second agreement was entered into by the parties. If price fixation by the Central Government has a bearing on the question of restitution in respect of the enhanced tax burden, the same would have been clearly spelt out in clause 6 (c) of the agreement. An industry like that of the petitioner's depends upon several known factors and imponderable circumstances, to make profit. Rate of tax payable by it is only one circumstance amongst several imponderables. An industry like that of the petitioner's depends upon several known factors and imponderable circumstances, to make profit. Rate of tax payable by it is only one circumstance amongst several imponderables. Governmental wage policy, international market for the product in question, availability of raw materials, the discretionary factors which guide or influence the authority who has the ultimate power to fix the price for the product, the delay involved in the process of decision making by the said authority, are some such circumstances. The price of the aluminium fixed by central Government under Aluminium Control Order, does not fluctuate automatically with the rate of tax levied by the State government. Whenever burden of taxation is increased, petitioner may move the Central government for re-fixation of the price for the aluminium which it produces. But, it is not certain that the Central Government would respond immediately to revise the price structure. In the meanwhile the petitioner had to sell its product at the existing price. By the time, the Central Government revises the price, by permitting an increase, some other factor may intervene, to increase the cost of production,- say, the wages of the employees would have been raised, or the cost of raw materials may go up, thus, nullifying the effect of increase in the prescribed sale price of the ultimate product. There is a good deal of discretion involved in this process of fixation of the price under the Aluminium Control Order and it is not possible to identify the particular factor which ultimately influences the central Government in the matter of price fixation. ( 34 ) WHILE considering this contention based on the doctrine of unjust enrichment, all varieties of factors, operating on the factsituation will have to be taken note of. The "justness" or "unjustness" of the petitioner's claim does not depend, solejy on one factor, i. e. , the review of price of aluminium by the central Government. In the sphere of q vast industrial activity, and the sale of an industrial product, the manufacturer is not the sole person who can manipulate his profits and he alone cannot be always held responsible for the losses. In such a situation, the court cannot straightaway thrust the equitable doctrine of unjust enrichment to pierce the fabric of a contractual clause and tear it off. In such a situation, the court cannot straightaway thrust the equitable doctrine of unjust enrichment to pierce the fabric of a contractual clause and tear it off. The doctrine relied upon by the learned advocate General is an equitable one, application of which to a fact situation, can be possible only by an examination of all the contributory circumstances leading to the formation of the said fact- situation. ( 35 ) IT must also be remembered that to act equitably in the circumstances of a case, in the absence of a specific statutory bar to the contrary, is part of the regal behaviour, expetted of a State which has sovereign functions to discharge. ( 36 ) HERE the State, in the course of its functions as a State, is a party to an agreement, solemnly undertaking to reimburse the petitioner, in case, the tax rate on power tariff is increased in future. It is a promise held out, with affirmation to comply with it by the Executive wing of the State, whenever tax-rate is enhanced by the exercise of a legislative power. ( 37 ) THE circumstances invoked by the state not to abide by its promise to reimburse the petitioner, is solely based on the fact that, Central Government has been approached by the petitioner for enhancement of the price of its product (aluminium) consequent upon the enhancement of the tax rate on power tariff, and the Central Government while fixing the price would take this factor into consideration. The Aluminium (Control) Order, 1970 is made under the provisions of Section 3 of the Essential Commodities Act. Clause (4) of this Order grants power to Central Government to fix the price of aluminium. The price is to be fixed 'having regard' to the estimated cost of production, etc. Similar is the language of clause (4-A) which provides for the fixation of 'retention price'. ( 38 ) THIS order came up for consideration before a Division Bench of Calcutta High court in Union of India and Others v Hindustan aluminium Corporation Ltd. and Another ( AIR 1983 Cal. 307 ). The HINDALCO, there, challenged the price fixed under the aluminium Price Control Order on several grounds. One such ground was the alleged failure of the Central Government to consider the increase in the power tariff rate while fixing the price of aluminium. 307 ). The HINDALCO, there, challenged the price fixed under the aluminium Price Control Order on several grounds. One such ground was the alleged failure of the Central Government to consider the increase in the power tariff rate while fixing the price of aluminium. On a consideration of several rulings of Supreme court on a similar question, the Calcutta high Court held that, it was not possible for the Court to direct the Central Government to consider the question of price fixation afresh. The relevant passages from the said decision are extracted below: (i) Para-30:"the grievance of HINDALCO is that the retention price of aluminium have not been fixed in accordance with the clause 4a of the Control Order. Its case is that although clause 4a provides for the fixation of the retention price of indigenous aluminium having rega/d to all relevant factors, including the estimated cost of production of indigenous aluminium, the Government has not at all taken into consideration the increase in the prices of essential commodities, such as steel, paper, cement, coal and petroleum products which the government was bound to take into account. The Government has not also taken into consideration the increase in the power tariff rate fully and it has also altogether ignored the cost of power supply to HINDALCO by Renusagar, a 100% subsidiary of hindalco. It has been urged by mr. Ray, learned counsel for HINDALCO that in view of the expression 'having regard' to clause 4a, the government should not only take into consideration the estimated cost of production but also ensure the cost of production in the retention price that may be fixed by the Government. It is submitted that far from reflecting the increases in the prices of inputs required for production and manufacture of aluminium, the Government has not at all taken into consideration such increase in the fixation of retention prices. Before considering whether the Government is bound to reflect in the retention price of indigenous aluminium the estimated cost of production or the increase in the prices of various items of inputs, we may first of all consider whether the Government has taken into consideration sucn increases in the cost of production". Before considering whether the Government is bound to reflect in the retention price of indigenous aluminium the estimated cost of production or the increase in the prices of various items of inputs, we may first of all consider whether the Government has taken into consideration sucn increases in the cost of production". (ii) At p. 323:"we are therefore, unable to accept the contention of the learned counsel for hindalco that in view of the said observation of the Supreme Court in prag Ice and Oil Mill's case it should be held that under clause 4a of the Control Order, it is statutorily obligatory for the Government to ensure or reflect in the retention price, the estimated cost of production or the increases in the price of. inputs". (iii) At pp. 324-325, the Calcutta High court quoted from the decision of the supreme Court in M/s. New India sugar Works v State of U. P. ( AIR 1981 sc 998 ) which is apposite here :"the policy of price control has for its dominant object equitable distribution and availability of the commodity at fair price so as to benefit the consumers. It is manifest that individual interests, however, precious, they may be must yield to the larger interest of the community namely, in the instant case, the large, body of the consumers of sugar. In fact, even if the petitioners have to bear some loss there can be no question of the restrictions imposed on the petitioners being unreasonable". (iv) After a few discussion, the High court proceeded to say in para-69 ; 'so even if the retention price has not included the whole of the increase in the cost of power from the above two sources, we do not think that the retention and sale prices fixed by the government should be set aside and the Government should be asked to reconsider the same as has been done by the learned Judge. In the circumstances, we do not find any merit in the contention of HINDALCO that as the full increase in the cost of power has not been included in the retention prices, the Government should be directed not to insist on the payment in the Aluminium Regulation account till the retention price is refixed by the Government for *he period in question after due consideration of the increase in the cost of production incluing the increase in the cost of power". ( 39 ) IN M/s. Pragrice and Oil Mills and another etc. etc. v Union of India ( AIR 1978 sc 1296 ) it was held at p. 1313 :"in the ultimate analysis, the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases as valid". Again at para 58, Supreme Court observed,". . . . . . AND though patent injustice to the producer is not to be encouraged, a reasonable return on investment or a reasonable rate of profit is not the sine que non of the validity of action taken in furtherance of the powers conferred by section 3 (1) and Section 3 (2) (c) of the essential Commodities Act". ( 40 ) THE observations of the Calcutta High court and of the Supreme Court clearly demonstrate that, revision of price of the aluminium by Central Government under the Control Order is only a "mere possibility" and the fixation of price thereunder depends on several imponderables. In the very nature of things, even if the price is inceased by the Government, it cannot operate retrospectively to operate on the sales effected by the petitioner. Therefore, the claim of the petitioner seeking the enforcement of cl. 6 (c) of the agreement cannot be stigmatised, as a claim for unjust enrichment. RE. POINT F: ( 41 ) THIS again is an argument in desperation. Sufficient material is found on record that Bills were being prepared to and tax collected from the petitioner, having due regard to cl. 6 (c) of the agreement all these years. RE. 6 (c) of the agreement cannot be stigmatised, as a claim for unjust enrichment. RE. POINT F: ( 41 ) THIS again is an argument in desperation. Sufficient material is found on record that Bills were being prepared to and tax collected from the petitioner, having due regard to cl. 6 (c) of the agreement all these years. RE. POINT'g': ( 42 ) PRINCIPLE is now fairly settled that in the absence of a specific statutory bar, the state is bound to honour its commitment to those who acted on its promise. When there is a specific clause in an agreement, question of applying the doctrine of promissory estoppel may not arise. However, the sanctity attached to this principle is such that, its relevance to a fact situation as the one involved herein, cannot be ignored. Petitioner has established its factory and has been fulfilling all the conditions agreed upon by it. In such a circumstance, it will be inequitable to say that the State is not bound to carry out its part of the bargain. The reimbursement or the indemnification of the petitioner by the state, as promised by the latter, cannot be refused on grounds other than statutory. ( 43 ) IN_union of India v Godfrey Philips india Ltd. ( AIR 1986 SC 806 ), the scope of this doctrine was reiterated : (i) Para-9:". . . . . THE true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making k and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. . . . . . . . . . . " (ii) Para-14/p. 815:"of course we must make it clear, and that is also laid down in Motilal Sugar mills case (AIR 1978 SC 621) (supra) that there can be 'no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it". ( 44 ) IN the case before us, it is seen from cl. 6 (c) of the agreement, the State has clearly and in unequivocal terms promised the petitioner to make restitution or indemnify the petitioner, under certain circumstances. There is no dispute that the said circumstances have come into existence. Therefore, it has to be held that the State is bound to fulfil its promise as per cl. 6 (c) of the agreement. RE. POINT 'h': ( 45 ) ALL the contentions of the respondents are negatived and in the said process the petitioner has made out a clear case for the relief of reimbursement and indemnification under cl. 6 (c) of the agreement. 6 (c) of the agreement. RE. POINT 'h': ( 45 ) ALL the contentions of the respondents are negatived and in the said process the petitioner has made out a clear case for the relief of reimbursement and indemnification under cl. 6 (c) of the agreement. ( 46 ) IN the result, for the foregoing reasons, these petitions are allowed, rule is made absolute, and we (I) declare that petitioner is entitled to the relief of reimbursement and indemnification from the first respondent - State - towards any payment of tax which is in exess of the percentage stated in cl. 6 (c) of the agreement dated 7-8-1976 entered into between the petitioner, the state and the Board; (ii) issue a writ of mandamus to the first respondent to reimburse and indemnify the petitioner, towards the quantum of tax which is in excess of the rate envisaged by cl. 6 (c) of the aforesaid agreement; and (iii) direct the respondents to pay the costs of the petitioner, assesssed at rs. 3,000. 00. --- *** --- .