Judgment : 1. In this writ petition filed under Article 226 of the Constitution of India the petitioner-company has assailed the order passed by the Government of Kerala whereby it was directed to levy royalty and the cost component of controlled release of water to Kuthungal Hydro Electric Project on the water utilized by it and it has been quantified that the royalty shall be collected at the rate of 10% of the energy tariff rate of EHT consumers current from time to time for every unit of energy generated. It was further provided in the impugned order that the company was also liable to pay 1.2 paisa per unit as electricity duty for each unit of electricity generated in accordance with the provision of the Kerala Electricity Duty Act. This order dated 3.7.2004 was passed by the Government of Kerala, Department of Power and has been appended as Ext.P11 to the writ petition. The petitioner seeks issuance of a writ of certiorari for quashing the impugned order, Ext.P11. 2. The petitioner is a company engaged in the manufacture of ferro alloys at a factory situated in Pallatheri at Palakkad. The manufacturing of ferro alloys is power intensive and electricity is virtually a raw material used in the manufacturing process. 3. The shortage of power in the State of Kerala, as in other States in India was affecting industrial progress. On 22nd December, 1989, the Government of Kerala through Electricity Department issued a Government Order bearing No.35/89/PD informing the public that the State of Kerala had in principle decided that private agencies would be allowed to undertake small/mini/micro Hydel Schemes for generation of power and that the terms and conditions to which they would be so allowed to do would be laid down separately. 4. The State Government received representations from a few private/public undertakings seeking permission pursuant to the said declaration of policy for the setting up of small/mini/micro Hydel Schemes. Considering the representations and after consulting with the Kerala State Electricity Board, the State Government issued a further government order being G.O.(MS) No.23/90/PD dated 7th December, 1990 (Ext.P1) laying down the terms and conditions on which permission for setting up such hydro power schemes would be granted. 5. Considering the representations and after consulting with the Kerala State Electricity Board, the State Government issued a further government order being G.O.(MS) No.23/90/PD dated 7th December, 1990 (Ext.P1) laying down the terms and conditions on which permission for setting up such hydro power schemes would be granted. 5. Under the policy as laid by the said GO dated 7th December, 1990 read with the earlier G.O. dated 22nd December, 1989 (the Hydro Power Policy), the private companies were to be allowed to set up sanctioned hydel schemes falling in small/mini/micro hydel schemes category at their own cost with the construction, operation and maintenance being managed by them as per the stipulations to be made by the Government/Board in accordance with the provisions of the Electricity Act, 1910 and the Indian Electricity (Supply) Act, 1948 as were then in force. It was also provided that the captive plant energy fed into the KSEB Grid would be metered at a location in accordance with the Metering Equipment Rules and the quantum of energy less 12% towards wheeling charges, transmission and distribution loss etc. would be delivered free of cost to the agency at their High Tension Terminations at the point of supply in their HT Installation. It was further provided that in case of energy in excess of the requirement of the agency (i.e. company which sets up the Hydro Power Project) is generated during any accounting year, the excess energy would be fed into the State Grid itself at rates to be mutually agreed upon. 6. In other words, energy not utilized as captive energy was to be sold to KSEB. To ensure the same, it was also provided that under no circumstances would such a company be entitled to sell or transfer any excess energy to any party other than the Government/KSEB. Since the electricity being generated by such a private entity was to augment the availability of electricity supply with the KSEB, certain benefits in terms of eligibility for additional power consumption from the grid on account of power cut or power restrictions were also provided for. 7. Since the electricity being generated by such a private entity was to augment the availability of electricity supply with the KSEB, certain benefits in terms of eligibility for additional power consumption from the grid on account of power cut or power restrictions were also provided for. 7. Clause 14 of the GO dated 7th December, 1990 (Ext.P1) provided that "Royalty for the use of water together with the tax and duties on generation of power as fixed by the Government/Board from time to time have to be paid by the agency." It was clarified that ordinarily small/mini/micro units utilizing storage benefit of existing reservoirs and benefit of existing power station would not be entrusted with the private companies. However, an exception was made that the Government could under special circumstances allow such schemes by private entities but in such cases in order to account for additional advantage gained by the agency by way of getting controlled release, the agency would have to pay to the Government or the Board, as the case may be, in tariff equivalent, the cost component of the controlled release by the agency for the energy generated from the scheme. It was further clarified that "this would be in addition to the royalty of water, if any, to be paid" and that the tariff storage/controlled release was to be worked out in respect of each scheme separately taking into account the relevant factors. 8. As per Clause 19, the limitation for small/mini/micro hydro power schemes was a maximum total capacity of 15 MW with individual units of maximum 5 MW capacity each. It was stipulated that before the implementation of a scheme, an agreement setting forth ail the above aspects and such other conditions as would be found necessary would be entered into between the agency on the one part and KSEB/ Government on the other. 9. The petitioner finding that its requirement of power was not being adequately serviced by KSEB on account of the very substantial shortage of power in the State of Kerala, wished to take advantage of the policy to set up a captive power plant for its manufacturing facility referred to above. 10. Prior to doing so, the petitioner's representative met with the officials in the Power Department, the then Chairman, KSEB, Member Technical of KSEB and other officers of KSEB as also the Minister, Department of Power. 10. Prior to doing so, the petitioner's representative met with the officials in the Power Department, the then Chairman, KSEB, Member Technical of KSEB and other officers of KSEB as also the Minister, Department of Power. Pursuant to the said meeting, a letter No.10529/B1/94/PD, Power (B) Department dated 25th April, 1994 (Ext.P1(a) was issued forwarding a copy of the minutes of the meeting held on 8th April, 1994, i.e., the meeting referred to above. 11. One of the aspects recorded in the minutes and relevant to the petition reads as follows: "i) Royalty to be charged on water. It was decided that irrigation department will be requested not to charge the cess or royalty especially where water is being retained in the same basin and there is no consumptive use." (Ext.P1(a)). 12. It appears from the record that KSEB allotted the Kuthungal Phase I and Phase II Project in Idukki District for a 21 MW hydel power plant to the petitioner for execution and operation for a period of 30 years from the date of commissioning of the project vide G.O. MS.No.23/90/PD (Plg.VI/1/92/PP) dated 22nd August, 1992 (the "Project"). 13. Finally the petitioner entered into an agreement dated 30th December, 1994 (Ext.P3) with KSEB for setting up of the Hydro Project. 14. Clause 19 of the agreement being relevant for the purposes of the present petition in particular is extracted for convenience: "Cess/Royalty for use of water, if decided by the Government together with tax/ duties as fixed by Government from time to time shall be paid by the company to Government." 15. Significantly, in the Agreement no provision for payment of royalty on the use of water was made. Nor was there any provision made for charges for controlled release of water. The petitioner's submission is that no such provision was made for two reasons, viz, 16.a) that the State Government had, as recorded in the Minutes of the Meeting held on 8th April, 1994 promised that if the petitioner invested in the hydel power project as the project then proposed was a run of the river project and hence would not consume any water; and 17. that there was to be no controlled release of water for the petitioner's generating station. that there was to be no controlled release of water for the petitioner's generating station. Indeed to the limited extent that there was to be controlled release of water from the Anayirankal dam during summer months, that was for KSEB's own power plant which was already in existence at the time of the Agreement and neither the irrigation department nor KSEB were to carry out any controlled release of water for the petitioner as the petitioner's project was upstream to the KSEB project being the Penniar hydel project. 18. Pursuant to the agreement, the petitioner set up the Hydro Electricity Project in the year 2000 at a cost of approximately Rs.65 to 66 crores at the time with the object of generating 79 million units per annum based on the water flow data provided by KSEB. Generation of the electricity commenced from on or about June, 2001 without the levy of any cess, duty or royalty under the Agreement. 19. 0n 11th October, 2002, the State Government through Department of Power issued a further Government Order bearing No. GO (MS) No.28/02/PD (Ext.P8) to encourage private participation in small/mini/micro hydel projects as previously communicated vide G.O. dated 22nd December, 1989. An empowered committee had been constituted by the State Government pursuant to G.O. (Rt) 200/2002/PD dated 5th September, 2002 to oversee the implementation of reforms of KSEB and to examine the details for the erection of small/mini/micro hydel projects. After having considered the recommendations of the said committee, the State Government through the aforesaid GO and as an attachment thereto, issued its guidelines for the allotment of hydel schemes to private sectors/captive power projects, (the Guidelines). 20. The Guidelines record that there was a large gap between demand and availability of the power in the State and that capacity building was highly essential to bridge the gap. It was noted that thermal power stations were economically and ecologically less viable and that hydro electric potential have been harnessed only to the extent of 40%. It was acknowledged that the Government and the public sector did not have huge resources necessary for large scale investment in the generation of power. The Guidelines provided that all HT/ELHT consumers and other consumers of KSEB with demand load of 2 MW and above would be eligible to apply for hydel captive projects. It was acknowledged that the Government and the public sector did not have huge resources necessary for large scale investment in the generation of power. The Guidelines provided that all HT/ELHT consumers and other consumers of KSEB with demand load of 2 MW and above would be eligible to apply for hydel captive projects. The allotment of the project was to be based on competitive bidding process with the criteria for selection being the lowest bid rate. However, other elements for consideration of allotment were also provided such as financial status, technical expertise, experience in similar works, organizational capacity etc. of the bidder. The allotment was to be on a Build Own Operation and Transfer (BOOT) basis for a period of 30 years from the date of allotment of the project as per the agreements to be entered into. The power generated from such projects was to be purchased by KSEB at mutually agreed terms and conditions for which the allottees were to enter into the power purchase agreements with KSEB. Transmission facilities were to be constructed and maintained upto the nearest KSEB grid at the cost and responsibility of the allottee. Various other guidelines were laid with respect to the generation and sale of electricity from such projects. 21. Thereafter on 16th January, 2003, the State Government through Power Department issued a further G.O.(MS)No.2/2003/PD (Ext.P9) by reference to the above referred GO including the Guidelines. Materially it reads that "in the GO read above, Government had issued guidelines for the allotment of small hydro projects to captive power producers and independent power producers". Reference to the G.O. read above is the G.O. dated 11th October, 2002 which attached the aforesaid guidelines. 22. By the G.O. dated 16th January, 2003 (Ext.P9), the State Government having examined various recommendations issued the revised guidelines "for allotment of small hydel projects to captive power producers and independent power producers". The earlier guidelines were to stand modified accordingly. 23. What is relevant from the above order in the context of the present petition is that these guidelines of 11th October, 2002 and 16th January, 2003 apply equally to captive power producers who do not generate electricity for their own use but simply sell to KSEB. The earlier guidelines were to stand modified accordingly. 23. What is relevant from the above order in the context of the present petition is that these guidelines of 11th October, 2002 and 16th January, 2003 apply equally to captive power producers who do not generate electricity for their own use but simply sell to KSEB. It is easy to see the reason why the State Government made no distinction between the two categories as essentially both serve the same function i.e., augment in one form or the other the availability of power to KSEB. It is also relevant that the GO dated 22nd December, 1989 and 7th December, 1990 as the said GO states "Government have decided in principle to encourage private participation in small/mini/micro hydel projects as per the G.O. read as first paper above. The terms and conditions for allotment of small hydel projects were also laid down by the Government as per G.O. read as second paper above. Since the Government proposed to invite more private participation in this sector, it has become necessary to prescribe guidelines through competitive bidding." 24. The reference to GO read as first paper above is the G.O. dated 22nd December, 1989 and reference to G.O. read as second paper above is a reference to G.O. dated 7th December, 1990 i.e. the two G.O.'s read with the Minutes of meeting of 8th April, 1994 pursuant to which the petitioner set it's project. 25.The revised guidelines dated 16th January, 2003 (the "Revised Guidelines") in so far as material for the present petition apart from being applicable to both captive and independent power projects provides under the general conditions applicable to captive power producers that (a) the developers shall pay tax, duties and other levies to the central or the state government as per the statutes and rules in force and (b) in Clause 15, under the heading "Guidelines for allotment of hydel schemes to private sector on BOOT basis" that water cess was not required to be paid as it would reflect on tariff and hence not investors friendly. However, under sub clause (j) of Clause 17, General Conditions, it is provided that "the allottee shall pay taxes, duties and other levies to the central or the state government as per the statutes and rules in force". 26. However, under sub clause (j) of Clause 17, General Conditions, it is provided that "the allottee shall pay taxes, duties and other levies to the central or the state government as per the statutes and rules in force". 26. While the revised guidelines give an impression that the bar on the levy of water cess for the use of water for power generation is for IPP's and not CPP's that is not actually so as subsequently the same Power Department of the State Government listed by reference to the revised guidelines, as one of the highlights of the policy for CPP's that "Water cess: No water cess will be levied by Government for the water utilised for power generation". This is evident from the attachment to the Department of Power, Energy Management Centre's letter dated 4th February, 2003. 27. On 3rd July, 2004, the State Government however issued a Government Order being G.O.(RT)283/2004/PD (Ext.P11) (the impugned order) which is material and reads as follows: "In the agreement executed between KSEB and M/s. INDSIL Electrosmelters Ltd. read as 1st paper above, as per clause 19 "Cess/Royalties for use of water, if decided by Government together with tax/duties as fixed by Government from time to time shall be paid by the company to Government." Government Order read as 2nd paper also stipulates that royalty is to be collected for use of controlled water for power generation. The Kuthugnal HEP (21 MW) is a CPP implemented by M/s. INDSIL. The project utilises the water available from the free catchment between Anayirankal dam and Kuthungal weir as well as the controlled releases from Anayirankal dam. The Maniyar HEP (12 MW) the first CPP owned by M/s. Carborandum Universal utilises the controlled releases from Sabarigiri and Kakkad Hydro Electric Project of KSEB. The royalty for this project is being charged at the rate of 10% of the energy tariff rate of EHT consumers and is paid to KSEB. The Maniyar HEP (12 MW) the first CPP owned by M/s. Carborandum Universal utilises the controlled releases from Sabarigiri and Kakkad Hydro Electric Project of KSEB. The royalty for this project is being charged at the rate of 10% of the energy tariff rate of EHT consumers and is paid to KSEB. Government after detailed examination hereby order that the royalty and cost of controlled release of water to the Kuthungal HEP shall be reckoned on the quantum of energy generated and shall be 10% of the energy tariff rate for EHT consumers current from time to time for every unit of energy generated and in addition, the company is liable to pay 1.2 paise per unit as electricity duty for each unit of electricity generated in accordance with the provisions of the Kerala Electricity Duty Act. The Chief Electrical Inspector shall collect the royalty from the company and remit to the State revenue. 28. As a consequence of the said GO, it appears that KSEB had sought to recover royalty from the petitioner on the basis that the project utilises water available from the free catchment area between Anayirankal dam and weir as well as controlled releases from Anayirankal dam and by equating this to the agreement entered into between M/s.Carborandum Universal and KSEB dated 18th May; 1991 (Ext.P2) and in respect of which a separate writ petition is being considered being O.P. No.6880/2003. The petitioner herein has drawn a distinction between its facts and that of Carborandum Universal and has contended that as in Carborandum's case the agreement signed between KSEB and Carborandum it self provides for the payment of royalty, the petitioner's case cannot be equated with carborandum but stands on a better footing. 29. The petitioner therefore challenges the impugned order on various grounds including that: a) the imposition of royalty is in the nature of a tax on the production of electricity which is not within the legislative competence of the State Government and which in any event cannot be done by an administrative or executive order but only by legislation. 29. The petitioner therefore challenges the impugned order on various grounds including that: a) the imposition of royalty is in the nature of a tax on the production of electricity which is not within the legislative competence of the State Government and which in any event cannot be done by an administrative or executive order but only by legislation. b) that even if the royalty sought to be charged is assumed to be on the sale or consumption of electricity and therefore within the legislative competence of the State Government under Entry 53 of List II, royalty being in the nature of a tax cannot be imposed by an administrative or executive order but can only be imposed by exercise of legislative power. c) that the levy of royalty on the petitioner is in violation of Article 14 of the Constitution of India in as much as pursuant to the guidelines and revised guidelines no other captive power plant or independent power producers save the petitioner is being subjected to similar royalty without a provision in the agreement for payment of royalty and in total only 2 projects that of the petitioner and carborandum out of 61 projects are being subjected to this royalty. d) that in any event, the petitioner was not based on the controlled release of water from Anayirankal dam and therefore cannot be equated to Carborandum Universal and that this fact is recognized by the Agreement itself which does not provide for any levy of royalty or other charges towards the cost of the controlled release as has been specifically imposed in the Carborandum Universal Agreement. e) that royalty even if not a tax cannot be charged as there is no consumption of water in the petitioner's power plant being a run of the river hydel project and no part of the natural resources is lost to the State Government and indeed the very same resource is used by downstream KSEB project namely Paniar Hydro Electric Project. f) that even if royalty is held to be not a tax but a charge for the use of water, in the present case, there is no contract with the State Government under which the State Government can impose royalty on the petitioner as the Agreement is between KSEB and the petitioner, and KSEB is not the owner of the natural resource water and hence cannot levy any royalty under the Agreement. In such circumstances, it is contended by the petitioner that the only legal way in which royalty could be charged could be by statutory imposition made by the State Government. g) that the State Government is estopped from seeking to levy royalty or cess on the principles of promissory estoppels and/or equitable estoppel and/or estoppel by conduct as the petitioner acted to it's detriment in setting up the Project based on the State Government's representations that water cess or royalty for the use of the water would not be levied. h) that in any event the charge is vague as it seek to combine royalty for use of water and cost of controlled release and thee is no mechanism to discern how much is being charged as royalty and how much for controlled release. Further, the GO dated 7th December, 1990 which has been made as part of the contract provides a specific formula for calculating the cost of controlled release and the said formula admittedly not having been applied, even if the controlled release was being effected for the petitioner's project which is not the case the whole of the levy is bad in law and non-contractual. 30. The respondents being the State Government and KSEB have opposed the writ petition on various grounds including: a) that royalty imposed by the impugned order is not a tax on the production of electricity and hence is within the legislative competence of the State Government. b) that royalty is not a tax at all but is a charge for the use of water and hence within the competence of the State to impose. c) that there is no discrimination as there is a distinction between captive power generator and indepdendent power producers under the policy since the independent power producers are selling to KSEB and making power available for distribution whereas captive power produced is used by the industry themselves. c) that there is no discrimination as there is a distinction between captive power generator and indepdendent power producers under the policy since the independent power producers are selling to KSEB and making power available for distribution whereas captive power produced is used by the industry themselves. d) that the petitioner has agreed by Clause 19 of its Agreement to pay royalty or cess as may be levied by the State Government from time to time. No question of principles of promissory estoppels or equitable estoppels or estoppels by conduct arises and indeed, neither has equitable estoppel nor estoppel by conduct been pleaded and hence the Court cannot consider such pleas. 31. A further objection has been raised that the writ petition is not maintainable in view of Section 86(1)(f) of the Electricity Act, 2003 whereby a dispute between the petitioner and KSEB, the licensee has to be resolved by the Kerala State Electricity Regulatory Commission unless sent to arbitration by Kerala State Electricity Regulatory Commission (KSERC). 32. Regarding maintainability of writ petition I may deal first with the last objection raised during arguments and in the written submission of KSEB. The writ petition raises issues relating to the legislative competence of the State Government and Article 14 of the Constitution of India amongst others. The existence of an alternative remedy under the Electricity Act, even if it did exist, does not take away the jurisdiction of the High Court under Article 226 of the Constitution of India. Further, when an issue of legislative competence is raised, it would not even be within the jurisdiction of KESRC to make any declaration that the State Government does not have legislative competence to impose a particular tax or cess or charge of such a nature. Similarly it would be wholly inappropriate, in my view, to relegate a party to the KSERC when the writ petitions have been admitted and pending since 2003 and 2008 without an objection of this nature being raised at the outset and when constitutional issues such as discrimination and arbitrariness in violation of Article 14 of the Constitution are involved. 33. Apart from the above, the writ petition in this case impugns an executive order of the State Government and not that of KSEB. The dispute is therefore not between a licensee and a generating company but essentially between the State Government and a generating company. 33. Apart from the above, the writ petition in this case impugns an executive order of the State Government and not that of KSEB. The dispute is therefore not between a licensee and a generating company but essentially between the State Government and a generating company. Such disputes do not fall within the ambit of Section 86 (1)(f) of the Electricity Act. The petitioner therefore in fact does not have an alternative remedy for redressal of it's grievance and hence the petition under Article 226 is not only maintainable but is the appropriate remedy for the petitioner to invoke in the facts and circumstances of the case. I, therefore, hold that the writ petition is maintainable. 34. Regarding discrimination with regard to violation of Article 14 of the Constitution one of the principle contentions raised by the petitioner is that the impugned order invidiously discriminates against the petitioner as other hydel power projects numbering as many as 59 others in the State have not been levied a similar charge by way of royalty or cess. The petitioner has referred to, specifically some projects, one of which is the Ullangal Power Project by way of example. It is contended that when the policy is clear and applicable to both CPP's and IPP's as evident from the revised guidelines read with February, 2003 clarification or explanation thereof, the State Government could not seek to pick and choose the petitioner to impose such a levy or charge. It is therefore contended that the impugned order is ex-facie discriminatory, arbitrary and unreasonable and in violation of Article 14 of the Constitution and hence liable to be struck down. 35. The respondents, State and KSEB, have refuted this contention by seeking to distinguish the case of the petitioner from that of the other 59 by reference to the petitioner's project being a captive power project and that of the others being independent power projects. The real distinction sought to be made is that the IPP's supply of power to KSEB which is then available to KSEB to sell and distribute to consumers generally and augments the availability of power for KSEB while a captive power plant generates power for it's own use and hence the power is not available for KSEB to sell to consumers i.e., there is no augmentation of power available to KSEB for distribution and sale. The second distinction sought to be made is that the petitioner's project is based on controlled release of power at least partly while the others are not. 36. It is the admitted position that no royalty is sought to be charged from the other 59 power projects including the one cited by the petitioner by way of example. It is also the admitted position that these 59 other projects are IPP's while the petitioner's project is a CPP. The question then is whether the fact that one is a CPP and the other IPP gives any rational basis for classification and treating them separately for the purpose of the levy of royalty for the use of water for generation of electricity when both types of project are for the use of water for generation of electricity and neither of the uses are consumptive in nature. 37. The policy of the State Government as reflected in the revised guidelines and as explained or clarified in February, 2003 was and continues to be that water cess on the use of water for the generation would not be charged both in respect of CPP's and IPP's. The February, 2003 elucidation of the State's policy uses identical terms for both CPP's and IPP's i.e., "water cess: No water cess will be levied by Government for the water utilised for power generation". No distinction can be drawn between water cess and royalty for this purpose and the State/KSEB have fairly not sought to draw any distinction between water cess for the use of water and royalty for the use of water in this context. Both being exactions or charges on the use of water for the generation of electricity, in fact and in law, no such distinction can in any event be drawn. 38. Both being exactions or charges on the use of water for the generation of electricity, in fact and in law, no such distinction can in any event be drawn. 38. 1n the light of the above position, one can find no basis for this subsequent distinction sought to be made by the State Government between CPP's and IPP's. When the State has itself in it's policy clearly treated both CPP's and IPP's alike in this respect in it's policy and that is the basis on which persons have been invited to invest in the State in Hydel projects, clearly it would be wholly arbitrary, unreasonable and discriminatory to seek to levy a cess or royalty on a CPP and not to levy the same cess or royalty on IPP's both of which are using the State's water resources to generate electricity for their own benefit. 39. The fact that IPP's sell power to KSEB and that CPP's themselves use the power generated by them affords no ground for a rational distinction or basis for classification. If that were so, the State should have first amended its policy accordingly. Even otherwise, there is no substance in the plea. Both CPP's and IPP's in effect augment the availability of power to KSEB. A CPP when it generates and uses the power by itself, to the extent of such generation, does not use power available to KSEB from its other sources and hence the power which the CPP would have used but for it's own generation becomes available to KSEB for sale and distribution to others. That is why even the State Government came out with a single policy inviting both CPP's and IPP's to set up hydel projects. They both serve the same function. They augment the generation of power in the State and hence reduce the gap between demand and supply. 40. It is to be noted that the State's policy itself i.e, the revised guidelines state that "There is a large gap between demand and availability of power in our State. Capacity addition is highly essential to bridge this gap". This exact language finds its place under both the headings of CPP and IPP. 40. It is to be noted that the State's policy itself i.e, the revised guidelines state that "There is a large gap between demand and availability of power in our State. Capacity addition is highly essential to bridge this gap". This exact language finds its place under both the headings of CPP and IPP. If there is a common object sought to be achieved both from CPP's and IPP's as is evident from the State's policy itself, there can be no rational basis for classification of the two differently to satisfy the tests required for Article 14 not to be offended. 41. The first justification therefore given by the State and KSEB to levy the royalty on the petitioner but not the other private hydel projects is not an acceptable one under our Constitution and is therefore rejected. 42. The second distinction sought to be urged is that the petitioner's project is based on controlled release of water from the Anayirankal dam while the other 59 projects are not based on any controlled release. 43. The petitioner has disputed this allegation of the State/KSEB. The petitioner contends that the best evidence of the fact that the petitioner's project is not based on controlled release of the Anayirankal dam but is a run of the river project is the Agreement itself and the Carborandum Universal Ltd. agreement. Further, the petitioner relies on the counter affidavit filed by the State Government where even according to them only 22.54% of the power generated by the petitioner is attributable to controlled release of water that too not for the petitioner's project but for KSEB's own project being the Panniyar Hydro Electric Project. 44. The petitioner draws attention to Clause 14 of the Carborandum agreement which provides: "14. Royalty for the use of water together with the tax and duties on generation of power as fixed by Govt./KSEB from time to time have to be paid by CUMI to KSEB. Manniyar Hydro Electric Project will utilise the existing head works benefit of the Maniyar Irrigation Dam of PWD which is fed mainly by the controlled release of water from existing Moozhiyar Power House of KSEB. In order to account for the additional advantage gained by getting of such controlled releases, CUMI will have to pay to KSEB the cost component for the controlled release utilised by CUMI for the energy generated from the scheme. In order to account for the additional advantage gained by getting of such controlled releases, CUMI will have to pay to KSEB the cost component for the controlled release utilised by CUMI for the energy generated from the scheme. This will be in addition to the royalty of water to be paid. The charges for controlled release as above as well as royalty on water, will be reckoned on the quantum of energy generated and shall be ten per cent of energy tariff rate for EHT consumers current from time to time for every unit of energy generated and shall be paid to KSEB". 45. The petitioner has submitted that in contradistinction to the above, although the Carborandum agreement dated 18th May, 1991 was already in existence prior to the petitioner's agreement, no such provision was made and no reference even was made that the petitioner's project would be getting release from the Anayirankal dam. 46. The petitioner submits that if at the time of the Agreement it was contemplated that the State Government would have to arrange for controlled release of water for the petitioner's project and therefore would have incurred any cost which it would not have otherwise incurred as in the case of Carborandum's project, the State Government would have, ensured that the petitioner's agreement would have made a similar provision. The only reason it did not and the State specifically agreed in the meeting of 8th April, 1994 that water cess for use of water would not be charged was that the State Government and KSEB were well aware that the State Government would not have to incur any additional cost towards controlled release of water for the petitioner's project. The petitioner has in this context also submitted that to the extent that there is any controlled release of water from the Anayirankal dam, it is for KSEB's project located downstream i.e. the Panniyar Hydro Electric Project for which it must incur whatever cost may be incurred and the petitioner is in fact not even asking for any controlled release of water for it's project. If the State Government wishes not to make any controlled release of water from the Anayirankal dam, it is free not to do so. 47. The aforesaid facts stated by the petitioner are not seriously disputed by the State Government. If the State Government wishes not to make any controlled release of water from the Anayirankal dam, it is free not to do so. 47. The aforesaid facts stated by the petitioner are not seriously disputed by the State Government. No explanation has been given for not including any charges for controlled release in the Agreement with the petitioner when it was specifically done so for Carborundum. It is an admitted fact further that the controlled release to the extent resorted to during the lean season is done specifically for the KSEB project which is the Panniyar Hydro Electric Project and which was already in existence at the time of the Agreement. Admittedly, no special or specific controlled release was contemplated or was to be done or is being done for the petitioner. As and when controlled release is done it is being done for the Panniyar project. 48. The above position is evident as in paragraph 9 of the State's counter affidavit it is averred "It is true that the release of water from Anayirankal reservoir is mainly decided based on generation requirements at the Penniyar Power Station". The State Government in paragraph 12 of the said counter affidavit while reiterating that "Even though the controlled release of water is made to suit the requirement of power generation at Penniyar" further refers to the benefit of the controlled release for the Penniyar Power Station that the Petitioner gets by reason of it's Project being upstream to Penniyar and that on an average over the period concerned, about 22.54% of the Petitioner's generation comes from controlled release. 49. Thus clearly the State Government is not carrying out any controlled release for the Petitioner but only for Penniyar and incidentally the Petitioner may get the benefit. Hence the Agreement made no provision of payment of any controlled release cost. One can also envisage a situation where the controlled release for Penniyar may not be to the Petitioner's benefit and even possibly to it's detriment, for example, when some maintenance work is going on at the Petitioner's Project. 50. Further, as per the norms of the State Government the benefit is limited to an average of 22.54% of the generation over the years. 50. Further, as per the norms of the State Government the benefit is limited to an average of 22.54% of the generation over the years. There could be no logical reason for the Impugned Order to equate the Petitioner's Project with that of Carborundum's project which is based on controlled release and to impose the same level of royalty/charges. For this reason also the Impugned Order is arbitrary and unreasonable and liable to be struck down. 51. The Petitioner has further submitted that in any event it is not correct for the State Government to urge that none of the other 59 projects use controlled release. According to the Petitioner, it is aware that at least one of the other hydel projects i.e the Ullungal Power Project, does use controlled release of water from an upstream plant and it's generation is based on such controlled release but admittedly the State has not levied any similar royalty and/or charges for controlled release either in KSEB's agreement with it or by any GO issued by the State Government. This fact has also not been countered by the State Government and therefore stands admitted. 52. Under these circumstances, the second distinction sought to be made in an attempt to justify the distinction between the Petitioner's project and the other two projects referred to above is also not a valid one. 53. Accordingly I hold that the Impugned Order is invalid as it is discriminatory and has been arbitrarily and unreasonably issued in violation of Article 14 of the Constitution of India. 54. 1n view of the above findings, I need not go into the other issues, but as detailed arguments have been addressed on the various issues raised, deem it appropriate to consider and decide those issues as well. Clause 19 of the Agreement 55. Clause 19 of the Agreement reads thus: "Cess/Royalties for use of water, if decided by the Government together with tax/duties as fixed by Government from time to time shall be paid by the company to Government". 56. Clause 19 of the Agreement 55. Clause 19 of the Agreement reads thus: "Cess/Royalties for use of water, if decided by the Government together with tax/duties as fixed by Government from time to time shall be paid by the company to Government". 56. The first issue that is required to be decided is what, on a true and proper construction of the Agreement i.e a contract between the parties in this case which is KSEB and the Petitioner, is the meaning of Clause 19 i.e whether the true meaning of clause 19 is that the Petitioner would be obliged to pay cess/royalty or other taxes which the State Government may impose in accordance with law and not merely by way of an administrative or executive order or whether the Petitioner would be obliged to pay royalty even if the Government at any time issues an administrative or executive order to that effect. Essentially, the question is whether the term "Royalties" used in Clause 19 is in the nature of a tax or cess or not. 57. The Clause starts with the words "Cess/Royalties". The term "Cess/Royalties" having been used with a "/" indicates to me that the parties have used them interchangeably. It equates "royalties" with "cess". A cess is inevitably either a tax or a fee depending on the nature of the levy. In the instant case if the mere use of the water is the subject of the levy, the levy of cess cannot be a fee as there would be no service in return or quid pro quo. It would therefore be a tax. A compulsory exaction, by whatever name called would fall within the definition of a tax under Article 265 of the Constitution. Accordingly the term "royalties" has not been used in Clause 19 in it's usual sense of simply a charge imposed by an owner for the use of a natural resource and possibly for good reason. 58. KSEB is the contracting party and not the State Government. KSEB is not the owner of the natural resource concerned -water. It is the State Government which is the owner thereof. But the State Government is not a contracting party although nothing prevented it from being one. It possibly wished to insulate itself from any claims for breach of contract or did not wish to undertake any contractual obligations choosing to retain it's sovereign status. It is the State Government which is the owner thereof. But the State Government is not a contracting party although nothing prevented it from being one. It possibly wished to insulate itself from any claims for breach of contract or did not wish to undertake any contractual obligations choosing to retain it's sovereign status. The State Government could, therefore, impose a statutory levy like a tax or cess or fee at any time but cannot impose a contractual charge when it is not a party to the Agreement. 59. Both terms "Cess" and "Royalties" are terms used in connection with the use of water. They are therefore clearly intended to be levied for the same purpose. It is not the State Government's case also that the State Government contemplated levying Cess as a tax or fee on the use of water and again Royalty as a charge on the use of water. They therefore cannot be of two different characters, one a tax a cess must be a tax in the present case and the other not at all in the nature of a tax. It is, in my view, in this context that Clause 19 uses the term "Cess" and "Royalties" interchangeably. The terms "tax/duties" are also separated by the slash sign as both are taxes. If the intention was that Royalty would be imposed as a charge for the use of controlled release of water and not as a tax, the Agreement would have itself provided for and fixed the royalty as it did in the Carborundum agreement. 60. In support of the plea that the term "Royalties" used in Clause 19 must be a tax or cess, the Petitioner has relied on the principle noscitur a sociis. It is contended that firstly the term "Royalties" is used with a slash in between the term "cess" and a cess is a tax and further, then goes on to use the words "together with tax/duties as fixed by Government" indicating that all the four terms belong to the same societas and there can be no reason to hold that the term "Royalties" was used by the Parties to the Agreement in any other way. Any doubt as to the character of the term "Royalties" i.e whether it is used referring to a tax or not a tax in Clause 19 can be resolved by application of the said principle. Any doubt as to the character of the term "Royalties" i.e whether it is used referring to a tax or not a tax in Clause 19 can be resolved by application of the said principle. 61. It was urged that, the Court in this case is not being called upon to interpret a statute which is the unilateral act of the State but a contract between two parties where it is the common and objective intention of the Parties which is relevant and to be found by the process of interpretation. Reliance was placed on the decision of the Constitution Bench in the case of Godfrey Phillips India Ltd Versus State of U.P [ (2005)2 SCC 515 ] where in connection with Entry 62 of List II to the Seventh Schedule, the Honourable Supreme Court had applied the said principle. 62. The argument is a compelling one. In Godfrey Phillips, the word "including" was held to clear the doubt with regard to use of the word "luxury" in Entry 62 of List II VII th Schedule as the term luxury was not free from ambiguity as it had been used in different senses. There is no doubt that a "Royalty" when imposed by a statute would be a tax or can be construed as a tax. Ordinarily it may not be a tax. In the context of the Mines & Minerals (Development & Regulation) Act, a bench of seven judges had in India Cement Ltd versus State of Tamil Nadu (1990) 1 SCC 12 held that royalty as provided in Section of the said Act was a Tax. Although subsequently a number of judgments confirmed that India Cements had so held, in Keshoram Industries versus State of West Bengal (2004) 10 SCC 201 , a Constitution bench of five judges held that the same was an error leading ultimately to the issue amongst others being referred in Mineral Area development Authority versus Steel Authority of India & Others (2011) 4 SCC 450 to a nine judge bench which is yet to hear it. There is thus ambiguity in the term used in Clause 19 of the Agreement and the principle noscitur a sociis can be applied to resolve that doubt or ambiguity. 63. There is thus ambiguity in the term used in Clause 19 of the Agreement and the principle noscitur a sociis can be applied to resolve that doubt or ambiguity. 63. The Petitioner also contends that the relevant words in Clause 19 should in any event be read ejusdem generis and therefore also that the term "Royalties" in Clause 19 must partake the character of a tax and not a contractual charge. There is substance in this contention as well. 64. As a matter of interpretation of the contractual clause 19, I am therefore of the view and hold that the term "Royalties" used therein has not been used to enable the levy of contractual royalty by an owner as a charge for the use of a natural resource but as a tax in the nature of and interchangeably with a cess. 65. Apart from the above the issue can be considered from another perspective i.e whether the State Government who is not a party to the Agreement can effectively by issuance of an administrative or executive order alter the terms and conditions of a contract between KSEB and the Petitioner or whether in order to make the Petitioner liable to pay royalty or cess, the State Government necessarily had to legislate to make such a royalty or cess or tax payable. 66. For this purpose it is not necessary to go into the aspect as to whether royalty is a tax or is not a tax but merely a charge for the use of natural resource such as water. 67. All that the Agreement provides under Clause 19 is that cess/royalty for use of the water, if decided by the Government from time to time, shall be paid by the company to the Government along with taxes. 68. The Government is admittedly not a party to the Agreement or the contract between KSEB and the Petitioner. 67. All that the Agreement provides under Clause 19 is that cess/royalty for use of the water, if decided by the Government from time to time, shall be paid by the company to the Government along with taxes. 68. The Government is admittedly not a party to the Agreement or the contract between KSEB and the Petitioner. It is noteworthy that in so far as GOs dated 7th December 1990 and 12th March 1992 are concerned, they are incorporated by reference as part of the Agreement itself as the recital to the Agreement provides as follows; "WHEREAS the Kerala State Government has announced the Terms and Conditions of the private sector participation in generation of Power through Small/Mini/micro Hydel Schemes vide G.O MS No.23/90/PD dated 7.12.1990 and G.O MS No.5/92/PD dated 12.3.1992 hereinafter referred to as the said G.O which shall form part of this Agreement as if incorporated herein...." 69. Clause 19 does not provide that any future GO issued by the State Government imposing on the Petitioner any cess or royalty would be, as a matter of contract, incorporated or would form part of the Agreement itself. 70. It is trite that in order for a contractual obligation for payment of a particular amount or liability to arise, it is the parties to the contract who must agree to such liability as part of the contract. It is not the State Government's argument that the impugned Order could be deemed to form part of the contract by reason of Clause 19 of the Agreement. Even if the State Government had raised such an argument, in my view, it would not be capable of acceptance as if that were the intent of the parties and it should have been clearly and by express words provided that any GO issued by the Government imposing royalty would be deemed to be a part of the contract between the Parties. This is so because had such a provision been suggested in the Agreement, it would have been opened for the Petitioner to have rejected the Agreement itself and not made the investment or to have negotiated to remove such a clause particularly in the light of the fact that in the letter dated 25 April 1994 with reference to the minutes of the meeting held on 8th April 1994 it was expressly recorded that the irrigation department would be requested not to charge cess on water especially where water is being retained in the same basin and there is no consumptive use thereof. 71. In the light of the aforesaid position, in my view, the true construction of Clause 19 is that the intention of parties was that should the Government impose a tax such as a cess on the use of water naturally it would be done by a state legislature and not by administrative or executive order and hence such a cess would be payable by law and not as a matter of contract. As mentioned above, the term "cess/royalties" having been used with a "/" indicates to me that the parties have used them interchangeably and that royalty in the instant case would therefore necessarily have to be a tax imposed by the State Government just as any cess would be, as it would be by way of a compulsory exaction and not by a contractual agreement. Does the Impugned Order validly impose Royalty on the use of water 72. Article 265 of the Constitution clearly provides that no tax can be levied or collected except by authority of law. On the basis that Clause 19 only contemplates a tax being levied on the use of water, whether such a tax is called a cess or royalty, and admittedly the Impugned Order being an executive order and not by way of a law, the Impugned order cannot be sustained and must be struck down. 73. However, the State's and KSEB's main plank in defence of the Impugned order is that the royalty and charges levied are not by way of a tax and therefore the State had executive authority to levy it and as the Petitioner has agreed by Clause 19 of the Agreement to pay such a levy, it is bound by the terms of the contract to pay it. KSEB has referred to several dictionary meanings of royalty in support of its plea and then while accepting that "royalty can be collected either under a legislative enactment or by virtue of a contract executed between the parties" seeks to support the levy on the ground that "Here royalty is collected for the release of water and not on the production of electricity". 74. If as KSEB and the State's case is that in this case royalty levied by the Impugned Order is for the release of water, then the difficulty that comes in the way of the State is that in fact the Petitioner's project is not the project for which the State does the controlled release. As admitted by the State Government in it's counter affidavit and extracted above, the controlled release is regulated by the needs of the Penniyar Power Station of KSEB and not the petitioner's Project. Hence there can be no basis to levy royalty on the Petitioner by reference to controlled release. 75. Also the further difficulty which comes in the way is that if at all a contractual charge could be fixed for the controlled release, the Agreement provides a formula for the calculation of such a charge by incorporating paragraph 15 of the 7th December 1990 GO and that formula has not been applied. The State Government has also not applied its' own policy in this respect as the policy GO of 7th December 1990 provides this formula. Having worked out a specific formula to calculate the charges payable for controlled release and having made that formula as a part of the Agreement by incorporating the concerned GO, the State Government and KSEB could not have given a go by to that formula and seek to levy charges on some other basis i.e on the production of electricity. 76. Quite apart from the above, even if the royalty is taken to be levied simply on the use of water being a mineral (and not on the right to win the mineral itself) and not by way of tax but as a charge imposed by the owner of the resource, the question which arises is whether the State Government has executive power to levy such a charge. 77. The admitted position here is that the water is not consumed by the Petitioner. 77. The admitted position here is that the water is not consumed by the Petitioner. There is no winning of the mineral that is water unlike in the case of mining leases where a lessee wins the minerals from the earth and sells the minerals as his own property. Water is not being sold at all after drilling or winning it by mining. Water which is flowing in the river is simply used by installing various machineries to generate power and then the same water flows down the river without any depletion. Therefore, in the first instance, the State and KSEB's comparison of royalty paid for winning minerals or when a patent or copyright is used to manufacture or reproduce the product, is not at all apposite and cannot be a ground to sustain the levy even as an executive order. 78. The further difficulty that may come in the way of the State is one of the State's competence to impose such a levy. Although this point has not been raised in arguments, it is of some importance and I merely mention it so that the parties may consider this aspect of the matter and as it has not been argued I do not propose to decide the issue. 79. Article 162 of the Constitution provides that the States executive power extends to matter with respect to which the Legislature of the State has power to make laws. There is no entry in List II pointed to by the State or KSEB which authorises the State Government to levy a tax on the use of water. The taxing entries in List II are clear Entries 45 to 63. None of them relates to water. Entry 17 of List II does empower the State to legislate with respect to water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56 of List I (which is not relevant here). Significantly there is no corresponding taxing entry unlike with respect to land where Entry 18 is the legislative field while various taxing entries in relation to land are to be found in Entries 45 to 49. There is no entry in List III or List I in respect of a tax on the use of water. Significantly there is no corresponding taxing entry unlike with respect to land where Entry 18 is the legislative field while various taxing entries in relation to land are to be found in Entries 45 to 49. There is no entry in List III or List I in respect of a tax on the use of water. Thus a tax on the use of water would fall within the Central Government's legislative competence under the residuary List I Entry 97 of the Seventh Schedule. 80. If the State has no legislative competence to levy any tax or exaction on the use of water, by reason of Article 162, it would lack competence to levy a charge such as royalty on the use of water as well. What cannot be done directly, also cannot be done indirectly. This may be a further ground affecting the validity of the Impugned Order but I leave the issue open and am not rendering any decision thereon as the parties have not addressed arguments on the issue. Is the Impugned Order a tax on generation of electricity 81. The next contention urged by the petitioner is that the Impugned Order seeks to levy a tax on the generation of Power and hence is beyond the legislative competence of the State Government. The contention is that while the Impugned Order ostensibly states that the levy is on the use of power, in reality, there is no nexus between the subject matter of the levy and the measure and hence the subject matter of the tax itself is the generation of power. As per the Petitioner, the levy is hence a colourable exercise of power. The Petitioner relies on the decision of the Supreme Court in M.P.Cement Manufacturer's Association Versus State of Madhya Pradesh (1990) SCC 111. It is further contended relying on Article 162 of the Constitution that when the State Government lacks legislative competence, it equally lacked executive power to issue the Impugned Order. 82. The Respondents contend that even assuming that the charge is a tax and not a contractual charge on use of water, the levy is not on the generation of power but on the use of water and that the production or generation of electricity is merely a means to measure the charge. 82. The Respondents contend that even assuming that the charge is a tax and not a contractual charge on use of water, the levy is not on the generation of power but on the use of water and that the production or generation of electricity is merely a means to measure the charge. It is contended that the State Government therefore has legislative competence to levy the tax and/or to levy the charge as an executive order. It has been vehemently contended that the decision of the Supreme Court in M.P. Cement's case is clearly distinguishable and that the Petitioner's contention that their case is covered by the said decision is incorrect. 83. Before considering the ratio of the decision of the Supreme Court in M.P. Cement's case, it is necessary to analyse whether the levy is truly on the generation of electricity and therefore ultra vires the State's competence or whether as the Respondent's contend, the levy is on the use of water and the generation of power is merely a measure. In the decision in MP. Cement's case, the Supreme Court held that the levy in that case was on the generation of power and not a measure of the tax with the levy being on the sale and consumption of power as contended by the State Government to bring the tax within Entry 53 of List II to the Seventh Schedule. The measure itself should not be the incidence of taxation. 84. There can be no doubt that on the face of the Impugned Order the levy is stated to be on the use and controlled release of water and the generation of power is apparently used as a measure on which the levy be imposed. The only question therefore is whether there is sufficient nexus between the use of water and the generation of power for the levy to be valid and not suffer from the vice of colourable exercise of power. 85. In the generation of hydel power, the mere use of water will not generate electricity. A complex and capital intensive hydel power plant comprising of various equipment must be installed to enable the force of the water to run the turbines to generate electricity and to transfer it to the grid. 85. In the generation of hydel power, the mere use of water will not generate electricity. A complex and capital intensive hydel power plant comprising of various equipment must be installed to enable the force of the water to run the turbines to generate electricity and to transfer it to the grid. Therefore, in my view, it cannot be said that there is sufficient nexus between the mere use of water and the generation of power to justify the generation of power and it's tariff being used as a measure of the levy. 86. 1n R.R.Engineering Co. Versus Zilla Parishad, Barielly [ AIR 1980 SC 1088 (para 22)], the Honourable Supreme Court set out the circumstances when what is contended to be the measure of tax could itself become the subject matter of the tax. 87. 1n my view therefore the Impugned Order in effect seeks to impose a levy on the generation of power although it ostensibly seeks to impose the levy on the use of water. 88. 0nce that is the conclusion on the nature of the levy imposed by the Impugned Order, then there can be no doubt that the decision of the Supreme Court in the MP .Cement's case covers the Petitioner's case in it's favour. In the said case it was held that the State Government lacked legislative competence to levy a tax on the generation of power even by an Act passed by the State Legislature. Estoppel 89. I may first deal with the plea of promissory estoppel. It is urged by the Petitioner that the State Government is estopped from seeking to levy royalty as it seeks to do by the Impugned Order on the principles of promissory estoppel and/or estoppel by conduct or equitable estoppel. It is contended that the State Government invited investments in the hydel sector with the object of bridging the gap between the supply and demand and at all times represented that if the project was not based on controlled release to enable generation of power, such as the proposed project of the Petitioner, cess or royalty for the use of water would not have to be charged. It is further urged that in any event it was agreed that cess or royalty for the use of water would not have to be charged and that was the basis on which the Petitioner was invited to set up its project. 90. It is contended that the Petitioner acted on the promise and particularly the promise held out during the meeting of 8th April, 1994 which included both representatives of the State Government through the Minister, Electricity and KSEB through its Chairman, it's member technical and other officers where it was assured that royalty would not be charged but explained that since it is the irrigation department that levies royalty on use of water, if any, the power department would request the irrigation department not to charge the royalty. This was expressly recorded in the minutes circulated to the Petitioner on 25th April, 1994. It is contended that the Petitioner acted on the basis of the said representation in setting up its Project to alter its position to its detriment by spending about Rs.65 Crores in the Project and that the levy of such royalty makes the Project entirely unviable. 91. The Petitioner has in its additional counter affidavit set out various details showing how based on the representation by KSEB as to the availability of water, the Project envisaged generation of 79 Million units per year on the basis of which a sum of Rs.65 Crores was invested. 92. It is contended that the cost of the power generation by its Project is far more than the grid tariff that the Petitioner would have paid if the Project had not been set up because, on account of the representations as to the water availability being incorrect and to generate not more than 37 Million units at the very maximum and in some years has generated even less than 20 Million units. These details have been expressly averred in paragraph 10 of the Petitioner's additional reply affidavit filed in response to the preliminary objections, counter affidavits and further objections filed by the State Government. 93. The Petitioner has also relied on the Revised Guidelines which expressly provide that cess on the use of water would not be charged as it affects the financial viability of the Project as clarified in the subsequent clarification issued on 4th February, 2003 (Exhibit-P/9(a)). 94. 93. The Petitioner has also relied on the Revised Guidelines which expressly provide that cess on the use of water would not be charged as it affects the financial viability of the Project as clarified in the subsequent clarification issued on 4th February, 2003 (Exhibit-P/9(a)). 94. The Petitioner has relied on several decisions of the Honourable Supreme Court including Power Alloys & Casting Pvt. Ltd Versus UP State Electricity Board (1997) 7 SCC 251 and State of Punjab Versus Nestle India Ltd. (2004) 6 SCC 465 . 95. The Respondent, State Government and KSEB have contended that the principles of promissory estoppel do not apply in the present case as no promise was ever made by the State Government that royalty or water cess would not be charged. It is further submitted that when the Agreement itself provides that cess/royalties would have to be paid, if levied by the State Government it negates any promise to the contrary. 96. 1n the context of promissory estoppel, in my view, the Petitioner cannot rely on the Revised Guidelines read with the explanation or clarification of 4th February 2003, as by the time the Revised Guidelines were issued, the Petitioner's project had already been set up and had commenced generation. 97. In my view, there are two aspects to be considered on these issues. The first is whether the facts are sufficient to attract the principle of promissory estoppel in favour of the Petitioner and if so, whether that principle would only prevent the State Government from seeking to levy royalty as a matter of executive order or whether it would also extend to prevent the State Government from imposing any cess or tax by legislature. 98. The 7th December, 1990 Policy does not expressly provide that the Government would not charge cess on the use of water. In other words, under the said policy, it was possible that the Government could by legislature impose a cess on the use of water. The policy further does provide that where controlled release on water was being made available by the State Government for a particular project, charges/royalties for the controlled release would be imposed by reference to a particular formula. 99. The policy further does provide that where controlled release on water was being made available by the State Government for a particular project, charges/royalties for the controlled release would be imposed by reference to a particular formula. 99. Prior to the Petitioner setting up the Project, the Petitioner amongst others met with the State Government's representatives including the Minster -Electricity, Chairman KSEB etc in which the admitted position is that the Petitioner requested that royalty for use of water would not be charged by the State Government leading to the minutes of the meeting which is as follows: "i)Royalty to be charged on water. It was decided that irrigation Dept. will be requested not to charge the cess or royalty especially where water is being retained in the same basin and there is no consumptive use". 100. Although this records that the irrigation department would be requested not to charge royalty, it is apparent that a decision to that effect was made by the Power Department and the irrigation and power departments being limbs of the same government, naturally the irrigation department when so requested would presumably accept the request and not charge royalty. The fact that the irrigation department never sought to charge royalty at the time of the agreement or subsequently from the Petitioner's Project, is evident from the fact that in fact the State Government did agree not to levy royalty even if it could be legally levied as a charge on the use of water by way of exercise of executive power and not by way of tax. There can also be no doubt that the Petitioner entered into the agreement on that basis and set up its project acting to its detriment in spending large amounts of money based on the said representations. 101. I am satisfied therefore that to the extent of exercise of the State's executive power, the principle of promissory estoppel would be attracted in the present case. However, the question still arises is whether the principle would extend to prevent the State Government from imposting royalty or cess or a legislative action i.e a tax under Article 265 of the Constitution of India. 102. However, the question still arises is whether the principle would extend to prevent the State Government from imposting royalty or cess or a legislative action i.e a tax under Article 265 of the Constitution of India. 102. Given the terms of Clause 19 of the Agreement and the interpretation thereon as I have held above, the principle of promissory estoppel would not be attracted against the State Government if it chose to, by legislative act, impose cess or royalty on the use of water by satisfying the requirement of Article 265 of the Constitution subject only to State's legislative competence on that behalf. The Petitioner having agreed in its contract with KSEB that cess/royalty and other taxes and duties would be payable, if so levied by the State Government, the principle of promissory estoppel cannot be invoked by the Petitioner contrary to the contractual provision which alone must govern in this respect. 103. Hence, in my view, it would be open for the State Government by an act of legislature to impose a water cess on the use of water but naturally, if that were done it would have to be uniformly imposed on all hydel projects whether they are CPPs or IPPs. Retrospective Levy 104. The Petitioner has submitted without prejudice to its challenge to the validity of the Impugned Order that in any event an executive order could not be passed making the Petitioner liable for the royalty with retrospective effect from the time when it commenced generation in 2001. It is contended that, if at all valid, the Impugned Order could only have prospective effect. The Respondent has not given any justification for the application of the Impugned Order retrospectively. 105. Assuming that the levy of royalty was held to be valid, I have no doubt that an executive order by the State Government cannot have retrospective effect. Retrospectivity could only arise in the case of legislation subject to the usual challenges which are made in respect of such retrospective levies. It is noteworthy that the Impugned Order itself does not expressly provide that the levy of royalty is to be from the date of generation of power. However, the demand has been raised on that basis. Retrospectivity could only arise in the case of legislation subject to the usual challenges which are made in respect of such retrospective levies. It is noteworthy that the Impugned Order itself does not expressly provide that the levy of royalty is to be from the date of generation of power. However, the demand has been raised on that basis. When the Impugned Order does not expressly even provide for retrospective effect, then even otherwise, in my view, there can be no basis for the levy of royalty, assuming its validity, retrospectively from the date when the project started generation but can operate only prospectively from the date of the impugned order. 106. In view of my findings recorded above, I hold that the Government is devoid of jurisdiction to realize any amount from the petitioner by way of Royalty/Cess on the water used from the Kuthungal Hydro Electric Project and accordingly I quash Ext.P11. In the result, this writ petition is allowed. But there will be no order as to costs.