Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
CASE NO.:
Appeal (civil) 8322 of 2001
Appeal (civil) 8323 of 2001
Appeal (civil) 8324 of 2001
PETITIONER:
Hitech Electrothermics & Hydropower Ltd.
RESPONDENT:
State of Kerala & Ors.
DATE OF JUDGMENT: 17/12/2002
BENCH:
CJI,K.G. BALAKRISHNAN.
JUDGMENT:
JUDGMENT
PATTANAIK, CJI.
These appeals by grant of special leave are directed
against the judgment of Kerala High Court dated 6th April,
2001. The appellant approached the High Court of Kerala
claiming that it would be entitled to the concessional tariff
under the policy of the Government and approved by the
Board even though the actual commercial production of the
appellant’s factory started in 1998. The High Court in the
impugned judgment accepted the stand of the State
Government that in order to be eligible to get the
concessional tariff under the policy in question, commercial
production must have started by 31st December, 1996 and
since admittedly, the appellant did not have the commercial
production by that date the incentive of concessional tariff
would not be available. The question for consideration in
these appeals, therefore, is whether an industrial unit which
has set up the industry being lured by policy decision of the
Government can still claim the benefit of the concessional
tariff under the policy notwithstanding the fact that there has
been delay in production, such delay being attributable to the
inaction on the part of the Board in providing the necessary
electric connection.
The Government of Kerala in the Industry department,
issued GO(MS) dated 21.5.90, indicating therein that the
power connection will be given on completion of any project
irrespective of whether a general power cut is in force or not.
It had also been stated therein that the new units commencing
industrial production will be exempted from power cut for a
period of 5 years from the date of commercial production. In
February, 1992, the government came out with industrial
policy offering concessional rate of tariff and electricity duty
to new industries for a period of five years from the date of
commercial production, if the production commences
between 1.1.92 and 31.12.96. The Kerala State Electricity
Board adopted the aforesaid policy decision for
implementation and in its order dated 27th of March, 1992,
reiterated that the concessional tariff as indicated in industrial
policy resolution, would be available if the commercial
production is made between 1.1.92 and 31.12.96. The
appellant industry was issued the registration certificate by
the District Industries Centre, on 27.12.1993. In April,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
1994, government issued another GO(MS), confirming that
the industries registered prior to 31.12.1993 will continue to
enjoy the tariff concession and exemption from payment of
electricity duty. The State Electricity Board issued a letter on
7.11.1995 to the appellant industry, allocating power in their
favour. In its letter dated 13th March, 1996, the said Kerala
State Electricity Board confirmed that the appellant will be
entitled to the tariff concession, as per the policy resolution
of the government. The appellant is stated to have invested a
huge sum of money in setting up factory for production of
ferro alloys. On 24th of April, 1996, the Secretary to the
Government of Kerala confirmed that the appellant will be
eligible for concessional tariff, if commercial production
starts before 31.12.1996. In June,1996, the appellant had
informed the Board that it is going ahead with the
implementation of the project of manufacturing ferro alloys
and requested for issuance of demand note to enable the
appellant to pay the charges. On 23rd of August, 1986, the
State Electricity Board informed the appellant about the
estimated amount on the electric connection and further
stated that the demand note will be intimated to the appellant
at the earliest. On 3rd of August, 1986, news item was
published in Delhi’s Times of India, showing the Kerala
Government Policy in welcoming the investment in Kerala.
Between August and October, 1996, the appellant intimated
several authorities of the government as well as the Board,
requesting them to provide power for manufacture of ferro
alloys in appellant’s factory, which was otherwise ready for
commissioning. But it is only in August, 1997, the Board
issued the order, intimating the supply of power to the
appellant’s factory to the extent of 15 MVA at 110 KV.
The Board then took about one year in connecting the sub-
station in the appellant’s factory for supply of power.
Ultimately, the Board granted power to the appellant’s
company on 22nd October, 1998. In the first week of
November, 1998 the appellant got the Bill from the Board at
the regular rate without the benefit of the concessional tariff
as indicated in the Industrial Policy of the Government and
also adopted by the Board. The appellant, therefore,
approached the High Court and the High Court by an interim
order directed that the appellant would be demanded the tariff
on the basis of the prevalent rate prior to 1.1.1992. But the
power connection had been cut off on account of non-
payment of the electricity charges. The High Court then
passed an order that on payment of Rs.50 lacs by the
appellant, the electric connection would be given by its order
dated 15.12.1999. The Board filed an application for
modification of the aforesaid order and finally on 6.4.2000,
the High Court of Kerala modified earlier order, denying the
benefit of concessional tariff. The appeal was carried against
the order to the division Bench, wherein the division Bench
directed the Single Judge to dispose of the pending Writ
Petition of the appellant and till the disposal of the Writ
Petition, stayed the order and directed that the appellant
would pay the electricity charges at pre 1.1.1992 rate by its
order dated 23.5.2000. The Writ Petition of the appellant
was dismissed by the learned Single Judge by order dated
21.12.2000 against which the appellant carried the appeal to
the Division Bench and the Division Bench by the impugned
order dated 6.4.2001 having dismissed the appeal, the present
appeal by grant of special leave has been filed.
Mr. Salve, the learned senior counsel appearing for the
appellants contended that the Government of Kerala
unequivocally in its policy dated 6th February, 1992 had
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
indicated that new industrial units will be exempted for five
years from the payment of enhanced power tariff which came
into effect on 1.1.92 and this should be available to the units
from the date of commercial production which start
production between 1.1.92 and 31.12.1996. This policy was
adopted by the Kerala State Electricity Board which issued
the letter dated 27th of March, 1992, stating therein that the
concessional power tariff and electricity duty to industries
would be supplied as a measure of incentive to all the units
who start their commercial production between 1.1.92 to
31.12.1996, irrespective of the day of permanent electric
connection. On 7.11.1995, the Kerala State Electricity Board
intimated to the appellant that in principle sanction of power
had been accorded to the extent of 15 MVA at 110 KV to the
appellant’s factory premises at Pudussery Village and the
power can be availed and will be operational with peak load
restrictions only after commissioning of 220 KV substation at
Kanjikode. But notwithstanding the same, the Board having
not taken any steps to see that the power supply is given to
the appellant’s premises and it is for such non-supply of
power, the commercial production being delayed, it will be
un-equitable to deny the concessional tariff flowing from the
policy resolution of the government. Mr. Salve contended
that under Section 22 of the Indian Electricity Act, 1910, the
Board is responsible to supply power on the terms and
conditions of the licence and the said Board having allocated
the power in favour of the appellant on 7.11.95 and thereafter
their being no power connection until 1998, it cannot deny
the benefit flowing from the policy resolution of the
government which was adopted by the Board in its letter
dated 27th of March, 1992. According to Mr. Salve, the
Board cannot be permitted to prevent the benefit of an
incentive policy by its own failure to provide power, which
prevented the appellant from starting commercial production
by 31.12.1996. Mr. Salve relying upon the judgment of this
court in Pawan Alloys and Casting Pvt. Ltd., Meerut vs.
U.P. State Electricity Board and Ors., (1997) 7 SCC 251,
contended that when the appellant was persuaded to set up
the industry being lured by incentive of getting the
concessional power tariff for a period of five years, ought not
to be denied that relief on construing the power policy and
literally no such concessional tariff could be granted unless
commercial production starts before 31.12.96.
Mr. Rohtagi, the learned Additional Solicitor General,
appearing for the State of Kerala as well as on behalf of the
Board, vehemently argued that the language of the policy
issued by the Government and adopted by the State
Electricity Board was unequivocal and such policy clearly
stipulated that only those units which would start commercial
production between 1.1.92 and 31.12.96 would be entitled to
the concessional tariff indicated in the policy. Since
admittedly the appellant’s manufacturing unit did not start
commercial production within the stipulated period, the
benefit of the concessional tariff under the policy has rightly
been denied and the impugned judgment does not suffer from
any infirmity. According to Mr. Rohtagi, even if for certain
latches on the part of the Board, the appellant may be entitled
to an equitable consideration, but in the matter of incentive
granted under the policy decision by the government, no
manufacturing unit can claim the benefit, so long as the
conditions precedent of the applicability of policy resolution
have not been satisfied. Mr. Rohtagi also contended that
there might have been some latches on the part of the Board
in its failure to provide power connection in time, but the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
same is not one-sided and even the appellant himself was not
in a position to start commercial production within the
stipulated date. Mr. Rohtagi also urged that since there has
been no finding of the Division Bench of the High Court, as
to who was at fault and if so, to what extent on which
equities could be worked out, the matter could be remanded
back to the High Court for re-adjudication. Mr. Rohtagi,
however to the suggestion from the Court finally agreed that
the appeal can be disposed of on equitable consideration by
this Court by reducing the period for which concessional
tariff could be given to the appellant.
On perusal of the industrial policy of the government,
unequivocally indicting that concessional tariff rate would be
given as well as the order of the Electricity Board adopting
the same, it can be safely held that such concession could be
availed of by the industrial units for a period of five years
from the date, commercial production which start such
production in between 1.1.92 and 31.12.1996. In this context
the stand of the Board as well as the State Government
cannot be held to be devoid of any substance when
admittedly the commercial production of the appellant’s
unit did not start till 31.12.96. But the question for
consideration is when the government has itself come
forward alluring industrial units to set up their industries and
when under the provisions of the Electricity Act, every
consumer has the right to get the supply of power and in the
case in hand, when power allocation has been made in favour
of the appellant as early as in 1995, and yet the same power
could not be supplied for such non-supply of power, the
commercial production could not start by 31.12.96, would it
at all be equitable to deny the relief to the appellant by giving
a literal interpretation to the incentive scheme of the
government as adopted by the Board? Our answer to this
question must be in the negative. There are several
documents on record, which were produced before us to
indicate that the appellant has been communicating with the
Board, seeking power connection at an early date so that it
would be able to start commercial production by 31.12.96. In
making such communication, the appellant has been bringing
it to the notice of the Board but for supply, the appellant has
made all other arrangements to set the production, but yet
there has been inaction on the part of the Board in providing
power to the appellant. Mr. Rohtagi, appearing for the Board
no doubt brought to our notice a letter from the appellant to
the Board and contended that it could not have been possible
for the appellant to start production by 31.12.96 but we are
unable to accept this submission nor are we making deeper
probe into the matter. Suffice it to say that the appellant has
been denied power supply by the Board in appropriate time,
which has prevented the appellant from starting the
commercial production by 31.12.96. This being the position,
and having regard to the gamut of the circumstances, starting
from the government policy resolution and culminating in
setting up of the factory by the appellant in Kerala and
commensurate the production of ferro alloys, though not by
31.12.96, we are of the considered opinion that granting the
concessional tariff for a period of three years instead of five
years, as indicated in the policy resolution would meet the
ends of justice and we, accordingly, so direct. Be it be stated
that the appellant has been enjoying the concessional tariff on
the basis of interim orders of the court and, therefore, that
should be taken into account and due adjustment would be
made in computing the period of three years, for which we
are directing for grant of concessional tariff. The impugned
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
judgment of the Kerala High Court is set aside and these
appeals are allowed to the extent indicated above.