Kusumam Hotels (P) Ltd. Vs. Kerala State Electricity Board & Ors.
 INSC 963 (16
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE
JURISDICTION CIVIL APPEAL NO.101 OF 2007 Kusumam Hotels (P) Ltd. ... Appellant
Versus Kerala State
Electricity Board & Ors. ... Respondents WITH
CIVIL APPEAL NOS.102, 103, 104, 105, 106 AND 3309 OF 2007
S.B. Sinha, J.
1. These appeals involving similar
questions of facts and law were taken up for hearing together and are being
disposed of by this common judgment.
2. Appellants herein are owners of
hotels situated at different parts of the State of Kerala.
2 By reason of a policy decision
adopted by the Central Government, `tourism' was declared to be an `industry'.
The State of Kerala adopted the said policy of the Central Government.
Pursuant to the said policy decision, various incentives were to be granted. It
was declared that "Tourism" will be treated as an `Industry' and the
concessions available to the' tourism industry' were :
"Subsidy for prepration of
subsidy limited to 10% thereof.
for training local manpower.
availability of funds from State Financial Corporations.
in electricity and water charges.
Allocation of land at concessional rate.
Exemption from building tax
levied by the Revenue Department. (Action to amend the Kerala Buildings Tax Act
1975 will be taken separately)."
3. Apart from the concession in
electricity and water charges and payment of building tax to be levied by the
Revenue Department which was open ended in nature, other concessions were to be
granted on a one time measure.
4. A new policy for grant of
investment subsidy was also floated.
3 Classified hotels (One to Five Stars)
came within the purview thereof. In terms of the said policy decision, the
Kerala State Electricity Board (the Board) was directed to grant tariff
concessions to the classified hotels and motels consequent on the said
declaration of Government of Kerala and Government of India. The concessions to
be granted thereby were :
"The electricity tariff
applicable to the categories listed above will be ht i- industrial tariff/l.t.
Iv industrial tariff depending on the type of supply from 1.4.1987
tariff as indicated above will be applied to the institutions either on
production of proper certificate from the Director of Tourism or based on list
of institutions eligible for the concessional tariff furnished by the director
of tourism to the Secretary, Kerala Electricity Board. The certificates/
communications should be given by the Director of Tourism himself.
In the case of institutions in
the above categories applying for power connection hereafter tariff as above
will be applied by the Kerala State Electricity Board on receipt of necessary
certificate from the Director of Tourism.
Regarding the admissibility of
the concession to any particular unit the matter will be referred to the
Director of Tourism and the report on the matter will 4 be accepted by the Kerala State Electricity Board."
5. Indisputably, the appellants
had set up or upgraded their hotels and motels. The Government of Kerala
classified the hotels in question in several categories for which they became
entitled to from the year 1990.
The Board, allegedly, had been
suffering losses. The Government of Kerala, however, issued a Government Order
on or about 25.8.1997 adopting the mode of grant of subsidy, inter alia, to the
industrial sector, the relevant portions whereof read as under :
"In the Government order read
as first paper above it was ordered that the actual cost of electricity
concessions allowed to Industries in the State, as part of Industrial policy
will be reimbursed to Kerala State Electricity Board to the extent necessary to
reach 3% Rate of Return (ROR) starting with the accounting year 1986- 87, by
adjusting the amount of concession against the dues payable to Government by
Kerala State Electricity Board.
2. The Chairman, Kerala State
Electricity Board in his letters read above has reported that the loss
sustained by the Kerala State Electricity Board due to concessional electricity
tariff allowed to Industries during the last ten years comes to Rs.60.3 crores
and that the loss for the year 1995-96 alone is Rs.24 crores.
XXX XXX XXX 5
4. Having considered the entire
issue in detail, Government are pleased to issue the following orders:
(i) The Industries and the
Agricultural Departments in Government will find the funds from their
respective Budget required for giving subsidy to Industries and farmers for the
year 1997-1998 by re-appropriation. The above departments will also provide
required amounts in their department budget from the financial year 1998-99
(ii) The subsidy for electricity
tariff admissible to Industrial consumers and farmers will be disbursed to the
beneficiaries by the concerned Departments from the financial year 1998-99
6. By an order dated 11.10.1999,
the industrial tariffs granted to the hotels in the State stood cancelled w.e.f
15.10.1999. It was ordered that industrial tariff already granted by various
officers of the Board from 15.5.1999 would be suspended by an order dated
8.11.1999, stating :
"The Board hereby orders that
the institutions which were already enjoying industrial tariff prior to 15.5.99
on the strength of certificate issued by Director of Tourism shall continue to
be charged at the industrial tariff until further orders. This is subject to
the final decision of the Government on payment of subsidy. From 15.5.99 new
applications for granting industrial tariff will not be sanctioned to such
The field officers of the Board
shall not grant 6 industrial tariff from 15.5.99 to the institutors certified
by Director of Tourism."
7. The hotels of the appellants
were reclassified in the year 1999 keeping in view the investment made by them.
Appellants, however, were served
with demand-cum- disconnection notices on the basis of bills raised on
commercial tariffs on or about 9.4.2000.
8. A writ petition was filed
thereagainst. In the meantime, the State of Kerala issued a Government Order on or about 26.9.2000 stating
that the concession on electricity tariff shall be limited only to five years
by the Department of Tourism, Government of Kerala. The concession was not to
be extended for any further period. Clause (3) of the said GO reads, thus :
"These orders will be
operative from 15.5.1999, the effective date from which Kerala State
Electricity Board has withdrawn the concessional tariff offered to tourism
The tourism units, which have
received certificate of eligibility for tariff concession from Director,
Department of Tourism, have to produce a certificate from the Kerala State
Electricity Board regarding the total period for which they have enjoyed the
concessional tariff. They will be eligible for concessional tariff only for a
period of five years including the period for which already enjoyed the 7
concession. i.e., if the tourism unit has already enjoyed tariff for a period of
three years prior to 15.5.1999, they will be eligible for concessional tariff
for a further period of two years only. This period will be counted from the
effective date originally certified by the Director of Tourism, Government of
Kerala for granting concessional tariff for three years. If any tourism unit
has already enjoyed concessional tariff for a period of five years or more
prior to 15.5.1999, it will not be eligible for any extension of the period of
9. The writ petition filed by the appellants
was disposed of by an order dated 4.8.2004 directing that commercial tariff may
be charged w.e.f. 15.5.1999 onwards. After the aforementioned Government Order
dated 26.9.2000 was issued, demand-cum-disconnection notices were issued again.
Representations were made by the appellants which were rejected.
10. They preferred an intra court
Fresh writ petitions were filed,
inter alia, praying for quashing of the bill and the said Government Order as
also for further classification of the hotel, as industrial units.
By reason of a judgment and order
dated 16.2.2005, the said writ petition was disposed of directing that 18%
interest instead of 24% would be charged, if the demanded amount is paid till
11. Intra court appeals were
preferred thereagainst and by reason of the impugned judgment, the same have
12. Mr. Patwalia, Mr.
Venkataramani and Mr. Krishnamoorthy, learned senior counsel appearing on
behalf of the appellants, would submit :
concessions granted to the appellants should not have been withdrawn from an
could not have directed application of commercial tariff despite the fact that
the hotels are still considered to be an industry.
In view of
the provisions in sub-section (2) of Section 56 of the Electricity Act, 2003, no
bill could have been raised after a period of two years.
13. Mr. George, learned counsel
appearing on behalf of the State Electricity Board and Mr. Sathish, learned
counsel appearing on behalf of the State of Kerala, would submit :
(a) 2003 Act is not applicable in
relation to the bills raised under the Electricity
(Supply) Act, 1948.
9 (b) The impugned order dated
26.9.2000 is not retrospective in operation. In any event, the State has the
requisite jurisdiction to stop grant of concession even with retrospective
(d) No foundational fact having
been laid to establish the plea of promissory estoppel, the same is not
available to the appellants particularly when they had entered into a contract
with the Board for which the bills were to be raised on the basis of commercial
(e) Appellants having filed writ
petitions after a long time, the impugned judgment should not be interfered
14. Indisputably, by reason of the
impugned Government Order, the benefit of one of the concessions made available
to the appellants by reason of the Government Order dated 11.7.1996 had been
The core question which arises for
our consideration is whether the said Government Order dated 26.9.2000 is
reasonable having been given retrospective effect and retroactive operation.
15. Tourism was declared to be an
industry. The wide range of concessions as noticed hereinbefore, inter alia,
covered electricity and water charges. It is not a case where some exemptions
or concessions were to be given for a specific period or as a one time measure.
No time 10 limit was fixed for applicability in respect of the policy decisions.
Pursuant thereto long term
investments might have been made. It is not based on a principle of giving
benefit with a view to facilitate the initial growth of the industry. It was
not based on any formula or criteria to evaluate the realization of the object
of grant of such concession over a period. It was an open ended offer. It must,
therefore, be held that the Government was satisfied that the need was to grant
concession if not permanently, at least for a long time.
16. There cannot be any doubt whatsoever
that a policy decision can be reviewed from time to time. It is also beyond any
doubt that the concessions granted can be withdrawn in public interest.
Indisputably, the State is also
entitled to change or alter the economic policies. Appellants do not have any
vested right to enjoy the concessions granted to them forever, particularly
when the Board is constituted and incorporated under the provisions of
Electricity (Supply) Act, 1948. Any policy decision adopted by the State would
not be binding on the Board, save and except provided for in the Act. The Board
being an independent entity, the duties and functions of the Board vis-`-vis
the State are enumerated in the Act. The Board, however, would be bound by any
direction issued by the State Government on 11 questions of policy. A dispute
which may arise as to whether a question is or not a question of policy
involving public interest, Central Government is the final arbiter. The policy
decision adopted by the State on the basis whereof the Board felt obligated to
grant electrical connection in favour of the appellants on the basis of
industrial tariff must, therefore, be understood in the context of Section 78A
of the 1948 Act. What is binding on the Board is the policy of the State. The
direction of the State was to apply a particular category of tariff to the
appellants. Such directions could have been withdrawn while making another
tariff. The State indisputably has the power to grant subsidy from its own
coffer instead of directing the Board to grant concession.
17. It is now a well settled
principle of law that the doctrine of promissory estoppel applies to the State.
It is also not in dispute that all administrative orders ordinarily are to be
considered prospective in nature. When a policy decision is required to be
given a retrospective operation, it must be stated so expressly or by necessary
The authority issuing such
direction must have power to do so. The Board, having acted pursuant to the
decision of the State, could not have taken a decision which would be violative
of such statutorydirections.
12 15.5.1999 was fixed as the cut
off date by the Board. It, by itself, could not have done so. But the State for
issuing the GO dated 26.9.2000 could have fixed the said cut off date on its
own. We although do not agree that by granting retrospectivity to the said
order, the entirety of the Government Order should be set aside the same or per
se would be held to be unreasonable, but what we mean to say is that it could
be given effect to only from the date of the order, i.e., prospectively and not
from an anterior date, i.e., retrospectively.
18. It was held in Lohia Machines
Ltd. and Anr. v. Union of India (UOI) and Ors. [(1985) 2 SCR 686] :
"On the other hand it is
quite clear that if the relief granted is to be withdrawn with retrospective
operation from 1972 the assessees who have enjoyed the relief for all those
years will have to face a very grave situation. The effect of the withdrawal of
the relief with retrospective operation will be to impose on the assessee a
huge accumulated financial burden for no fault of the assessee and this is
bound to create a serious financial problem for the assessee. Apart from the
heavy financial burden which is likely to upset the economy of the undertaking,
the assessee will have to face other serious problems. On the basis that the
relief was legitimately and legally available to the assessee, the assessee had
proceeded to act and to arrange its affairs. If the relief granted is now permitted
to be withdrawn with retrospective operation, the assessee may be found guilty
of violation of provisions of other 13 statutes and may be visited with penal
Yet again in M/s. Indian Metals
and Ferro Alloys Ltd. & Anr. v.
State of Orissa & Ors. [(1987)
3 SCC 189], it was opined :
"25...we hold that the High
Court was not right in observing that the orders under Section 22-B of the Act
imposing restrictions on consumption of power could not legally and validly be
passed by the Government "with retrospective effect" in the middle of
a water year. But the position regarding disallowance of clubbing stands on an
entirely different footing. If a consumer had been allowed the benefit of
clubbing previously, that benefit cannot be taken away with retrospective
effect thereby saddling him with heavy financial burden in respect of the past
period where he had drawn and consumed power on the faith of the orders
extending to him the benefit of clubbing..."
19. It is not necessary for us to
notice a large number of decisions on promissory estoppel as the principle
thereof has recently been noticed by this Court in Southern Petrochemical
Industries Co. Ltd. v. Electricity Inspector & Etio & Ors. [(2007) 5
SCC 447] wherein it was stated :
"We are also unable to agree
Andhyarujina that exemption from
tax is a mere concession defeasible by the Government and 14 does not confer
any accrued right to the receipient. Right of exemption with a valid
notification issued gives rise to an accrued right. It is a vested right. Such
right had been granted to them permanently. "Permanence"
would mean unless altered by
statute. Thus, when a right is accrued or vested, the same can be taken away
only by reason of a statute and not otherwise. Thus, a notification which was
duly issued would continue to govern unless the same is repealed."
It was further held :
"126. This Court
distinguished its earlier decision in Kasinka Trading v. Union of India55
whereupon Mr Andhyarujina placed strong reliance, in the following terms:
"40. The case of Kasinka
Union of India cited by the
appellant is an authority for the proposition that the mere issuance of an
exemption notification under a provision in a fiscal statute such as Section 25
of the Customs Act, 1962, could not create any promissory estoppel because such
an exemption by its very nature is susceptible to being revoked or modified or
subjected to other conditions. In other words, there is no unequivocal
representation. The seeds of equivocation are inherent in the power to grant
exemption. Therefore, an exemption notification can be revoked without falling
foul of the principle of promissory estoppel. It would not, in the
circumstances, be necessary for the 15 Government to establish an overriding equity
in its favour to defeat the petitioner's plea of promissory estoppel.
The Court also held that the
Government of India had justified the withdrawal of exemption notification on
relevant reasons in the public interest.
Incidentally, the Court also noticed
the lack of established prejudice to the promises when it said :
`The burden of customs duty, etc.
is passed on to the consumer and
therefore the question of the appellants being put to a huge loss is not
understandable.' (See also Shrijee Sales Corpn. v. Union of India56 and STO v.
Shree Durga Oil Mills) We do not see the relevance of this decision to the
facts of this case. Here the representations are clear and
In LML Ltd. v. State of U.P. &
Ors. [2007 (14) SCALE 469], this Court opined :
"38. Those suppliers, who
keeping in view of their capacity to supply uninterrupted electrical energy had
made a representation and pursuant thereto the consumers had altered their
position, cannot be permitted to take a different stand as the doctrine of
promissory estoppel would apply against them. The said doctrine is premised on
the conduct of party making a representation to the other so as to enable him
to arrange its affairs in such a manner as if the said representation would be
acted upon. It 16 provides for a cause of action. It need not necessarily be a
Yet again in U.P. Power
Corporation Ltd & Anr. v. Sant Steel &
Alloys (P) Ltd. & Ors. [2007
(14) SCALE 36], it was held :
"In this background, in view
of various decisions noticed above, it will appear that the Court's approach in
the matter of invoking the principle of promissory estoppel depends on the
facts of each case. But the general principle that emerges is that once a
representation has been made by one party and the other party acts on that
representation and makes investment and thereafter the other party resiles,
such act cannot stated to be fair and reasonable. When the State Government
makes a representation and invites the entrepreneurs by showing various benefits
for encouraging to make investment by way of industrial development of the
backward areas or the hill areas, and thereafter the entrepreneurs on the
representations so made bona fidely make investment and thereafter if the State
Government resile from such benefits, then it certainly is an act of unfairness
and arbitrariness. Consideration of public interest and the fact that there
cannot any estoppel against a Statute are exceptions."
In State of Orissa & Ors. V.
Mangalam Timber Products Ltd.
[(2004) 1 SCC 139], a Three Judge
Bench of this Court, held :
17 "... The State Government
having persuaded the respondent to establish an industry and the respondent
having acted on the solemn promise of the State Government, purchased the raw
material at a fixed price and also sold its products by pricing the same taking
into consideration the price of the raw material fixed by the State Government
and supplied; the State Government cannot be permitted to revise the terms for
supply of raw material adversely to the interest of the respondent and
effective from a back date and place the respondent in a situation which it
will not be able to resolve.
The respondent could not have
revised its price from a back date and recovered it from innumerable consumers
to whom its finished products were supplied at a fixed price."
20. Our attention, however, has
been drawn to a decision of this Court in Kasinka Trading & Anr. v. Union
of India & Anr. [(1995) 1 SCC 274].
Therein the power of the State to
change its policy decision in public interest was emphasized. It was held that
the power which can be used for grant of concession, namely, Section 25(1) of
the Customs Act itself is the source to rescind the earlier notification,
"Since, the notification had
been issued under Section 25(1) of the Act, the very same power was available
to the authority for rescinding or modifying that notification and appellant
ought to have known that the said notification was capable of or liable to be
revoked, modified or rescinded at any time even before the expiry of 31.3.1981
if the `public interest' so demanded.
To hold that after the Government
had issued 18 the Notification No.66 of 1979 indicating that it was to remain
operative till 31.3.1981, it could not be rescinded or modified before the
expiry of that date would amount to prohibiting the Government from discharging
its statutory obligation under Section 25(1) of the Act, if it was satisfied
that it was in the `public interest' to withdraw, modify or rescind the earlier
notification. The plain language of Section 25 of the Act is indicative of the
position that it is the public interest and public interest alone which is the
dominant factor. It is not the case of the appellants that the withdrawal of
Notification No.66 of 1979 by the impugned notification was not in `public
interest'. Their case, however, is that relying upon the earlier notifications
they had acted and the Government should not be permitted to go back on its
assurance as otherwise they would be put to huge loss. The courts have to
balance the equities between the parties and indeed the courts would bind the
Government by its promise `to prevent manifest injustice or fraud'."
It was further held :
"23. The appellants appear to
be under the impression that even if, in the altered market conditions the
continuance of the exemption may not have been justified, yet, Government was
bound to continue it to give extra profit to them. That certainly was not the
object with which the notification had been issued. The withdrawal of exemption
"in public interest" is a matter of policy and the courts would not
bind the Government to its policy decisions for all times to come, irrespective
of the satisfaction of the Government that a change in the policy was 19 necessary
in the "public interest". The courts, do not interfere with the
fiscal policy where the Government acts in "public interest" and
neither any fraud or lack of bona fides is alleged much less established. The
Government has to be left free to determine the priorities in the matter of
utilisation of finances and to act in the public interest while issuing or
modifying or withdrawing an exemption notification under Section 25(1) of the
21. We are not concerned with the
exercise of a statutory power in this case. We are concerned with issuance of a
direction by the State which is binding on the Board as also how and to what
extent it can be rescinded.
22. We may, however, notice that
in Motilal Padampat Sugar Mills v.
State of U.P. [(1979) 2 SCR 641,
this Court held :
"Public bodies are as much
bound as private individuals to carry out representations of facts and promises
made by them, relying on which other persons have altered their position to
their prejudice * * * If our nascent democracy is to thrive different standards
of conduct for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry out its
obligation arising out of representations made by it relying upon which a
citizen has altered his position to his prejudice."
23. Another Bench in Jit Ram v.
State of Haryana [(1980) 3 SCR 689] took a different view. Jit Ram was
overruled in Union of India v.
Godfrey Philips India Ltd. Ltd.
[(1985) 4 SCC 369].
24. If the doctrine of promissory
estoppel applies for the purpose of enforcing the concession granted in favour
of entrepreneurs, it can be withdrawn, inter alia, in public interest. Despite
absence of an overriding public interest, however, although a different policy
decision can be taken but therefor adequate notice should be given. It was so
held in Shrijee Sales Corporation & Anr. v. Union of India [(1997) 3 SCC
398] in the following terms :
"Once public interest is
accepted as the superior equity which can override individual equity, the
principle should be applicable even in cases where a period has been indicated.
The Government is competent to resile from a promise even if there is no
manifest public interest involved, provided, of course, no one is put in any
adverse situation which cannot be rectified. To adopt the line of reasoning in
Emmanuel Ayodeji Ajay v.
Briscoe quoted in M.P. Sugar Mills
even where there is no such overriding public interest, it may still be within
the competence of the Government to resile from the promise on giving
reasonable notice which need not be a formal notice, giving the promise a
reasonable opportunity of resuming his 21 position, provided of course, it is
possible for the promise to restore the status quo ante. If, however, the
promise cannot resume his position, the promise would become final and
The same principle was reiterated
in Sales Tax Officer & Anr. v.
Shree Durga Oil Mills & Anr.
[(1998) 1 SCC 572].
25. In Pawan Alloys & Casting
Pvt. Ltd. v. U.P. State Electricity Board & Ors. [(1997) 7 SCC 251], it was
"60. So far as Point No. 3 is
concerned the appellants are on a weaker footing. It is true that by earlier
notifications dated 29-10-1982, 13-7-1984 and 28-1-1986 the scheme of
incentives by way of development rebate of 10% was continued to be offered to
new industries to be established in the plains of State of U.P. Identically
worded Item 9 in the earlier notifications and Item 8 in the last notification
dated 28-1-1986 had continued the said incentive scheme. By virtue of the last
notification of 28-1-1986 it was clearly laid down by the Board that all new
industries which might be established on and after 28-1- 1986 will earn this
development rebate for the three years' period from the date of commencement of
supply of electricity. It was also provided that all the existing new
industries which might have earlier been established before 28-1-1986 and which
had still some part of unexpired period of three years of development rebate
available with them also were given the continued benefit of the development
rebate for the unexpired 22 period from 1-2-1986. What the impugned
notification of 31-7-1986 sought to do was to delete this first para of Item 8
of the notification of 28-1-1986. The result was that from 1-8-1986 whatever
unexpired period for getting development rebate of 10% was available with the
new industries covered by the sweep of the said notification, got withdrawn. It
could not be said and it is also not the case of the respondent-Board that in
the light of the notification of 31-7-1986 whatever development rebate was
granted to these new industries earlier as per the then existing scheme would
stand withdrawn or any recovery would be effected against them for the said
amount. The case of the Board is that despite any unexpired period for earning
the incentive rebate of 10% was available to the existing new industries on
31-7-1986, they would lose that benefit of development rebate for the rest of
the unexpired period with effect from 1-8-1986 onwards. Hence it is not
possible to agree with the contention of learned counsel for the appellants
that the said notification had any retrospective effect. It was purely
prospective and had resulted into two consequences -- (i) any new industry
which entered into an agreement with the Board for supply of electricity for
the first time on and after 1-8- 1986 could not get the benefit of incentive of
10% development rebate; and (ii) all existing new industries which were armed
with the guarantee of 10% development rebate under the earlier notifications
and had unexpired period out of the three years from the date of earlier
commencement of supply of electricity to their concerns lost the benefit for
that unexpired period which otherwise would have been available to them from
1-8-1986 onwards till the entire three years' period which had already
commenced would have been over. Both these 23 effects of the notification of
31-7-1986 were purely prospective in character and had no retrospective effect.
Consequently it cannot be said that the said notification was liable to be
struck down on the score of being retrospective in nature. The third point for
consideration, therefore, is answered in the negative."
Similar view has been taken in
Bannari Amman Sugars Ltd. v.
Commercial Tax Officer & Ors.
[(2005) 1 SCC 625]; Kuldeep Singh v.
Govt. of NCT of Delhi [(2006) 5
SCC 702]; and M.P. Mathur & Ors. v.
DTC & Ors. [(2006) 13 SCC
26. The law which emerges from the
above discussion is that the doctrine of promissory estoppel would not be
applicable as no foundational fact therefor has been laid down in a case of
The State, however, would be
entitled to alter, amend or rescind its policy decision. Such a policy
decision, if taken in public interest, should be given effect to. In certain
situations, it may have an impact from a retrospective effect but the same by
itself would not be sufficient to be struck down on the ground of
unreasonableness if the source of power is referable to a statute or statutory
provisions. In our constitutional scheme, however, the statute and/or any
direction issued thereunder must be presumed to be prospective unless the
retrospectivity is indicated either expressly or by necessary implication. It
is a principle 24 of rule of law. A presumption can be raised that a statute or
statutory rules has prospective operation only.
27. The State of Kerala in this
case did not grant any concession by itself. The Central Government took a
larger policy of treating the tourism as an industry. A wide range of
concessions were to be granted by way of one time measure; some of them,
however, had a recurring effect. So far as grant of benefits which were to be
recurring in nature, the State exercises its statutory power in the case of
grant of exemption from payment of building tax wherefor it amended the
statute. It issued directions which were binding upon the Board having regard
to the provisions contained in Section 78A of the 1948 Act. The Board was bound
thereby. The Board, having regard to its financial constraints, could have
brought its financial stringency to the notice of the State. It did so. But the
State could not have taken a unilateral decision to take away the accrued or
vested right. The Board's order dated 11.10.1999 in law could not have been
given effect to. The Board itself kept the said notification in abeyance by
reason of order dated 8.11.1999.
continued to derive the benefits in terms of the original order. They obtained certificates
of classification. It is on the aforementioned context, the question as regards
construction of the 25 impugned notification dated 26.9.2000 arises. Ex facie,
the said policy decision could not be given a retrospective effect or
retroactive operation. The State was not exercising the power under any statute
to grant or withdraw the concession. It was exercising its statutory power of
issuing direction. It is, therefore, a statutory authority. The 1948 Act does
not authorize the State to issue a direction with retrospective effect.
The Board, therefore, could only
give prospective effect to such directions in absence of any clear indication
contained therein. By reason of withdrawal of concession with retrospective
effect, the accrued right of the appellants had been affected. In Kuldeep Singh
v. Govt. of NCT of Delhi. [(2006) 5 SCC 702], this Court held :
"In a case of this nature,
where the State has the exclusive privilege and the citizen has no fundamental
right to carry on business in liquor, in our opinion, the policy which would be
applicable is the one which is prevalent on the date of grant and not the one,
on which the application had been filed. If a policy decision had been taken on
16.9.2005 not to grant L-52 licence, no licence could have been granted after
the said date."
We, however, are not concerned
with a similar situation.
28. However, in Ramchandra
Murarilal Bhattad & Ors. v. State of Maharashtra & Ors. [(2007) 2 SCC
588], it was held :
26 "64. It is not a case
where the court is called upon to exercise its equity jurisdiction. It is also
not a case where ex facie the policy decision can be held to be contrary to any
statute or against a public policy. A policy decision may be subject to change
from time to time. Only because a change is effect, (sic) the same by itself
does not render a policy decision to be illegal or otherwise vitiated in
29. We, therefore, are of the
opinion that the impugned GO dated 26.9.2000 must be held to have a prospective
operation and not a retrospective operation. That view would save it from being
vulnerable to the challenge of being hit by Article 14 of the Constitution of
30. We, however, are not in a
position to accept the contention that the Bills could not have been issued having
regard to sub-section (2) of Section 56 of the Act. Appellants herein have
Sub-section (5) of Section 185 of
the Electricity Act, 2003 reads, thus:
"(5) Save as otherwise
provided in sub-section (2), the mention of particular matters in that section,
shall not be held to prejudice or affect the general application of section 6
of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of
27 Whereas the bills are issued
only in respect of the dues arising in terms of the law as was applicable prior
to the coming into force of 2003 Act. Sub-section (2) of Section 56 shall apply
after the said Act came into force. The Board could have even framed a tariff
in terms of the provisions appended to Section 61 of the Act. Appellants
incurred liability to pay the bill. The liability to pay electricity charges is
a statutory liability. The Act provides for its consequences. Unless,
therefore, the 2003 Act specifically introduced, the bar of limitation as
regards the liability of the consumer incurred prior to coming into force of
the said Act. In our opinion, having regard to Section 6 of the General Clauses
Act, the liability continues. [See Southern Petrochemical Industries Co. Ltd.
v. Electricity Inspector and E.T.I.O. and Ors. [(2007) 5 SCC 447].
31. We, therefore, are of the
opinion that the High Court was not correct in its view to the aforementioned
extent. The judgment of the High Court is, thus, set aside to the
aforementioned extent. The appeals are allowed with costs. Counsels fee
assessed at 25,000/- (Rupees five thousand only) in each appeal.
CIVIL APPEAL NO.106 OF 2005 28
32. Board has preferred this
appeal only against grant of instalments in favour of the respondents. The
contention of Mr. George that the High Court could not have waived the
provisions of interest on the delayed payment under the tariff cannot be
accepted. In all other cases, the High Court directed that 18% interest would
be payable following the decision of the Court in Kerala State Electricity
Board through its Special Officer (Revenue) & Anr. v. M.R.F. Ltd. [(1996) 1
SCC 597]. The same principle would apply in this case also but the bill having
been raised only in 2003, the question of charging any interest thereupon from
a retrospective date would not arise.
33. This appeal is, thus,
dismissed. However, there shall be no order as to costs.
[ S.B. Sinha ]
[Lokeshwar Singh Panta] New Delhi;