Hitech
Electrothermics & Hydropower Ltd. Vs. State of Kerala & Ors [2002] Insc
555 (17 December 2002)
Cji,
K.G. Balakrishnan. Pattanaik, Cji.
Appeal (civil) 8323 of 2001 Appeal (civil) 8324 of 2001
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, 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 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 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 judgment of the Kerala
High Court is set aside and these appeals are allowed to the extent indicated
above.
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