it Petition No 1753 of 1986 etc
Under Article 32 of the Constitution of India
271 KK Venugopal Gauri Shankar Kapil Sibal Ms Lira Goswami DN Misra DP Mohanty and RK Mehta for the appearing parties
The Judgment of the Court was delivered by BALAKRISHNA ERADI J
Ms Indian Metals and Ferro Alloys Ltd the petitioner in Writ Petition No 1753 of 1986 and in SLP C Nos 14923 14924 of 1986 is a public limited company incorporated under the Indian Companies Act which is engaged inter alia in the manufacture of ferro silicon and silicon metal which are said to be a valuable raw material used by the Defence establishments in India and also export ed out of the country
The second petitioner in the afore said Writ Petition and the Special Leave Petitions is the Managing Director of the company
The company has installed three units namely 11 KV 33 KV and 132 KV furnaces in which it is manufacturing ferro alloys and silicon metal in a composite industrial complex in a place called Therubali in the State of Orissa
The company has also a subsidiary by name Ms Indian Metal and Carbide Ltd engaged in the manu facture of silicon carbide and its factory is also situated in the same industrial complex
All the four units utilise electricity as raw material and they are therefore classi fied as power intensive industrial units  the four units shall hereinafter referred to as 11 KV IMFAL 33 KV IMFAL 11 KV IMCL and 132 KV IMFAL
The company has entered into separate agreements with the Orissa State Electricity Board hereinafter called the Board  for supply of electric energy to these four different units and the rates of tariff to be charged for such supply
The agreement in respect of 11 KV IMFAL was entered into ini tially on 341967 and subsequently renewed on 181983 that in respect of 33 KV IMFAL on January 2 1974 and the agreement for supply of 11 KV IMCL was entered into on January 28 1975
The agreement in respect of supply of energy to 132 KV IMFAL was entered into on 4121982
These agreements show that the Board had agreed to supply 788 MU for 11 KV IMFAL unit for the manufacture of silicon metalcharge chrome by the company 1971 MU for the 33 KV IMFAL unit for the manufacture of ferro silicon silicon metal 158 MU for the 11 KV IMCL for the manufacture of silicon carbide and 2628 MU for the 132 KV IMFAL unit for the manufacture of charge chromeferro siliconsilicon metal
As already indicated all the above furnaces of the company are located in the same complex and are adjacent to one another
The tariff fixed for supply of the energy to the first three units is the same and that for the KV IMFAL is 05 paise less per unit
272 Supply of energy was made to the company regularly as per the agreements in respect of the first three units till the year 1979 80
The unit of time for supply of electricity adopted by the Board is the water year  which commences on the 1st of July of a year and ends with 30th June of the succeeding year
In the year 1979 80 the State of Orissa resorted to power cuts on account of non availability of sufficient power in the State to meet in full the require ments of the various categories of consumers
It accordingly passed orders allocating restricted quotas of power to the four units of the company for the water year 1979 80
This order however permitted the clubbing of the electricity supplied to the 11 KV IMFAL 33 KV IMFAL IMCL furnaces of the company
The 132 KV IMFAL furnace of the company had not been commissioned at that time
The aforesaid position continued for the water years 1981 82 and 1982 83
The company s 132 KV IMFAL furnace was commissioned on 20th February 1983 but the agreement of supply of energy to this unit had been executed on December 4 1982 itself
On July 16 1983 the company addressed a letter to the Board requesting the facility of clubbing of the power allocated to its four furnaces for the water year 1983 84
By a tele printer message dated August 4 1983 sent by the Chief Engineer of the Board to the Superintending Engineer Teach er it was intimated that IMFAL and IMCL may be permitted to draw the power allotted to the four units taken together as requested by the company in its letter dated July 17 1983 subject to the condition that the company s drawal of power at its 132 KV IMFAL furnace in excess of the allotment of the said unit shall be made at the tariff applicable to the supply at 132 KV IMFAL 
It was also made clear that the said order will be effective from July 16 1983 that being the date of the company s letter of request
Pursuant to the above permission the company clubbed the supply of power to all its units for the water year 1983 84
On July 23 1984 the Chief Engineer addressed a letter to the company inform ing the latter that with effect from July 1 1984 the drawal of power by the company against the different units will be regulated separately and as such the company was requested to limit its drawal for the different units as per the allotment indicated in that letter with effect from July 1 1984 in other words the facility of clubbing was withdrawn by the said letter with effect from July 1 1984
On July 2 1984 the company wrote to the Board pointing out the hard ship involved in the denial of the facility of clubbing and requesting for permission to club the energy for all the four units for the water year 1984 85
In reply thereto the Chief Engineer of the 273 Board sent a communication dated July 12 1984 informing the company as follows ORISSA STATE ELECTRICITY BOARD BHUBANESHWAR No Com V 4238 Dated 1271984 From Sri NK Das Chief Engineer and Member TDC To Ms Indian Metals and Ferro Alloys Ltd Bomikhal PO Rasulgarh Bhubaneshwar 75 10 10 Sub Restriction in power supply
Ref Your letter No 821201 Exp
130 dated 271984
Dear Sirs As requested in your letter cited above you are permitted to draw 2264 MW average and 2775 MW peak from 1 7 84 to 31784 for IMFAL 11 KV 33 KV and 132 KV and IMCL Theruvalli taken together subject to the condition that drawal at 162 KV in excess of 1080 MW average and 13501 MW peak shall be billed at the tariff applicable to power supply at 11 KV33 KV
This will be revised in October 1984
In case your drawal exceeds the energy andor the demand as indicated above you will be liable to pay at double the normal tariff rate
Yours faithfully Sd CHIEF ENGINEER AND MEMBER TDS
 One of the points raised before this Court relates to the correct construction to be placed upon this letter
We shall advert to that 274 aspect later on
For the present it is sufficient to men tion that on the basis of the said letter the company was permitted to club the power supply made to its four units from July 1984 onwards and the bills for the period from July 1984 to December 1984 were drawn up by the Board and served on the company on the basis that the company was entitled to the benefit of clubbing in respect of the power allotted to the four units
Though the letter stated that the position would be subject to revision in October 1984 no revision was effected till December 1984 and the company continued to enjoy the benefit of clubbing till the end of the calendar year
However on December 11 1984 the Chief Engineer of the Board wrote to the company stating inter alia that the combined drawal of power for purposes of flexibility of operation had been permitted to the company at its request only for the month of July 1984 by the Board s letter dated July 12 1984 and the clubbing could no longer be permitted since power supply to 132 KV IMFAL which was a 100 export oriented industry  was to be regulated separately for pur poses of energy allocation
It may be mentioned at this stage that in the agreement entered into regarding supply of power to the 132 KV IMFAL unit there was no mention whatev er of the fact that the said unit was a 100 export oriented industry
It was treated only as a power intensive indus try  just like the other three units of the company
The aforesaid letter was followed by another communication addressed by the Chairman of the Board to the Company stat ing inter alia as follows Since it has been decided by the Government to treat allotment of power to 100 export oriented industries separately allotment of power to your 100 export oriented unit at 132 KV cannot be permitted to be utilised for other purposes unless specific Government permission is necessary for the same
As you are aware the allocation of power for IMFAL 11 KV IMFA1 33 KV and IMCL had been combined together for the purpose of flexibil ity in operation and hence you should have no difficulty regarding the same
 It will thus be seen that the sole reason given for refusing the facility of clubbing to the company was that the State Government had taken a decision that 100 export oriented industries should be treated separately for the purposes of power allocation Significantly no statutory order of the State Government incorporating such a policy 275 decision has been placed on record either before the High Court or before this Court
It is worthy of note that the scheme of according spe cial priority and preferential treatment to 100 export oriented industries in the matter of supply of electric energy was evolved by the Government of India for the first time only in June 1983 and it was implemented only in 1984 85 All that the said scheme envisaged was to provide for supply of additional power to such export oriented industries in the event of their satisfying certain condi tions relating to their export performance
On January 22 1985 the State of Orissa issued an order under Section 22B of the Indian Electricity Act hereinafter called the Act  directing the Board to reduce supply of energy so as to allow the consumers to avail of the supply only to the extent specified in the Annexure to the said order
All the four units of the company were shown in the Annexure under the classification power intensive indus tries
 The 11 KV IMFAL 33 KV IMFAL and 11 KV IMCL were together allotted 5760 million Kwh and the 132 KV IMFAL was separately allotted 5256 million Kwh
There was a note to the order which was in the following terms Every hundred percent export oriented unit will however be provided additional supply of energy if i It exported not less than 95 of its entire production during the preceding year or made no internal sale during the same period
ii It has export commitment from foreign buyers for at least 95 of the produc tion during the current year
iii It obtains specific recommenda tion of the Union Commerce Ministry regarding its export performance during the previous year and export commitment during the current year
 The aforesaid order was to be effective from the com mencement of the water year 1984 85 ie from July 1 1984
As already stated the petitioner company had been permitted to enjoy the benefit of clubbing from July 1984 till the end of December 1984 on the basis of the permission granted as Board s letter dated July 12 1984 and the bills 276 issued to the company for the said period were all on the basis that it was entitled to club the supply allotted to it in respect of the four different units
After the promulga tion of the order dated January 22 1985 grouping together only the three units of the company other than 132 KV IMFAL unit the Board served revised bills on the company on July 8 1985 demanding payment at the higher tariff rate for the period from October 1984 to June 1985 on the basis that there had been alleged excess drawal by the company due to clubbing
Aggrieved by the said action taken by the Board the company filed Writ Petition No OJC 1549 of 1985 in the High Court of Orissa challenging the order dated January 22 1985 passed by the State Government in purported exercise of its powers under Section 22B of the Act as also the letter dated January 24 1985 of the Board refusing clubbing for the entire water year 1984 85
Besides seeking the quashing of the aforesaid letter as well as the revised bills of the higher tariff issued to the company on July 8 1985 the company also sought a writ of mandamus directing the Board and the State Government to permit clubbing for the water year 1984 85 as well as the future years
In the counter affidavit filed by the State of Orissa the stand taken by the State was that clubbing had been allowed to the company by the Board temporarily for the month of July 1984 only during the water year 1984 85
It was further contended that the power allotted to the 132 KV IMFAL furnace could not be allowed to be clubbed with that allotted to the other three units since the 132 KV IMFAL furnace was a 100 export oriented unit and therefore it had to be treated separate ly for the allocation of power
While the aforesaid Writ Petition was pending the State Government passed another order dated August 31 1985 effecting allocation of power under Section 22B of the Act for the water year 1985 86
On October 11 1985 the company was served with a notice of disconnection by the Board for non payment of the bills prepared at the higher tariff rate for the month of August 1985
It may be mentioned at this juncture that the High Court of Orissa by an interim order passed in the Writ Petition No OJC 1549 of 1985 had stayed the demand made by the Board as per the revised bills for the months of October 1984 to June 1985 and had directed the Board not to take any action to disconnect power supply to the petitioner company
The notice dated October 11 1985 was apparently issued by the Board on the basis that it was in respect of the subsequent water year covered by the Government order dated August 31 1985
277 Aggrieved by the said notice dated October 11 1985 the company filed another Writ Petition OJC No 2496 of 1985 in the High Court of Orissa challenging the Government s order dated August 31 1985 passed for the water year 1985 86 and praying for identical reliefs in the previous Writ Petition regarding directions to allow clubbing for all the four furnaces
In the counter affidavit filed by the State of Orissa in this Writ Petition also the only reason given for refusal to allow the benefit of clubbing to the company s 132 KV IMFAL furnace was that the said unit being a 100 export oriented unit had to be treated separately for the purpose of power allocation
On December 12 1985 the High Court passed an interim order in the aforesaid Writ Petition directing the State Government to dispose of the company s application dated November 9 1985 wherein the company had requested for being allowed the benefit of clubbing of the power allotted for all the four furnaces for the water year 198586
On December 18 1985 the State Government through its Deputy Secretary wrote a letter to the company stating as follows  Sir In inviting a reference to your letter No Proj
4103 1920 dated 9111985 on the subject noted above I am directed to say that after due consideration Government have been pleased to reject your request for club bing of power allocation during the water year 1985 86 2
You are allowed to draw only 5760 Million KWH of energy of 11 KV and 33 KV and 5266 Million KW of energy on 132 KV as allotted in this department order No 37477 dated 3181985 for the period from 1 7 1985 to 30 6 1986
Yours faithfully Sd DEPUTY SECRETARY TO GOVT
 It will be noticed that no reason whatever was given by the Government in this order forrejecting the company s request for clubbing of power allocation
After receipt of the said communication the company moved the High Court by a miscel laneous petition for amending the Writ Petition OJC No 2496 of 1985 by incorporating a challenge against the said letter of the State Government refusing clubbing for 278 the water year 1985 86
That prayer for amendment was al lowed by the High Court
Ultimately the two Writ Petitions OJC No 1549 of 1985 and OJC No 2496 of 1985 were disposed of by the High Court by a common judgment dated August 7 1986
The High Court held that under Section 22B of the Act the State Government had the power to grant or refuse the request of a consumer for being allowed the facility of clubbing
The High Court negatived the contention of the company that it was beyond the power of the State Government to impose special tariff in case the allotted quoa of energy is ac ceeded
It however upheld the contention of the company that the State Government and the Board had no power under the Act to impose restrictions on the use of the electric energy with retrospective effect
The demands made under the re vised bills impugned in the first Writ Petition were there fore quashed by the High Court
The High Court further held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the Government on the question as to whether clubbing should be allowed or not with reference to relevant considerations
In the opinion of the High Court the plea raised in the counter affidavits filed by the State Govern ment and the Board that the 132 KV IMFAL should be treated separately from the other three units since the former was an export oriented unit was without any substance
The High Court held that the only classification which appeared from the record was of power intensive industries and others
Since all the units of the company had been classified under the heading power intensive units and the only privilege available to an export oriented unit as indicated in the note to the Government s order passed under SeCtion 22B of the Act was that such unit would be entitled to additional power if it satisfied the conditions laid down therein there was no justification at all for refusing the benefit of clubbing in respect of the 132 KV IMFAL unit on the mere ground that it was an export oriented unit
Accordingly the Writ Petitions were allowed to the extent of quashing the demands for additional tariff made in the revised bills produced as Annexure II series in OJC No 1549 of 1985 and it was declared that the company will be liable to pay tariff only at the contractual rate for the supply made during the water year 1984 85
In respect of the water year 1985 86 which formed the subject matter of OJC No 2496 of 1985 the High Court directed that the company shall enjoy the benefit of clubbing till the State Government in exercise of its power under Section 22B of the Act passed an appropriate statutory order rejecting its request
The Writ Petitions were disposed of by granting the aforesaid reliefs to the company
279 Subsequent to the judgment of the High Court the State Government passed an order dated October 31 1986 in pur ported exercise of its power under Section 22B of the Act effecting an allocation of power supply for the water year 1986 87
The allocation followed the same pattern as was adopted for the previous year by making a joint allotment in respect of the three units of the company other than the 132 KV IMFAL unit and a separate allotment in respect of the 132 KV IMFAL unit
The order also contained a note in terms identical with the note that was contained in the order relating to the water year 1985 86 the text of which has been already reproduced supra
By its letter dated November 22 1986 the company made a request to the State Government to allow clubbing of the power allotted to its four units for the water year 1986 87 and requested also for a personal hearing before a decision was taken in the matter
The State Government refused the said request by its letter dated December 8 1986 which reads as follows Government of Orissa Irrigation and Power Department No 53250IP Dated 8th December 1986
29986 To The Executive Vice President Ms Indian Metals and Ferro Alloys Ltd Bomikhal Bhubaneshwar
Sir Please refer to your letter No OSEBELECTIMFA BBSR86025 dated 22nd Novem ber 1986 enclosing your letter dated November 15 1986 to Superintending Engineer Commer cial OSEB
It is found from your letter that you have assumed that power allotted to IMFAL 11 and 33 KV and IMCL can be availed in a clubbed manner with power allotted to IMFAL 132 KV
This is to inform you that Government after careful consideration of the difficult power situation during the current water year and also in view of the fact of IMFAL 132 KV unit being a 280 100 export oriented unit for which special provisions have been made in the power cut order No 46885EL11111585 dated 31st October 1986 there is no merit in your request for clubbing
Accordingly it is clarified that you are eligible to receive power in terms of the order dated 31101986 as aforesaid sepa rately for IMFAL 11 KV and 33 KV and IMCL to the extent of 5760 MUs and separately for IMFAL 132 KV to the extent of 5256 MUs during the current water year
Please note therefore that club bing as assumed in your letters has not been allowed
Please also note that your re quest for allocation of additional power for IMFAL 132 KV can only be considered upon your fulfilment of the conditions specified in the order dated 31101986
Yours faithfully Sd Commissioner cum Secretary to Government No personal hearing was afforded to the company before the decision incorporated in the said letter was taken by the Government
It will be seen that despite the clear pro nouncement by Government regarding invalidity of the said reason the sole ground stated by the State Government in the said letter for denying the benefit of clubbing to the company is that IMFAL 132 KV unit being a 100 export ori ented unit for which special provisions had been made in the power cut order dated October 31 1986 there was no merit in the company s request for dubbing
Aggrieved by the said action taken by the State Government rejecting the request for clubbing the company has filed Writ Petition No 1753 of 1986 in this Court seeking to quash the said order
SLP C Nos
13848 13849 of 1986 have been filed by the State of Orissa challenging the correctness of the above mentioned judgment of the High Court in OJC No 1549 of 1986 and OJC No 2496 of 1985
SLP C Nos
14173 14174 of 1986 have been separately filed 281 by the Board challenging the very same judgment
The company has filed SLPC Nos
14923 14924 of 1986 questioning the correctness of the High Court s judgment in so far as the High Court has turned down its contentions regarding the competence
of the State Government to pass orders under Section 22B of the Act making allocation of power supply to individual consumers and to deny the benefit of clubbing and to prescribe for levy of higher tariff for excessive drawal
It was submitted before us by Counsel appearing for the company that the four electrical submerged arc furnaces of the company producing ferro alloys cannot be run at a low capacity and they require continuous and uninterrupted supply of energy to sustain production and also to ensure that the furnaces do not sustain damage
It is electric power that is used as a raw material in the manufacture of ferro alloys
The electrical energy is converted to heat energy which generates the requisite temperature for reduc tion of the ore to the metal and unless that temperature is attained the necessary reaction will not take place and the desired product will not be obtained
According to learned Counsel for the company in view of the unsatisfactory power situation in the State and the consequent drastic power cuts imposed on the industrial units the extension of the facil ity of clubbing becomes very vital because that would render possible for the multiple unit industries concerned which are having more than one unit to decide to operate a reduced number of furnaces with the available allocation of power by diverting the quota allotted to some of the units to those which are to be continuously worked
By this process alone it is said it will be possible for such industries to avert damage to the furnaces and to avoid large scale retrenchment of the labour force
The petitioner company has averred both before the High Court and before this Court that on account of frequent interruptions and the undependable nature of supply of power the company s 132 KV IMFAL furnace had suffered very serious damage causing a loss of about Rs 16 crores to the company
But this averment has been seriously controverted by the Board and the State Government
For the purposes of this case it is not necessary for this Court to enter into the merits of this controversy and to determine which version is correct
It would suffice merely to state that the denial of clubbing to such industrial units has very serious implications and repercussions both economic and otherwise on the viable functioning of the industry
We shall first proceed to deal with the contentions raised by the 282 State Government and the Board in their Special leave peti tions
Section 22B of the Act is in the following terms 22B1 If the State Government is of opinion that it is necessary or expedient so to do for maintaining the supply and securing the equitable distribution of energy
it may by order provide for regulating the supply distribution consumption or use thereof
2 Without prejudice to the general ity of the powers conferred by sub section 1 and order made thereunder may direct the licensee not to comply except with the per mission of the State Government with i the provisions of any contract agreement or requisition whether made before or after the commencement of the Indian Electricity Amendment Act 1959 for the supply other than the resumption a supply or an increase in the supply of energy to any person or ii any requisition for the resumption of supply of energy to consumer after a period of six months from the date of its discontinu ance or iii any requisition for the resumption of supply of energy made within six months of its discontinuance where the requisitioning consumer was not himself the consumer of the supply at the time of its discontinuance
 It is also necessary to refer to Section 49 of the as amended in 1967
That Section reads 49
1 Subject to the provisions of this Act and of regulations if any made in this behalf the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs
283 2 In fixing the uniform tarrifs the Board shall have regard to all or any of the following factors namely a the nature of the supply and the purposes for which it is required b the co ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner with particular reference to such development in areas not for the time being served or adequately served by the licensee c the simplification anti standardi sation of methods and rates of charges for such supplies d the extension and cheapening of supplies of electricity to sparsely developed areas
3 Nothing in the foregoing provi sions of this section shall derogate from the power of the Board if it considers it neces sary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee having regard to the geographic al position of any area the nature of the supply and purpose for which supply is required and any other relevant factors
4 In fixing the tariff and terms and conditions for the supply of electricity the Board shall not show undue preference to any person
 It appears to us to be clear on a reading of Section 22B of the Act that what is contemplated by it is that the State Government should only lay down policy guidelines to be adopted by the Board for regulating supply jurisdiction consumption or use of energy
The implementation of the policy after working out the details is a matter to be carried out by the Board
It is therefore somewhat strange that the State Government has taken upon itself the task of allocating the quantum of power that may be consumed by the different industrial units mentioned in the Annexures to the Government Orders passed in respect of the years 1984 85 1985 86 and 1986 87 under Section 22B of the Act
However the High Court is in our opinion right in holding that under the aforesaid section the Government may for the pur 284 poses of securing equitable distribution of energy regulate its consumption or use and decide as a matter of policy whether the benefit of clubbing should be allowed to the consumers of energy
The immediate consequence of dental of the facility of clubbing will be to restrict the quantum of permissible consumption of energy by each of the respective units to the quota allotted to it singly or jointly and this necessarily involves serious financial implications because excessive drawals of energy by resort to clubbing would necessarily invite liability for payment at a higher tariff for the energy so drawn
It was contended before us by the Counsel appearing for the State and the Board that the power availability position in respect of each water year can be reasonably ascertained with some degree of precision only after the peak monsoon period and hence the High Court was not right in holding that the orders under Section 22B of the Act cannot be passed with retrospective effect in the middle of a water year
We find there is some force in this argument and we hold that the High Court was not right in observing that the orders under Section 22B of the Act imposing restrictions on consumption of power could not legally and validly be passed by he 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 previous ly 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 bene fit of clubbing
The High Court was therefore perfectly right in holding that the benefit of clubbing which the company had enjoyed pursuant to the order dated July 12 1984 during the water year 1984 85 till the end of December 1984 could not be taken away by the letter of the Board dated January 24 1985
We find no merit at all in the stand taken by the said Electricity Board that by the letter dated July 12 1984 the Board had permitted clubbing only for a limited period of one month ie the month of July 1984
It is to be remembered that right from the inception of the power cut in the State of Orissa the benefit of clubbing had been allowed to the company in respect of the three units which were classified as power intensive units
The same position continued in the year 1983 84 after the com missioning of the company s fourth unit namely 132 KV IMFAL and the benefit of clubbing was allowed in respect of all the four units during that year as is clear from the tele printer message sent by the Chief Engineer of the Board to the Superintending Engineer Teacher granting the request for clubbing made by the company in respect of its 285 four units by its letter dated July 16 1983
It was there after that the Board issued order as per its letter dated July 12 1984 in reply to the company s request for being given the benefit of clubbing for the year 1984 85
The text of this letter has been reproduced by us
In our opinion the correct construction to be placed on this letter is that it only makes an allocation of power to all the four units on a monthly basis commencing from 1st July 1984 with permission accorded to the company to club the drawal subject to the condition that the whole position will be reviewed in Octo ber 1984
In actual point of fact however no such review was made in October 1984 and it was only on January 24 1985 that the Board addressed a letter to the company incor porating its decision not to permit clubbing
This decision taken on January 24 1985 even if it is assumed to be valid could not operate retrospectively during any period prior to the date of issue of the said letter because during the said period the company had been enjoying the benefit of clubbing under the permission validly granted to it by the order dated July 12 1984 which had not been revised till then
We accordingly uphold as correct the conclusion reached by the High Court that the demands for additional tariff made by the Board as per the revised bills issued to the company produced in the High Court as Annex ure Il series in OJC No 1549 of 1985 were illegal and were liable to be guashed
We are in complete agreement with the view expressed by the High Court that the sole reason stated by the Board in its letter dated January 24 1985 for refusing the facility of clubbing to the company is not valid or tenable
On a reference to the Orissa State Electricity Board General Conditions of Supply Regulations 1981 it is seen that the Regulation 28 which deals with classification of service to consumers classifies consumers under 15 differ ent categories namely domestic lighting and power commer cial lighting and power cinema theatre etc street light ing railway traction irrigation pumping and agriculture public water works and sewerage pumping general purpose tariff small industries medium industries large indus tries power intensive industries heavy industries and temporary supply
There is no separate categorisation of export oriented industries 
Under the scheme of the Regu lation industries have to fall under one or other of the five categories small medium large power intensive and heavy
This position is further confirmed by the fact that in the orders passed by the State Government under Section 22B of the Act for the years 1984 85 1985 86 and 1986 87 also there is no separate categorisation of export 286 oriented industries
The only categories mentioned are heavy industries and power intensive industries and all the four units of the company had been included under the category power intensive industries
 It is admitted in the counter affidavit and it is not disputed before us at the time of heating the arguments that clubbing has been allowed by the Board and is being allowed even now in respect of power intensive industries other than export oriented indus tries
We see no justification at all for this differential treatment meted out to export oriented industries
The note appended to the Government s orders passed under Section 22B of the Act for the years 1985 86 and 1986 87 does not in any way support the contention of the State and the Board that an export oriented industry is to be made a separate alloca tion of power and is to be denied the benefit of clubbing merely on account of its being engaged in an export oriented venture
It continues to be classified as a power intensive industry for purposes of allocation of power
The only effect of the note is that in case such export oriented industry fulfils the conditions mentioned in the note it will be entitled to additional allocation of power on the ground of its being entitled to preferential treatment as an incentive for export promotion
This is only an enabling provision which would entitle an 100 export oriented indus try to claim additional allotment of power if it is able to satisfy the Board and the State Government that the condi tions mentioned in the note are fulfilled by it
The only consequence of said condition not being satisfied by an export oriented industry is that it will be treated only as an ordinary power intensive industry and will not be entitled to any additional allocation of energy
For the mere reason that it has not fulfilled the conditions pre requisite for claiming additional allocation of power a power intensive industry which is export oriented cannot be subjected to treatment otherwise than at a par with other power intensive industries
If additional allocation of power has been granted to an export oriented industry it may well be that to the extent of such additional allocation which is specifically granted for the purpose of promotion of export diversion of supply to the other units may not be permitted
So long as no additional power allocation has been made and no preferential treatment has been given to the particular power intensive industry on the ground that it is a 100 export oriented industry it cannot be meted out a prejudicial treatment different from what is given to other power intensive industries which are termed as demos tic units
We have therefore no hesitation to uphold the conclusion reached by the High Court that the reason stated by the Board in its letter to the company dated January 24 1985 for refusing the benefit of clubbing to the company for the year 1984 85 was fallacious illegal and untenable
We have already 287 held that the High Court was not right in observing that orders under Section 22B of the Act imposing restrictions on consumption of power could not legally and validly be passed by the State Government in the middle of a water year
There is no merit in the rest of the contentions raised in SLP C Nos
13848 13849 of 1986 filed by the State Government of Orissa and SLPC Nos 14173 14174 of 1986 filed by the Board
Subject to our above observation regarding the competence of the State Government to pass orders under Section 22B of the Act even after the commencement of the water year these four Special Leave Petitions will stand dismissed
In Writ Petition No 1753 of 1986 the company has challenged the action of the State Government in refusing the company s request for clubbing as per the State Govern ment s letter dated December 8 1986
It appears to us rather strange that inspite of the express pronouncement by the High Court to the effect that the reason stated by the Board in its communication to the company dated January 24 1985 namely that the company s 132 KV IMFAL unit being a 100 export oriented unit it had to be treated separately for the purpose of power allocation and hence the benefit of clubbing could not be allowed was illegal and untenable the State Government has merely reiterated the very same reason in its impugned letter dated December 8 1986
This clearly indicated lack of due care and proper application the mind of the Government to relevant aspects of the matter before the order was passed
We have already indicated that we are in full agreement with the view expressed by the High Court that it is not legally permissible to refuse the facility of clubbing merely on the ground that a particular power inten sive unit is an export oriented unit so long as it had not been given any special allotment of power on the said ground on the basis of its fulfilment of the conditions specified for a 100 export oriented unit in the note appended to the Government s order passed under Section 22B of the Act
When all other power intensive units termed as domestic units are being allowed the benefit of clubbing it would not be legally proper to deny the same facility to an industry classified as power intensive unit  merely on the ground that being an export oriented unit it has failed to fulfil the conditions pre requisite for allocation of additional power
Such differential treatment would amount to arbitrary discrimination violative of Article 14 of the Constitution and it cannot be permitted
A power intensive unit which has not been extended any advantage in the nature of allocation of additional power on the ground that it is a 100 export oriented industry must be treated on the same footing as other power intensive industries called domestic indus tries and so long as 288 the benefit of clubbing is allowed to domestic power inten sive  units such benefit cannot be denied to an export oriented unit which has not been allocated any additional power on the basis of its export performance
We make it clear that nothing contained in this judgment is to be construed as laying down as a general proposition that industrial consumers having more than one unit are under all circumstances entitled as of right to club the power allotted to their different units since we are not called upon to consider or pronounce upon the said question in this case
The observations and the conclusions recorded in our judgment are based on the special facts and circum stances of the instant case before us where admittedly all power intensive industries in the State of Orissa other than export oriented industries had been allowed the benefit of clubbing by the Board and the limited question arising for consideration has been whether the denial of said benefit to some of the power intensive industries on the sole ground that they are export oriented industries which had not complied with the conditions specified in the note to the Government order issued under Section 22B of the Act for the three years in question was legally valid and permissible
We accordingly quash the order of the State Government dated December 8 1986 and direct the respondent to allow the petitioner company the facility of clubbing of the energy supply to 11 KV IMFAL unit 33 KV IMFAL unit 11 KV IMCL and 132 KV IMFAL unit
We see no reason to grant the prayer of the company for quashing the order dated October 31 1986 passed by the State Government under Section 22B of the Act in so far as it fixes the energy allocation for the different units but the said order shall not be treated or construed as denying the facility of clubbing to the company
The Writ Petition is allowed to the limited extent indicated above
The parties will bear their respective costs in all these petitions
SLP Nos 14923 and 14924 of 1986 will also stand disposed of as above


Summary:
The petitioner company engaged in manufacture of ferro silicon silicon metal and silicon carbide was per mitted clubbing of electricity for the water years 1979 80 to 1983 84 for its units in an industrial complex in the State of Orissa which utilised electricity as raw material and which were classified as power intensive industries
During the water year 1984 85 clubbing of power supply from July 1984 onwards was allowed and bills for the period from July 1984 to December 1984 were drawn up and served on the basis that the company was entitled to the benefit of club bing
Though the position was subject to revision in October 1984 no revision took place
In December 1984 the facility of clubbing was refused on the ground that one of the units being a lOO export oriented industry power supply to it had to he regulated separately for purposes of power alloca tion and that clubbing had been allowed for the month of July 1984 only
Under Section 22B of the Indian Electricity Act 1949 the State of Orissa issued an order on January 22 1985 effective from July 1 1984 directing the State Electricity Board to reduce supply of energy so as to allow consumers to avail of supply only to the extent specified in the Annexure to the order
There was a note to the order prescribing certain conditions
All the units of the petitioner company were shown in the 266 Annexure under the classification power intensive indus tries 
The First three units were allotted energy together and the fourth unit separately
After the promulgation of the above order the Board served a revised bill on the company demanding payment at the higher tariff rate for the period from October 1984 to June 1985 on the ground that there had been alleged excess drawal by the company due to clubbing
The company field a writ petition in the High Court challenging the aforesaid order and also the letter of the Board refusing clubbing for the entire water year 1984 85 and praying for quashing the same
The company also sought a writ of mandamus directing the Board and the State Govern ment to permit clubbing for the water year 1984 85 as well as for the future years
On behalf of the State it was contended that clubbing had been allowed to the company by the Board temporarily for the month of July 1984 only during the water year 1984 85 and that the power allotted to the fourth unit could not be allowed to be clubbed with that allotted to the other three units since the former was a 100 export oriented unit and it had therefore to be treated separately for the allocation of power
During the pendency of the writ petition the State Government passed another order effecting allocation of power under Section 22B of the Act for the water year 1985 86
The company was served with a notice of disconnection for non payment of the bills prepared at the higher tariff rate for the month of August 1985
The company filed anoth er writ petition challenging the order and praying for identical reliefs as in the previous petition
This petition was opposed by the State contending that the said unit being a 100 export oriented unit had to be treated sepa rately for the purpose of power allocation
The High Court passed an interim order directing the State Government to dispose of the company s request for clubbing of the power allotted for all the four units for the water year 1985 86
The State Government thereafter passed an order rejecting the application without giving any reason
The company s application for amending the writ petition by challenging the Government s refusal was allowed
The High Court held that under Section 22B of the Act the State Government had the power to grant or refuse the request of a consumer for being allowed the facility of clubbing and upheld the power of the State Government to impose special tariff in case the allotted quota of energy was exceeded
It however held that the State Government and 267 the Board had no power under the Act to impose restrictions on the use of electric energy with retrospective effect and quashed the demands made under the revised bills impugned in the first writ petition
It also held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the Govern ment on the question as to whether or not clubbing should be allowed with reference to relevent considerations and that the plea raised by the State Government that the fourth unit should be treated separately from the other three units since the former was an export oriented unit was without any substance
The High Court quashed the demands for additional tariff made in the revised bills challenged in the first writ petition and declared that the company would be liable to pay tariff only at the contractual rate for the supply made during the water year 1984 85
In respect of the water year 1985 86 the High Court directed that the company shall enjoy the benefit of clubbing till the State Government passed an appropriate statutory order rejecting its request
For the water year 1986 87 the State Government passed an order dated 8th December 1986 effecting an allocation of power supply on the same pattern as was adopted for the previous year and rejecting the request of the company to allow the facility of clubbing to its fourth unit
The company filed a writ petition in this Court challenging the said order
In the Special Leave Petitions of the company it was submitted
that the four electrical sub merged arc furnaces of the company producing ferro alloys cannot be run at a low capacity and they required continuous and uninterrupted supply of energy to sustain production and also to ensure that the furnaces did not sustain damage as electric power was used as a raw material in the manufacture of ferro alloys that on account of frequent interruptions and the undependable nature of supply of power the fourth unit had suffered very serious damage causing a great loss and that the benefit of clubbing cannot be denied to the company under Section 22B of the Act
It was contended in the Special Leave Petitions on behalf of the State and the Electricity Board that the power availability position in respect of each water year can be reasonably ascertained with some degree of precision only after the peak monsoon period and the High Court was there fore not right in holding that the orders under Section 22B of the Act cannot be passed with retrospective effect in the middle of a water year
268 Allowing the writ petition to a limited extent and disposing of the Special Leave Petitions of the company and dismissing the Special Leave Petitions of the State and the Board this Court HELDI
It is clear from a reading of Section 22B of the Electricity Act that what is contemplated by it is that the State Government should only lay down policy guidelines to be adopted by the Board for regulating supply jurisdic tion consumption or use of energy
The implementation of the policy after working out the details is a matter to he carried out by the Board
It is therefore strange that the State Government had taken upon itself the task of allocat ing the quantum of power that may he consumed by the differ ent industrial units in respect of the years 1984 85 1985 86 and 1986 87 under Section 22B of the Act
283F H 2
The High Court was right in holding that under this Section the Government may for purposes of securing equita ble distribution of energy regulate its consumption or use and decide as a matter of policy whether the benefit of clubbing should he allowed to the consumers of energy
The immediate consequence of denial of the facility of clubbing will he to restrict the quantum of permissible consumption of energy by each of the respective units to the quota allotted to it singly or jointly and this necessarily in volves serious implications and repercussions both economic and otherwise on the viable functioning of the industry because excessive drawals of energy by resort to clubbing would necessarily invite liability for payment at a higher tariff for the energy so drawn
283H 284A B 3
The High Court was right in holding that the benefit of clubbing which the company had enjoyed pursuant to the impugned order during the water year 1984 85 till the end of December 1984 could not he taken away by the impugned letter of the Board dated 24 1 1985
The earlier letter dated 12th July 1984 had made an allocation of power to all the four units on a monthly basis commencing from 1st July 1984 with permission accorded to the company to club the drawal subject to the condition that the whole position would be reviewed in October 1984
There was no such review and it was only in the impugned letter of 24th January 1985 that the Board had incorporated its decision not to permit clubbing
This decision could not operate retrospectively so as to cover the period during which the company had been enjoying the benefit of clubbing under the permission valid ly granted to it by the Board and which had not been revised till then
284F 285B D 269 4
The High Court was right in holding that the demands for additional tariff made by the Board as per the revised bills issued to the company for the year 1984 85 were illegal and were liable to be quashed and that the sole reason stated by the Board in its impugned letter for refus ing the facility of clubbing to the company was fallacious illegal and untenable
285D E 5
The High Court was not right in observing that the orders under Section 22B 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
284D 6
If a consumer had been allowed the benefit of club bing previously that benefit could not be taken away with retrospective effect thereby saddling him with heavy finan cial 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
284E 7
Inspite of the express pronouncement by the High Court to the effect that the reason stated by the Board for refusing the benefit of clubbing for the year 1984 85 was illegal and untenable the State Government merely reiterat ed the very same reason in its impugned order refusing benefit of clubbing for the year 1986 87
This clearly indicated lack of due care and proper application of the mind of the Government to relevant aspects of the matter before the order was passed
287C 8
There was no separate categorisation of export ori ented industries under Regulation 28 of the Orissa State Electricity Board General Conditions of Supply Regulations 1981
Under the scheme of the regulation industries had to fall under one or other of the five categories small medi um large power intensive and heavy
In the orders passed by the State Government under Section 22B of the Act for the years 1984 85 1985 86 and 1986 87 the only categories mentioned were heavy industries and power intensive indus tries and all the four units of the company had been includ ed under the category power intensive industries 
Clubbing had been allowed by the Board and was being allowed even now in respect of all the power intensive industries other than export oriented industries
There is no justification at all for this differential treatment meted out to export oriented industries
The note appended to the Government s orders for the years 1985 86 and 1986 87 did not in any way lay down that an export oriented industry was to he made a separate allocation 270 of power and was to be denied the benefit of clubbing merely on account of its being engaged in an export oriented ven ture
It continues to be classified as a power intensive industry for purposes of allocation of power
285G H 286A C 9
So long as no additional power allocation had been made and no preferential treatment had been given to the particular power intensive industry on the ground that it was a 100 export oriented industry it cannot be meted out a prejudicial treatment different from what was given to other power intensive industries termed as domestic units
286G 10
When all other power intensive industries were being allowed the benefit of clubbing it would not be legally permissible nor proper to deny the facility of clubbing to an industry classified as power intensive unit  merely on the ground that the particular power intensive unit was an export oriented unit so long as it had not been given any special allotment of power on the said ground on the basis of its fulfilment of the conditions specified for a 100 export oriented unit in the note appended to the Govern ment s order passed under Section 22B of the Act
Such differential treatment would amount to arbitrary discrimina tion violative of Article 14 of the Constitution
287F The Court quashed the impugned order of the State Gov ernment for the year 1986 87 and directed that a the respondents allow the petitioner company the facility of clubbing of the energy supply to the four units 288E b the impugned order for the year 1986 87 passed by the State Government under Section 22B of the Act insofar as it fixes the energy allocation for the different units shall not be treated or construed as denying the facility of clubbing to the company and 288F c that nothing contained in the judgment of this Court is to be construed as laying down a general proposi tion that industrial consumers of electrical energy having more than one unit are entitled under all circumstances as of right to club the power allotted to their different units
288B