IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE EIGHTH DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No. 27351 of 1995 Between: M/s.Vijay Agro Products Limited Enkipadu Vijayawada. ..... PETITIONER AND 1 The General Manager District Industries Centre Krishna Dist Vijayawada 2 The Superintending Engineer Operation Circle A.P.S.E.B Vijayawada. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to To issue an order or direction more particularly one in the nature of the Writ of Mandamus declaring the proceedings of the 2nd respondent, Letter No.R2/A/D No.5122/95, dated 9-11-1995 as unsustainable, arbitrary and without autority and consequently direct the 2nd respondent to allow 25% rebate as per the eligibility certificate issued by the 1st respondent herein and pass such other order or orders as this Hon'ble Court may deem fit and proper in the interest of justice. Counsel for the Petitioner:M/SC.KODANDA RAM Counsel for the Respondent No.: MR.O.MANOHER REDDY The Court made the following : Form-NIC-OGS/WP{SRAVAN} WRIT PETITION NO : 593 of 1996 Between: M/s. Vijay Agra Products Limited, Enikepadu - 521 108. Vijayawada rep. by its Manager Sri C. J. P. Mahadev. Vijayawada ..... PETITIONER AND 1 The General Manager, District Industries Centre. Vijayawada, Krishna Dist. 2 The Superintending Engineer, Operation Circle A.P.S.E.B., Vijayawada. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue an Order or Direction or a Writ declaring the notice of the 2nd Respondent Lr.No. HT/REV/R2/A/D No. 116/96, dated 16.1.1996 as unsustainable, arbitrary, and without authority and consequently issue a Writ of Mandamus directing the 2nd respondent to allow 25% power rebate as per the eligibility certificate issued by the 1st respondent herein covering the 2nd Expansion Phase from 8-2-91 to 7-2-94 and pass such other order or orders. Counsel for the Petitioner:M/SC.KODANDA RAM Counsel for the Respondent No.: MR.O.MANOHER REDDY The Court made the following : Form-NIC-OGS/WP{KRD} WRIT PETITION NO : 18895 of 2003 Between: M/s Vijay Agro Products Pvt. Ltd., Rep. by its Manager Sri C.J. P. Mahadev, Enikepadu - 521 108, Vijayawada , Krishna District. ..... PETITIONER AND 1 Transmission Corporation of A.P.Ltd., Rep. by its Managing Director, Vidyut Soudha, Somajiguda, Hyderabad. 2 Southern Power Distribution of A.P. Ltd., Rep. by its Managing Director, Tirupathi, Chittoor District. 3 The Superintending Engineer Operation Circle, Southern Power Distribution of A.P. Ltd., Vijayawada, Krishna District. 4 Senior Accounts Officer, Operation Circle, Southern Power Distribution of A.P. Ltd., Vijayawada, Krishna District. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to pass order or orders or direction or a Writ declaring the action of the respondents in not refunding the consumption deposit to the petitioner as illegal arbitrary, ultravires the HT-agreement and terms and conditions of the Electricity Supply Act, 1948 and further issue a Writ of Mandamus directing the respondents to refund the balance consumption deposit of Rs. 17,91,244 to the petitioner company and pass Counsel for the Petitioner:M/SC.KODANDA RAM Counsel for the Respondent No.: MR.O.MANOHER REDDY The Court made the following : Form-NIC-OGS/WP{MADHURI} THE HON’BLE SRI JUSTICE V.ESWARAIAH W.P Nos. 27351 OF 1995, 593 OF 1996 AND 18895 OF 2003 COMMON ORDER: All these three writ petitions have been filed by the same petitioner namely M/s.Vijay Agro Products Limited, Enikepadu, Vijayawada, Krishna District against the same respondents and as common questions of facts and the law involved, they are disposed of by a common order. W.P.No.27351 OF 1995: The petitioner questions the letter of the second respondent-Superintending Engineer, Operation Circle, Southern Power Distribution of Andhra Pradesh Limited, Vijayawada, Krishna District, dated 9-11-1995, expressing that the Electricity Board is not agreeable to sanction 25% rebate for the industries which have not obtained the eligibility certificates within two years, and accordingly, the proceedings issued for the sanction of 25% power rebate for the first expansion period from 15-6-1988 to 14-6- 1991 and second expansion period from 8-2-1991 to 7-2-1994 are cancelled, requesting the petitioner to arrange the payment of Rs.6,74,680/- which was allowed towards rebate for the first expansion period. W.P.NO.593 OF 1996: The petitioner questions the notice of the second respondent dated 16-1-1996, demanding the bill amount of Rs.3,86,824/- towards the monthly consumption charges of December, 1995, without granting any rebate of 25% of power consumption charges as per the eligibility certificate issued by the General Manager , District Industries Centre, Vijayawada, Krishna District for the second expansion period covering from 8-2-1991 to 7- 2-1994 as illegal and arbitrary. W.P.NO.18895 OF 1996: The petitioner questions the action of the respondents in not refunding the consumption deposit amount of Rs.17,91,244/- under the HT-agreement and as per the terms and conditions of the Electricity Supply Act as illegal and arbitrary. It is the case of the petitioner that the petitioner’s firm is a Private Limited Company and subsequently converted into Public Limited Company under the provisions of the Indian Companies Act. The petitioner company engaged in manufacture of vegetable oil by solvent extraction process and is registered with the Department of Industries, Government of Andhra Pradesh. The petitioner has been availing the electricity supply from the Electricity Board as per the agreement entered into in the year 1984, which was being renewed from time to time and the petitioner had a contracted MD of 850 KV with service connection No.VJA 084. It is stated that for the rapid growth of industrialization, the State Government offered various incentives, subsidies, concessions in taxes and electricity charges etc. A procedure was evolved to avail the benefits given under various Government Orders. One of the benefit that is being offered by the State Government is 25% power rebate on the electricity charges for a period of three years from the date of commencement of the production or expansion in exercise of powers given under Section 78-A of the Electricity (Supply) Act, 1948 (for short hereinafter referred to as “the Act”). The policy decision taken by the Government giving certain directions to the Electricity Board under Section 78-A of the Act is binding and enforceable. The petitioner had set up the unit with the initial capacity of 45,000 MTS and 20 TDP Hydro generation plant of extraction of DOB. For setting up of the industry, the petitioner was initially entitled the power rebate of Rs.6,67,847-09 Ps., for the period from 22-8-1984 to 21-8- 1987 by the Electricity Board pursuant to the letter issued by the Department of Industries. It is stated that mis-interpreting the orders issued by the Government allowing the power rebate, the Electricity Board, threatened the dis-connection of electricity supply, Therefore, the petitioner approached the Subordinate Judge’s Court, Vijayawada by filing O.S.No.135 of 1987 and then only, the second respondent allowed 25% power rebate subject to withdrawal of the suit and accordingly, the suit was withdrawn and 25% power rebate was allowed by the second respondent vide his letter No.R2/A1/D No.4247/92, dated 6-8-1992. Thus, it is stated that there was a delay of five years from 1987 to 1992 in granting the rebate for the initial period of three years from the date of its production It is further stated that the petitioner had taken subsequent expansion of its unit from 45,000 MTS to 80,000 MTS and commenced production of the second expansion with effect from 8-2-1991 and approached the Government to grant eligibility certificate for availing 25% power rebate. Accordingly, the General Manager, District Industries Centre, Vijayawada vide his letter dated 26-12-1994 issued eligibility certificate for availing 25% power rebate for the second expansion programme with effect from 8-2-1991 for a period of three years. For the first expansion also, the eligibility certificate claiming 25% rebate was issued on 26-12-1994 from 15-6-1988 to 14-6-1991 i.e., for a period of three years. It is stated that the petitioner is entitled for the total rebate of Rs.6,74,680/- for the first expansion period between 15-6-1988 to 14-6-1991 and pursuant to the eligibility certificate of the second expansion, the petitioner is entitled to Rs.2,93,736/- as rebate in the electricity bills payable in the month of May, 1995 and Rs.3,80,944/- in the bills payable in June, 1995, but contrary to the entitlement, the second respondent demanded to pay the electricity consumption charges without granting any rebate. It is the case of the petitioner in W.P.No.18895 of 2003 that the petitioner is entitled for the rebate of 25% power charges for the initial period of production when the company was set up and for the first and second expansion, but the Electricity Board erroneously denied the benefit given by the Government and therefore, he filed the suit and thereafter only grant of 25% power rebate was accepted and after grant of rebate for the initial period the first and second expansions, the petitioner is entitled for the refund of the consumption deposit as and when the agreement to supply power comes to an end, but as the petitioner obtained the interim orders from this Court, staying the collection of 25% rebate amount, with-holding of consumption deposit is illegal and ultra-vires the HT agreement and terms and conditions of the Act. The first respondent in W.P.Nos.27351 of 1995 and 593 of 1996 namely the General Manager, District Industries Centre, Vijayawada, Krishna District filed a counter, stating that the Government in G.O.Ms.No.646, Industries & Commerce (II C.P.) Department, dated 5-10-1979 have issued orders extending 25% concession in power tariff to the existing industries undertaking substantial expansion i.e., involving an increase in the existing value of their fixed capital investment by not less than 25% and also an increase in production capacity by not less than 25% and the rebate being limited to the expanded portion of capacity and not to the total production of the whole plant. Pursuant to the orders of the Government, the Electricity Board has also issued B.P.Ms.No.1045 (Commercial) dated 31-12- 1979 allowing the above concession to the new industries. The petitioner unit was accorded registration dated 28-4-1984 for the manufacture of vegetable oils by solvent extraction process for 45,000 MTS per annum, in terms of Rice Bran. The unit was given eligibility certificate for availing 25% power rebate for the initial period of three years from 22-8-1984 vide letter dated 30-11-1984 in terms of G.O.Ms.No.654, dated 13-7-1976 and B.P.Ms.No.691 dated 10-8- 1976 of the then Electricity Board and there is no dispute that the petitioner unit had availed the said 25% power rebate. The petitioner unit obtained the first expansion registration under forward integration for manufacture of “Industrial Hard Oil” on 15-6- 1988 and the second expansion enhancing the capacity from 45,000 to 80,000 MTPA by obtaining additional power supply from the Electricity Board 400 KVA and 100 KVA respectively and commenced production. The first respondent has certified that the petitioner unit has utilized machinery value of Rs.75,19,063/- in the first expansion and Rs.95,45,112/- in the second expansion and further confirmed that there is increase in investment and production capacity by 25%. Thus it is stated that the petitioner filed an application on 9-11-1994 for grant of eligibility certificate for availing 25% concessional power tariff for both the expansions i.e., for the first expansion period of three years commencing from 15-6-1998 and second expansion period commencing from 8-2-1991. It is stated that the subject matter of the delay in submission of application for obtaining the eligibility certificate was referred to the Commission of Industries, Hyderabad and on the peculiar facts and circumstances, explaining the problems by the petitioner with the Electricity Board in allowing concessional power tariff in the original unit, which was finalized only in the year 1992 pursuant to the filing of the suit by the petitioner unit and also due to the fact of the demise of the youngest son of the Managing Director of the petitioner unit, the delay was condoned and accordingly, the Commissioner of Industries issued a Memo dated 15-12-1994 requesting the General Manager, District Industries Centre to issue eligibility certificate dated 26-12-1994 for the first expansion period of three years from 15-6- 1988 and the second expansion period of three years from 8-12- 1991 was issued and therefore, it is stated that the petitioner is entitled for 25% concessional power tariff as per the orders in G.O.Ms.No.646, Industries & Commerce (II & CP) Department dated 5-10-1979 and the Electricity Board B.P.Ms.No.1045 Commercial, dated 31-12-1979. Thus, it is stated that the eligibility certificate issued by the first respondent is in order and valid. The electricity Board filed a counter stating that the supply of electricity was released as per the initial agreement with the contracted load of 350 KVA under Category-I and thereafter additional CMD of 400 KVA was released on 6-6-1988 and further additional CMD of 100 KVA was released on 31-10-1991 subject to payment of M.D.charges, energy charges, surcharges, penal charges etc., in accordance with the tariff applicable and terms and conditions of supply prescribed by the Board under the agreement. It is stated that the State Government as well as the Board are statutory functionaries under the Central Act and they have to perform their obligations within the limits and the State Government is entrusted with the power of issuing directions under Section 78-A of the Act to the Board on the question of policy and the Board has also perform its statutory obligations under the Act with reference to the fixation of tariff as contained in Sections 49 and 59 of the Act. It is stated that if the policy direction issued by the Government is beyond the statutory limitations, it cannot be treated as a direction within the meaning of Section 78 of the Act and the Board is not entitled to act up on the said directions. It is stated that admittedly, the General Manager, District Industries Centre, Vijayawada issued eligibility certificate dated 26-12-1994 for both the expansions, according sanction for allowing 25% power rebate, but the Board refused to act upon the said certificates as the General Manager of the District Industries Centre has not given such eligibility certificate within two years from the date of commencement of the commercial production or the date of release of power supply. Accordingly, the Electricity Board cancelled the earlier letter dated 16-7-1994 to extend 25% rebate in respect of industries who had obtained the eligibility certificate from the District Industries Centre vide its letter dated 9-5-1995 and requested the petitioner to pay Rs.6,74,680/- vide letter dated 9-11- 1995, which was questioned in W.P.No.593 of 1996. It is stated that the eligibility certificate issued by the first respondent on 26-12-1994 for the first and second expansion period cannot be acted upon, as there was a delay in obtaining the eligibility certificate. It is further stated that as per the policy decision of the Board, the units are entitled to 25% rebate only in respect of the industries who have obtained eligibility certificates within two years from the date of commencement, but the eligibility certificate obtained by the petitioner is beyond two years and therefore, it is contended that the petitioner is not entitled for the rebate of 25% for the first and second expansions. Heard the arguments of both the counsel. The Government of Andhra Pradesh in exercise of its powers under Section 78-A of the Act issued directions in G.O.Ms.No.654, Industries & Commerce Department, dated 13-7-1976 allowing rebate of 25% in demand and energy charges for HT industries, which go into commercial production on or after 1-1-1976. The Electricity Board issued consequential orders in B.P.Ms.No.691, dated 10-8-1976 allowing rebate of 25% in demand and energy charges for HT industries other than the 65 excluded industries notified in G.O.Ms.No.224 dated 9-03-1976. This rebate shall be allowed for those new HT industries from the date of their going into regular production on or after 1-1-1976. The Government again issued directions in G.O.Ms.No.646, Industries & Commerce Department dated 5-10-1979 in exercise of its powers under Section 78-A of the Act, extending 25% rebate in Power Tariff to the existing industries undertaking substantial expansion. Consequential orders have been issued by the Electricity Board in B.P.Ms.No.1045, dated 31-12-1979 allowing 25% rebate for new industries undertaking substantial expansion in production capacity over and above 25% with effect from 25-10-1975. It is not in dispute that the petitioner company is established for manufacture of vegetable oil by solvent extraction process with an installed capacity of 45,000 MTS and 20 TPD Hydro generation plant in the year 1984 and commenced operation of the plant from 22-8- 1984. Pursuant to the orders of the Government in G.O.Ms.No.654, dated 13-7-1976 and consequential B.P.Ms.No.691, dated 10-8-1976 issued by the Electricity Board, petitioner company was allowed 25% rebate with effect from 22-8-1984 for a period of three years up to 21- 8-1987 in view of the eligibility certificate dated 30-11-1984, but when the said incentive was sought to be cancelled and the amount was sought to be recovered under the threat of dis-connection in 1987, petitioner filed O.S.No.135 of 1987 on the file of the Subordinate Judge, Vijayawada, then only the benefit of availing 25% rebate was accepted subject to the withdrawal of the suit. As per the letter dated 30-4-1992 of the second respondent, the petitioner was allowed 25% rebate on the energy charges initially for a period of three years from August, 1984 to August, 1987 amounting to Rs.6,67,847-09 Ps. Even before the withdrawal of the suit, the petitioner company undertook first expansion of the unit for manufacture of industrial hard oil with a capacity of 54,000 MTS and commenced production with effect from 15-6-1988 and the second expansion was undertaken for the manufacture of Vegetable Oil from 45,000 TPA to 80,000 TPA from 8-2-1991. The petitioner made an application on 9-11-1994 to the General Manager, District Industries Centre, Vijayawada, seeking eligibility certificate for the first and second expansions. Pursuant to the said application, the General Manager, District Industries Centre, Vijayawada after getting clarification from the Commissioner of Industries with regard to the delay in submitting the application, issued eligibility certificate vide proceedings No.1695/A6/94-1, dated 26-12-1994 for the first expansion with effect from 15-6-1988 for a period of three years up to 14-6-1991 and for the second expansion from 8-2-1991 for a period of three years up to 7-2-1994 requesting the second respondent to allow the petitioner to avail 25% power rebate for the first expansion as well as second expansion. In fact, pursuant to the issuance of the eligibility certificate dated 26-12-1994, the second respondent also issued proceedings No.R2/A1/D.No.807/95 dated 7-3-1995 according sanction of 25% power rebate for the first expansion period of three years from 15-6- 1988 to 14-6-1991. The electricity Board issued bills for the month of April, 1995 and May, 1995 adjusting an amount of Rs.2,93,736/- and Rs.3,80,944/-, total of which comes to Rs.6,74,680/- towards 25% rebate as per the sanction letter dated 7-3-1995. The second respondent also issued proceedings dated 27-6-1995 according sanction of 25% power rebate from 8-2-1991 to 7-2-1994 for the second expansion, but the 25% bill amount was not adjusted and unilaterally cancelled the earlier sanction proceedings dated 7-3- 1995 relating to the first expansion and sanction proceedings dated 27-12-1995 relating to the second expansion period by proceedings dated 9-11-1995 informing the petitioner that the petitioner is not entitled to 25% rebate for the first expansion as well as second expansion as the eligibility certificate was not obtained within two years from the date of production and therefore, the petitioner was requested to refund Rs.6,74,680/- which was allowed as rebate. Questioning the demand made by the second respondent in canceling the earlier grant of rebate and in demanding to pay the electricity bills by refunding the amount which was earlier adjusted towards 25% rebate for the first expansion, the petitioner filed W.P.Nos.27351 of 1995 and 593 of 1996, challenging the demand and disconnection notice, which demand was stayed by this Court. The learned counsel appearing for the Electricity Board submits that the Board has taken a policy decision in 1994 to extend 25% rebate only in respect of the industries which have obtained eligibility certificate within two years from the District Industries Centre and therefore, 25% rebate sanction orders issued earlier by the Electricity Board vide proceedings dated 7-3-1995 and 27-6-1995 were withdrawn and demanded to pay the electricity consumption charges without any reference to the rebate orders. Neither the orders of the Government in G.O.Ms.No.654 dated 13-7- 1976 and G.O.Ms.No.646, dated 5-10-1979 nor the consequential orders issued by the Electricity Board in B.P.Ms.No.691 dated 10-8- 1976 and B.P.Ms.No.1045, dated 31-12-1979 stipulates any time or period for production of the eligibility certificate. It is not the case of the Electricity Board that the eligibility certificate issued by the General Manager, District Industries Centre is not genuine. There is no dispute with regard to the genuineness of the eligibility certificate dated 26-12-1994. The reasons for the delay in making application and grant of eligibility certificate was due to the lapses on the part of the Electricity Board in not allowing 25% power rebate for the initial period of three years i.e., from 22-8-1984 to 21-8-1987 leading to filing of suit O.S.No.135 of 1987, which was withdrawn pursuant to the assurance given by the Superintending Engineer, Electricity Board in 1992. When the grant of rebate for the original period itself was in dispute, there was no occasion for in making attempt to get the eligibility certificate for the first and second expansions. The first and second expansions were enquired into and eligibility certificate was issued and as there is no doubt or dispute with regard to the genuineness of the eligibility certificate, I am of the opinion that the delay in obtaining the eligibility certificate dated 26-12-1994 is not willful or intentional and the Electricity Board cannot deprive the petitioner in availing the benefit of 25% rebate on account of the first expansion as well as the second expansion. This Court time and again held that the statutory directions issued by the Government under Section 78-A of the Act are binding on the Electricity Board. Pursuant to the directions issued by the Government in the aforesaid Government Orders, consequential orders have been issued by the Electricity Board in the aforesaid relevant B.P.Ms. numbers. If that be so, in the absence of any stipulation of the specific period either in the Government Orders or in the B.P.Ms. numbers and in view of the peculiar facts and circumstances for the delay in obtaining the eligibility certificate, the petitioner cannot be deprived of the 25% rebate on the consumption charges for the first as well as second expansions. In view of the aforesaid facts and circumstances of the case, I am of the opinion that the policy decision said to have been taken by the Electricity Board on 16-7-1994 is not inconformity with the orders of the Government or the aforesaid B.P.Ms. numbers and therefore, the Electricity Board ought not to have cancelled the earlier rebate orders which were extended to the petitioner. Having regard to the facts and circumstances, the writ petitions are allowed, directing the respondents to grant the rebate of 25% on the consumption charges as incentive pursuant to the eligibility certificate issued by the General Manager, District Industries Centre, Vijayawada dated 26-12-1994 for the first expansion period of three years from 15-6-1988 and the second expansion period of three years from 8-2-1991 and refund the consumption deposit to the petitioner after grant of rebate and deducting any pending bills. No order as to costs. ________________ V.ESWARAIAH,J Date: -08-2008. Shr. ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1 The General Manager District Industries Centre Krishna Dist Vijayawada 2 The Superintending Engineer Operation Circle A.P.S.E.B Vijayawada. 3.2CCs to 2.2CD copies