THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.14024 OF 2002 DATED MARCH, 2011 BETWEEN M/s.Anjani Portland Cement Ltd. …Petitioner And The Government of A.P., represented by its Principal Secretary, Industries & Commerce, (IP) Department, Secretariat, Hyderabad and others. …Respondents THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.14024 OF 2002 ORDER: The petitioner company is aggrieved by the denial of its request for grant of 25% rebate in its power bills to the tune of Rs.50.00 lakhs from the date of its commencement of commercial production, viz., 29.12.1999. The petitioner company also assails B.P.Ms.No.88 dated 29.11.1997 and T.O.O.No.36 dated 08.03.1999 on the basis of which the Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) rejected its request. The petitioner company was originally incorporated in the year 1986 as M/s.Shez Cements Private Limited. After change of management, its present name, M/s.Anjani Portland Cements Ltd., was adopted in the year 1999. The Government of Andhra Pradesh floated a new Industrial policy offering various incentives to entrepreneurs to set up new industries in the State. This policy titled ‘Target 2000, New Industrial Policy, 1995’ was embodied in G.O.Ms.No.108, Industries & Commerce (IP) Department, dated 20.05.1996. Under clause 6.04 thereof, the Government offered a rebate to all new eligible industries as stipulated therein to 25% rebate in power bills for a period of three years from the date of commencement of commercial production. The ceiling on such rebate was fixed at Rs.50.00 lakhs for large and medium Industries and at Rs.30.00 lakhs for Small Scale Industries. Thereafter, under G.O.Ms.No.11, Industries & Commerce (IP) Department, 16.01.1997, the Government clarified that the 25% concessional power tariff should be allowed to new Industrial Units for a period of three years from the date of release of power or going into commercial production whichever is later. However, the erstwhile Andhra Pradesh State Electricity Board while issuing revised orders in B.P.Ms.No.88 dated 29.11.1997 pursuant to G.O.Ms.No.11 dated 16.01.1997, stated that the 25% rebate in power charges would be available for a period of three years for eligible new industries, which go into production with effect from 01.04.1997, from the date of going into commercial production or date of release of power supply whichever is earlier. This was quite contrary to the State’s policy embodied in G.O.Ms.No.11 dated 16.01.1997 which required the rebate to be given for a period of three years from the date of release of power or going into commercial production whichever is later. Again, under T.O.O.(Comml.) No.36 dated 08.03.1999, the A.P. Transco, being the successor-in-interest of the erstwhile Board, issued an amendment to B.P.Ms.No.88 dated 29.11.1997 stating that consequent to the representations from industrial consumers, the relevant issues were reviewed by the Government of Andhra Pradesh in consultation with the Industries Department and the A.P. Transco and pursuant to such discussions, it had been decided to amend B.P.Ms.No.88 dated 29.11.1997 whereby 25% rebate of power charges was to be allowed for a period of three years from the date of release of power supply only. Relevant to note, no policy decision was taken by the State in this regard, though the State was said to have been involved in the discussion. The petitioner company was initially sanctioned a power connection of 3000 KVA CMD for its proposed cement plant, while under the old management. The power supply was commenced on 16.12.1996. Though the petitioner company commenced trial runs it was unable to start commercial production owing to financial difficulties. It was thereafter closed down completely for a period of about 36 months. While so, the erstwhile Electricity Board disconnected the power connection on 22.04.1997 for non-payment of dues. This situation continued till 28.12.1999. After the new management took over the petitioner company, it sought revival of the power connection for 1000 KVA CMD under its letter dated 05.10.1999. The power supply was resumed on 29.12.1999 after collecting the dues of Rs.1,05,69,156/- from the petitioner company and a sum of Rs.21.00 lakhs as consumption deposit. The petitioner company commenced commercial production on the very same day. The petitioner company, with the objective of availing the 25% power rebate offered by the Government of Andhra Pradesh, applied to the District Industries Centre, Nalgonda. Thereupon, Eligibility Certificate dated 28.01.2000 was issued in its favour by the General Manager, District Industries Centre, Nalgonda, certifying that the petitioner was entitled to avail the benefit from 29.12.1999 for a period of three years in accordance with G.O.Ms.No.108 dated 20.05.1996 and G.O.Ms.No.11 dated 16.01.1997. The Principal Secretary to Government, Energy Department, Government of Andhra Pradesh, also addressed letter dated 28.11.2000 to the APTRANSCO informing it that the request of the petitioner company had been examined by the Government in consultation with the Industries Department and that it had been decided to permit the APTRANSCO to extend the 25% rebate to the petitioner as per the scheme of the Industries Department. However under letter dated 03.02.2001, the APTRANSCO informed the petitioner company that it had been decided to allow 25% rebate to it in terms of B.P.Ms.No.88 dated 29.11.1997 and therefore it may contact the concerned authority, the Superintending Engineer, Operation Circle, Nalgonda, in the matter. Thereupon, the Superintending Engineer, Operation Circle, Nalgonda, issued proceedings dated 17.02.2001 stating that the petitioner company would be eligible for a 25% rebate on its power consumption for a period of three years from the date of release of the power supply, viz., 16.12.1996, subject to the ceiling of Rs.50.00 lakhs. In his consequential proceedings dated 22.02.2001, the Superintending Engineer, Operation Circle, Nalgonda, calculated the rebate entitlement of the petitioner company at Rs.30,04,304/- for the period 16.12.1996 to 15.12.1999. In effect, the petitioner company was deprived of an approximate sum of Rs.20.00 lakhs which it would have been entitled to, had the date of its commencement of commercial production in the year 1999 been taken into account. As the APTRANSCO relied upon B.P.Ms.No.88 dated 29.11.1997 and T.O.O.No.36 dated 08.03.1999, the petitioner also challenged the said two proceedings. The Superintending Engineer (Operation), APCPDCL, Circle Office, Nalgonda, the fourth respondent, while affirming the above facts in his counter, stated that under Section 49 of the Electricity (Supply) Act, 1948 (for brevity, ‘the Act of 1948’), the erstwhile Board while adopting G.O.Ms.No.108 dated 20.05.1996 and G.O.Ms.No.11 dated 16.01.1997, issued B.P.Ms.No.88 dated 29.11.1997 restricting the period of three years for entitlement to the rebate to be reckoned from the date of commercial production or the date of release of power supply whichever is earlier. He further stated that upon representations of the industrial consumers the issue was reviewed by the Government of Andhra Pradesh in consultation with the Industries Department and the APTRANSCO and pursuant thereto, T.O.O.No.36 dated 08.03.1999 was issued amending B.P.Ms.No.88 dated 29.11.1997 whereby the rebate was allowed for a period of three years from the date of release of power supply only. It is on this basis, according to him, that the petitioner’s company entitlement had been worked out taking into account the date of initial release of power supply in the year 1996. He however admitted that the power supply was disconnected owing to non-payment of dues and was thereafter restored only on 29.12.1999, the date of commencement of commercial production by the petitioner company. The General Manager, District Industries Centre, Nalgonda, the fifth respondent, supported the petitioner company in his counter. He stood by the Eligibility Certificate dated 28.01.2000 issued by his office holding that the petitioner company was eligible for a 25% rebate in its power bills for a period of three years from the date of commencement of commercial production, viz., 29.12.1999. The issue for consideration is whether the APTRANSCO had the liberty and power to alter and modify the incentives offered by the Government of Andhra Pradesh vide a policy direction issued under Section 78-A of the Act of 1948. Section 78-A of the Act of 1948 reads as under: “78-A: Directions by the State Government (1) In the discharge of its functions, the Board shall be guided by such directions on questions of policy as may be given to it by the State Government. (2) If any dispute arises between the Board and the State Government as to whether a question is or is not a question of policy, it shall be referred to the Authority whose decision thereon shall be final.” It is the case of the APTRANSCO that under Section 49 of the Act of 1948, it had issued modifications to the incentive scheme while adopting it. Section 49 of the Act of 1948 deals with the power of the Board to stipulate the terms and conditions for supply of electricity to the general consumers. It is however relevant to note that in so far as the policy directions of the State under Section 78-A of the Act of 1948 are concerned, including an industrial policy with its concomitant incentive schemes, the APTRANSCO would be bound thereby and would have to give effect to the same without modification. It is in this context that the Supreme Court in KUSUMAM HOTELS PRIVATE LIMITED v. KERALA STATE ELECTRICITY BOARD[1] observed: “20. Indisputably, the State is also entitled to change or alter the economic policies. The appellants do not have any vested right to enjoy the concessions granted to them forever, particularly when the Board is constituted and incorporated under the provisions of the Electricity (Supply) Act, 1948. Any policy decision adopted by the State would not be binding on the Board save and except provided for in the Act. The Board being an independent entity, the duties and functions of the Board vis-à-vis the State are enumerated in the Act. The Board, however, would be bound by any direction issued by the State Government on the questions of policy. A dispute which may arise as to whether a question is or is not a question of policy involving public interest, the Central Government is the final arbiter. The policy decision adopted by the State on the basis whereof the Board felt obligated to grant electrical connection in favour of the appellants on the basis of industrial tariff must, therefore, be understood in the context of Section 78-A of the 1948 Act. What is binding on the Board is the policy of the State. The direction of the State was to apply a particular category of tariff to the appellants. Such directions could have been withdrawn while making another tariff. The State indisputably has the power to grant subsidy from its own coffers instead of directing the Board to grant concession.” The further observations of the Supreme Court in para 37 of the Judgment are also relevant: 37. ……… So far as grant of benefits which were to be recurring in nature is concerned, the State exercises its statutory power in the case of grant of exemption from payment of building tax wherefor it amended the statute. It issued directions which were binding upon the Board having regard to the provisions contained in Section 78-A of the 1948 Act. The Board was bound thereby. ………” Therefore, the argument advanced by the APTRANSCO that the policy direction embodied in G.O.Ms.No.108 dated 20.05.1996 and G.O.Ms.No.11 dated 16.01.1997 was not binding on it and that it could alter the terms thereof under Section 49 of the Act of 1948 cannot be countenanced. Reference may also be made to the decision of a Division Bench of this Court in A.P.STATE ELECTRICITY BOARD, HYDERABAD v. M/S.VENUS HOTEL, KHAMMAM[2], wherein it was held that in the eventuality of permitting the instrumentality of the State to run contrary to the State policies, no State policy could be implemented and the progress of the State would be hampered. That was also a case involving a policy direction under Section 78-A of the Act of 1948 and the Division Bench held that it did not require any specific mention or a specific direction to the instrumentalities of the State to follow the State’s policy and that the instrumentalities of the State were expected to follow such policy. Earlier, another Division Bench of this Court in V.K.FERRO ALLOYS PVT. LTD. v. A.P.STATE ELECTRICITY BOARD, VIDYUT SOUDHA, HYDERABAD[3] opined that on questions of policy, directions issued by the State Government under Section 78-A of the Act of 1948 were binding and had to be followed by the Electricity Board. I n SHREYA PET (P) LTD. v. CENTRAL POWER DISTRIBUTION COMPANY OF A.P. LTD.[4], a learned Judge of this Court while dealing with G.O.Ms.No.108 dated 20.05.1996 held that the provisions thereof were binding on the Board under Section 78-A of the Act of 1948 and therefore, the Board and its officers could not act in violation of the policy contained in G.O.Ms.No.108 dated 20.05.1996. It is stated that this order is under appeal. Be that as it may, the fact remains that the Supreme Court in KUSUMAM HOTELS PRIVATE LIMITED1 put it beyond the pale of doubt that the directions issued by the State Government under Section 78-A of the Act of 1948 are binding on the Electricity Boards. That being so, the action of the APTRANSCO in modifying the incentive scheme offered by the State Government by altering the manner in which the period of three years for entitlement to the rebate is to be reckoned cannot be sustained. In consequence B.P.Ms.No.88 dated 29.11.1997 and T.O.O.No.36 dated 08.03.1999 are held to be illegal and ultra vires. The denial of 25% rebate in its power bills to the petitioner company for a period of three years from the date of commencement of its commercial production on 29.12.1999, is therefore legally unsustainable. The Writ Petition is accordingly allowed directing the respondents to extend the benefit of 25% rebate in power bills to the petitioner company for a period of three years from the date of its commencement of commercial production, viz., 29.12.1999. The balance amount payable in this regard shall be duly adjusted against the future consumption charges payable by the petitioner company. In the circumstances of the case, there shall be no order as to costs. ____________________ SANJAY KUMAR, J. ________MARCH, 2011. VGSR/PGS [1] (2008) 13 SCC 213 [2] 1999 (4) ALT 15 (DB) [3] 1996 (1) ALD 544 (DB) [4] 2009 (1) ALT 54