THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.257 OF 1999 DATED DECEMBER 31, 2009 Between: The A.P. State Electricity Board, Rep. by its Secretary, Vidyut Soudha, Somajiguda, Hyderabad, and others. … Appellants a n d M/s.Sanjay Alloys (P) Ltd., Rep. by its Managing Director, Jayaprakash Gupta, Moram, Kuppam Road, Palamaneru Post, Chittoor District, And another. … Respondents THE HON’BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL NO.257 OF 1999 J U D G M E N T (Per Sri Justice Sanjay Kumar) The entitlement of the first respondent SSI Unit to claim 25% rebate on power tariff for three years falls for consideration in this appeal. By his judgment dated 29.01.1999 in W.P.No.9412 of 1992, the learned single Judge held in favour of the first respondent. Hence, this appeal by the State Electricity Board, presently the Transmission Corporation of Andhra Pradesh Limited (A.P. Transco). The first respondent is a Small Scale Industrial Unit engaged in the manufacture of corrosion resistant steel blocks, heat resistant steel blocks, special alloy blocks and alloy iron blocks (Mini Steel Plant). It was granted provisional registration as a SSI Unit under Certificate dated 25.07.1986 of the District Industries Centre, Chittoor, which was validated upto 23.07.1988. Further validation was however denied, constraining the first respondent to approach this Court by way of W.P.No.5574 of 1989. Pursuant to the interim orders of this Court in the said writ petition, the provisional SSI registration of the first respondent was continued. The said writ petition was allowed subsequently and the first respondent was granted permanent SSI registration by proceedings dated 25.05.1992. As per the policy of the Government of Andhra Pradesh embodied in G.O.Ms.No.654, Industries and Commerce Department, dated 13.07.1976, new Industrial Units which went into commercial production on or after 01.01.1976 (thereafter modified as 20.10.1975), were extended 25% concession in power tariff for the first three years from the date of going into production. This concession was however denied to the 65 excluded industries notified in G.O.Ms.No.224, Industries and Commerce Department, dated 09.03.1976. Pursuant to G.O.Ms.No.654 dated 13.07.1976, the State Electricity Board issued B.P.Ms.No.691 (Commercial) dated 10.08.1976 allowing a rebate of 25% on the power tariff to specified new industries for a period of three years from the date of their going into regular production. It is the case of the first respondent that it was eligible for the concession extended by G.O.Ms.No.654 dated 13.07.1976 and B.P.Ms.No.691 dated 10.08.1976. However, it is to be noted that the first respondent commenced commercial production only on 08.12.1989. In the meanwhile, the Government of Andhra Pradesh issued G.O.Ms.No.379, Industries and Commerce (I.A) Department, dated 27.07.1989, excluding eight more categories of industries from eligibility for availing the concession under G.O.Ms.No.654 dated 13.07.1976. One of the categories so excluded is Mini Steel Plants. While so, the first respondent obtained an eligibility certificate for claiming 25% rebate on energy charges, under proceedings dated 27.06.1992 issued by the District Industries Centre, Chittoor. Though the certificate was issued long after the promulgation of G.O.Ms.No.379 dated 27.07.1989, the General Manager of the District Industries Centre, Chittoor, surprisingly stated that the first respondent did not fall in the list of 65 industries ineligible for 25% rebate on power tariff. No mention was made in the said certificate about the eight categories added to the existing list of 65 ineligible categories, by way of G.O.Ms.No.379 dated 27.07.1989. The grievance of the first respondent before the learned single Judge was that in spite of the issuance of an eligibility certificate by the Industries Department, the Electricity Board failed to give effect to the rebate to which it was entitled. The first respondent stated that it was ready to commence commercial production in March, 1989 itself but owing to the delay on the part of the Electricity Board in energising the unit, the commencement of production was also delayed. The first respondent claimed entitlement for the rebate for three years from 08.12.1989, being the date it went into commercial production. The Electricity Board contested the matter by stating that the first respondent had failed to comply with the necessary conditions for release of supply of power by the Board and therefore, the first respondent was itself responsible for the delay in this regard. While admitting the receipt of the eligibility certificate dated 27.06.1992 issued by the Industries Department, the Board pointed out that owing to the revision of the policy of the Government as reflected in G.O.Ms.No.379 dated 27.07.1989, the rebate was withdrawn so far as the newly declared ineligible industries were concerned and the first respondent was one such industry. The Board also stated that G.O.Ms.No.379 dated 27.07.1989 being prospective, the cut-off date would be the date of the said G.O. and as the first respondent failed to commence commercial production by that date, it was not eligible to claim such rebate thereafter. The delay on the part of the first respondent in availing the power supply was demonstrated by setting out the details of the failure on the part of the first respondent in complying with the conditions precedent for release of the power supply. It was pointed out that the first respondent had to pay (1) service line charges of Rs.14,67,000/-, which was reduced to Rs.10,47,800/- as the first respondent undertook to supply two numbers of 33 K.V. Vaccum Circuit Brackets costing Rs.2,09,600/- each, (2) security deposit of Rs.14,56,000/-, and (3) service connection line charges of Rs.1,15,000/-. While so, the first respondent appears to have requested permission from the Board to make the payment by way of instalments. This request was acceded to by the Board which permitted the said payment in six instalments, vide its proceedings dated 11.01.1988. The first respondent paid the first instalment of service line charges of Rs.1,75,000/- on 11.03.1988 and paid the first instalment of Rs.4,14,000/- towards security on 27.03.1989 and Rs.15,000/- towards service connection charges on the same date. But, without paying the balance instalments, it appears that the first respondent approached this Court by filing W.P.No.10512 of 1989 seeking release of the power supply unconditionally. Pursuant to the interim order granted in the said writ petition, the power supply was released on 29.11.1989. However, the writ petition was eventually dismissed on 27.02.1998 directing the first respondent to pay the charges as demanded. The first respondent also filed W.P.No.18359 of 1989 before this Court challenging the action of the Electricity Board in demanding payment of service line charges on the ground that the same was opposed to the policy of the Government in G.O.Ms.No.41, Energy, Environments and Science and Technology (PR.II) Department, dated 15.05.1986. These facts were set out by the Board in its counter to support its contention that there was no laxity on its part in the release of the power supply and that it was the first respondent itself that was to blame for the delay. The sheet anchor of the first respondent’s case before the learned single Judge was that the Board could not decline 25% rebate on power tariff for three years by operation of the principle of ‘promissory estoppel’. This argument found favour with the learned single Judge, who accordingly allowed the writ petition holding that the first respondent was eligible to be given the rebate under the incentive scheme. Sri O.Manohar Reddy, learned counsel for the appellant- Transco, stressed upon the facts to demonstrate that the first respondent was involved in litigation at every turn, be it for registration as a Small Scale Industry or for availing power supply and owing to the same, it could not commence commercial production before the issuance of G.O.Ms.No.379 dated 27.07.1989. Once the said G.O. was issued, the first respondent lost its eligibility to claim the concession given under G.O.Ms.No.654 dated 13.07.1976. The learned counsel contended that the principle of promissory estoppel and the judgments cited in this regard had no role to play, as the first respondent did not commence commercial production before the relevant date, i.e., 27.07.1989. On the said date, the first respondent was declared ineligible to claim such benefit vide G.O.Ms.No.379 dated 27.07.1989 and could not thereafter be permitted to turn back the clock. Per contra, Sri D.V.Nagarjuna Babu, learned counsel for the first respondent, argued that the Unit was ready to commence operations as early as in March, 1989 and that it was only due to the delay on the part of the Board in releasing the power supply that it could not commence commercial production. The learned counsel therefore asserted that the first respondent could invoke the doctrine of promissory estoppel against the Board and the Government, and insist on the concession promised to it under the scheme embodied in G.O.Ms.No.654 dated 13.07.1976. The learned counsel pressed into service a catena of decisions in support of his contention. The established facts of the case clearly demonstrate that the first respondent did not commence commercial production till 08.12.1989. The same was crucial to avail the 25% rebate under G.O.Ms.No.654 dated 13.07.1976, as the said concession was time bound, being relatable to a period of three years from the date the Unit went into regular production. In the meanwhile, the Government revised its policy by excluding certain industries from availing the said concession by issuing G.O.Ms.No.379 dated 27.07.1989. Admittedly, the first respondent fell in the newly excluded categories of industries. Had the first respondent Unit commenced its commercial production prior to 27.07.1989, the matter would have been otherwise. In such a case the first respondent could have asserted its entitlement to receive the concession, notwithstanding its subsequent inclusion in the list of excluded industries. However, the first respondent failed to commence its commercial production before the issuance of G.O.Ms.No.379 dated 27.07.1989. The details put forth by the Electricity Board clearly demonstrate that the first respondent had failed to make the payments required by the Board for release of the power supply and was, on the other hand, involved in litigation before this Court. In such circumstances, the first respondent cannot seek to lay the blame upon the Board for the delay in release of its power supply and consequently, in the commencement of its production. It is to be noted that this Court directed release of power supply by way of its interim order in W.P.No.10512 of 1989, but eventually the said writ petition was dismissed directing the first respondent to pay the required charges. It is also to be noticed that the registration of the first respondent as a Small Scale Industrial Unit for establishing an industry in the backward areas of Andhra Pradesh was for enabling it to seek the 10% outright subsidy in terms of the policy of the Government of India. The first respondent failed to prove that it had established the industry, acting only upon the promised concession of 25% rebate on the power tariff held out by the Government of Andhra Pradesh under G.O.Ms.No.654 dated 13.07.1976. Further, as it had not gone into commercial production prior to the withdrawal of the concession in so far as mini steel plants are concerned, the question arises as to whether the first respondent could seek the protection of the doctrine of promissory estoppel. Where one party by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place and this would be so irrespective of whether there is a pre-existing relationship between the parties or not. This is the principle of promissory estoppel. It is an equitable principle evolved by the Courts for doing justice. However, what is crucial is that the party to whom the promise has been made should have acted upon the same. In the present case, the first respondent Unit did not commence commercial production before the withdrawal of its eligibility. Further, as pointed out supra, there is no evidence that the establishment of the first respondent Unit was on the basis of the concession held out in G.O.Ms.No.654 dated 13.07.1976. Therefore, the very basis for invocation of ‘promissory estoppel’ is not made out, as the first respondent did not ‘act’ in pursuance of the promised concession, be it by establishing the unit or by commencing production before the relevant date. Now, the case law cited by Sri D.V.Nagarjuna Babu, learned counsel for the first respondent. In HITECH ELECTROTHERMICS & HYDROPOWER LTD. V/s. STATE OF KERALA[1], the Supreme Court was dealing with the question whether an industrial unit could claim the benefit of concessional tariff under the policy of the Government notwithstanding the fact that there was delay in production, such delay being attributable to the inaction on the part of the Board in providing the necessary electricity connection. The Supreme Court came to the finding that the industrial unit was denied power supply in appropriate time which prevented it from starting commercial production by the cut- off date to claim the eligibility for the concessional power tariff and accordingly held that the unit was entitled to grant of concessional tariff. In MARUTHI STEELS (P) LTD., ANANTHAPUR V/s. GOVT. OF A.P.[2], the industrial unit claimed benefit under G.O.Ms.No.375 dated 23.08.1985, whereby it was eligible to claim 25% power rebate for a period of five years. The industrial unit was given the benefit of the concession for the initial three years but was thereafter denied on the ground that it was included in the list of ineligible industries under G.O.Ms.No.379 dated 27.07.1989. The learned Judge, having referred to the judgment of the Supreme Court in A.P.S.E.B. V/s. M/s. SARADA FERRO ALLOYS LIMITED[3], observed that G.O.Ms.No.379 dated 27.07.1989 was not retrospective and that any unit which went into production prior to 27.07.1989 was entitled to the benefit of G.O.Ms.No.375 dated 23.08.1985 as against the Government. The unit, however, had gone into production on 13.11.1989 i.e. after the promulgation of G.O.Ms.No.379 dated 27.07.1989 and the learned Judge was of the opinion that if the said G.O. was taken as the basis to determine the rights of the parties, the unit had no justiciable right under the policy. But, the learned Judge was of the opinion that the doctrine of promissory estoppel would operate against the authorities as the unit had completed all the formalities and complied with all the conditions of both the Electricity Board and the Government by 25.03.1989, but it was only owing to the reticent attitude on the part of the Electricity Board that the unit could not go into production. The learned Judge took note of the fact that there were no laches on the part of the unit after 25.03.1989 and before the promulgation of G.O.Ms.No.379 dated 27.07.1989, with regard to commencement of production. The learned Judge observed that the unit was able to demonstrate that it was ready to commence production in the month of March, 1989 but was prevented from doing so due to the conduct of the Electricity Board in not energising the unit. The learned Judge also took note of the fact that it was on the basis of the promise/assurance by the Government under the scheme that the first respondent had obtained loans from financial institutions. It was in these circumstances that the learned Judge held that the ingredients of promissory estoppel were fulfilled and accordingly extended the benefit of the concessional tariff to the industrial unit. Both the above cases are distinguishable from the present case, wherein the established facts demonstrate that the first respondent was itself at fault for the delay in the release of the power supply and a clean chit cannot be given to it as was given to the industrial units in the two aforestated decisions. In SHRIJEE SALES CORPORATION V/s. UNION OF INDIA[4], the Supreme Court spelt out the scope and ambit of the principle of promissory estoppel. The Court observed that in public interest, an exemption could be granted and in public interest, the exemption could be rescinded. Therefore, the rights of individuals were subordinated to the paramount interest of the public good. The Supreme Court further observed that though the principle of promissory estoppel would be applicable against the Government, if there was a supervening public equity the Government would be allowed to change its stand and withdraw from the representation made by it earlier. The Court also dealt with the question whether an exemption notified without specifying the period within which it would remain in force could be withdrawn in public interest but not one in which a period has been so specified. The Court observed that when once public interest was accepted as the superior equity to override individual equity, the principle would be applicable even in cases where a period has been indicated. In such a case, the Government would be competent to resile from a promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. In the present case, the exemption claimed by the first respondent hinged upon its commencement of commercial production. The first respondent, owing to its own delays and actions, was responsible for the fact that the electricity service connection was not provided to it enabling commencement of its commercial production, before the promulgation of G.O.Ms.No.379 dated 27.07.1989. Once the said G.O. came into effect, the eligibility of the first respondent stood extinguished as it was included in the list of ineligible industries. As there was a change in the policy and prior to such change, the first respondent’s eligibility had not crystallized, the principle of promissory estoppel has no application. In M/s. V.K. FERRO ALLOYS INDUSTRIES PVT. LTD., V/s. THE A.P. STATE ELECTRICITY BOARD[5], a Division Bench of this Court was concerned with the exclusion of an industrial unit from the list of eligible industries to receive 25% concession in power tariff. This exclusion was effected by G.O.Ms.No.379 dated 27.07.1989. The industrial unit in the said case claimed the rebate in the power tariff basing on G.O.Ms.No.654 dated 13.07.1976. The Division Bench took note of the fact that the industrial unit in that case had commenced regular production from 16.09.1988 i.e. before the issuance of G.O.Ms.No.379 dated 27.07.1989 declaring it to be an ineligible industry, and therefore held that the said G.O. being prospective in nature, could not be applied to the said industrial unit. The above case is distinguishable from the case on hand as the first respondent did not commence commercial production prior to the issuance of G.O.Ms.No.379 dated 27.07.1989. I n M/s. SREE RAYALASEEMA ALKALIES & ALLIED CHEMICALS LTD., V/s. GOVERNMENT OF ANDHRA PRADESH[6], the issue before a Full Bench of this Court was whether the doctrine of promissory estoppel could be invoked against the Government compelling it to act contrary to the obligation or duty imposed by statute. Reference was made therein to the Judgment of the Supreme Court in VASANTKUMAR RADHAKISAN VORA V/s. BOARD OF TRUSTEES OF THE PORT OF BOMBAY[7], where the Supreme Court stated as under: "it is equally settled law that promissory estoppel cannot be used compelling the Government or a public authority to carry out a representation or promise which is prohibited by law or which was devoid of the authority or power of the officer of the Government or the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield place to the equity, if larger public interest so requires, and if it can be shown by the Government or public authority, for having regard to the facts as they have transpired that it would be inequitable to hold the Government or public, authority to the promise or representation made by it. The Court on satisfaction would not, in those circumstances raise the equity in favour of the persons to whom a promise or representation is made and enforce the promise or representation against Government or the public authority. " The Full Bench held that the doctrine of promissory estoppel could not be invoked in the face of statutory provisions governing the situation and that the Government could not be compelled by the invocation of the said doctrine to act contrary to the provisions of the statute. What was stated by the Full Bench with regard to the doctrine of promissory estoppel not being enforceable against statutory provisions holds good for policy decisions also. Once the Government took a bona fide policy decision to include certain industries in the list of ineligible industries, the first respondent, being one such industry, can no longer claim entitlement to the concession. It is relevant to note that the learned single Judge, while allowing the writ petition, drew support from the judgment of this Court in M/s. SHARADA FERRO ALLOYS LTD. (W.P.No.8932 of 1991 and W.A.No.1271 of 1991). It is however to be noticed that the judgment in the said case was reversed by the Supreme Court in A.P.S.E.B. V/s. M/s. SHARADA FERRO ALLOYS LTD.3. Therein, the industrial unit claimed concession of 25% power tariff which was subsequently withdrawn. This Court allowed the writ petition filed by the industrial unit claiming continuance of the concession after such withdrawal, on the ground that the industrial unit had acted upon the representation made by the Electricity Board and the State Government and therefore, the doctrine of promissory estoppel was attracted. However, the Supreme Court was of the view that the doctrine of promissory estoppel was not applicable to the facts and circumstances of the case as the promise or representation held out by the Board/State Government was directly linked with the date of commencement of production by the Company and as it was an admitted fact that the industrial unit commenced production after the withdrawal of the incentive, it could not claim eligibility. The Court observed that even if a promise or representation was made, the doctrine of promissory estoppel would not be attracted if the company failed to act upon such promise or representation. The Court further observed that only those industries were entitled to the benefit of the incentive, who fulfilled the requirements during the period the incentive was operative. This decision is squarely applicable on all fours to the present case as the first respondent failed to commence production before the operative date and therefore, its eligibility to claim the concessional tariff did not crystallize by the time the said rebate was withdrawn from it under G.O.Ms.No.379 dated 27.07.1989. The judgment of the Supreme Court in POURNAMI OIL MILLS ETC. V/s. STATE OF KERALA[8] has no application to the present case. In that case, the concessions given to the industries in pursuance of the prior order were sought to be withdrawn under the second order. The Supreme Court, having found that the industries had been set up prior to the issuance of the second order, held that they would be entitled to the exemption extended and/or promises made under the earlier order for the full period. In the present case, the first respondent failed to secure its entitlement for the 25% rebate by the time its eligibility was withdrawn under G.O.Ms.No.379 dated 27.07.1989. It cannot therefore draw parity with the industries before the Supreme Court in POURNAMI OIL MILLS. In M/s. MOTILAL PADAMPAT SUGAR MILLS CO. LTD., V/s. THE STATE OF UTTAR PRADESH[9], the Supreme Court considered the meaning of ‘promissory estoppel’. The observations of the Supreme Court in this regard are apposite: “… But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is