* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NO. 9986 OF 1999 % Dated 15.02.2007 # M/s.Penna Cement Industries Ltd., Regd. Office at Plot No.703, Sriniketan Colony, Road No.3, Banjara Hills, Hyderabad-500 034 Rep. by its Managing Director, Sri P.Prathap Reddy, …. Petitioner Vs. $ 1 Government of Andhra Pradesh, Rep. by its Secretary, Energy Department Secretariat, Hyderabad and 4 others …. Respondent ! Counsel for the Petitioner: Sri S.R.Ashok, Learned Senior Counsel ^ Counsel for the Respondents: G.P. for Industries for respondents 1 to 3 Sri O.Manohar Reddy, SC for respondents 4 and 5 <GIST: > HEAD NOTE: ? Cases referred [1] (2004) 6 SCC 465 2 1993 AIR SCW 1496 = AIR 1993 SC 1521 3 (1979) 2 SCC 409 4 (1996) 5 SCC 268 5 AIR 1968 SC 718 6 (2007) 5 SCC 447 7 (2005) 1 SCC 625 8 (2008) 7 SCC 353 9 (2002) 2 SCC 188 10 AIR 1998 SC 591 11AIR 1997 SC 3910 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE NINTH DAY OF APRIL TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT PETITION NO : 9986 of 1999 Between: M/s.Penna Cement Industries Ltd., Regd. Office at Plot No.703, Sriniketan Colony, Road No.3, Banjara Hills, Hyderabad-500 034 Rep. by its Managing Director, Sri P.Prathap Reddy, ..... PETITIONER AND 1 Government of Andhra Pradesh, Rep. by its Secretary, Energy Department Secretariat, Hyderabad. 2 Government of Andhra Pradesh Rep. by its Secretary, Industries & Commerce Department, Secretariat, Hyderabad. 3 Commissioner of Industries, Government of Andhra Pradesh, Hyderabad. 4 The Director, TRANSCO, Hyderabad. 5 The Superintending Engineer (Opn), TRANSCO, Anantapur, .....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 Writ of Mandamus or any other Writ or order or direction; A. i) declaring G.O.Ms.No.117 Industries & Commerce (IFR) Dept., Dt:17-3-1993 to the extent of clause-14 is illegal, arbitrary and without jurisdiction and aside the same. ii) or in alternative declare that clause-14 of the said G.O. is applicable to the industries which are set up on or after 3-10-92 and consequently G.O.Ms.No.117 Dt:17-3-93 has no application to the petitioner industry. B. and further declare that the order of the G.M, DIC, Anantapur in so for as restricting the power tariff rebate in a sum of Rs.50 lacs as illegal, without jurisdiction and accordingly set aside the order No.5399/B4/94 Dt:3-9-94 passed by DIC to the extent imposing of ceiling on power tariff rebate. C. declare the order of the Governments (2nd Respondent) letter No.3906/I.P/A3/95-2 Dt:21-6-1995 as illegal, without jurisdiction, inoperative and violative of G.O.654 Dt:13- 7-1976 and direct the respondent to extend the benefit of power rebate at 25% on the agggregate power bills for the initial period of 3 years without imposing monitory ceiling of Rs.50 lacs and direct repondents to refund forth with to the petitioner the excess amount collected by the respondent board together with interest at 18% per annum from the date of remittance till refund and fund Counsel for the Petitioner:MR.P.VASUDEVA REDDY Counsel for the Respondent No.: GP FOR ENERGY The Court made the following : THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO: 9986 of 1999 ORAL ORDER: The petitioner, a cement manufacturing company, seeks to have Clause 14 of G.O.Ms.No.117 dated 17.03.1993 declared as illegal, arbitrary and without jurisdiction or in the alternative for a declaration that Clause 14 of the said G.O. is applicable only to industries set up on or after 03.10.1992 and that G.O.Ms.No.117 dated 17.03.1993 has no application to the petitioner – industry. Petitioner seeks a further declaration that the order of the General Manager, District Industries Centre, Anantapur, in so far as he had restricted the power tariff rebate to Rs.50.00 lakhs, was illegal and without jurisdiction. Petitioner also seeks to have the order of the Government dated 21.06.1995 declared as illegal, without jurisdiction, inoperative and violative of G.O.Ms.No.654 dated 13.07.1976, for a direction to the respondents to extend the benefit of power rebate at 25% on the aggregate power bills of the petitioner company for the initial period of three years without imposing a monetary ceiling of Rs.50.00 lakhs and to forthwith refund the excess amount collected by them together with interest at 18% per annum. Facts, in brief, are that the Government of A.P. issued orders, in G.O.Ms.No.654 dated 13.07.1976, declaring, among others, that newly set up industries would be entitled to a power rebate of 25% in the initial period of three years after commencement of production. The A.P. State Electricity Board, (hereinafter referred to as ‘the Board’), issued B.P.Ms.No.689 extending the said benefit to industries set up in specified areas. G.O.Ms.No.498 dated 16.10.1989 was issued by the Government and thereunder entrepreneurs setting up new industries, other than those listed in the Annexure, were entitled to the incentives specified therein, provided the industries were set up on or after 03.10.1989 and went into commercial production before 31.03.1995. The Government published a brochure titled “Industrial Clearances”, in December, 1991, wherein the incentives, available to entrepreneurs establishing industries in the State, were detailed to include power subsidy, at 25% of the power tariff, in terms of G.O.Ms.No.654 dated 13.07.1976. The Government introduced a new comprehensive scheme of state incentives in G.O.Ms.No.117 dated 17.03.1993 which was in operation from 03.10.1992 to 31.03.1997. Under this G.O, all new industries, other than those listed in Annexure I and those set up in municipal corporation areas of Hyderabad, Vijayawada and Visakhapatnam, were eligible for 25% rebate in power bills for a period of 3 years from the date of commencement of commercial production subject to a maximum admissible rebate of Rs.50.00 lakhs in respect of large and medium industries and Rs.30.00 lakhs in respect of small scale industries. This was confirmed by the Board, vide B.P.Ms.No.51 dated 24.05.1993, wherein, under para 3(ii), the Board put a ceiling for power rebate as specified in G.O.Ms.No.117 dated 17.03.1993. Petitioner would submit that, during the period 1985 to 1992, the Board was extending power tariff concessions to all industries set up in the Andhra Pradesh except to certain specified industries listed in the Annexure to G.O.Ms.No.498 dated 16.10.1989, that the directions issued by the Government were binding on the Board, that the Board had accepted the directions in G.O.Ms.No.654 dated 13.07.1976 and had issued proceedings from time to time extending the said incentives, that, until the Government issued G.O.Ms.No.117 dated 17.03.1993, this incentive, of 25% rebate on the total power tariff, continued to hold the field and that all industries situated in Andhra Pradesh were extended the said benefit of power subsidy. According to the petitioner, industries which had been set up prior to 03.10.1992, pursuant to G.O.Ms.No.375 dated 23.08.1985 or G.O.Ms.No.498 dated 16.10.1989, continued to be governed by G.O.Ms.No.654 dated 13.07.1976 and B.P.Ms.No.689 dated 17.09.1975 in respect of power rebate, that the restrictive ceiling, subsequently specified in G.O.Ms.No.117 dated 17.03.1993, could not be made applicable to such industries, that, relying on the representation of the Government in G.O.Ms.No.654 dated 13.07.1976, G.O.Ms.No.498 dated 16.10.1989 and the brochure titled “Industrial Clearances”, they had established a cement manufacturing industry in Tadipatri, Anantapur District, which was notified as industrially the most backward area in Andhra Pradesh, that the said modern cement plant was established in medium scale with a capacity outlay of Rs.62.80 crores, that the General Manager, District Industries Centre, Anantapur, had issued registration certificate to the petitioner on 14.04.1992 on the basis of the application submitted by them on 06.03.1992, that the petitioner had acquired 87 acres of land at a cost of Rs.14.37 Lakhs between March, 1992 and June, 1992 and had paid Rs.59.89 Lakhs for purchase of machinery during the said year, that the petitioner had taken various steps for appointment of technical and financial personnel, that they had got the land alienated in their favour from appropriate agencies and had obtained provisional power sanction for 6000 KVA from the Board in the year 1992. Petitioner claims to have spent Rs.1231.72 Lakhs for purchase and improvement of the land, civil works, purchase and erection of machinery during the period between 04.10.1992 and 17.03.1993. They would submit that, while trial production began on 10.08.1994, commercial production commenced on 01.09.1994, that they satisfied the requirements of G.O.Ms.No.498 dated 16.10.1989 and were entitled to such of the incentives that were issued during the relevant period including the one covered by G.O.Ms.No.654 dated 13.07.1976 as they did not figure in the excluded categories mentioned in the Annexure. Petitioner also contends that any application of the restrictive conditions in G.O.Ms.No.117 dated 17.03.1993 would amount to its enforcement with retrospective effect, that the 2nd respondent had issued orders dated 21.06.1995 informing them that the eligibility certificate issued by the General Manager, District Industries Centre, restricting the ceiling on power tariff to Rs.50.00 lakhs, was valid as the petitioner unit had commenced commercial production on 01.09.1994 i.e, after G.O.Ms.No.117 was issued, that, aggrieved thereby, they made another representation to the 2nd respondent on 17.07.1995 contending that Chapter V of the industrial clearance standard norms and procedures specified that power tariff concession shall be extended without any ceiling limit in terms of G.O.Ms.No.654 dated 13.07.1976 and as such the petitioner industry, which was set up pursuant to the said representation made by the Government, was entitled to the benefit of 25% rebate on power tariff without any ceiling limit, more so as the unit was set up during the period when G.O.Ms.No.498 dated 16.10.1989 was holding the field. Petitioner would also contend that applying the conditions, incorporated in G.O.Ms.No.117 dated 17.03.1993, to units which had already come into existence by the said date was arbitrary and unfair. They would submit that the action of the Board, in restricting power rebate to Rs.50.00 lakhs, was arbitrary and violative of Article 14, that the Board, having allowed them to arrange their affairs relying on the representation, was estopped from denying the benefit, that the doctrine of promissory estoppel would apply and that the respondent authorities were duty bound to extend the benefit of power rebate at 25% for the initial period of 3 years, without the ceiling limit of Rs.50.00 lakhs, as the petitioner had taken all necessary steps to set up the industry before 03.10.1992 or, at any rate, before G.O.Ms.No.117 dated 17.03.1993 was issued. Petitioner would submit that they had acquired a vested right of being granted the incentives specified in G.O.Ms.No.654 dated 13.07.1976 and G.O.Ms.No.498 dated 16.10.1989 read with B.P.Ms.No.689 dated 17.09.1975, that such a vested right could not be unsettled or disturbed when the State’s agencies had no power to issue orders with retrospective effect, more so, when such orders had an impact or affected the rights of a citizen, that, since a vested right accrued to the petitioner by reason of its taking steps to set up its unit prior to 03.10.1992 when G.O.Ms.No.498 dated 16.10.1989 was holding the field, its right could not be unsettled or disturbed by any order subsequently issued by the Government and it was, therefore, reasonable that the restrictive ceiling limit imposed in G.O.Ms.No.117 dated 17.03.1993 would apply only to such of those industries which took steps to set up the industry after 17.03.1993. According to the petitioner, G.O.Ms.No.117 dated 17.03.1993, when reasonably construed, would apply only to entrepreneurs who took steps to set up an industry after 17.03.1993 and not to those who had already taken steps to set up an industry prior thereto, that, based on the brochure ‘Industrial Clearance’, published by the Government, the petitioner had arranged its affairs accordingly and that the respondents, having represented and allowed the petitioner to arrange its affairs, should not prevaricate from its stated position to the petitioner’s detriment. Petitioner would contend that, since they had commenced production by 01.09.1994 i.e., before the specified date stipulated in G.O.Ms.No.498 dated 16.10.1989, it should not be excluded from the purview of the said G.O. or G.O.Ms.No.654 dated 13.07.1976, that, at any rate, the petitioner industry could not be classified as falling within the purview of G.O.Ms.No.117 dated 17.03.1993 and that they should not be deprived of the incentives under G.O.Ms.No.654 dated 13.07.1976. They would also claim to have structured their sale price on produced cement keeping in mind these incentives, that deprivation of such a substantial incentive had resulted in huge loss and that the excess amount of Rs.4.23 Crores collected from the petitioner was liable to be refunded to them. In his counter affidavit, filed on behalf of respondents 2 and 3, the Assistant Director of Industries would submit that the petitioner had commenced commercial production on 01.09.1994 and had applied for an essentiality certificate for 25% CPT on 03.09.1994, that the eligibility certificate, for availing power concession, was issued in terms of G.O.Ms.No.117 dated 17.03.1993 vide letter dated 03.09.1994, that by letter dated 21.06.1995 the petitioner was informed that the eligibility certificate, issued by the District Centre restricting the ceiling on power tariff to a limit of Rs.50.00 lakhs, was valid and held good, that the brochure published by the department was merely informative and did not confer any right to claim the benefits mentioned therein, that the petitioner was granted eligibility certificate under G.O.Ms.No.117 dated 17.03.1993, that 25% power concession was not part of the scheme announced in G.O.Ms. 498 dated 16.10.1989, that they could not claim the incentive without any ceiling, that the petitioner had set up their unit in a backward district, not because incentives were offered by the Government, but as abundant raw material was available there. In the counter affidavit filed on behalf of respondents 4 and 5, it is stated that while, under B.P.Ms.No.152 dated 13.02.1978, 25% rebate was allowed to certain specified industries for a period of 3 years from the date of going into regular production, revised orders were issued in B.P.Ms.No.51 dated 24.05.1993 restricting the rebate to Rs.50.00 lakhs and Rs.30.00 lakhs as the case may be, that the said orders were effective from 24.05.1993, that an industry was eligible for rebate without ceiling limit only when it was in operation, that the petitioner could not expect the Board to keep the incentives open till it started production, that the rebate was directly linked with the date of commencement of production, that the petitioner had taken H.T. supply on 17.07.1994, that, by the time regular production was commenced on 01.09.1994, both the orders of the Government, in G.O.Ms.No.117 dated 17.03.1993, and B.P.Ms.No.51 dated 24.05.1993 had come into force and a ceiling was fixed on the quantum of rebate, and that the petitioner was, therefore, sanctioned 25% rebate with effect from 01.09.1994 with the ceiling limit vide proceedings dated 18.11.1994. In the additional counter affidavit filed on behalf of respondents 4 and 5, it is stated that G.O.Ms.No.498 dated 16.10.1989 related to incentives offered on investment subsidy, deferment of sales tax etc., and not to electricity charges, that the petitioner’s contention that they were entitled to 25% rebate for energy charges, in terms of G.O.Ms.NO.498 dated 16.10.1989 and G.O.Ms.No.375 dated 23.08.1985, was misconceived, that in B.P.Ms.No.51 dated 24.05.1993 it was made clear that 25% power rebate would be available to units which commenced commercial production by 31.03.1997, that it was clarified in para 4 of the said proceedings that the orders would come into force with immediate effect, that industries which commenced production after 25.04.1993 were subjected to the monetary restriction prescribed in B.P.Ms.No.51 dated 24.05.1993 within the 3 year period, and, as the petitioner’s unit commenced commercial production thereafter, they were subjected to the monetary restrictions in availing power subsidy. It is stated that G.O.Ms.No.117 dated 17.02.1993 and B.P.Ms.No.51 dated 24.05.1993 were prospectively applied to industries which commenced production after B.P.Ms.No.51 dated 24.05.1993 was issued, that the petitioner was not a unit entitled for 25% power subsidy for any year during which it was in the process of establishment and that it was entitled to power rebate only after it started commercial production. It is further stated that the Board realized in the year 1975 that industrial growth was necessary to create reliable consumers from whom sizeable revenues would be achieved and, with this objective and to encourage the developers to establish industries in the State, the Board had announced 25% power rebate, that, as the Board was incurring losses, it had no alternative but to restrict the pecuniary limit and, therefore, the petitioner could not raise any grievance against B.P.Ms.No.51 dated 24.05.1993. Sri S.R.Ashok, Learned Senior Counsel appearing for the petitioner company, would submit that G.O.Ms.No.117 dated 17.03.1993 was inapplicable to the petitioner as it applied only to new units which came into existence after 03.10.1992, that G.O.Ms.No.498 dated 16.10.1989 held the field till then, that the petitioner had fulfilled both the inner and outer time limit specified in G.O.Ms.No.498 dated 16.10.1989, that the respondents had made a promise based on which the petitioner had arranged its affairs, that the promise made could be altered by the respondents provided only that such an alteration was dictated by public interest, that there was neither a plea in the counter affidavit nor was there any evidence to suggest that the benefit, or denial, under G.O.Ms.No.117 dated 17.03.1993, was to be made applicable to enterprises which had come into existence before 03.10.1992, that, if the said G.O. was held applicable to industries which came into existence during the subsistence of G.O.Ms.No.498 dated 16.10.1989, it would amount to giving retrospective operation to G.O.Ms.No.117 dated 17.03.1993 which was impermissible, that para 14 of G.O.Ms.117 dated 17.03.1993 was applicable only to units born/which came into existence after the said G.O. was issued and this was also evident from para 15 of the said G.O., that the said G.O. would only apply to industries which had taken steps to set up their units after 03.10.1992, that subsequent orders had to be read in the light of the understanding of the Government as reflected in the earlier G.Os, that executive power could not be exercised retrospectively, that the respondents were estopped from denying the benefit under G.O.Ms.No.654 dated 13.07.1976, that the respondents could not withdraw the benefits available under G.O.Ms.No.654 dated 13.07.1976 by way of G.O.Ms.No.117 dated 17.03.1993 as it affected the vested rights of the petitioners, that no public interest was involved in withdrawing the concession available under G.O.Ms.No.654 dated 13.07.1976 or in placing a monetary limit on such a concession by way of a subsequent G.O. and that Clause 14 of G.O.Ms.No.117 dated 17.03.1993 should be made applicable only to units set up after 03.10.1992. Learned Senior counsel would place reliance on State of Punjab vs. Nestle India Ltd[1]. Learned Government Pleader for Industries would submit that, since the petitioner unit went into commercial production and an eligibility certificate was issued to them subsequent to issuance of G.O.Ms.No.117 dated 17.03.1993, their entitlement for power rebate was rightly considered only in terms of G.O.Ms.No.117 dated 17.03.1993, that G.O.Ms.No.498 dated 16.10.1989 provided certain incentives such as investment subsidy and sales tax deferment and did not provide for the incentive of power rebate and, on the other hand, the incentives under G.O.Ms.No.117 dated 17.03.1993 included rebate in energy charges. Learned Government Pleader would submit that, while G.O.Ms.No.654 dated 13.07.1976 provided for 25% power rebate without monetary limit, the petitioner unit had started commercial production only after G.O.Ms.No.117 dated 17.03.1993 had come into force and, accordingly, their entitlement for being extended the benefit of power rebate could only be granted in terms of G.O.Ms.No.117 dated 17.03.1993 and not the earlier orders in G.O.Ms.No.654 dated 13.07.1976. Sr i O.Manohar Reddy, Learned Standing Counsel for A.P.TRANSCO, would submit that, even for claiming the benefit of power rebate under G.O.Ms.No.654 dated 13.07.1976, applications were required to be submitted within six months of the unit having commenced commercial production, that the emphasis placed in G.O.Ms.No.654 dated 13.07.1976 was also on the date on which the unit went into commercial production, that the brochure relied upon by the petitioner was issued prior to G.O.Ms.No.117 and provided for power tariff concession in terms of G.O.Ms.No.654 dated 13.07.1976, that, even in the said brochure, the procedure prescribed for claiming incentives was that the claim application should be made within six months from the date of commencement of commercial production and, since the petitioner commenced commercial production on 01.09.1994, which was more than a year after G.O.Ms.No.117 dated 17.03.1993 was issued, the petitioner’s case was rightly considered in terms of the said G.O. and not on the earlier G.Os. Learned Counsel would submit that G.O.Ms.No.498 dated 16.10.1989 had no application as it related to incentives other than power rebate. He would submit that the respondents had made no promise to the petitioner to grant them 25% power rebate without monetary limit and as such the doctrine of promissory estoppel had no application. He would rely on A.P. State Electricity Board vs. M/s.Sarada Ferro Alloys Ltd.[2] in this regard. Under G.O. Ms. No. 498 dated 16.10.1989, the State Government decided to extend certain concessions to industries set up in the State of Andhra Pradesh. The concessions related to investment subsidy and deferment/tax holiday on sales tax. Under para 9 of the said G.O, it was made clear that separate orders would be issued with regard to concessions on power tariff. Admittedly, no orders were issued, thereafter, in this regard. Para 10 of the said G.O. provides that only new industrial units, which held valid registration/letters of intent, and had taken steps on or after 03.10.1989 for project implementation such as applying for project finance, placing orders for any part of the machinery, commencement of construction etc., would be eligible for those concessions, provided they went into commercial production before 31.03.1995. The concessions in G.O. Ms. No.498 dated 16.10.1989 were to be in force till 02.10.1992. While the petitioner may have satisfied the conditions prescribed in para 10 of G.O.Ms.No.498, of having set up the unit during the period 03.10.1989 to 31.03.1995, that would only enable them to claim the concessions prescribed in the said G.O., and, since power tariff concession did not fall within the ambit of the said G.O., G.O.Ms.No.498 cannot be relied upon by the petitioner in support of their claim to power tariff rebate. G.O.Ms.No.654, dated 13.07.1976 provides for 25% power tariff concession to all new industrial units, going into regular production on or after 01.01.1976, without any monetary ceiling. This concession in G.O.Ms.No.654 has also been referred to in the brochure published by the State government in 1991. Para V prescribes the procedure for claiming incentives and, thereunder, new industrial units eligible for the incentives should file their claim application in the prescribed form within six months from the date of commencement of commercial production. Thus, both under G.O.Ms.No.654 dated 13.07.1976, and the brochure issued by the Government, the date from which the industrial unit goes into commercial production is the relevant date for their entitlement for concession of power tariff. G.O.Ms.No.117 dated 17.03.1993 was brought into force retrospectively from 03.10.1992 and remained in force till 31.03.1997. The validity of retrospective operation, of G.O.Ms.No.117 dated 17.03.1993, from 03.10.1992 would have necessitated examination if the petitioner unit had gone into commercial production during the period from 03.10.1992 (when G.O.Ms.No.117 was brought into force), and 17.03.1993 (when G.O.Ms.No.117 was notified). It is not in dispute that the petitioner unit went into commercial production only on 01.09.1994, more than a year after G.O.Ms.No.117 was notified on 17.03.1993. It is, therefore, unnecessary for this Court to examine the question whether G.O.Ms.No.117 dated 17.03.1993 could have validly been given retrospective operation. Under G.O.Ms.No.117 dated 17.03.1993, the Government decided to introduce certain modifications in its earlier orders, (including G.O.Ms.No.654 dated 13.07.1976), in order to accelerate industrial development in the State. The concessions under the said G.O. included investment subsidy, deferment/tax holiday on sales tax and rebate in electricity charges. All industries, other than those listed in Annexure-I and those set up in Municipal Corporation areas of Hyderabad, Vijayawada and Visakhapatnam, were eligible for 25% rebate on