IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE NINETEENTH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION NO : 20776 of 2000 Between: M/s. Jairaj Ispat Limited, Rep. by it s Executive Director, Mr. N. Venkateswarlu, Polt No. 8, Phase III, IDA Jeedimetla, Hyderabad, Ranga Reddy District. ..... PETITIONER AND 1 The General Manager, District Industries Centre, Ranga Reddy District, Balanagar, Hyderabad. 2 The Commissioner of Industries, Government of Andhra Pradesh, Chiarag Ali Lane, Abids, Hyderabad. 3 The Government of Andhra Pradesh, Rep.by its Principal Secretary (industries) Secretariat, Hyderabad. .....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 issue a Writ or Order or direction more particularly one in the nature of a Writ of Mandamus declaring that the Petitioner is entitled to rebate in power tariff in respect of its expanded unit for the 4th & 5th year to be met out of the industries budget as provided in G.O.Ms.No. 375 dated 23/8/1985 and as recommended by the 1st Respondent and consequently direct the Respondents to release the amount of Rs. 47,33,122/- to the Petitioner towards 25% power tariff rebate for the 4th & 5th years together with interest at 18% per annum and pass such other order or orders as the Hon'ble Court May deem fit and proper in the circumstances of the case. Counsel for the Petitioner: MR.S.DWARAKANATH Counsel for the Respondents: GP FOR INDUSTRIES & COMMERCE The Court made the following : THE HON’BLE SRI JUSTICE VILAS V. AFZULPURKAR W.P.NO. 20776 OF 2000 ORDER: 1. This writ petition is filed questioning the decision of the respondents 2 and 3 in refusing to consider the claim of the petitioner for 25% power rebate in respect of its expanded unit for the 4th and 5th years. 2. The facts in brief are as follows, The Government of Andhra Pradesh had introduced a scheme of State Incentives for new Industries to be set up in Andhra Pradesh vide G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985. Under the said scheme, the Government had categorized the Intensive Industrial Development Areas into categories A & B. Under category A, three Intensive Industrial Development Areas were identified one each in Coastal Andhra Region, Telangana Region and Rayalaseema Region. Various concessions and incentives were offered to entrepreneurs who wished to set up industries in the said Intensive Industrial Development Areas. Under category B, 20 Growth Centres were identified which are the areas not covered by the Central Subsidy Scheme and the scheme of Intensive Industrial Development Areas enumerated under category A. Under this category B, certain incentives were offered viz., investment subsidy, concessional power tariff and deferment of sale tax. The first incentive-investment subsidy of 10% would be available on the fixed capital cost with a maximum of Rs.10.00 lakhs. The second incentive-concessional power tariff for initial 3 years would be provided by the Andhra Pradesh State Electricity Board and for last two years thereafter would be met from the Industries Budget. Third incentive-deferment of sales tax would be available up to a maximum of Rs.45.00 lakhs or 15% of the total value of the fixed assets of the unit. Under this scheme, it was necessary for the entrepreneurs to register with the Commissioner of Industries for claims for the incentives and prior approval of the Commissioner of Industries for the industrial units/lines of manufacture should be obtained under this scheme for the subsidy. Further all claims for subsidy were to be scrutinized by a committee as constituted under this scheme. 3. The petitioner’s case, on hand, is undisputedly referable to the industry set up at Medchal, Ranga Reddy district, which is one of the growth centers under category B, as identified in the aforesaid scheme and the petitioner claims that he is entitled to investment subsidy, concessional power tariff and deferment of sale tax, as envisaged under the above said scheme. In this writ petition we are concerned with incentive of conessional power tariff. The respondents have rejected the claim of the petitioner for concessional power tariff for the 4th and 5th years with respect to its expanded capacity. 4. An eligibility certificate for incentives was issued to the petitioner by the General Manager, District Industries Centre, Ranga Reddy district vide certificate No. 3235/F/86, dated 10.5.1986. Their expansion capacity was also approved and an eligibility certificate was issued to the petitioner vide certificate No. 3236/F/86, dated 4.6.1986 by the General Manager, District Industries Centre, Ranga Reddy district. Under the letter of General Manager, District Industries Centre, Ranga Reddy district in Lr.No. 1640/B2/92, dated 21.12.1992 the claim of the petitioner for 25% concessional power tariff for the 4th and 5th years’ production was recommended to the Commissioner of Industries, Government of Andhra Pradesh. The said recommendation was considered by the State Level Committee in its meeting held on 19.11.1993 and the committee had sanctioned Rs.56,11,410/- for original capacity of the petitioner’s unit as against the total claim of Rs.1,07,65,924/- and rejected rest of the claim as it related to expanded capacity. Thereafter, a substantial correspondence ensued between the petitioner and the respondents and ultimately the claim of the petitioner was finally rejected under the proceedings of the Commissioner of Industries, Hyderabad in Lr.No. 30/1/9/0861/0861/FD, dated 4.8.2000 on the following grounds, (1) that the petitioner’s unit commenced commercial production with effect from 26.11.1987 under second expansion and (2) the Andhra Pradesh State Electricity Board vide B.P.Ms.No. 946, dated 14.10.1987 had withdrawn 25% power tariff concession to mini steel plant with effect from 15.10.1987 and the Government had confirmed the same vide G.O.Ms.No. 379, Industries and Commerce Department, dated 27.7.1989. 5. The question, therefore, which arises for consideration is, “Whether the action of the respondents in refusing the claim of the petitioner for 25% power rebate for its expanded capacity with reference to 4th and 5th years’ production is justified? 6. I have heard Sri E. Manohar, learned senior counsel appearing for the petitioner and the learned Government Pleader for Industries appearing for the respondents. 7. It is contended by the learned senior counsel that withdrawal of the concessions by the Andhra Pradesh State Electricity Board under its B.P.Ms. No. 946, dated 14.10.1987 has no nexus with the relief sought for, inasmuch as even under the original scheme vide G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 though the industries were eligible for a concessional power tariff for a period of five years, only for initial three years was to be reimbursed by the State Electricity Board and later two years was to be met from the Industries Budget. The learned senior counsel, therefore, submits that the withdrawal of incentives by the State Electricity Board under the aforesaid subsequent proceedings of the State Electricity Board has no relevance while considering the eligibility of the petitioner for the concession relating to the 4th and 5th years’ production, which are, in any case, payable by the Industries Department. It is also contended by him that under the scheme vide G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 there was no such restriction or quantification with regard to the capacity of the unit and the bifurcation of the said capacity into original unit and expanded unit is not of any significance as long as both are registered with the Industries Department for claiming eligibility under the scheme of incentives. The learned counsel would submit that the original unit as well as expanded unit were duly issued eligibility certificates dated 10.5.1086 and 4.6.1986 respectively and further the petitioner’s unit continues to be a small scale unit and as such the denial of the said concessional power tariff for the 4th and 5th years with respect to expanded capacity is contrary to the incentives scheme under G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985. On the principles of promissory estoppel also, the learned counsel contends that the petitioner had already expanded the unit and completed the required process and achieved the required eligibility as evidenced by the eligibility certificates and as such the concessional power tariff ought to have been released by the Industries Department and the rejection of the said claim is not sustainable. The learned counsel has relied upon decisions of this Court reported in Maruthi Steels (P) Ltd., rep. by its Director Mawsood Khan Vs. Government of A.P., Industries & Commerce Department, Hyderabad rep. by its Secretary and others , Sanjay Alloys (P) Ltd., Moram, Chittoor Dist. Vs. Government of A.P., and others , A.P.S.E.B. Vidyut Soudha Vs. M/s. UNI Metal Alloys Ltd., , SHV Energy South East Limited Vs. State Investment Promotion Board, Hyderabad , A.P. State Electricity Board and others Vs. Sree Rayaaseema Alkalies and Allied Chemicals Ltd. a n d M/s. Vadilal Chemicals Ltd. Vs. The State of Andhra Pradesh and others . 8. On the other hand, the learned Government Pleader for Industries has relied upon counter affidavit filed by the Assistant Director of Industries wherein it is asserted that the petitioner was granted the incentives on the original unit in terms of G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 including the concessional power tariff for the 4th and 5th years’ production. The learned Government Pleader justifies the action of the respondents in limiting the said concessional power tariff to the original load of 2000 KVA and claims that as the A.P. State Electricity Board has withdrawn the concessions to which the industries were hereto eligible, and the Government was fully justified in rejecting the claim of the petitioner. 9. The counter-affidavit furnishes the details of the power drawn by the petitioner’s unit from the A.P. State Electricity Board which are as follows, (a) Original Power … 2000 KVA from 31.1.1985; (b) Additional Power … 1500 KVA from 15.3.1987 (1st expansion) © Additional Power … 1500 KVA from 26.11.1987 (2nd expansion) It is, however, accepted in the counter-affidavit that the petitioner had registered with the Industries Department and obtained registration certificate dated 4.6.1986 for the proposed first expansion and additional power of 1500 KVA was released with effect from 15.3.1987. However, the petitioner did not avail the first expansion as it was implemented with leased machinery. The learned Government Pleader, therefore, submits that the concessional power tariff to the original power load of 2000 KVA having been considered and released, no further grievance of the petitioner remains to be considered and he justifies the action of the Government impugned in this writ petition. 10. In the light of the above submissions of both sides, it is to be considered as to whether the claim of the petitioner is justified. The issuance of eligibility certificates dated 10.5.1986 and 4.6.1986 covering the expanded capacity as well, has been specifically admitted in the counter-affidavit of the respondents. Further the Industries Department has undisputedly recommended the petitioner’s claim for the said power rebate for the 4th and 5th years in respect of entire unit including the expanded capacity and all the required papers and documents were enclosed to the said recommendation and sent to the Commissioner of Industries. However, in the State Level Committee, the aforesaid recommendation for power rebate was restricted to the original capacity and excluded the power rebate for the expanded capacity from consideration. The Commissioner of Industries under his subsequent communication vide Memo No. 30/1/7/1143/1143/FD, dated 21.9.1998 has justified the said rejection on the ground that the original capacity of 2000 KVA was alone registered under SSI limits and the expanded capacity was not considered. He has also mentioned that the State Electricity Board having withdrawn the power rebate on 8.12.1987, the grant of power rebate for the 4th and 5th years’ production does not arise. Another reason that was given was that as per the registration certificate issued by the General Manager, District Industries Centre on 4.6.1986, the claim for incentives under NSIS had to be made within six months and the present claim is highly belated. Under the petitioner’s reply dated 2.11.1998 and 22.4.1999 the petitioner asserted that they have filed an application for sanction of power rebate for the 4th and 5th years’ production which included for the expanded capacity as well and the same was also recommended by the General Manager, District Industries Centre, Ranga Reddy district and the power subsidy was approved only with respect to original capacity and as such further correspondence ensued between the petitioner and the respondents with respect to the expanded capacity. It is, therefore, not as if that the claim is belated and in fact the original claim itself was a comprehensive claim covering the original capacity as well as expanded capacity. Secondly, it was pointed out that the withdrawal of concession by the A.P. State Electricity Board is relevant for the first three years alone, as that component was for the State Electricity Board to release. Since the aforesaid aspect was not subject mater of the claim of the petitioner, the withdrawal of the said concession by the A.P. State Electricity Board is completely irrelevant for considering the claim of the petitioner. The petitioner also mentioned that in view of the incentives offered by the Government, the petitioner went ahead with the expansion project and commenced production by investing huge amounts and also participated in the economic growth of the State. It was also clarified that the petitioner’s unit continues to be a SSI unit as has been certified by the Commissioner of Industries vide his letter being Lr.No.4243/DSK.3 (1)/88, dated 1.4.1992 as well as proceedings of the General Manager, District Industries Centre, Ranga Reddy district in Lr.Ref.No.4170/A2/91, dated 22.12.1992. It was also pointed out that A.P. State Electricity Board has already allowed the power rebate for first three years which covered the expanded capacity also. It is also claimed by the petitioner that the expansion of the project was well before the withdrawal of the concessions by the Government vide G.O.Ms.No. 379, Industries & Commerce (I.A.) Department, dated 27.7.1989 and the said expanded capacity had already become operational from 26.11.1987 itself. Thus the reasons given by the respondents under their proceedings dated 4.8.2000, as mentioned above, are clearly erroneous. The said ground mentioned by the respondents in support of their action for rejection has, therefore, to be held irrelevant consideration and the action of the respondents on that ground is liable to be declared unsustainable. 11. That the petitioner’s unit being SSI unit is not controverted and on the contrary there are proceedings of the respondents dated 1.4.1992 and 22.4.1992, referred to above, clearly support the same. Further the petitioner’s expanded capacity became operational even as early as on 26.11.1987 and the petitioner was granted eligibility certificates with respect to the said expanded capacity also, the claim of the petitioner, therefore, for the concessional power tariff for the 4th and 5th years’ production was clearly within the scheme envisaged under G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 and the denial of the same cannot be said to be justified on any ground. 12. In Maruthi Steels (P) Ltd., rep. by its Director Mawsood Khan Vs. Government of A.P., Industries & Commerce Department, Hyderabad rep. by its Secretary and others (1st supra) this Court had an occasion to consider the principles of promissory estoppel relevant to the very same G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 as well as G.O.Ms.No. 379, Industries & Commerce (I.A.) Department, dated 27.7.1989. In the said case, the petitioner got power connection on 22.1.1989 and started production on 13.11.1989 and was released the concession for the first three years by the A.P. State Electricity Board. However, the claim of the petitioner for the next two years was rejected by the Government on the basis of G.O.Ms.No. 379, Industries & Commerce (I.A.) Department, dated 27.7.1989 – just like in our present case –. This Court found that the concession of rebate of power tariff was available to cases where process of setting up of industry had started, expenditure was incurred and all requirements were fulfilled and though actual production started subsequent to withdrawal of benefit, the principles of promissory estoppel would still be available to the petitioner. On the facts of that case, the petitioner was disabled from starting the production as A.P. State Electricity Board prevented the same by withholding the power supply, but the petitioner having fulfilled all the requirements was found eligible. This Court had considered similar issue in extensio and found the petitioner eligible to the power rebate for the later two years from the Government. 13. In Sanjay Alloys (P) Ltd., Moram, Chittoor Dist. Vs. Government of A.P., and others (2nd supra) it was a case where in spite of the eligibility certificates were granted to the petitioner therein, the Electricity Board has wrongfully denied extension of the concessional tariff on the ground that the said concession was withdrawn by G.O.Ms.No. 379, Industries & Commerce (I.A.) Department, dated 27.7.1989. A Learned Singe Judge of this Court held that the said withdrawal has only prospective effect and cannot affect the industries established pursuant to the incentives promised by the Government which was binding on the Electricity Board as well. 14. A Division Bench of this Court in A.P.S.E.B. Vidyut Soudha Vs. M/s. UNI Metal Alloys Ltd., (3rd supra) was considering the withdrawal of 25% power rebate to the Mini Steel Plants. In that case also an industry was set up and was granted necessary eligibility certificate and the Electricity Board had extended the benefit, but later the Electricity Board had withdrawn the said benefit. It was held by this Court that the petitioner therein was entitled to power tariff for three years and the Electricity Board had no power to withdraw the power tariff contrary to its orders. 15. In SHV Energy South East Limited Vs. State Investment Promotion Board, Hyderabad (4th supra) was a case relating to denial of benefit of exemption under the Sales Tax Act as provided by the Government and challenging the action of the State in disqualifying the petitioner therein for the relief under the aforesaid policy decision on the ground that the petitioner had not taken up manufacture or commercial production in terms of the Government Order. On the facts of that case, a Division Bench of this Court found, after referring to a large number of cases, that there was no promise as such made by the State and it was found that the doctrine of promissory estoppel has no application to the fact situation therein. 16. In A.P. State Electricity Board and others Vs. Sree Rayaaseema Alkalies and Allied Chemicals Ltd. (5th supra) was a case where Andhra Pradesh State Electricity Board has changed the categories of high tension meters, but in view of the petitioner therein being eligible for the power concession, was held entitled to 25% power rebate and the change of categorization will have no effect on the incentives originally promised at the time of setting up of industry. 17. In M/s. Vadilal Chemicals Ltd. Vs. The State of Andhra Pradesh and others (6th supra) was a case arising under different fact situation where eligibility certificate issued by the Industries Department was cancelled by the Sales Tax authorities and the concessions to which the petitioner was eligible, were denied. 18. In the present case, G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 under which the scheme of incentives was announced as a policy of the Government, had envisaged a clear promise. It is also not disputable that the petitioner’s industry was set up at the growth centers identified under the aforesaid GO and the petitioner has incurred huge expenditure in setting up the industry and its expansion. The eligibility of the petitioner to the concessional power tariff for a total period of five years is also, in fact, not disputed and while the A.P. State Electricity Board had released its component of initial three years of concession for the original capacity as well as expanded capacity in part, the extension of the said incentive for the 4th and 5th years’ production was also granted by the Government, however, restricting it to the original capacity of the petitioner’s unit. The denial of the same with respect to the expanded capacity is, therefore, clearly covered by the principles of promissory estoppel as enunciated in the decisions referred to above. Further, G.O.Ms.No. 375, Industries and Commerce (I.A.) Department, dated 23.8.1985 as above, is neither restrictive nor differentiates between original and expanded capacity of industry. The case in Maruthi Steels (P) Ltd., rep. by its Director Mawsood Khan Vs. Government of A.P., Industries & Commerce Department, Hyderabad rep. by its Secretary and others (1st supra) is quite nearer, on facts, to the present case. Further the rejection of the petitioner’s eligibility on the irrelevant ground clearly shows that the respondents have relied upon irrelevant considerations and thereby the decision of the respondents is rendered arbitrary and unreasonable and deserves to be struck down in terms of the Article 14 of the Constitution of India. I am, therefore, of the view that the petitioner’s case for the concessional power tariff ought to have been favourably considered by the respondents. 18. Accordingly, the writ petition is allowed and the respondents are directed to consider the case of the petitioner in the light of the above observations and release the power rebate in favour of the petitioner within a period of one month from the date of receipt of a copy of this order. No costs. KR __________ 19.12.2008 ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1 The General Manager, District Industries Centre, Ranga Reddy District, Balanagar, Hyderabad. 2 The Commissioner of Industries, Government of Andhra Pradesh, Chiarag Ali Lane, Abids, Hyderabad. 3 The Principal Secretary (industries), Government of A.P., Secretariat, Hyderabad. 4.2 CCs to GP for Industries 5. 2 CD copies Form-NIC-OGS/WP{SAM}