wp214-11(corrected).doc 1 IN THE HIGH COURT OF BOMBAY AT GOA PANAJI, GOA APPELLATE SIDE WRIT PETITION NO.214 OF 2011 ALONGWITH WRIT PETITION NO.240 OF 2011 Marmagoa Steel Ltd & Anr .. Petitioners versus State of Goa and Ors .. Respondents Mr.Shreehari Aney, Sr.Advocate with Ms.Tejaswini Shirodkar with Mr.Shivan Dessai for the petitioners. Mr.S.S.Kantak, Advocate General with Ms.Sapna Mordekar, Addl.Govt.Advocate for the respondents. CORAM : S.C.DHARMADHIKARI & F.M.REIS, JJ. RESERVED ON : 26th April 2011. PRONOUNCED ON : 8TH July, 2011. JUDGMENT (PER S.C.DHARMADHIKARI, J): . Rule. Respondents waives service. By consent Rule made returnable forthwith. wp214-11(corrected).doc 2 2 By this petition under Article 226 of the Constitution of India, the petitioner is impugning the demand notice dated 3rd March 2011 under which a demand of Rs.86,32,75,991/- has been raised. It is seeking a direction to the respondents to calculate the amount of 25% rebate due to it on the basis of the order dated 21st January 1999 and 13th February 2001 passed by this Court and the Supreme Court and refund the balance amount due to it. Prayer clause (c) of the petition reads as under: “(c) to direct the respondent to reimburse the balance 25% rebate arrears amounting to a sum of Rs.4 crore as the principal amount and Rs.149 crore as the interest @ 24% per annum thereon i.e a total sum of Rs.153 crore approximately as on 1st October 2010 as per the guidelines laid down in the judgment of this Hon’ble Court dated 21.01.1999;” 3 The facts necessary to appreciate the challenge are that the petitioner is a company registered under the Companies Act, 1956 and carrying on manufacture of speciality Steel for Automobile Sector, Defence, Railways etc. It claims to be a Sick Industrial Unit. The petitioner submits that at the Cabinet Meeting held on 16th June 1991 the State Cabinet decided that water and power be wp214-11(corrected).doc 3 supplied to new industrial units at a concessional rate on the commercial tariff. Based on this cabinet decision on 30th September 1991, a notification was issued in exercise of the powers conferred by section 23 read with section 51A of the Indian Electricity Act, 1910. A copy of this notification is annexed as Annexure ‘P-2’. On 2nd December 1991 the petitioner-company for the first time availed 24 MVA power supply to steel plant at Curtorim and thus became entitled for 25% rebate for five years under the aforesaid notification. On 30th May 1992 the petitioner applied to the respondent No.2 for implementation of the rebate scheme. On 8th July 1992 the petitioner was told to approach the Industries Department in the matter which it did on 17th August 1992. The petitioner made certain representations for implementation and release of 25% benefit of tariff. It is the case of the petitioner that during the entire entitlement period of five years i.e from 2nd December 1991 till 1st December 1996 the petitioner went on paying its full monthly bills whenever possible and sometimes after adjusting 25% rebate but never less than 75% of the total bill. Simultaneously, it requested the respondent to grant wp214-11(corrected).doc 4 and adjust the 25% rebate benefit to it. On 31st March 1995 another notification was issued by respondent No.1 rescinding the earlier notification dated 30th September 1991 with effect from 1st April 1995. Thus, the rebate scheme was withdrawn for those industries who would avail power supply on or after 1st April 1995. Reliance is placed on a copy of this notification which is annexed as Annexure ‘P-3’. It is submitted that this aspect was further clarified by guidelines framed by respondents on the basis of which actual implementation of the rebate promised under the notification dated 30th September 1991 was started from September 1996. Reliance is placed on Clause IV of these guidelines and a certificate dated 6th August 1996 issued by the Director of Industries and Mines. On 15th May 1996 the respondent No.1 issued a notification to amend the above rescinded notification by substituting the words “High Tension”, “Extra-High Tension” and “Low Tension” power supply in place of the words “High Tension” and “Low Tension” power supply. By another notification dated 1st August 1996 the respondent No.1 in supersession of the September 1991 notification directed that all wp214-11(corrected).doc 5 industrial units who applied or availed of power supply on or after 1st October 1991 and were certified by the Electricity Department eligible for concessional tariff would be entitled to 25% rebate on prevailing energy charges only for a period of five years from the date of supply of electricity to them. 4 The petitioners submit that for the first time the 25% rebate benefit under the superseded notification of 1991 was given to the petitioner by correcting the same in the electricity bill of September 1996. The petitioners were thus informed that the Electricity Department has unilaterally decided to disburse the 25% rebate benefit in 60 monthly installments spread over the future bills for next five years. The petitioners in para 16 of the petition refer to various representations made so as to give the benefit of 25% rebate scheme. However, by a circular dated 31st March 1998 the release of 25% rebate benefit to all industrial consumers was suspended. Further, the petitioners’ power supply was disconnected on 20th April 1998 ignoring its request for one time set-off of the accumulated rebate arrears. Against this also wp214-11(corrected).doc 6 representations were made but finding that there was no favourable response, Writ Petition No.244 of 1998 was filed in this Court challenging the disconnection of the power supply and praying for its restoration. Further, by an interim order of this Court, the power supply was reconnected. However, on account of several factors including non-grant of rebate benefit, there were accumulated losses which eroded the total net worth of the petitioner which forced it to make a reference to the Board of Industrial and Financial Reconstruction (BIFR), New Delhi on 26th October 1998. This was a reference made under Sick Industrial Companies (Special Provisions) Act, 1985. On 21st January 1999 the above writ petition was disposed off with a judgment together with connected writ petitions in the following terms: “ In view of the above conclusions, we pass the following order: ORDER 1. It is hereby held that the circular dated 31st March 1998 issued by respondent No.2, suspending wp214-11(corrected).doc 7 release of rebate with immediate effect as well as suspension of rebate agreed to be given in sixty monthly installments has no legal efficacy and it is invalid and inoperative. 2. The Notification dated 24th July 1998, published in the official gazette dated 27th July 1998 which is challenged by the petitioner in Writ Petition No.239/98 is held to be legal, valid and operative. It does not suffer from any infirmity. 3. All the petitioners are entitled to 25% rebate in power tariff for the periods as indicated in paragraph 56 of this judgment. 4. The rebate shall be adjusted in sixty equal installments minus the installments which have already been adjusted. 5. The rebate in all cases with effect from 1st August 1996 till 24th July 1998 shall be on energy charges only as per the prevailing tariff in force from time to time at which they were to be billed during the said wp214-11(corrected).doc 8 period. 6. The disconnection of electric connection of the petitioners in Writ Petition No.239/98 and 244/98 is held to be not proper. 7. The proper supply of the aforesaid two petitioner shall be restored (in case it is not already restored) by working out the dues of rebate payable to them as aforesaid in installments. 8. The dues, in any, minus first installments shall be paid by the petitioners within a period of thirty days from today. 9. All the petitions are disposed of in the abovementioned terms and Rule is made absolute accordingly. 10. In the circumstances of the cases, we leave the parties to bear their respective costs.” 5 Being aggrieved and dissatisfied with the judgment and order passed, the respondent Nos.1 to 3 preferred a Special Leave wp214-11(corrected).doc 9 Petition before the Hon’ble the Supreme Court being Special Leave Petition No.6847-58 of 1999. The Hon’ble Supreme Court upheld the judgment of the Division Bench of this Court and disposed off this Special Leave Petition. 6 On 7th April 1999, the respondent No.3 issued a supplementary bill for an amount of Rs.9.32 crores and it is urged that despite judgment of this Court the respondents calculated rebate due to the petitioner based on the tariff prevailing in 1988 and keeping it fixed for five years instead of calculating the same on the basis of the tariff as revised from, and, in force from time to time. The billing should be on the basis of the prevailing tariff. Therefore, according to the petitioner there is a bonafide dispute on the working of the charges and the computation. The petitioner filed Civil Misc.Applications in the disposed off writ petition challenging the bill dated 7th April 1999 and also made representations. The petitioner submits that in the meanwhile the reference was registered by BIFR as Case No.175 of 1999 and on 20th August 1999 the petitioner was declared as Sick Company. wp214-11(corrected).doc 10 The BIFR then appointed an Operating Agency, namely, Industrial Finance Corporation of India (for short “IFCI”). The petitioners case, therefore, is that it is entitled to rebate under the notification dated 30th September 1991 for full five years from December 1991 to 1st December 1996 and no delayed payment charges could be levied by the Authorities qua the petitioner. It is then urged that the petitioner could not get any favourable order in the Civil Misc.Applications and, therefore, the petitioners had to approach the Hon’ble Supreme Court. Moreover, a draft rehabilitation scheme was prepared by BIFR, yet, on 25th October 2001 a notice was issued by respondent No.3 to the petitioner to pay alleged arrears of Rs.17 crores approximately. This notice was replied. Thereafter also several notices were issued to the petitioner with a threat of disconnection of electric supply. A meeting was convened to address the issue of arrears. The petitioner, therefore, withdrew their Special Leave Petition challenging the order passed by this Court on the Civil Misc. Applications and were hopeful of amicable resolution of the dispute. The petitioner pointed out to the Authorities that it is undergoing a financial crisis because it is a wp214-11(corrected).doc 11 sick company and scheme of its rehabilitation has been formulated. Such a stand was taken in the representations made from time to time. However, firstly the supply came to be disconnected on 6th July 2007 for non-payment of alleged arrears of Rs.69 crores and thereafter a “Billing Dispute Redressal Committee” (for short BDR) was formed and the Committee was called upon to decide the dispute. Since the Committee was not doing anything fruitful and even the petitioner’s request for grant of rebate benefit was not considered, the petitioner had to file a writ petition in this Court being Writ Petition No.460 of 2008 seeking directions to the respondents to recalculate the supplementary bill dated 7th April 1999. That Writ Petition was disposed off on 30th November 2009 with a direction that the party should approach the BDR Committee and it should decide the issue within eight weeks. Thereafter, the meetings of BDR Committee were held and petitioner had presented to the said Committee several charts, representations and objections and gave clarifications to the queries raised as well. However, the BDR Committee arrived at certain calculations based upon which a demand notice dated 25th wp214-11(corrected).doc 12 February 2011 was issued which came to be replied. This demand notice and the controversy pertaining to the same is subject matter of Writ Petition No.240 of 2011. The petitioner thus received the impugned demand notice raising a demand of Rs.86,32,75,991/-, a copy of which is annexed as Annexure ‘P-16’. This demand notice was replied and it was pointed out that there is no liability. The petitioner requested that it be supplied with a copy of findings of BDR Committee. 7 In paras 54 and 55 of the Writ Petition, this is what is stated: “54. The Billing Dispute Redressal Committee gave a decision which was never communicated to the petitioner and all that was communicated was the impugned demand notice dated 3.3.2011. 55. That after the reworking and reconciliation of figures pursuant to the meetings before the respondent 4 Committee, the alleged arrears in the disputed supplementary bill dated 7.4.1999 of Rs.9.32 crore has dwindled to an alleged amount of Rs.5,87,19,681/- (Rs.5.87 crore) as per the disputed chart dated 5.10.2010. This alleged amount of Rs.5.87 crore which the petitioner company is not liable to pay includes Rs.3.70 crore as interest calculated @ 24% per annum on compounded basis and levied as delayed payment charges, which cannot be levied in terms of the judgment wp214-11(corrected).doc 13 and order dated 21.01.1999. Further the alleged amount of Rs.81 crore frozen as on June 2008 and communicated to the petitioner company in the July 2008 bill (mentioned in para 42 herein above in this petition) has decreased to Rs.52 crore as on June 2008 in the disputed chart of 5.5.2010. This alleged amount of Rs.52 crore again is inclusive of Rs.50 crore as interest calculated @ 24% per annum on compounded basis and charged as delayed payment which levy is illegal as per this Hon’ble Court’s Judgment.” 8 Thus, it is alleged that the impugned demand notice is erroneous as the Committee did not apply the correct method of calculation. The petitioner could not have denied the 25% rebate benefit which has been wrongfully done. Further, disconnection of the power supply also is untenable and unjustified. 9 It is on the above allegations that the instant writ petition has been filed, raising several grounds and also pointing out that there is no question of any interest much less at 24% being charged when the benefit of the rebate scheme has been denied. There is also no question of any delayed payment charges being levied and collected. wp214-11(corrected).doc 14 10 On being served with the copy of this writ petition and its annexures, a reply affidavit has been filed by the respondents. The affidavit is affirmed by the Chief Electrical Engineer, Government of Goa who has pointed out that the various notifications have to be understood before appreciating the controversy. It is stated that the petitioner is entitled for rebate of five years from 2nd December 1991 despite the notification dated 30th September 1991 being rescinded with effect from 1st April 1995. It is stated that the dues payable by the petitioner by considering 25% rebate from 2nd December 1991 till 31st March 1995 has been calculated and there is no grievance raised with regard to this calculation. It is stated that even the BDR Committee has calculated the dues payable by the petitioner by taking into account rebate of 25%. However, the reliance placed by the petitioner on the guidelines dated 10th December 1995 is misplaced. Once the rebate benefit was withdrawn with effect from 1st April 1995, the guidelines in the nature of executive instructions cannot have effect of conferring any benefit on the petitioner. The notification dated 31st March 1995 was issued pursuant to cabinet decision. Once it was wp214-11(corrected).doc 15 decided not to continue the rebate beyond 1st April 1995, any further decision to grant the rebate would require a fresh cabinet decision as the same involves financial burden on the Government. In these circumstances, the guidelines are of no relevance. For all these reasons, it is submitted that there is no error committed by BDR Committee and its decision is legal and valid. Writ petition be, therefore, dismissed. 11 It is on the above material that we have heard this writ petition. Mr.Aney, learned senior advocate appearing on behalf of the petitioner submitted that the BDR Committee has committed three errors. It has not applied the notification dated 30th September 1991 and granted rebate for five years as envisaged therein. It has granted rebate benefit at the rate stipulated in the notification but for a period of three years only. The first error committed is to ignore period of five years. The second error committed is that the rate of rebate is on the charges leviable in 1988. The charges as revised from time to time should have been taken into consideration. In this behalf, reliance is placed on wp214-11(corrected).doc 16 condition Nos.1 and 11 of the schedule to the notification published in the Official Gazette of Government of Goa on 28th June 1988. Thirdly, the error committed is with regard to levy of delayed payment charges at 2% per month. 12 Mr.Aney submitted that the petitioner has raised a bonafide dispute. There was no neglect, no default committed by the petitioner, instead the State had agreed to grant refund in terms of the notification from the bills raised and paid from time to time. There is no question of any unlawful demand being made by the petitioner. Once their demand was legal and valid, then, the petitioner cannot be called upon to refund any amounts. Alternatively and without prejudice, delayed payment charges at 2% are not justified because it is the respondents who have delayed the 25% rebate benefit. It is they who have delayed the refund. Once they delay the refund and if they are called upon to pay the same, it is the State which will have to bear the interest burden. Thus, far from the petitioner paying any interest and/or delayed payment charges, it is the respondents who should be wp214-11(corrected).doc 17 called upon to refund the amount calculated in terms of the notification dated 30th September 1991 and pay interest at 24% thereon. In such circumstances, according to Mr.Aney the impugned demand cannot be sustained and deserves to be quashed and set aside. 13 Mr.Aney has placed strong reliance on the decision of this Court in the Writ Petition No.244 of 1998 filed by the petitioner and other similarly placed industries delivered on 21st January 1999. He has also relied on a judgment of this Court reported in [1969] 39 Company Cases 238 (Bom) (Bank of India Ltd Vs. Commissioner of Income Tax, Bombay City II). Mr.Aney has also relied on a judgment of the Division Bench of this Court reported in 1988 (34) Excise Law times 522 (Someshwar Sahakari Sakhar Karkhana Ltd & Ors Vs. Union of India & Ors). Mr.Aney has also relied on the chart and the communication dated 10th July 1991 of the Government of Goa, Industries Department. 14 On the other hand, Mr.Kantak, learned Advocate General wp214-11(corrected).doc 18 appearing on behalf of the respondents submitted that the arguments of Mr.Aney proceed on the misconception that the petitioner is entitled to the rebate at 25% from 2nd December 1991 to 1st December 1996. Mr.Aney’s argument overlook the notification dated 31st March 1995 which rescinds the earlier notification of September 1991. This rescission is with effect from 1st April 1995. The petitioner has never challenged the notification dated 31st March 1995. That was the position even when it moved the Court earlier and sought relief when its power supply was disconnected as far back as in July 1998. In the bunch of writ petitions that were filed and decided by this Court by common judgment none of the petitioners challenged the rescission of the rebate benefit which was effected from 1st April 1995. In such circumstances, the petitioner is not entitled to five years rebate benefit as claimed. The learned Advocate General has invited our attention to paras 13 and 14 of the Division Bench judgment and submitted that the factual position as noticed therein, is that the notification dated 30th September 1991 remained in force for 3½ years and it was rescinded by the Government of Goa vide wp214-11(corrected).doc 19 notification dated 31st March 1995. While it may be true that the Division Bench noted that the notification dated 15th May 1996 intended to amend the rescinded notification dated 30th September 1991 but the Division Bench has observed that it is pertinent to note that the amendment notification is issued without apparently reviving the notification dated 30th September 1991. This 1991 notification stood rescinded with effect from 1st April 1995 by virtue of the rescission notification dated 31st March 1995. Therefore, the calculation as made by the BDR Committee is not erroneous. 15 Mr.Kantak then invited our attention to the judgment of the Division Bench of this Court in Writ Petition No.277 of 1999 and Writ Petition No.364 of 1999 decided on 24th April 2001 and submitted that the Division Bench had on that date decided another writ petition being Writ Petition No.316 of 1998 (Manohar Parrikar Vs. Government of Goa) in which it held that the notifications dated 15th May 1996 and 1st August 1996 cannot be termed as Government decisions and they are void ab initio. Therefore, the amendment made to the rescinded notification by wp214-11(corrected).doc 20 the notification issued in May 1996 and August 1996 was of no legal effect. These findings are clearly coming in the way of all the petitioners. The Court had clarified that in Writ Petition No.316 of 1998 the issue regarding legality, validity, propriety of Notifications was not under consideration. That aspect was already dealt with and decided in the earlier batch of writ petitions which came to be disposed off on 21st January 1999. Mr.Kantak, therefore, was at pains to point out that the petitioner cannot claim the benefit of 1996 notifications. They are entitled to 25% rebate in tariff on the basis of the notification dated 30th September 1991 only from the date of supply of electricity till 31st March 1995 and not beyond the same. 16 Mr.Kantak then took us through the judgment of the Hon’ble Supreme Court in the case of M/s.M.R.F Ltd Vs. Manohar Parrikar & Ors.. (Civil Appeal No.4220 of 2002 and companion appeals) decided on 3rd May 2010. The learned Advocate General relied specifically on para 60 of this judgment and contended that the observations of the Hon’ble Supreme Court bind everybody. Thus, wp214-11(corrected).doc 21 nothing much can be derived by the petitioners from the judgment dated 21st January 1999 delivered in a batch of petitions by this Court. The learned Advocate General has also relied on paras 64 and 65 of the Supreme Court judgment and submitted that the factual position has been noted fully therein. Now, the petitioner cannot raise any factual pleas and that too for the first time. It has failed to challenge the legality of the notifications. In these circumstances, now there is no question of the plea of res judicata or other pleas being raised. 17 He, therefore, submits that the first contention of the learned senior counsel should fail. Inviting our attention to para 5, page 4 of the Writ Petition No.214 of 2011, the learned Advocate General submits that the notification which is invoked by the petitioner makes it clear that tariff rate of 1988 is applicable. He submits that the notification dated 30th September 1991 makes it very clear that the concessional tariff shall be based on rebate eligible for concessional tariff and the entitlement to rebate @ 25% is on the Tariff chargeable under the Government notification dated 27th wp214-11(corrected).doc 22 June 1988 which was published in the Official Gazette dated 28th June 1988. In such circumstances, any reliance on the notification dated 28th June 1988 and its wording and phraseology is completely misplaced. The rate as per the 1988 notification is the governing rate. The 25% rebate is to be computed on this rate. There is no scope, therefore, to read anything further. Mr.Kantak was at pains to emphasise the difference and distinction in the words used in 1991 and 1996 notification. He submits that the wording is different. That the wording is different is also noted in the petitioner’s own case by the Division Bench of this Court and while granting relief