Case: Paschimanchal Vidyut Vitran Nigam Ld.&amp;Or Vs. M/S Adarsh Textiles

Act of 2003 that to grant subsidy to any consumer or class of consumers is the prerogative of the State Government and such other direction issued in the public interest shall be binding upon the Commission. 26. When we consider the policy decision of the State Government dated 14.6.2006 read with communications dated 6.10.2006, dated 24.2.2007 and lastly dated 1.5.2007, the State Government never intended to extend the benefit of the subsidy to HV-2 category consumers. It had not made any provision for extending subsidy to HV-2 consumers. The Commission in order dated 11.7.2006 itself has confined the tariff respite to LMV-2 and LMV-6 consumers. It was not open to the Commission to issue clarification dated 14-15/9/2006, as the matter of providing subsidy was clearly prerogative of the State Government under the provisions of Section 65 read with Section 108 of the Act of 2003 and Section 12 of Reforms Act, 1999 hence Commission could not have accepted on its own, or directed the State Government to release the subsidy to HV-2 consumers and that too unilaterally. 27. When we read the order dated 14.6.2006 it becomes clear that the State Government has granted approval for supply of electricity to "power loom bunkers on flat rate as extended to farmers". It has fixed the tariff for the loom having 60 inches reed space, Rs.65/- per loom and it will be presumed that load of loom is 0.5 H.P. and for looms having reed space of more than 60 inches, Rs.130/- per month will be charged and it will be presumed that load of the loom is 1 H.P. In additional machines in urban areas, Rs.130/HP/month would be charged and in rural area 75/HP/month would be charged. It also provided that the expenses for new meter will not be taken from consumers. 28. It can be culled out from order dated 14.6.2006 that the State Government intended the benefit to be extended to power loom weavers alike farmers. The activity of manufacturing textile is generally understood as the weaving of such textile and man who is engaged in such power loom activity is known as weaver. Weaving means: to form a fabric by interlacing yarn on a loom. It also means the method of pattern of weaving or the structure of a woven fabric, as observed by this Court in Ess Dee Carpet Enterprises v. Union of India (UOI) and Others (1990) 1 SCC 461. The State Government thus, never intended the benefit to be given to big industries like HV-2 industries. In the circumstances, it was incumbent upon the Commission to consult the State Government before passing clarification order dated 14-15/9/2006 while applying its order dated 11.7.2006 to HV-2 consumers. When the State Government has written to the Commission on 6.10.2006, thereafter there was no justification for the Commission not to recall the clarification issued on 14-15/9/2006 as it was the prerogative of the State Government to extend the benefit of subsidy to a class or particular class of consumers and subsidy being a concession could not have been enforced as a matter of right. The Commission was bound to act as per such directives of State Government.29. The submission that the State is bound by the principle of promissory estoppel to extend the benefit of subsidy to HV-2 consumers is also devoid of merit. This Court in Gujarat State Financial Corporation vs. M/s. Lotus Hotels Pvt. Ltd. [1983 (3) SCC 379 ] had referred to Motilal Padampat Sugar Mills Co. Ltd. vs. State of U.P. & Ors. [1979 (2) SCC 409 ] and observed as under : "The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect 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 between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not." The aforesaid principle is not attracted in the instant case as the State Government has not extended any assurance by its conduct much less unequivocal one, thus there was no question of the industries acting upon it. The State Government had not extended any assurance to extend the subsidy and, on the other hand, it had made its stand clear and objected to the Commissions clarification by writing a letter on 6.10.2006.30. Equally futile is the reliance upon the agreements which have been entered into for supply of electrical energy after the clarification was issued by the Commission. It was on the basis of the directive issued by the Commission that the said agreements have been entered into by the consumers with the Corporation. However, a perusal of the agreement makes it clear there is no mention as to the subsidy to be extended by the State Government. The only stipulation is that the supply would be made at the rate specified by the Commission. Thus, the agreement does not deal with the question of subsidy at all. Even otherwise the agreements can also not be said to be binding upon the State Government as the Commission/Corporation had no authority to burden the State with the subsidy when it had made no such provision for HV-2 consumers. It is a settled proposition that the assurance to form promissory estoppel must come from the person in authority having competence to extend it. The Commission and the Corporation had no jurisdiction in the matter of subsidy which is the domain of the State Government. 31.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It can be culled out from order dated 14.6.2006 that the State Government intended the benefit to be extended to power loom weavers alike farmers. The activity of manufacturing textile is generally understood as the weaving of such textile and man who is engaged in such power loom activity is known as weaver. Weaving means: to form a fabric by interlacing yarn on a loom. It also means the method of pattern of weaving or the structure of a woven fabric, as observed by this Court in Ess Dee Carpet Enterprises v. Union of India (UOI) and Others (1990) 1 SCC 461.  The State Government thus, never intended the benefit to be given to big industries like HV-2 industries. In the circumstances, it was incumbent upon the Commission to consult the State Government before passing clarification order dated 14-15/9/2006 while applying its order dated 11.7.2006 to HV-2 consumers. When the State Government has written to the Commission on 6.10.2006, thereafter there was no justification for the Commission not to recall the clarification issued on 14-15/9/2006 as it was the prerogative of the State Government to extend the benefit of subsidy to a class or particular class of consumers and subsidy being a concession could not have been enforced as a matter of right. The Commission was bound to act as per such directives of State Government.29. The submission that the State is bound by the principle of promissory estoppel to extend the benefit of subsidy to HV-2 consumers is also devoid of merit. This Court in Gujarat State Financial Corporation vs. M/s. Lotus Hotels Pvt. Ltd. [1983 (3) SCC 379 ] had referred to Motilal Padampat Sugar Mills Co. Ltd. vs. State of U.P. & Ors. [1979 (2) SCC 409 ] and observed as undertrue principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect 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 between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties oraforesaid principle is not attracted in the instant case as the State Government has not extended any assurance by its conduct much less unequivocal one, thus there was no question of the industries acting upon it. The State Government had not extended any assurance to extend the subsidy and, on the other hand, it had made its stand clear and objected to the Commissions clarification by writing a letter on 6.10.2006.30. Equally futile is the reliance upon the agreements which have been entered into for supply of electrical energy after the clarification was issued by the Commission. It was on the basis of the directive issued by the Commission that the said agreements have been entered into by the consumers with the Corporation. However, a perusal of the agreement makes it clear there is no mention as to the subsidy to be extended by the State Government. The only stipulation is that the supply would be made at the rate specified by the Commission. Thus, the agreement does not deal with the question of subsidy at all. Even otherwise the agreements can also not be said to be binding upon the State Government as the Commission/Corporation had no authority to burden the State with the subsidy when it had made no such provision for HV-2 consumers. It is a settled proposition that the assurance to form promissory estoppel must come from the person in authority having competence to extend it. The Commission and the Corporation had no jurisdiction in the matter of subsidy which is the domain of the State Government.