Case: M/S A.P. Steel Re-Rolling Mill Ltd Vs. State Of Kerala

3. We will, however, notice the fact of the matter from M/s. Victory Papers and Boards India Ltd.s case.4. The State of Kerala adopted an industrial policy in the year 1992 and in the light thereof a notification bearing No.G.O.(MS)No.4/92/PD dated 6.2.1992, was issued, which reads as underthe light of the statement of Industrial Policy approved for implementation by Government the following incentives in respect of electricity are ordered:1. New industrial units will be exempted for 5 years from payment of enhanced power tariff which came into effect on 1.1.92. This concession will be available.i. to new units from the date of commercial production, which start such production between 1.1.92 and 31.12.96.ii. to manufacturing units only and not to service and entertainment units.iii. To existing units for substantial expansion/modernization/diversification the concession in such cases will be available only for the consumption of the new machinery and equipments which adds to the capital asset, by not less than 25% of the exiting fixed capital investment excluding land and building, the installation of which is to be certified by the competent authority.iv. for modernization, to industrial units having a contract demand not exceeding 500 KVA. In such cases, new equipments alone will be eligible for the concession.The said industrial policy of the State was accepted by the Kerala State Electricity Board, which is a body constituted and incorporated under the provisions of the Electricity (Supply) Act, 1948, in respect of which a notification was issued on 27.3.1992. By reason of the said notification, some guidelines were also issued. The appellant herein contended that pursuant to or in furtherance of the representation made by the State of Kerala and/or the respondent-Board, they altered their position by investing a huge amount by setting up factories/new units. The State, admittedly, at the district level constituted a Green Channel Clearance Committee (GCC).6. The appellant had applied for grant of electric power allocation to the extent of 2500 KVA. It obtained loan on 19.1.1995. As the application of the appellant had not allegedly been processed, GCC issued several reminders to the Board. On or about 17.11.1995, Appellant informed the Board that the project was at an advanced stage. It was recorded that despite recommendations by GCC, sanction for grant of electrical connection had not been issued,wish to add at this juncture that the Government is inviting entrepreneurs to start their industrial units in the State and are offering Power, Water and other infrastructural facilities availability so easily. But on the contrary the concerned authorities are reluctant to sanction the necessary infrastructural facilities to the units. Our case is one of the examples. Your good self will appreciate that without electric power we cannot start out production as schedule, which will hamper the work and finally affect the production of the unit. The delay in implementing the project will, finally, escalate the cost of the project. Since more than one year has lapsed after submitting our application to the KSEB, we have so far not received sanction of Power to our unit. Hence we request to your good self to kind enough to prevail upon the authority to sanction Electric Power to out unit to the extent of our requirement.It, allegedly, imported machinery from abroad, which fact was intimated to the Board by a letter dated 24th June, 1996,the circumstances, our Bankers are reluctant to clear term loan because of non-sanctioning of Power to the Project. Presently, the total machinery worth Rs.3.5 Crore have already arrived at site and the erection is in progress. Any further delay in receiving the power allocation will affect our total project which will lead to a financial constraint. It is really unexpected from the authorities such a situation by the entrepreneur who is taking initiative to install a factory in Kerala. Since we have already invested a huge amount for land, building and machinery, we do not have other alternative other than to complete the project and start production at the earliest.We have informed these facts and figures to the previous Ministry vide our letter dated 22nd February, 1996, addressed to Honble Minister of Electricity. We are sorry to inform you that so far we have not received any favourable decision.According to our schedule, we are planning to start production in the month of August, 1996. Of the huge investment of Rs.12.5 crore, 75% of the total cost of the project has already been invested and any more delay in power allocation will effect our project very seriously. To avoid unnecessary delay in starting the production, we need the sanction of power allocation urgently.We understand that our file is pending with the Chief Engineer, World Bank Projects, Vaiduthy Bhavanam, Thiruananthapuram and with the Secretary, Kerala State Electricity Board, Trivandrum vide No. TSI/PA/Victory Paper/95-96/3019 dated 7.8.1995." [EmphasisThe response of the Board thereto is to be found in the letter dated 11.2.1997, whereby sanction for power allocation was sought for by the Deputy Chief Engineer from the Chief Engineer of the Board. Having regard to the fact that there was no adequate transformer capacity at Kanjiokode Sub Station, the allocation could not be granted, as was informed to the appellant by the Board in terms of its letter dated 21.4.1997. Electrical energy was allocated for six months on trial-run basis on 24.12.1997 and a final sanction was granted on 21.12.1998. Appellant started commercial production on 10.3.1999. It evidently denied the benefit of the said incentive scheme dated 6.2.1992. A writ petition was filed by the appellant, which has been dismissed by reason of the impugned judgment of the High Court, inter alia,only question to be considered is whether the Petitioner had satisfied the various terms and conditions laid down in the order dated 6.2.1992. Facts would eloquently show that Petitioner had not satisfied the various conditions laid down in the order. Petitioner might have submitted an application during the year 1994. Mere submission of application would not be sufficient to hold that Petitioner had complied with all the terms and conditions. Power allocation was issued by the fourth Respondent on 24.12.1997 with specific condition that the connection would be effected only after providing a separate 22 KV feeder with outlet from the substation to the factory under OYEC scheme.Respondent could start the work of drawing at 2.8 km of 22 KV line only after the Petitioner remitting the OYEC amount. Even though allocation was given on 24.12.1997 Petitioner took his own time to remit the amount. Petitioner has taken considerable time to complete the work and was not ready for availing power supply. Petitioner has produced energization sanction order under Rule 63 of the Indian Electricity Rules 1956 from the Chief Electrical Inspector only during December 1998 even though power allocation was sanctioned on 24.12.1997. Petitioner had executed the H.T. agreement only on 22.1.1999 and the unit was energised on 10.3.1999, by the time period fixed for concessional tariff was already over. We are of the view, ext. P1 order of the apex court would not apply to the facts of this case where power allocation was made from the year 1991 but the power could not be supplied. Hence commercial production could not be started by 31.12.1996. Hence Petitioner had not complied with the formalities so as to get the benefit of the concession orders. The principle of promissory estoppel in the facts and circumstances of the case cannot be put against the Board. Above being the factual situation, we are of the view Petitioner is not entitled to get concessional tariff.So far as case of M/s. A.P. Steel Re-Rolling Mill Ltd. is concerned, we need not go into the factual aspect of the matter. Suffice it to notice that its writ petition was permitted to withdrawn by the High Court by an order dated 24th November, 2003. A review application filed by the said appellant was also dismissed by an order dated 25th May, 2004. We may, however, note that an application for grant of electrical connection was filed by it in November, 1995 and actual commercial production started in or about October, 1998.

Reasoning:
14. Applicability of doctrine of promissory estoppel in a case where entrepreneur alters his position pursuant to or in furtherance of a promise made by the State to grant exemption from payment of charges on the basis of current tariff is not in dispute. The State made its policy decision. The said policy decision could be made by the State in exercise of its power under Section 78A of the Electricity (Supply) Act, 1948. The Electricity Board framed tariff for supply of electrical energy in terms of Sections 46 and 49 of the 1948 Act. While framing its tariff, the Board could take into consideration the policy decision of the State. It was, therefore, permissible both for the State to issue a policy decision and for the Board to adopt the same in exercise of their respective statutory powers under the 1948 Act. When a beneficent scheme is made by the State, the doctrine of promissory estoppel would undoubtedly apply.The general principles with regard to construction of exemption notification are not of much dispute. Generally, an exemption notification is to be construed strictly, but once it is found that the entrepreneur fulfils the conditions laid down therein, liberal construction would be made.A question as to whether, in a given situation, an entrepreneur was entitled to the benefit under an exemption notification or not, thus, would depend upon the fact of each case. A bare perusal of the notification dated 6.2.1992 issued by the 1st respondent would show that the purport and object thereof was to grant benefit of a concessional power tariff which came into force on and from 1.1.1992. The phraseology used in the said notification postulates that the benefit was to be granted in regard to the enhanced power tariff. Thus, where the new units had started production between 1.1.1992 and 31.12.1992, such exemption was available to the entrepreneurs.31. Evidently, except in a situation as might have been existing in Hitech Electrothermics (supra) that any application filed by the entrepreneur had not been processed within a reasonable time, in which case benefit might not be denied on equitable ground; in cases where there has been a substantial failure on the part of the industrial unit to obtain such benefit owing to acts of omission and commission on its part, in our opinion, no such benefit can be given.32. The High Court has arrived at a finding of fact that the appellant herein had failed and/or neglected to comply with the terms and conditions of the scheme or contributed to a large extent in not being able to obtain such sanction within a reasonable time.33. The appellant applied for grant of electrical connection on 9.11.1994. It, however, on its own showing did not receive any sanction till 17.11.1995. But even on that date the project was not complete. It was only at an advanced stage.34. From the appellants letter dated 24th June, 1996, as noticed supra, it would appear that it merely had been complaining of about non-grant of sanction, but then, evidently, it was not ready for commencing commercial production. Machineries were obtained by it only on 4.6.1996. How much time was taken for installation of machinery and completion of the project, is not known.35. Sanction, evidently, had been allocated on 24.2.1997. It accepted the same without any demur. It had been making payments in terms of the new tariff. It filed the writ petition only in the year 2003, i.e., only after this Court rendered its decision in Hitech Electrothermics (supra) on 17th December, 2002.36. The benefit of a judgment is not extended to a case automatically. While granting relief in a writ petition, the High Court is entitled to consider the fact situation obtaining in each case including the conduct of the petitioner. In doing so, the Court is entitled to take into consideration the fact as to whether the writ petitioner had chosen to sit over the matter and then wake up after the decision of this Court. If it is found that the appellant approached the Court after a long delay, the same may disentitle him to obtain a discretionary relief.We are, thus, of the opinion that the principle of promissory estoppel will apply where an entrepreneur has altered its position pursuant to a promise made by the State, but the application thereof would depend upon the facts and circumstances of each case. Having regard to the findings of fact arrived at by the High Court, we are of the opinion that it cannot be said to have committed any illegality in passing the impugned judgment. So far as the case of M/s. A.P. Steel Re-Rolling Mill Ltd. is concerned, evidently the question involved therein was a disputed question of fact. Although, the High Court could have entertained a writ petition, as has been done in the case of M/s. Victory Papers and Boards India Ltd., but as M/s. A.P. Steel Re-Rolling Mill Ltd. withdrew its writ application, in our opinion, no case has been made out for interference with the impugned judgment. As the appellant has still its remedies open, it may avail the same.