Case: State of U.P. and Ors.  Vs. Renusagar Power Co. and Ors.

The first appellant is the State of Uttar Pradesh impleaded through the Chief Secretary to the Government of Uttar Pradesh, Lucknow. The second appellant is the Secretary to the Government of Uttar Pradesh, Department of Energy, Lucknow. The third appellant is one Shri Yogendra Narain, presently acting as Secretary to the Chief Minister, State of Uttar Pradesh, Lucknow. At a particular point of time Shri Yogendra Narain was the Secretary to the Department of Energy. The fourth appellant is the Assistant Electrical Inspector, a functionary under the U.P. Electricity (Duty) Act, 1952, Mirzapur Zone, Rani Patti, Mirzapur. The fifth appellant is the Collector of Mirzapur.2. There are four respondents in this appeal. The first respondent is Renusagar Power Company Ltd. The second respondent is M/s. Hindustan Aluminium Corporation Ltd. Respondent No. 3 is Shri D.M. Mimatramka who resides at Hindalco Administrative Colony, Renukut, Mirzapur. The fourth respondent is Shri Rajendra Kumar Kasliwal who resides at Hindustan Aluminium Corporation Ltd., Renukut, District Mirzapur. Respondents 3 and 4 mentioned above are the shareholders of the first respondent and the second respondent, that is, Renusagar Power Company and M/s. Hindustan Aluminium Corporation Ltd. respectively. It is stated that M/s. Hindustan Aluminium Corporation Ltd., established and aluminium factory at Renukut in Mirzapur District, U.P. in 1959. It is the case of the respondents that it was induced to do so on the assurance that cheap electricity and power would be made available at the relevant time. In 1962, a plant of Hindustan Aluminium Corporation Ltd. for manufacture of aluminium, was commissioned. M/s. Renusagar Power Co. Ltd. a wholly owned subsidiary of M/s. Hindustan Aluminium Corporation Ltd, was incorporated in 1964. M/s. Renusagar Power Company Ltd. was incorporated separately and had its own separate Memorandum and Articles of Association. On 9th September, 1967, the first generating unit of 67.5 MW in Renusagar was commissioned by M/s. Renusagar Power Company Ltd. The second generating unit of the company was commissioned on 5th October, 1968. The U.P Electricity (Duty) Act, 1952 (hereinafter called the Act) came into force from 15th January, 1953 and it sought to levy a duty on the consumption of electrical energy in the State of Uttar Pradesh.4. By virtue of the provisions of the U.P. Electricity (Duty)(Amendment) Ordinance, 1959 various amendments were carried out in the said Act. In Section 2 of the principal Act, a new clause, Clause (hh) describing a scheduled industry was inserted. By virtue of the aforesaid newly inserted clause, the expression scheduled industry meant any of the industries specified in the schedule. In the proviso to Section 3 of the principal Act, after Clause (d), a new Clause (e) was inserted which provided for non-levy or exemption from the payment of electricity duty on the energy consumed by a consumer in a scheduled industry. The. expression which was added was by a consumer in a scheduled industry. By virtue of Section 8 of the Amending Act, a schedule was added to the principal Act. In the schedule, non-ferrous metals and alloys were placed at serial No. 1 in Part B of the schedule under a broad heading Metallurgical Industries. It appears, therefore, that by virtue of the aforesaid provisions electricity duty on the energy consumed by M/s. Hindustan Aluminium Corporation Ltd. was exempted from 1st April, 1959, the date on which the Ordinance came into force. It was further stated that the U.P. Electricity (Duty)(Amendment) Ordinance, 1959 was repealed and the provisions were incorporated into an amending Act, viz., U.P. Act No. 12 of 1959 and termed as the U.P. Electricity (Duty)(Amendment) Act, 1959. By virtue of Sub-section (2) of Section 1, the Amendment Act provided that the Act would be deemed to have come into force with effect from 1st April, 1959. The amendment Act repealed the provisions of the U.P. Electricity (Duty)(Amendment) Ordinance, 1959. In Section 2, after Clause (d), the clause which was inserted as a new Clause (e) provided that electricity duty would not be leviable on the consumption of energy by a consumer in any industry engaged in the manufacture, production, processing, or repair of goods. Ordinance No. 14 of 1970 was promulgated on 5th August, 1970. The provisions contained in the Ordinance were subsequently incorporated in U.P. Act No. 2 of 1971. The amended provisions of U.P. Act No. 2 of 1971 came into force from 1st April, 1970. The Amendment Act was preceded by U.P. Ordinance No. 14 of 1970. The Ordinance was described as the Uttar Pradesh Taxes and Fees Laws (Amendment) Ordinance 1970. By virtue of Chapter III of the said Ordinance, amendments were sought to be made to the Act. Section 3 of the principal Act was substituted by a new section which provided that there would be levied and paid to the State Government a duty called electricity duty on the energy sold to a consumer by a licensee/Board/the State Government the Central Government; there would be a duty on the consumption of energy by a licensee or the Board in or upon the premises used for commercial or residential purposes, or in or upon any other premises except in the construction, maintenance or operation of his or its works, and there would be a duty upon the consumption of electricity by any other person from his own source of generation. It was provided that a duty was to be determined at such rate or rates as may, from time to time, be fixed by the State Government by notification in the official gazette. Sub-section (2) of Section 3 provided that in respect of certain classes of consumption the electricity duty would not exceed 25% of the rate charged.9. M/s. Renusagar Power Company Ltd. had in the meantime obtained a sanction under Section 28 of the Indian Electricity Act, 1910 to engage in the business of supply of electricity to the second respondent, M/s. Hindustan Aluminium Corporation Ltd. By virtue of Section 2(f) which defines a licensee for the purposes of the Duty Act to mean any person licensed under Part II of the Indian Electricity Act, 1910 and includes any person who has obtained sanction from the State Government under Section 28. Renusagar Power Company Ltd., the first respondent herein, was deemed to be a licensee for the purposes of the U.P. Electricity (Duty) Act. By virtue of Section 2(d) of the Act, M/s. Hindustan Aluminium Corporation Ltd. was a consumer since it was supplied energy by the licensee, M/s. Renusagar Power Company Ltd., the first respondent. Thus, the consumption of electricity by M/s. Hindustan Aluminium Corporation Ltd. under a contract of sale by the licensee was exigible to duty. In other words, Clause (a) of Sub-section (1) of Section 3 of the Act, as amended, came into operation and a levy of duty would take place on the energy sold, to a consumer by a licensee. Clause (a) of Sub-section (1) of Section 4 as newly added provided that where the energy was supplied by a licensee, the licensee would be liable to pay electricity duty. Thus, by virtue of the amended provisions of the Electricity (Duty) Act, M/s. Renusagar Power Co. Ltd. the first respondent herein was liable to pay electricity duty in respect of its supplies to M/s. Hindustan Aluminium Corporation Ltd.10. In exercise of the powers conferred by the Amendment Ordinance (U.P. Ordinance No. 14 of 1970, the provisions of which were re-enacted in U.P. Act No. 2 of 1971), the Governor on or about 25th August, 1970 passed an order that with effect from 1st September, 1970 the electricity duty on industrial consumption would be levied at one paisa per unit. On 28th August, 1970, the Governor ordered in supersession of all the previous orders that with effect from 1st September, 1970 electricity duty on the energy consumed by the consumers would be levied at the rates specified therein. There was further notification dated 30th September, 1970, issued in the name of the Governor modifying the terms of the notifications dated 25th August, 1970 and 28th August, 1970.11. On or about 4th December, 1952 after the inauguration of the First Five Year Plan, electricity duty was imposed to gather additional revenue for attaining the objectives set out in the plan. The U.P. Electricity (Duty) Act, 1952 was enacted on 4th December, 1952. On 1st April, 1959 in order to mitigate the hardship which might be caused to certain industries in the State, the U.P. Electricity (Duty)(Amendment) Ordinance, 1959 (U.P. Ordinance No. 3 of 1959) was promulgated by the Governor of U.P. By the aforesaid Ordinance it was provided in the first proviso to Section 3 of the principal Act that no duty shall be leviable on the energy consumed by a consumer in a Scheduled Industry, including Non-ferrous Industries manufacturing Aluminium like that of respondent No. 2, Hindalco. The aforesaid Ordinance was substituted by the U.P. Electricity (Duty)(Amendment) Act, 1959 (U.P. Act No. 12 of 1959). It substituted Sub-clause (e) in the first proviso of Section 3 which reads as follows:(e) by a consumer in any Industry engaged in the manufacture, production, processing or repairs of goods.12. In the year 1959 respondent No. 2 looking to the profitability of establishing a factory for manufacture of aluminium, set up a plant at Renukut, District Mirzapur in the State of U.P. On or about 29th October, 1959 an agreement was arrived at with the State Government and the Hindustan Aluminium Corporation Ltd. (Hindalco) for supply of 55 M.W. electrical power at the rate of 1.997717 paise per unit inclusive of all charges, duties and taxes of whatever nature on electricity for 25 years.13. In the year 1962 Hindalco, respondent No. 2, started production of aluminium. On 14th October, 1964 respondent No. 2 requested the State Government to grant sanction to the Renusagar Power Company Ltd., to supply electricity to respondent No. 2. On 12th November, 1964 respondent No. 1 Renusagar Power Company Ltd. was granted sanction under Section 28 of the Indian Electricity Act, 1910, to engage in the business of supply of electricity to respondent No. 2 Hindalco. There was an agreement on 29th December, 1967 with Hindalco and U.P. State Electricity Board to supply 5.5 M.W. and 7.5 M.W. of power. The rate of charges along with levy of sales tax, etc. were to be paid by the consumer. On 1st July, 1970, there was an agreement between Hindalco and State Electricity Board to supply 7.5 M.W. of power. The rate of charges including levy such as Sales Tax etc. were to be paid by the consumer. On 5th August, 1970, the U.P. Ordinance No. 14 of 1970 was promulgated further to amend the U.P. Electricity (Duty) Act, 1952 which came into force from 1st September, 1970. By the aforesaid amendment provisions of Sections 3, 4 and 7 were substituted by new sections, Sections 3A and 9 were omitted and there were several amendments in various sections of the original Act. As a result of the promulgation of the Ordinance, electricity duty became leviable on the industrial consumption as well as on the energy consumed by any person from his own source of generation. The provisions of Section 3 have been set out before. Thereafter notification was issued on 25th August, 1970 under which rate of electricity duty on the energy consumed for industrial purposes was prescribed at one paisa per unit on consumption of electricity with effect from 1st September, 1970. On 1st September, 1970, the provisions of the Ordinance amending U.P. Electricity (Duty) Act, 1952 came into force. Electricity duty became leviable on the respondent No. 1 on the energy supplied to Hindalco, respondent No. 2 for the industrial purposes. On 28th September, 1970 respondent No. 2, Hindalco, made an application under Sub-section (4) of Section 3 of the Act to the State Government to grant exemption on the energy supplied by respondent No. 1 to respondent No. 2 for industrial purposes. On 17th January, 1971 Ordinance No. 14 of 1970 was substituted by the U.P. Electricity (Duty)(Amendment) Act, 1970. On 26th February, 1971 report was made by the Three-Men Committee appointed to examine the request of Hindalco for grant of exemption from payment of electricity duty on the energy supplied by Renusagar Power Company Ltd. According to the Committee the burden as a result of the imposition of electricity duty did not result in substantial or insufferable increase of the rate of duty for Hindalco. On 27th August, 1971 a demand for payment of electricity duty amounting to Rs. 59,13,891.80 was raised on respondent No. 1. On 29th March, 1972 application of respondent No. 2 for grant of exemption was rejected by the State Government on the following reasons:(a) That the intention of the legislation was clear to withdraw the exemption from payment of electricity duty on the industrial consumers with effect from 1.9.1970 the facility of which was being availed for a period of more than 11 years.(b) That the applicant was never given any assurance that he will be exempted from electricity duty nor the applicant is entitled for any exemption as a matter of right under the provisions of the amended Act.(c) That it was not in public interest to grant them exemption from electricity duty.(d) That the electricity duty is also being levied on the Aluminium Industries in other States also.(e) That the additional resources are taken into account to give the final shape of the State Development Plans and with a view to fulfil the requirement of these Development Plans the Electricity Duty Act was amended in 1970. The expected income from this duty is essential for the execution of State Government plans.(f) It cannot be inferred that the imposition of electricity duty will be an unbearable burden on Hindalco.14. Aggrieved by the aforesaid rejection, the respondents filed Writ Petition No. 4521 of 1972 before the High Court of Allahabad. On 17th March, 1973 the State Government granted exemption from payment of electricity duty on the energy consumed by any person from his own source of generation. Exemption was also granted on the energy sold to a consumer establishing a factory having capital investment upto Rs. 25 lakes in the backward district for five years.15. The High Court by its judgment on 17th May, 1974 in the Writ Petition No. 4521 of 1972 quashed the order of the State Government and directed the State Government to reconsider the application of the respondents for exemption in the light of the observations made in that judgment. On 6th September, 1975 Hindalco submitted an application again to the State Government for reconsideration of their previous application for exemption from payment of electricity duty. In the meanwhile, the State Government filed a special leave petition to this Court against the judgment and order of the High Court of Allahabad dated 17th May, 1974 in Writ Petition No. 4521 of 1972. In the meantime of 13th November, 1976 an agreement was entered into between the State Electricity Board and Hindalco for supply of 85 M.W. main supply. The rate fixed was 11 paise per unit inclusive of all taxes of whatever nature on electricity. Special leave petition was, however, dismissed on 28th March, 1977. In compliance with the High Courts judgment dated 17th May, 1974, on 5th April, 1977 respondents were given an opportunity of hearing by the State Government. For the purpose of considering the representation and to verify the correctness of the data and the profit and loss accounts furnished by Hindalco in their printed Balance Sheets the matter was got examined by Shri B.B. Jindal, Controller of Banking Operations, U.P. State Electricity Board who submitted his report in 1977. The State Government, however, was not satisfied with the report of Shri B.B. Jindal. On 6th September, 1978 the matter was got re-examined by the Chief Electrical Inspector to Government, Uttar Pradesh. He submitted his report. The Chief Electrical Inspector in his report compared the cost of power of Hindalco with similar industries in other States. On 5th December, 1978 Secretary of Power discussed the matter with Dr. R. Rajagopalan, Chief Advisor (Costs), Government of India. Then a note was prepared by the Secretary, Power, Government of U.P. in which reference was made to the above report of Chief Electrical Inspector to the Government of U.P. Thereafter the Chief Secretary to the Government of U.P. on 26th December, 1978 wrote a letter to the Secretary, Ministry of Finance, Government of India, requesting him that the matter may be got examined by the Chief Advisor (Costs), Government of India, expeditiously. After examination on 29th January, 1979 Dr. R. Rajagopalan, Chief Advisor (Costs), Government of India, submitted his report that the effect of imposition of electricity duty on the margin of profit available to Hindalco has been very insignificant. It did not have any adverse effect on the profitability of Hindalco since such a levy has been included in the cost in fixing the selling prices of Hindalcos products by the Government of India. Imposition of electricity duty did not result in reducing the normal profits of Hindalco to either an absolute loss or such a small margin of profit that Hindalco was turned into an uneconomic unit. According to him the claim of Hindalco for exemption from levy of electricity duty is not based on justifiable grounds of either low profitability or incapacity of resources with which to pay. Personal hearing was given to the respondents in view of the directions given by the High Court. Report of Dr. Rajagopalan was made available to the respondents. On 28th January, 1980 rate of electricity duty on the energy consumed for industrial purposes was revised from one paisa to two paise per unit applicable from the date of notification, that is, from 16th February, 1980. There was an agreement on 24th April, 1980 between the State Electricity Board and the Hindalco regarding 85 M.W. main supply and 60 M.W. stand by Emergency Supply. Rate of 28.42 paise per unit was fixed. A personal hearing was given to the respondents in compliance with the directions issued by the High Court. Respondents were allowed to inspect the report of the Chief Electrical Inspector and other reports available with the State Government were shown to them and they submitted their comments on the report of Dr. Rajagopalan which were duly considered by the State Government. A personal hearing was again given to the respondents to submit their submissions in support of their application for exemption. Respondents were represented by counsel during the course of hearing. After giving full consideration to the submissions made in the original and additional representations and the comments dated 23rd August, 1980 on the report of Dr. Rajagopalan and to the entire material placed before the State Government, the State Government came to the conclusion that the claim for exemption from levy of electricity duty was not at all justified on any ground whatsoever. Accordingly the request for exemption was disallowed. On 3rd March, 1982 respondent No. 1 was asked to pay Rs. 11,96,83,153.80 as the amount of electricity duty on the energy supplied by it to respondent No. 2 for industrial purposes. Respondent No. 1, however, failed to pay the aforesaid amount within the stipulated time. On 22nd March, 1982, the District Magistrate, Mirzapur, was requested to recover the said amount as arrears of land revenue. Being aggrieved by the decision of the State Government, the respondent filed a Writ Petition No. 3921 of 1982 in the High Court of Allahabad and the High Court issued stay order directing the petitioners not to take any proceedings for the recovery of the impugned electricity duty. On 26th September, 1984 the High Court allowed the Writ Petition No. 3921 of 1982 and held that the impugned order of the State Government was not maintainable in law and hence quashed the order of the State Government as well as the notice of demand dated 3rd March, 1982. The State Government was also directed to consider the request of the respondents for exemption in accordance with the directions issued by the Division Bench in Writ Petition No. 4521 of 1972 and also in the light of the observations made in the judgment after affording an opportunity of personal hearing to the respondents. Being aggrieved thereby the appellants have come up in appeal to this Court.Hindalco made an application to the State Government under Section 3(4) of the Act for exemption on 28th September, 1970. In spite of repeated requests made by Hindalco the State did not take any decision on the said application of Hindalco and also purported to raise and enforce demands under the Duty Act against Hindalco. Hindalco and Renusagar filed a Writ Petition No. 368 of 1972 in the High Court of Allahabad on 21st March, 1972. On that very date Hindalco was informed that the application previously made by it had been rejected by the State Government. Hindalco applied for amendment of the writ petition. Reasons for rejection were intimated on 16th June, 1972. Thereafter Writ Petition No. 368 of 1972 was withdrawn. On 21st July, 1972 Hindalco and Renusagar filed another Writ Petition No. 4521 of 1972 in the High Court of Allahabad challenging the order of rejection. On 17th May, 1974 the High Court delivered judgment quashing the aforesaid rejection and asking the State Government to consider the matter afresh in accordance with law and in accordance with the directions contained in the said judgment. Another Writ Petition being Writ Petition No. 3921 of 1982 out of which the present appeal arises was filed by Renusagar and Hindalco on 16th April, 1982. The High Court passed an order on 26th September, 1984 quashing the order. The High Court was of the view that the Government was under a mandatory duty to consider certain factOrs. These were: (1) How did the cost of power to the Corporation compare with the cost of power to similar industries in other States? (2) How the spending of huge sums by the Government of India in foreign exchange decreased and its keenness to attain self-sufficiency in the country by increasing its indigenous production in public interest attained? (3) The commitment made by the Government of Uttar Pradesh to the Hindalco to supply power at cheap rate as noticed in the report of Dr. Nagarajarao. (4) The effect of imposition of duty on the margin of profit available to Hindalco.

Reasoning: 17. Own source of generation is an expression connected with the question of lifting or piercing the corporate veil. It is well-settled that in interpreting items in statutes whose primary object is to raise revenue and or which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to the meaning attached to them by those dealing in them. See the observations of this Court in Chiranjit Lal Anand v. State of Assam and Anr. [1985] Supp 2 SCR 385.38. The first generating unit in Renusagar commenced on 9.9.67 and the second one commenced on 5.10.68. All steps for the expansion of the power in Renusagar so as to match the power requirement of Hindalcos expansion were taken by Hindalco even though Renusagar had been incorporated. Applications for all the necessary sanctions and permissions were made by Hindalco.39. Permissions and sanctions were first intimated to Hindalco even though Renusagar was in existence. See Vol. XVI, pages 129-134149 of the Paper Book. Changes in the sanctions and/or permissions granted were obtained by Hindalco and not by Renusagar. See Vol. XVI, pages 157,180 of the Paper Book.The expansion of the power plant in Renusagar was to exactly match the requirements of Hindalco for the production of aluminium. The expansion of the power plant in Renusagar was part and parcel of the expansion of the aluminium plant of Hindalco. See Vol. XVI, pages 145, 159, 161, 185, 187189 of the Paper Book.40. The third generation unit in Renusagar commenced in November 1981 and the fourth generating unit in April 1983. Hindalco consumes about 255 MW power out of which 250 MW comes from Renusagar and 5 MW by way of main supply and 15 MW by way of emergency supply is made by the Board.41. It was emphasised on behalf of Hindalco that the power plants at Renusagar were set up as part and parcel of the aluminium expansion scheme of Hindalco and the only object and purpose of the power plants in Renusagar was to supply power to suit the needs of Hindalco.42. All steps to set up the power plant in Renusagar and its further expansion were taken by Hindalco. The power plant was set up by Hindalco through the agency of Renusagar (100% subsidiary and wholly owned and controlled by Hindalco) to avoid complications in the event of take over by the State/Board.43. All the borrowings of Renusagar were arranged and guaranteed by Hindalco. Further, there is only one transmission line going out of Renusagar and the same goes to Hindalco. Renusagar can supply power only to Hindalco. Renusagar generates power only to the extent required by Hindalco. Hindalco has complete control over Renusagar including its day-to-day operations. This will be evident from the applications with regard to running of Renusagar Power Plant Station undertaken by Hindalco to the Board. See Vol. XV, pages 104, 118, 124 of the Paper Book.44. The agreement between Renusagar and Hindalco indicates this was not normal sale-purchase agreement between two independent persons at arms length. The price of electricity is determined according to the cash needs of Renusagar. This covenant also shows complete control of Hindalco over Renusagar.Ambit of Section 3(1)(c) is wider than the old section in view of the addition of the words source of generation which must be given their full meaning. We have set-out hereinbefore the provisions of Sections 3(1)(c) and 9 of the Act. Rule 2(g) referred to in the order shows that the expression any person in Section 3(1)(c) would mean a person other than licensee or a Board who consumes energy from his own source of generation. Hindalco fixes in the expression any other person under Section 3(1)(c) and it consumes energy from its own source of generation. Generation being done by Renusagar, it was pointed out that Rule 2(g) of the U.P. Electricity Duty Rules, 1952 supports this plea of the respondents. It should be borne in mind that the expression own source of generation which has not been defined in the Duty Act or 1910 Act, cannot be regarded as a term of art.46. The various documents and letters placed before the Court and referred to hereinbefore indicate that all persons and authorities dealing and conversant with this matter had consistently treated Renusagar as own source of generation of Hindalco. In the power-cuts matter under Section 22B of 1910 Act, 100% cut was imposed on Hindalco on the footing that it has its own source of generation. All the authorities including the State and the Board have all along treated Renusagar as own source of generation of Hindalco. The High Court as well as this Court had proceeded on that basis. In a note with the Advisory Counsel dated 31.5.77 the Secretary, Power Deptt. of the State Govt. treated Renusagar as own source of generation of Hindalco.We may say that Shri Trivedi mainly relied on the proposition that normally the Court has disregarded the separate legal entity of a Company only where the Company was formed or used to facilitate evasion of legal obligations. He referred us to the observations of this Court in Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr. [1982]2SCR1 . The facts of that case were, however, entirely different and it is useless to refer to them but at page 17 of the report, Chandrachud, C.J. speaking for the Court quoted the observations in Andhra Pradesh State Road Transport Corpn. v. The I.T.O. and Anr. [1994]52ITR524(SC) , where this Court had held that though the Transport Corporation was wholly controlled by the State Government it had a separate entity and its income was not the income of the State Government. While delivering the Judgment in that case Gajendragadkar, C.J., referred to the observations of Lord Denning in Tamlin v. Hannaford [1950] KB 18 where Lord Denning had observed that the Crown and the corporation were different and the servants of the corporation were not civil servants.52. Chandrachud, C.J., relied on the aforesaid observations and referred to penningtons Company Law 4th Edn., pages 50-51, where it was stated that there were only two cases where the Court had disregarded the separate legal entity of a Company and that was done because the company was formed or used to facilitate the evasion of legal obligations.54. Indubitably, in this case there was no question of evasion of taxes but the manner of treatment of the power plant of Renusagar as the power plant of Hindalco and the Government taking full advantage of the same in the case of power cuts and denial of supply of 100% power to Hindalco, in our opinion, underline the facts and, as such, imply acceptance and waiver of the position that Renusagar was a power plant owned by Hindalco.Shri Trivedi naturally relied on several decisions which we shall briefly note in aid of the submission that Renusagars power plant could not be treated as Hindalcos power plant. He referred us to the well-known case of Aron Salomon v. A. Salomon and Co. Ltd. [1897] AC 22 to emphasise the distinction between the shareholders and the company. This point of view was emphasised by this Court also in which Chandrachud, CJ., relied on Western Coalfields Ltd. in Rustom Cavasjee Cooper v. Union of India [1970]3SCR530 at 555, where this Court held that a Company registered under the Companies Act was a legal person, separate and distinct from its individual members. Property of the Company was not the property of the shareholders. These propositions, in our opinion, do not have any application to the facts of the instant case.61. Shri Trivedi drew out attention to the decision in Marshall Richards Machine Co. Ltd. v. Jewitt (H.M. Inspector of Taxes) 36 TC 511, where at page 525 of the report Lord Upjohn, J. observed that where you have a wholly-owned subsidiary, and both the parent company and wholly-owned subsidiary enter into trading relationships, there is, of course, a dual relation, but you cannot for the purposes of tax disregard the fact that there are, in fact, two entities and two trades, that is to say, the trade of each company. It is normally a question of fact whether the disbursement in question is laid out wholly and exclusively and for the purposes of the trade. In aid of this proposition and in furtherance Shri Trivedi drew our attention to the profits of the two companies which were separately computed and also referred to Vol. C, 641 where the profits of Renusagar were separately indicated and Vol. C at page 642 where the profits of Hindalco were separately indicated.62. We are, however, of the opinion that these tests are not conclusive tests by themselves.64. It is high time to reiterate that in the expanding of horizon of modern jurisprudence, lifting of corporate veil is permissible. Its frontiers are unlimited. It must, however, depend primarily on the realities of the situation. The aim of the legislation is to do justice to all the parties. The horizon of the doctrine of lifting of corporate veil is expanding. Here, indubitably, we are of the opinion that it is correct that Renusagar was brought into existence by Hindalco in order to fulfil the condition of industrial licence of Hindalco through production of aluminium. It is also manifest from the facts that the model of the setting up of power station through the agency of Renusagar was adopted by Hindalco to avoid complications in case of take over of the power station by the State or the Electricity Board. As the facts make it abundantly clear that all the steps for establishing and expanding the power station were taken by Hindalco, Renusagar is wholly-owned subsidiary of Hindalco and is completely controlled by Hindalco. Even the day-to-day affairs of Renusagar are controlled by Hindalco. Renusagar has at no point of time indicated any independent volition. Whenever felt necessary, the State or the Board have themselves lifted the corporate veil and have treated Renusagar and Hindalco as one concern and the generation in Renusagar as the own source of generation of Hindalco. In the impugned order of the profits of Renusagar have been treated as the profits of Hindalco.65. In the aforesaid view of the matter we are of the opinion that the corporate veil should be lifted and Hindalco and Renusagar be treated as one concern and Renusagars power plant must be treated as the own source of generation of Hindalco and should be liable to duty on that basis. In the premises the consumption of such energy by Hindalco will fall under Section 3(1)(c) of the Act. The learned Additional Advocate-General for the State relied on several decisions, some of which have been noted.66. The veil on corporate personality even though not lifted sometimes, is becoming more and more transparent in modern company jurisprudence. The ghost of Salomons case still visits frequently the hounds of Company Law but the veil has been pierced in many cases. Some of these have been noted by Justice P.B. Mukharji in the New Jurisprudence. (Tagore Law Lecture 183)67. It appears to us, however, that as mentioned the concept of lifting the corporate veil is a changing concept and is of expanding horizons. We think that the appellant was in error in not treating Renusagars power plant as the power plant of Hindalco and not treating it as the own source of energy. The respondent is liable to duty on the same and on that footing alone; this is evident in view of the principles enunciated and the doctrine now established by way of decision of this Court in Life Insurance Corporation of India, (supra) that in the facts of this case Sections 3(1)(c) and 4(1)(c) of the Act are to be interpreted accordingly. The person generating and consuming energy were the same and the corporate veil should be lifted. In the facts of this case Hindalco and Renusagar were inextricably linked up together. Renusagar had in reality no separate and independent existence apart from and independent of Hindalco.68. In the aforesaid view of the matter we are of the opinion that consumption of energy by Hindalco is clearly consumption by Hindalco from its own source of generation. Therefore, the rates of duty applicable to own source of generation have to be applied to such consumption, that is to say. I paisa per unit for the first two generating sets and nil rate in respect of 3rd and 4th generating sets. It is appropriate to refer that having regard to the conduct of the State the power-cuts matter and also the present proceedings the State should riot be permitted to treat consumption of Renusagars energy by Hindalco as anything other than different from consumption of energy by Hindalco from its own source of generation. We are, therefore, of the opinion that in the facts of this case the corporate veil must be lifted and Hindalco and Renusagar should be treated as one concern and if that is taken the consumption of energy by Hindalco must be regarded as consumption by Hindalco from its own source of generation.69. Inasmuch as the High Court upheld this contention of the respondent we are in respectful agreement of its views and the appeal directed against this finding of the High Court must, therefore, be rejected.72. The provisions of Sub-section (4) of Section 3 have been noticed. As we have read the said provisions, it appears to us that the dominance of public interest is significant and we refer to the various factors, namely, (a) prevailing charges for supply of energy in any area, (b) the generating capacity of any plant, (c) the need to promote industrial production generally or any specified class thereof and other relevant factors and then taking all these factors into consideration, in public interest, to fix different rates of electricity duty in relation to different classes of consumption of energy or allow any exemption from payment thereof. Various grounds have been made out.73. Shri Sen for the respondents is right that in view of the ceilings prescribed the power conferred upon the State under Section 3(1) of the Act by itself is valid and does not amount to excessive delegation. See also in this connection the observations of this Court in Devi Das Gopal Krishnan and Ors. v. State of Punjab and Ors. [1967]3SCR557 and Ram Bachan Lal v. The State of Bihar [1967]3SCR1 .Reliance was placed on the observations of this Court in Vincent Panikurlangara v. Union of India and Ors. : [1987]2SCR468 . There the writ petition involved the claim for withdrawal of 7000 fixed dose combinations and withdrawal of licences of manufacturers engaged in manufacture of about 30 drugs which have been licensed by the Drugs Control Authorities; the issues that fell for consideration are not only relating to technical and specialised matters relating to therapeutic value, justification and harmful side effects of drugs but also involved examination of the correctness of action taken by respondents 1 and 2 therein on the basis of advice; the matter also involved the interest of manufacturers and traders of drugs as also the interest of patients who require drugs for their treatment. this Court reiterated that in view of the magnitude, complexity and technical nature of the enquiry involved in the matter as also the far-reaching implications of the total ban of certain medicines for which the petitioner had prayed, a judicial proceeding of the nature initiated was not an appropriate one for determination of such matters. The technical aspects which arose for consideration in a matter of that type could not be effectively handled by a court. this Court also reiterated that similarly the question of policy which was involved in the matter was also one for the Union Government-keeping the best interest of citizens in view-to decide. No final say in regard to such aspects came under the purview of the court.75. The High Court in the instant case reiterated the necessity of cheap electricity and if cheap electricity was not made available, the cost of indigenous aluminium would go up. It would necessitate import of aluminium causing drain on the foreign exchange of the country. On the other hand, the learned Additional Advocate General for the State of U.P. contended and in our opinion rightly that primary purpose of the Act as stated in the preamble was to raise the revenue for the development projects. Whether in a particular situation, rural electrification and development of agriculture should be given priority or electricity or development of aluminium industry should be given priority or which is in public interest, in our opinion, are value judgments and the legislature is the best judge.The High Court in its impugned judgment referred to the order of the Government. The said order read as follows:The Corporation has also emphasized that the Government of India is spending a huge sum of money in foreign exchange to meet the requirements of aluminium in India, with a view to increasing the aluminium production by Hindalco Electricity should be made available at cheap rate and exemption should be granted to the Corporation from payment of electricity duty. In this connection it may again be pointed out that the imposition of electricity duty will not affect the productivity of aluminium by M/s. Hindalco as electricity duty is negligible as clearly made out in the earlier paragraphs. Accordingly, the electricity duty is not likely to have any adverse effect on foreign exchange of the country.76. Referring to the aforesaid observations of the State Government, the High Court was of the view that the said observations of the State Government clearly showed that the State Government did not address itself to the need of promoting aluminium industry for increasing production of aluminium which would in the long run save foreign exchange. We are unable to agree. What was paramount before introduction of the development programme and how the funds should be allocated and how far the Government considers a negligible increase and rise in the cost of aluminium for the purpose of raising monies for other development activities are matters of policy to be decided by the Government. It is true as the High Court has pointed out that the question regarding public interest and need to promote indigenous industrial production was related with the question of exemption of duty. But what the High Court missed, in our opinion with respect, was that a matter of policy which should be left to the Government. Reading the order of the Government, it appears to us that the Government had adverted itself to all the aspects of Sub-section (4) of Section 3 of the Act. It is true that certain amount of encouragement was given to Hindalco to start the industry in a backward area. After considerable point of time the very low rate of duty was charged. But if we need other sectors of growth and development for example, food, shelter, water, rural electrification, the need for encouragement to aluminium industry had to be subordinated by little high cost because that is a matter on which the Government as representing the will of the people is the deciding factor. Price fixation, in our opinion, which is ultimately the basis of rise in cost because of the rise of the electricity duty is not a matter for investigation of Court.The present case relates to the particular facts and circumstances of an individual, namely, Hindalco. To the extent, its claim for exemption was entitled to the consideration. In our opinion, the facts and circumstances of the case were examined in consonance with the principles of natural justice. All relevant factors were given consideration but subject to public interest. The High Court considered whether electricity duty was included in the prices of aluminium fixed by the Central Government. On this aspect our attention was drawn on behalf of the respondents at pages 372-387 of the judgment in Volume B. It was submitted that the assumption that electricity duty was included in the prices of Hindalco fixed by the Central Government formed a basic and a very important consideration in the making of the impugned order. We are unable to agree. It was also submitted that the said assumption was made by the State Government and Dr. Rajagopalan on the basis of the reports of BICP and the Working Group. The High Court on a perusal of the reports of the BICP and the Working Group came to the conclusion that the said assumption of the State and Dr. Rajagopalan is based on non-existent fact and/or is patently erroneous. Apparently such examination by the High Court was not warranted. It was pointed out that Dr. Rajagopalan had determined the adequacy of the profits of Hindalco by relating the same to the original subscribed capital only and had completely ignored the reserves of Hindalco. The aforesaid basis, it was held by the High Court is contrary to the well accepted principles of return on capital employed/net worth. It is true that Hindalco has made profits much more than it had before the imposition of the duty. The adequacy of the profits or whether it made much more profits is not a consideration which must prevail over public interest and the Government having taken into consideration this factor, in our opinion, did not commit any error and the High Court was in error in setting aside the order of the Government. It is true that the cost of power to similar industry in other State was a relevant factor and the State was under a mandatory duty to consider the same. The State has taken note of all those factors and has observed that M/s. Hindalco is being supplied with electrical energy at a very nominal rate and taking into consideration the prevailing practice of levy of electricity duty in other States as well as the provisions stated in Section 3(4), the Government have come to the conclusion that there is no justification for allowing exemption from electricity duty to M/s. Hindalco. The Government did not commit any error which required interference by the High Court in the manner it did. The assurance of cheap power factor was there. But the assurance of cheap power factor does not foreclose the public interest of raising public revenue.85. In July, 1975 the Central Government fixed uniform prices of aluminium for all the producers of aluminium. The Central Government also fixed uniform sale prices of aluminium applicable to all producers. The Central Government also fixed individual retention prices (based, inter alia, on the cost of production) for each individual producer. All producers of aluminium were to sell aluminium at the uniform sale prices. Any producer whose retention prices were lower than the sale prices had to pay difference into the Aluminium Regulation Account. Any producer whose retention prices were higher than the sale prices was entitled to receive the difference from the Aluminium Regulation Account. Price, therefore, was no question of the respondent being loser or sufferer. It is true that electricity duty was not included and was also considered in the fixation of the price. That is the only pre-dominant factor, having regard to the technical nature of the order. The impugned order does not suffer from the vice of non-application of mind or non-consideration of the relevant factors and the High Court was in error in interfering with the order of the Government. We are clearly of the opinion that the High Court was in error in interfering with the order in the manner it did. The High Court should not have interfered for interference by the High Court the matter should have been far less cloudy and far more clear.86. Natural justice in the sense that a party must be heard beforehand need not be directly followed in fixing the price. Reference in this connection may be made to the observations of this Court in Prag Ice and Oil Mills and Anr. etc. v. Union of India1978CriLJ1281a , where at page 325 of the report, this Court observed that in the ultimate analysis, the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases as valid. In this connection reference may also be made to Shree Meenakshi Mills Ltd. v. Union of India [1974]2SCR398 , where this Court dealing with the Cotton Textile (Control) Order, 1948 at page 419 of the report observed that if fair price is to be fixed leaving a reasonable margin of profit, there is never any question of infringement of fundamental right to carry on business by imposing reasonable restrictions. Unreasonableness and natural justice have to be judged in that context. In that view of the matter non-supply of the basis of the report of the BICP does not by itself, in our opinion, in the facts and circumstances of the case make the order of the State Government vulnerable to challenge.87. In Laxmi Khandsari etc. etc. v. State of U.P. and Ors. [1981]3SCR92 this Court was dealing with the Essential Commodities Act, 1955 and the Sugarcane (Control) Order, 1966 and observed that in determining the reasonableness of restrictions imposed by law in the field of industry, trade or commerce, the mere fact that some of the persons engaged in a particular trade may incur loss due to the imposition of restrictions will not render them unreasonable because it is manifest that trade and industry pass through periods of prosperity and adversity on account of economic, social or political factors. At page 129 of the report rejecting the plea that before fixing a price the rules of natural justice should be adhered to, this Court emphasised, referring to the observations in the case of Saraswati Industrial Syndicate Ltd. v. Union of India [1975]1SCR956 that price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material. There is scope for trial and error in such sphere. Judged by that standard, the impugned order in this case, in our opinion, is not bad.88. In support of the proposition that the principles of natural justice had been violated in passing the impugned order, five decisions were referred to, namely, State of Orissa v. Mr. (Miss) Binapani Dei (1967)IILLJ266SC ; A.K. Kraipak v. Union of India, [1970]1SCR457 ; Mohd. Rashid v. State of U.P. (1979)ILLJ146SC ; S.L. Kapoor v. Jagmohan and Ors., [1981]1SCR746 and Maneka Gandhi v. Union of India, [1978]2SCR621 . The principles of these cases will have no application to the facts of this case. There has been no violation of the principles of natural justice to the extent applicable to the order of this nature.89. Reference was made to the observations in the case of India Sugars and Refineries Ltd. v. Amravathi Service Co-operative Society Ltd. [1976]2SCR740 where at page 746 of the report, this Court observed that the power to grant exemption to factories from payment of additional price is intimately connected with the right of sugarcane growers to claim additional price. In granting of such power, principles of natural justice should be followed. In such a case a duty to act judicially does arise.90. this Court in Commissioner of Income Tax, Bombay and Ors. v. Mahindra and Mahindra Limited and Ors. [1983]144ITR225(SC) at page 786 of the report, dealt with the parameters of the Courts power of judicial review of administrative or executive action or decision. Indisputably, it is a settled position that if the action or decision is perverse or is such that no reasonable body of persons, properly informed, could come to or has been arrived at by the authority misdirecting itself by adopting a wrong approach or has been influenced by irrelevant or extraneous matters, the Court would be justified in interfering with the same. See also the observations at page 787 of the report. In this case the parameters had been adhered to. All relevant factors had been borne in mind. It is true that each factor had not been independently considered, but these had been borne in mind. In our opinion, the Government did not act in violation either of the principles of natural justice or arbitrarily or in violation of the previous directions of the High Court.91. In the premises, the High Court was in error in setting aside the order of the State Government in its entirety. The High Court should have allowed the claim of Hindalco for the reduced rate of bill on the basis that Renusagar Power Plant was its own source of generation under Section 3(c) and the bills should have been made by the Board on that basis. But the High Court was in error in upholding the respondents contention that the State Government acted improperly and not in terms of Section 3(4) of the Act and in violation of the principles of natural justice.