M/S. KOTHARI INDUSTRIAL CORPORATION LTD. versus TAMIL NADU ELECTRICITY BOARD & ANR.
[2016] 1 S.C.R. 564, Supreme Court of India, 2016
Outcome: Dismissed (Dismissed)
Segment: Ratio
[2016] I S.C.R. 564 
A 
M/S. KOTHARI INDUSTRIAL CORPORATION LTD. 
B 
c 
D 
E 
r 
G 
H 
v. 
TAMIL NADU ELECTRICITY BOARD & ANR. 
(Civil Appeal No. 9748 of2003 etc.) 
JANUARY 29, 2016 
(RANJAN GOGOi, ARUN MISHRA AND 
PRAI<ULLA C. PANT, JJ.J 
Electricily- Concessional lariffto new Industries -Alleralion/ 
modificalion qf: by S/a/e - l'ursuanl to e1~force111enl of Tamil Nadu 
Rel'ision of Tariff Rates on Supp~v of Electrical Eneri;y Act, 1978 -
Permissibility al- On the principle of promissory estoppel - Held: 
There ca11 be no es/oppel against a sta/u/e - The pri11ciple of 
promissory estoppel would have no application lo !he case of !he 
beneficiaries of co11cessional lar{ff; so as lo enlilie them any righl 
lo continue !he concessional 1arif1 which was earlier gra/1/ed - The 
assessment of profit/loss of !he induslry for determining the 
applicalion of !he (JO.No. 861 doled 30. 04.1982 (whereby the /arijf 
rales were revised), was no/ arbitrwy or unjustified - Subsequent 
wilhdrawal of the G 0. would no/ invalidate the some - Decision to 
grant/refi1.ml qfconcessimwl power at different points of lime, should 
he lefl lo !he Slate and 1101 lo !he Cour/S - Tamil Nadu Revision of 
Tariff.Ra/es m1 Supply of Eleclrical Energy Act, 1971! · ss. 3 and 4 
Administrative Law ·· Principle of Promissorr £.vtoppel. 
Shree Sidhbali Steels Limited vs. State ()f VIiar Pradesh 
& Ors. 2011 (3) SC I 93: 2011 (3) SCR 134; Stale of 
Rajasthan vs . .J.K. Udaipur V<(vog Ltd. 2004 (7) SCC 
673:
2004 (4) Suppl. SCR 812 - referred to. 
Case Law Reference 
2011 (3) SCR 134 
referred to. 
Para 11 
2004 (4) Suppl. SCR 812 
referred to. 
Para 12 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9748 
of2003 
From the Judgment and Order dated 06.12.200 I of the High Court 
of Judicature at Madras in Writ Appeal No. 421 of 1995. 
564
MIS_ KOTHARI INDUSTRIAL CORPORATION LTD_ v. TAMii. 
565 
NADU ELECTRICITY BOARD & ANR. 
WITH 
C. A_ NOS. 9749 and 9750 OF 2003 
Pravin 1-L Parekh. Nalini (~hida1nbaran1. E. R .. Ku1nar. Anurag 
Tripathi. (lor M/s. Parekh & Co .. ). Krislman1urthi Swami. Nikhil Swami, 
Divya Swami. Prabha Swami. Anushree Menon. Yikas Mehta. Rakhi 
Mohanty. Prashant Singh for the Appellant. 
Subramonium Prasad. 13. Bala_ji. Sudhanshu. Utkarsh Srivastava 
for the Respondents_ 
The Judgment of the Court was delivered by 
B 
RANJAN GOGOi, .I. I. These cases have been referred by a 
C 
two-Judges Bench of this Court on the question as to whether. iu the 
facts of the case. the principles or promissory cstoppel can be invoked in 
favour of the appellants so as to entitle them to the benefit of concessional 
tariff of e lcctric ity_ 
2. Civil Appeal No.9748 of 2003 and Civil Appeal No. 9750 of 
D 
2003 have identical facts. In fact the appellant in Civil Appeal No. 9750 
of2003 is the successor-in-interest of the appellant in Civil Appeal No. 
9748 of2003.The facts in the third appeal i.e. Civil Appeal No. 9749 of 
2003 are also largely similar_ 
3. The appellant in C.A.No.9748 of2003 Mis. Kothari Industrial 
Corporation Ltd. had proposed to set up a caustic soda manufacturing 
unit at Mana Ii in the State o fTam i I Nadu_ As the nrnnll l:1ct uring process 
involved high consumption of electrical power, the appcl I ant applied for 
concessional tariff which was promised to it by a Government Letter
dated 29 .6. 1976 for first fi vc years after commencement of production. 
In the said letter it was specifically mentioned that the rate at which the 
appellants were required to pay tariff would be below the rate applicable 
to the other two established caustic soda units in the State for the first 
three years and therealicr the rates will be at par with that of the other 
two units in the State. 
4. Admittedly the unit of the appellant had started commercial 
production with effect from Janumy, 1979. On 23.2.1979 the Tamil Nadu 
Revision of Tariff Rates on supply of Electrical Energy Act, 1978 
(hereinafter referred to as the ·'Act") came into force. 
5. Section 2(b) of the Act defines tariff in the following terms: 
E 
F 
G 
H
566 
SUPREME COURT REPORTS 
[2016] I S.C.R. 
A 
"Tariff' means the rate of tariff leviable upon the consumption of 
any electrical energy in this State supplied by the Tamil Nadu 
Electricity Board and as specified in the Schedule to this Act." 
Section 3 of the Act provides that the tariff rates for consumption 
of electrical energy shall be as specified in the Schedule to the 
B 
Act. 
Under Section I the State Government is empowered to amend 
the provisions <.fthe Schedule to the Act after taking into account 
the cost of production of energy and such other matter as may be 
prescribed. 
C 
The schedule to the Act, inter alia, provides that in the case of 
new industri !S, concessional tariff would be charged after 
commencem• nt of the production in the following manner-
D 
E 
F 
G 
H 
" For the f rst 
Three yeus 
..... 66-2/3 
For the fourth year ...... 80 
Tension rate's under I (A), 
For the firti'I year 
...... 90 
For the sixth year ...... 
Per cent of the High Tension 
rates under I (A) (B) as the 
case may be. 
Per cent of the High 
I (B) as the case may be. 
Per cent of the High 
Tension rates Lmder I (A) 
(B) as the case may be. 
Full Tariff.'' 
6. 
In exercise of the power conferred by Section 4 of the Act, 
the Schedule thereto was amended by GO. No.861 dated 30.4.1982. 
While maintaining the concessional tariff as noticed above, the 
Amendment provided that the same will not be available from the year 
when the industry starts earning profits. It is also an
admitted fact that 
the appellants had furnished undertakings that it will be bound by 
amendment to the Schedule as affected by G.O. No.861 dated 30.4. I 982. 
7. 
On the above basis, a demand was raised on the appellants 
for consumption of electricity at the normal rate of tariff applicable on 
the ground that the industries had started earning profits. The said demand 
insofar as the appellant, Mis. Kothari Industrial Corporation Ltd. and 
Southern Petro Chemical Industries Corporation Ltd. is concerned is for 
the period from May 1982 to November, 1983, while for the appellant 
National Oxygen Ltd. the period is May 1982 to April, 1984.
KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL. 
NADU ELECTRICITY BOARD [RANJAN GOGOi, J.] 
8. 
The appellants protested against the said demand and 
eventually moved the High Court contending that under the Act the 
respondent State had promised concessional tariff for a period of five 
years starting from the date of commencement of commercial production. 
The said position could not have been revisited by any contrary action as 
has been done. Alternatively, it was contended that the appellants had 
not rr.ade any profits as claimed by the State. Therefore, even if the 
amendment in the Schedule to the Act is to be construed to be legally 
permissible, the same would have no application to the appellants which 
were loss making concerns. The said claim was negatived by the High 
Court leading to the appeals before us. 
9. 
We have heard Shri Pravin H. Parekh and Ms. Nalini 
Chidambaram, learned senior counsels for the appellants in C.A. No 
9748 of2003 and C.A. No 9750 of2003 and Shri Krishnamurthi Swami, 
learned counsel forthe appellant in C.A.No.9749 of2003. We have also 
heard Shri Subramonium Prasad, learned counsel for the respondents. 
I 0. The question referred to this bench, as noticed, is whether 
the State would be estopped from altering/modifying the benefit of 
concessional tariff by means of the impugned G.O No. 861 dated 
30.4.1982 on the principle of promissory estoppel. In fact, insofar as the 
caustic soda unitofM/s. Kothari Industrial Corporation Ltd.,
subsequently 
taken over by Southern Petro Chemical Industrial Corporation Ltd., is 
concerned, strictly speaking, the above question. would not even arise 
inasmuch as at the time when the unit was set up and had started 
commercial production, the Act had not yet come into force. The promise, 
if ariy, was made by the letter dated 29.6.1976 on the terms noticed 
abovr; namely, the tariff payable by the industry was to be at a rate less 
than what was applicable to the other two units of the State for the first 
three years and thereafter at the rate equivalent to what was being paid 
by the said two units. 
11. Be that as it may, the question referred has been squarely 
answered by this Court in Shree Sidhbali Steels Limited vs. State of 
Uttar Pradeslr & Ors.I wherein this Court has considered a similar 
question with regard to the withdrawal of concessional tariff/rebate to 
an industrial unit carrying on business in the hill areas of the State of 
U.P. (now the State of Uttarakhand). After an indepth consideration of 
1 2011 (3) sec 193 
567 
A 
B 
c 
D 
E 
F 
G 
H
568 
SUPREME COURT REPORTS 
[201(>J 1 S.C.R. 
A 
the provisions orSection 48/49 or the Electricity Supply AcL 1948 under 
which the concessional tariff/rebate \Vas granted and the provisions or 
Section 21 of the (Jenera! ('lauscs Act as \vcll as the provisions ol'thc 
U.P. Electricity Reforms AcL 1999 undcr which the concessional tariff/ 
rebate \Vas later \Vilhdra\vn this C.'ourt in para 5 I ca1nc to the follo\ving 
B 
c0nclusiu11 -
"'Fron1 the above discussion. it is clear that lhc petitioners cannot 
raise pica of cstoppcl against the Notitication dated 7.8.2000 
reducing, hil I development rebate to 0% as there can be no estoppcl 
against the statute.'' 
c 
12. In Para 47 oft/Jc report this Court has considered and liad 
D 
E 
thought it appropriate to extract. the vic,vs c.\pn.:sscd in an earl icr dl:'cision 
i.e. Stal<,: o{ R11j_a.'jl_ha11_~·s . .{.K~UdaiJ!l11.· (/d)<JgJtd.' : 
'"25. An cxe111ption is by definition a rrccdo111 fro1n an obligation 
\Vhich the cxc111plcc is othcr\visi.: liable to disthargc. It is a privilege 
granli ng an a<lvanlagi.: not ava i lablc lo otht.:rs. ;\n t.:xcnipt ion granted 
under a statutory provision in a fiscal statute has been held to be 
a concession granted by the Stale (Jovcrn111ent so that the 
beneficiaries of such conccssio11 arc not required to pay the tax 
or duty they arc otherwise liable to pay under such statute. The 
recipient ofa concession has no legally cnfiJrccablc right against 
the Government to grant of a concession
except to enjoy the 
benefits of the concession during the period of its grant. This right 
to enjoy is a detcasiblc one in the sense that it may be taken away 
in exercise of the very power under which the exemption was 
granted. (Sec S/Jri Hukul Oil Industries v. Siule ol Gujunll, 
Kasinku liwli11)'.. v. U11io11 ol India and Shriiee Sain ( '011n1. 
v. U11i,)f) ol ludia. )" 
I}. On the aforesaid basis in Para 48 of the report in S'/1rce 
Sidhhali Steels Ud. (supra) it was concluded as ll>tlows : 
"'48. From the principle enunciated in the abovcmcnlioned decision 
G 
in Udaipur U<(VO)'.. rnse there is no manner of doubt that the 
rebate which \Vas granlcd to lhc petitioners. was, by definition, a 
freedom from an obligation which the appellants otherwise were 
liable to discharge. ·r1ic rebate \Vas a privilege granting an 
11 
2 2004 (7) sec 673
KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL 
NADU ELECTRICITY BOARD [RANJAN GOGOL J.] 
advantage which was not 111ade available to others. The rebate 
granted under Section 49 of the Electricity (Supply) Act of 1948 
was, therefore, a concession granted by the State Government so 
that the beneficiaries of such concessions were not re~uired to 
pay the electricity tariff they were otherwise liable to pay under 
the said Act during the pe1·iod of its grant. The petitioners. as 
recipients of a concession, accepted to enjoy the benefits of the 
concession during the period of" its grant. This right to enjoy was a 
defeasible one in the sense that it was liable to be taken away or 
withdrawn in exercise of the very power under which the 
exe1nption was granted.') 
14. In the light of the above discussion and the earlier views of 
this Court, as set out above, it has to be held that the principle of 
promissory estoppel would have no application to the case of the 
appellants so as to entitle the applellants any right to the continuation of 
the concessional tariff earlier granted. 
15. The appellants have urged certain other issues to persuade 
the court to strike down the impugned action of the respondents in 
withc!rawing the concessional tariff, the foremost being that the industries 
in question had earned no profits so as to attract the withdrawal/disabling 
condition introduced in the Amended Schedule. In this regard it is pointed 
out that Kothari Industrial Corporation
Ltd. had incurred losses as a 
\vhole though its caustic soda unit, to \vhoni concessional tariff \Vas 
promised and granted, may have ei1rned a profit. The concessional tariff 
having been granted to the industry by the Act in question, though in 
respe~t of its caustic soda unit, the assessment or profit/loss made by 
the industry as a whole and not by the unit alone, cannot be said to be an 
arbitrary or irrational basis for determining the application ofthc impugned 
GO. to the appellants in C.A.Nos.9748 and 9750 of2003. Similarly in 
the case of the appellant National Oxygen Ltd. the rel"usal of the 
respondent to compute the issue of profit/loss by distributing the 
depreciation of cylinders for a period of five years instead of the first 
year in which the depreciation was allowed, as claimed, cannot be termed 
as an unjustified basis for holding the industry to be a profit making 
enterprise. The contention on the above score made on behalf of the 
appellant National Oxygen, therefore, is of no consequence. Similarly 
the withdrawal of the GO. 861 dated 30.4.1982 in the year 1988 and a 
reversal to the situation prevailing earlier cannot invalidate the GO. (No. 
569 
A 
13 
c 
D 
E 
G 
II
.. 
570 
SUPREME COURT REPORTS 
[2016) 1 S.C.R. 
A 
861 dated 30.4.1982) inasmuch as it is for the State and not for the 
court to determine what should be the policy for grant/refusal of 
concessional power at different points of time. These are questions that 
must be left to the State and not to the Courts to decide . 
16. In the light of the above, even the contentions on the merits 
B of the decision as advanced by the appellants are not tenable so as to 
invalidate the action(s) impugned in the present cases. 
c 
17. For the aforesaid reasons all the appeals are without any 
merit and are accordingly dismissed. 
Kalpana K. Tripathy 
Appeals dismissed.