1999 (12) TMI 755 - HC - Companies Law

Court reinstates concessional electricity tariff, citing natural justice violation. Petitioner entitled to refund.

Madras Aluminium Co. Ltd. Versus State of Tamil Nadu

The court set aside the Government Order withdrawing concessional electricity tariff, citing a violation of principles of natural justice. The ... Rehabilitation by giving financial assistance Issues Involved:1. Validity of the Government Order G.O.Ms.No.190 dated 11-12-1997.2. Entitlement of the petitioner-company to concessional electricity tariff.3. Effective date for the commencement of the concessional period.4. Compliance with principles of natural justice.Detailed Analysis:1. Validity of the Government Order G.O.Ms.No.190 dated 11-12-1997:The petitioner-company and its workers challenged the Government Order G.O.Ms.No.190, which withdrew the concessional electricity tariff granted earlier. The respondents argued that the concession caused financial losses to the Tamil Nadu Electricity Board (TNEB). The court observed that the Government Order was passed without giving the petitioner-company an opportunity to be heard, violating principles of natural justice. The court emphasized that any order involving civil consequences must be preceded by a notice and an opportunity to respond. Consequently, the impugned Government Order was set aside.2. Entitlement of the Petitioner-Company to Concessional Electricity Tariff:The petitioner-company was granted a concessional electricity tariff of Re. 1 per KWH for four years as part of a revival package to prevent unemployment and revive the only aluminium manufacturing unit in Tamil Nadu. Despite the company's improved financial status, the court held that the petitioner-company was entitled to continue availing the concessional tariff until the end of the stipulated four-year period, unless validly withdrawn with due process.3. Effective Date for the Commencement of the Concessional Period:The core dispute was the commencement date for the four-year concessional period. The petitioner argued that the period should start from the date of production resumption on 21-2-1995, while the respondents contended it started from the date of the Government Order on 28-4-1992. The court noted that the concessional tariff was meant to support the company during its operational phase, not when it was non-functional. The court concluded that the four-year period should commence from the date of production resumption, aligning with the intent behind the concession.4. Compliance with Principles of Natural Justice:The court highlighted the necessity of adhering to principles of natural justice, especially when withdrawing previously granted concessions. The petitioner-company was not given an opportunity to present its case before the concessions were withdrawn, rendering the Government Order procedurally flawed. The court cited the Supreme Court's ruling in S.K. Bhargava v. Collector, emphasizing that any determination involving civil consequences must follow due process, including notice and hearing.Conclusion:The court allowed the writ petitions, setting aside the impugned Government Order for failing to adhere to principles of natural justice and misinterpreting the commencement date for the concessional period. The petitioner-company was entitled to the concessional tariff from the date of production resumption, and any future withdrawal of concessions must follow due process. The court also directed the refund of amounts paid by the petitioner-company under interim orders, after adjusting dues payable to the TNEB.