2016 (1) TMI 1115 - SC - Indian Laws

Court denies appellants' claim for concessional electricity tariff; State's authority upheld

KOTHARI INDUSTRIAL CORPORATION LTD. Versus TAMIL NADU ELECTRICITY BOARD & ANOTHER

The court ruled against the appellants, holding that the principles of promissory estoppel did not apply in their favor to claim the benefit of ... Principles of promissory estoppel - whether Principles can be invoked in favour of the appellants so as to entitle them to the benefit of concessional tariff of electricity? - 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. The appellants have urged certain other issues to persuade the court to strike down the impugned action of the respondents in withdrawing 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 whole though its caustic soda unit, to whom concessional tariff was promised and granted, may have earned a profit. The concessional tariff having been granted to the industry by the Act in question, though in respect of its caustic soda unit, the assessment of 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 of the impugned G.O. to the appellants in C.A.Nos.9748 and 9750 of 2003. Similarly in the case of the appellant National Oxygen Ltd. the refusal 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 G.O. 861 dated 30.4.1982 in the year 1988 and a reversal to the situation prevailing earlier cannot invalidate the G.O. (No. 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. Issues:1. Application of principles of promissory estoppel for entitlement to concessional tariff of electricity.2. Interpretation of the Tamil Nadu Revision of Tariff Rates on supply of Electrical Energy Act, 1978.3. Validity of the amendment to the Schedule affecting concessional tariff.4. Impact of profitability on the withdrawal of concessional tariff.5. Authority to determine policy for grant/refusal of concessional power.Analysis:1. The judgment deals with the invocation of promissory estoppel in favor of the appellants to claim the benefit of concessional electricity tariff. The court examined whether the State could alter the benefit of concessional tariff through an amendment. It referenced a similar case to conclude that there can be no estoppel against the statute.2. The court analyzed the Tamil Nadu Revision of Tariff Rates on supply of Electrical Energy Act, 1978, which defined tariff rates for electrical energy consumption. It scrutinized the Schedule under the Act, detailing concessional tariffs for new industries for specific years. The court noted the power of the State Government to amend the Schedule, considering factors like cost of production.3. The judgment evaluated the validity of an amendment to the Schedule by G.O. No.861 dated 30.4.1982, which restricted the availability of concessional tariff once the industry started earning profits. The appellants had agreed to be bound by this amendment. The court considered the legality of this amendment in light of the appellants' objections.4. The impact of profitability on the withdrawal of concessional tariff was a crucial issue. The appellants argued that they had not made profits as claimed by the State, challenging the applicability of the amendment to loss-making concerns. The court examined the profitability of the industries as a whole, dismissing the contention that profitability of specific units should determine tariff eligibility.5. Lastly, the judgment addressed the authority to determine policy for concessional power grant/refusal. It emphasized that such decisions are within the State's domain and not for the courts to decide. The court dismissed all appeals, concluding that the principles of promissory estoppel did not apply, and the contentions against the withdrawal of concessional tariff were not tenable on merit.