Government promise of uninterrupted electricity supply must be honoured in full; partial relief for shortfalls was rejected.

Industrial units induced to establish themselves on the basis of a State assurance of uninterrupted electricity supply were entitled to the full benefit of that promise. Although the State retained regulatory power under the Indian Electricity Act, 1910, that power could not be used to dilute the assurance by granting compensatory extension only for supply shortfalls of 50% or more. The Court held that even a lesser disruption could materially affect continuous-process industries, making the restricted relief unreasonable and unfair. The State was therefore required to extend the incentive period for every day on which the assured 100% supply was not provided, and the High Court's order was set aside.

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Issues: Whether the State was bound to extend the incentive period for every day on which the assured 100% electricity supply was not made available to the new industrial units, and not merely for days when the shortfall was 50% or more.

Analysis: The units were established on the basis of a State policy assuring uninterrupted electricity supply and tariff benefits for five years. The Court held that the State could regulate supply under Section 22B of the Indian Electricity Act, 1910, but that power did not justify withholding the full benefit of the assurance given to the units. Since even a shortfall of less than 50% could seriously disrupt continuous process industries, the limited extension granted by the State was found to be unreasonable and unfair. The Court further held that the State could not rely on its general regulatory power to avoid the consequences of its promise.

Conclusion: The State was required to extend the incentive period for all days during which the assured 100% electricity supply was not provided. The impugned order of the High Court was set aside and the appeals were allowed.

Ratio Decidendi: Where industrial units are induced to establish themselves on the basis of a specific governmental assurance of uninterrupted supply, the State must honour that promise by granting equivalent compensatory extension for any period of shortfall, and cannot restrict relief to only a part of the disruption on an arbitrary threshold.

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