# INDIAN METALS AND FERRO ALLOYS LIMITED AND ANR. ETC v. STA1E OF ORISSA & ORS. ETC. ETC - **Citation:** [1987] 3 S.C.R. 265 - **Court:** Supreme Court of India - **Decided:** 1987-05-06 - **Bench:** V. Balakrishna Eradi, G.L Oza - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/indian-metals-and-ferro-alloys-limited-and-anr-etc-v-sta1e-of-orissa-ors-etc-etc-9737 - **Pages:** 24 ## Headnote Indian Electricity Act, 1910-Section 228-Equitable distribution of energy-Benefit of clubbing-Whether can be withdrawn with retrospective effect-'Domestic unit'-Benefit of clubbing permittedWhether can be denied to industry classiMd a.r 'power intensive unit'. Orissa State Electricity Board (General Conditioru of Supply) Regulations, 1981-Regulation 28-Ckusification of service to consumers-Industries-Five categories-siTUl/1, medium, large, power A B c i intensive and heavy-Separate categorisation of 'export oriented ~ industries'-Not pennissible. D 'J i. '·· ... Tbe petitioner-company, engaged in manufadun et ferr.silicon1 silicon metal and silicon carbide, was permitted dabb~ of electricity for the water yt'ars 1979-80 to 1983--84 for iu v.nit5 in an industrial complex in t~ State of Orissa, which utilised electricity as raw material and which were classified as 'power lnteosiTe industries'. During the E water year 1984-85, clubbing of power supply from Jllfy 1984 ouwards wu allowed and bi.lb for the period from July 1934 to December 1984 were drawn up and served on the basis tbat the company was entitled to the be~fit of dubbing. Though tbe position was subject to re~n In October 1984 no revision took place. In ()Kember 1~, tbe facility of dllbblng was refused on tbe ground that one of the onib befnK a l~ f trport oriented Industry, power supply to it had to be regulated separately for purposn of power alJocatioa aDd that clubbing had been , allowed for the month of Joly1984 onl)'. Under Section 228 of the ladla.a Eledrklty Act.t949, tbe State of Orissa Issued an order on January ll, 1985, etrtdln from July t, 1984, G cllrtding the State El«trlclty Board to ml11~ sappiJ of energy so as to allow consumers to avail of supply only to the extent spedlled in the &tnt xure to the order. There was a note to the order prescribing certain toodltlons. All the units of the petltioner-compaay were sbowu in the H 265 · ··I ' ., ..... r 266 SUPREME COURT REPORTS [1987] 3 S.C.R. A Annexure under the classification 'power intensive industries'. The First three units were allotted energy together and the fourth unit separately. After the promulgation of the above order, the Board served a revised bill on the company demanding payment at the higher tariff B rate for the period from October 1984 to June 1985, on the ground that there bad been alleged excess drawal by the company due to clubbing. The company filed a writ petition in the High Court challenging ......,. the aforesaid order and also the letter of the Board refusing clubbing for the entire water year 1984-85 and praying for quashing the same. C The company also sought a writ of mandamus directing the Board and the State Goveroment to permit clubbing for the water year 1984-85 as - well as for the future years. On behalf of the State it was contended that '( clubbing had been allowed to the company by the Board temporarily for the month of July 1984 only during the water year 1984·85 and that the power allotted to the fourth unit could not be allowed to be clubbed with D that allotted to the other three units since the former was a 100% export oriented unit and, it had, therefore, to be treated separately for the -'( aUocation of power. During the pendency of the writ petition the State Government passed another order effecting allocation of power under Section 22B of E the Act for the water year 1985-86. The company was served with a notice of disconnection for non-payment of the bills prepared at the higher tariff rate for the month of August, 1985. The company filed \ another writ petition challenging the order and praying for identical reliefs as in the previous petition. This petition was opposed by the State contending that the said unit, being a 100% export oriented unit, had to F be treated separately for the purpose of power allocation. The High Court passed an interim order directing the State Government to dispose of the company's request for clubbing of the power allott ## Text _Characters 0–39,365 of 58,996. This is a partial read: ask again with offset=39365 for what follows._ INDIAN METALS AND FERRO ALLOYS LIMITED AND ANR. ETC v. STA1E OF ORISSA & ORS. ETC. ETC. MAY 6, 1987 [V. BALAKRISHNA ERADI AND G.L OZA JJ.) Indian Electricity Act, 1910-Section 228-Equitable distribution of energy-Benefit of clubbing-Whether can be withdrawn with retrospective effect-'Domestic unit'-Benefit of clubbing permittedWhether can be denied to industry classiMd a.r 'power intensive unit'. Orissa State Electricity Board (General Conditioru of Supply) Regulations, 1981-Regulation 28-Ckusification of service to consumers-Industries-Five categories-siTUl/1, medium, large, power A B c i intensive and heavy-Separate categorisation of 'export oriented ~ industries'-Not pennissible. D 'J i. '·· ... Tbe petitioner-company, engaged in manufadun et ferr.silicon1 silicon metal and silicon carbide, was permitted dabb~ of electricity for the water yt'ars 1979-80 to 1983--84 for iu v.nit5 in an industrial complex in t~ State of Orissa, which utilised electricity as raw material and which were classified as 'power lnteosiTe industries'. During the E water year 1984-85, clubbing of power supply from Jllfy 1984 ouwards wu allowed and bi.lb for the period from July 1934 to December 1984 were drawn up and served on the basis tbat the company was entitled to the be~fit of dubbing. Though tbe position was subject to re~n In October 1984 no revision took place. In ()Kember 1~, tbe facility of dllbblng was refused on tbe ground that one of the onib befnK a l~ f trport oriented Industry, power supply to it had to be regulated separately for purposn of power alJocatioa aDd that clubbing had been , allowed for the month of Joly1984 onl)'. Under Section 228 of the ladla.a Eledrklty Act.t949, tbe State of Orissa Issued an order on January ll, 1985, etrtdln from July t, 1984, G cllrtding the State El«trlclty Board to ml11~ sappiJ of energy so as to allow consumers to avail of supply only to the extent spedlled in the &tnt xure to the order. There was a note to the order prescribing certain toodltlons. All the units of the petltioner-compaay were sbowu in the H 265 · ··I ' ., ..... r 266 SUPREME COURT REPORTS [1987] 3 S.C.R. A Annexure under the classification 'power intensive industries'. The First three units were allotted energy together and the fourth unit separately. After the promulgation of the above order, the Board served a revised bill on the company demanding payment at the higher tariff B rate for the period from October 1984 to June 1985, on the ground that there bad been alleged excess drawal by the company due to clubbing. The company filed a writ petition in the High Court challenging ......,. the aforesaid order and also the letter of the Board refusing clubbing for the entire water year 1984-85 and praying for quashing the same. C The company also sought a writ of mandamus directing the Board and the State Goveroment to permit clubbing for the water year 1984-85 as - well as for the future years. On behalf of the State it was contended that '( clubbing had been allowed to the company by the Board temporarily for the month of July 1984 only during the water year 1984·85 and that the power allotted to the fourth unit could not be allowed to be clubbed with D that allotted to the other three units since the former was a 100% export oriented unit and, it had, therefore, to be treated separately for the -'( aUocation of power. During the pendency of the writ petition the State Government passed another order effecting allocation of power under Section 22B of E the Act for the water year 1985-86. The company was served with a notice of disconnection for non-payment of the bills prepared at the higher tariff rate for the month of August, 1985. The company filed \ another writ petition challenging the order and praying for identical reliefs as in the previous petition. This petition was opposed by the State contending that the said unit, being a 100% export oriented unit, had to F be treated separately for the purpose of power allocation. The High Court passed an interim order directing the State Government to dispose of the company's request for clubbing of the power allotted for aU the four units for the water year 1985-86. The State Government, thereafter passed an order, rejecting the application without giving any reason. The company's application for amending the writ petition by G challenging the Government's refusal was allowed. -1_ The High Court held that under Sectton 22B of the Act, the State Government had the power to grant or refuse the request of a consumer for being allowed the facUity of clubbing, and upheld the power of tbe State Government to impose special tariff in case the allotted quota of H energy was exceeded. It however held that the State Government and - INDIAN METALS v. STATE OF ORISSA 267 pl the Board had no power under tbe Act to impose restrictions on the use A of electric energy with retrospective effect and quashed the demands made under the revised biDs impugned in the rrrst writ petition. It also held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the Government on the question as .to whether or not clubbing should be allowed with reference to relevant considerations and that the plea B J raised by the State Government that the fourth unit should be treated separately from the other three units since the former was an export \ oriented unit was without any substance. The High Court quashed the ~ - demands for additional tariff made in the revised bills challenged in the first writ petition and declared that the company would be liable to pay - tariff only at the contractual rate for the supply made during the water c year 1984-85. In respect of the water year 1985-86, the High Court \.,. directed that the company shaD enjoy the benefit of clubbing till the r State Government passed an appropriate statutory order rejecting its request. For the water year 1986-87 the State Government passed an order D dated 8th December, 1986 effecting an allocation of power supply on the same pattern as was adopted for the previous year and rejecting the request of the company to allow the facility of clubbing to its fourth unit. The company tiled a writ petition in this Court challenging the said order. - In the Special Leave Petitions of the company it was submitted that the four electrical sub-merged arc furnaces of the company pro- ) ducing ferro-alloys cannot be run at a low capacity and they required E ' continuous and uninterrupted supply of energy to sustain production and also to ensure that tpe furnaces did not sustain damage, as electric power was used as a raw material in the manufacture of ferro-alloys, F that on account of frequent interruptions and the undependable nature of supply of power, the fourth unit had suffered very serious damage causing a great loss and that the benefit of clubbing cannot be denied to the company under Section 22B of the Act. It was contended in the Special Leave Petitions on behalf of the G ·~ State and the. Electricity Board that the power availability position in respect of each water year can be reasonably ascertained with some degree of precision only after the peak monsoon period and the High Court was, therefore, not right in holding that the orders under Section 22B of the Act cannot be passed with retrospective effect in the middle of a water year. H. 268 SUPREME COURT REPORTS [1987] 3 S.C.R. A Allowing the writ petition to a limited extent and disposing of the l... S~cial Leave Petitions of the company and dismissing the Special Leave Petitions of the State and the Board, this Court, B HELD: 1. It is clear from a reading of St!ction 228 of the Electricity Act that what is contemplated by it is that the State Government should only lay down policy guidelines to be adopted by the Board for regulating, supply, jurisdiction, consumption or use of energy. A, The implementation of the policy after working out the details is a matter to be carried out by the Board. H is, therefore, strange that the State Government bad taken upon itself the task of allocating the'-*' quantum of power that may be consumed by the different industrial c units in respect of the years 1984-85, 1985-86 and 1986-87 under Section ._ 22B of the Act. [283F-H] 2. The High Court was right in holding that under this Section, the Government may for purposes of securing equitable distribution of energy regulate its consumption or use and decide as a matter of policy D whether the benefit of clubbing should be allowed to the consumers of energy. The immediate consequence of denial of the facility of clubbjng will be to restrict the quantum of permissible consumption of energy by each ofthe respective units to the quota allotted to it singly or jointly and this necessarily involves serious implications and repercussions, both economic and otherwise, on the viable functioning of the industry E because excessive drawals of energy by resort to clubbing would necessarily invite liability for payment at a higher tariff for the energy so drawn. [283H; 284A-B] 3. The High Court was right in holding that the benefit of clubbing which the company had enjoyed pursua'\t to the impugned order ')-- F during the water year 1984-85 till the end of December, 1984 could not be taken away by the impugned letter of the Board dated 24-1-1985. The earlier letter dated 12th July 1984 had made an allocation of power to all the four units on a monthly basis commencing from 1st July, 1984 with permission accorded to the company to club the drawal subject to the condition that the whole position would be reviewed in G October, 1984. There was no such review and it was only in the impugned letter of 24th January, 1985 that the Board had incor- --.(, porated its decision not to permit clubbing. This decision could not operate retrospectively so as to cover the period during which the company had been enjoying the benefit of clubbing under the permission validly granted to it by the Board and which had not been H revised till then. [284F; 285B-D] - - - .F \ INDIAN METALS v. STATE Oii ORISSA 269 4. The High Court was right in holding that the demands for A additional tariff made by the Board as per the revised bills issued to the company for the year 1984-85, were illegal and were liable to be quashed and that the sole reason stated by the Board in its impugned letter for refusing the facility of clubbing to the company was fallacious, illegal and untenable. [285D-E] 5. The High Court was not right in observing that the orders under Section 22B of the Act imposing restrictions on consumption of power cuuld not legally und validly be passed by the Government 'with retrospective effect' in the middle of a water year. (284D] B 6. If a consumer had been allowed the benefit of clubbing preC viously, that benefit could not be taken away with retrospective effect thereby saddling him with heavy financial burden in respect of the past period where he had drawn and consumed power on the faith of the orders extending to him the benefit of clubbing. [284E) 7. lnspite of the express pronouncement by the High Court to the D effect that the t'eason stated by the Board for refusing1 the benefit of clubbing for the year 1984-85 was illegal and untenable, the State Government merely reiteiated the very same reason in its impugned order refusing benefit of clubbing for the year 19841-87. This clearly indicated lack of due care and proper application of the mind of the Government to relevant aspects of the matter before the order was E passed. [287C) 8. There was no separate categorisation of export oriented industries under Regulation 28 of the Orissa State Electricity Board (General Conditions of Supply) Regulations 1981. Under the scheme of ihe regulation, industries had to fall under one or other of the five F categories-small, medium, large, power intensive and heavy. In the orders passed by the State Government under Section 22B of the Act for the years 1984-85, 1985-86 and 1986-87, the only categories mentioned were heavy industries and power intensive industries and aU the four units of the company had been included under the category 'power intensive industries'. Clubbing had been allowed by the Board G and was being allowed even now in respect of all the power intensive industries, other than export oriented industries. There is no justification at all for this differential treatment meted out to export oriented industries. The note appended to the Government's orders for the years 1985-86 and l986-87 did not in any way lay down that an export oriented industry was to be made a separate allocation H ........ - - 270 SUPREME COURT REPORTS [1987] 3 S.C.R. A of power and was to be denied the benefit of clubbing merely on J..- account of its being engaged in an export oriented venture. It continues to be classified as a power intensive industry for purposes of allocation of power. [285G~H; 286A~C] B 9. So long as no additional power allocation had been made and no preferential treatment had been given to the particular power intensive industry on the ground that it was a 100% export oriented A__ industry, it cannot be meted out a prejudicial treatment different from what was given to other power intensive industries, termed as .. _._, "domestic units". [286G] \ c 10. When all other power intensive industries were being allowed - the benefit of clubbing it would not be legally permissible nor proper to deny the facility or clubbing to an industry classified as 'power intensive ~ unit' merely on the ground that. the particular power intensive unit was an export oriented unit, so long as it bad not been given any special D allotment of power on the said ground on the basis of its fulf'tlment of the conditions specified for a 100% export oriented unit in the note appended to the Government's order passed under Section 22B of the Act. Such differential treatment would amount to arbitrary discrimination, violative of Article 14 of the Constitution. [287F] E The Court quashed the impugned order of the State Government for the year 1986-87 and directed that: (a) the respondents allow the petitioner-company the facility of clubbing of the energy supply to the four units; [288E] - ' (b) the impugned order for the year 1986-87 passed by the State • F Government under Section 22B of the Act insofar as it fixes the energy )-- allocation for the different units shaD not be treated or construed as denying the facility of clubbing to the company; and [288F] (c) that nothing contained in the judgment oftiWi Court is to be construed as laying down a general proposition that industrial conswners of G electrical energy having more than one uuit are entitled, under aU clrcumstances, as of right, to club the power allotted to their different units. [288B] ' -~ EXTRA ORDINARY JURISDICfiON: Writ Petition No. 1753 of 1986 etc. H (Under Article 32 of the Constitution of India). ) INDIAN METALS v. STATE OF ORISSA [ERADI. J.l 271 K.K. Venugopal, Gauri Shankar, Kapil Sibal, Ms. Lira A Goswami, D.N. Misra, D.P. Mohanty and R.K. Mehta for the appearing parties. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. M/s Indian Metals and Ferro B Alloys Ltd.-the petitioner in Writ Petition No. 1753 of 1986 and' in S.L.P. (C) Nos. 14923-14924 of 1986 is a public limited company incorporated under the Indian Companies Act which is engaged, inter alia, in the manufacture of ferro silicon and silicon metal which are said to be a valuable raw-material used by the Defence establishments in India and also exported out of the country. The second petitioner in C the aforesaid Writ Petition and the Special Leave Petitions is the Managing Director of the company. The company has installed three units namely, 11 KV, 33 KV and 132 KV furnaces in which it is manufacturing ferro alloys and silicon metal in a composite industrial complex in a place called Therubali in the State of Orissa. The company has also a subsidiary by name M/s Indian Metal and Carbide Ltd. 0 engaged in the manufacture of silicon carbide and its factory is also situated in the same industrial complex. All the four units utilise electricity as raw material and they are, therefore, classified as 'power intensive industrial units'-the four units shall hereinafter referred to as "11 KV IMFAL", "33 KV IMFAL", "11 KV IMCL" and "132 KV IMFAL" .-The company has entered into separate agreements with E the Orissa State Electricity Board (hereinafter called the 'Board') for supply of electric energy to these four different units and the rates of tariff to be charged for such supply. The agreement in respect of 11 KV IMFAL was entered into initially on 3.4.1967 and subsequently renewed on 1.8.1983, that in respect of 33 KV IMFAL on January 2, 1974 and the agreement for supply of 11 KV IMCL was entered into on F January 28, 1975. The agreement in respect of supply of energy to 132 KV IMFAL was entered into on 4.12.1982. These agreements show that the Board had agreed to supply 78.8 MU for 11 KV IMFAL unit for the manufacture of silicon metal/charge chrome by the company, 197.1 MU for the 33 KV IMFAL unit·for the manufacture of ferro silicon/ silicon metal, 15.8 MU for the 11 KV IMCL for the manufacture of G silicon carbide and 262.8 MU for the 132 KV IMFAL unit for the manufacture of charge chrome/ferro silicon/silicon metal. As already indicated, all the above furnaces of the company are located ,in the same complex and are adjacent to one another. The tariff fixed for supply of the energy to the first three units is the same and that for the 132 KV IMF AL is 0.5 paise less per unit. H --- A B c 272 SUPREME COURT REPORTS [ 1987} 3 S.C.R. Supply of energy was made to the company regularly as per the agreements in respect of the first three units till the year 1979-80. The unit of time for supply of electricity adopted by the Board is the 'water year' which commences on the 1st of July of a year and ends with 30th June of the succeeding year. In the year 1979-80, the State of Orissa resorted to power cuts on account of non-availability of sufficient power in the State to meet in full the requirements of the various categories of consumers. It accordingly passed orders allocating restricted quotas of power to the four units of the company for the water year 1979-80. This order, however, permitted the clubbing of the electricity supplied to the 11 KV IMFAL, 33 KV IMFAL IMCL furnaces of the company. The 132 KV IMF AL furnace of the company had not been commissioned at that time. The aforesaid position continued for the water years 1981-82 and 1982-83. The company's 132 KV IMF AL furnace was commissioned on 20th February, 1983 but the agreement of supply of energy to this unit had been executed on December 4, 1982 itself. On July 16, 1983, the D company addressed a letter to the Board requesting the facility of clubbing of the power allocated to its four furnaces for the water year 1983-84. By a teleprinter message dated August 4, 1983 sent by the Chief Engineer of the Board to the Superintending Engineer, Talcher, it was intimated that IMFAL and IMCL may be permitted to draw the E F power allotted to the four units taken together as requested by the company in its letter dated July 17, 1983, subject to the condition that the company's drawal of power at its 132 KV IMFAL furnace in excess of the allotment of the said unit shall be made at the tariff applicable to the supply at 132 KV IMFAL . It was also made clear that the said order will be effective from July 16, 1983, that being the date of the company's letter of request. Pursuant to the above permission the company clubbed the supply of power to all its units for the water year 1983-84. On July 23, 1984, the Chief Engineer addressed a Jetter to the company informing the latter that with effect from July 1, 1984 the drawal of power by the company against the different units will be regulated separately and as such the company was requested to limit its drawal for the different units as per the allotment indicated in that G letter with effect from July 1, 1984; in other words, the facility of clubbing was withdrawn by the said letter with effect from July 1, 1984. On July 2, 1984, the company wrote to the Board pointing out the hardship involved in the denial of the facility of clubbing and requesting for permission to club the energy for all the four units for the water year 1984-85. In reply thereto the Chief Engineer of the H ------ - ···-· •···------------ ~ ... -~ If}' -~ ~ - y .I - r ' INDIAN METALS r. STATE OF ORISSA [ERADl. J.] 273 Board sent a communication dated July 12, 1984 informing the comA pany as follows:- "ORISSA STATE ELECTRICITY BOARD BHUBANESHWAR No. Com-V- /4238 Dated 12.7.1984 From: To: SriN.K. Das, Chief Engineer and Member(IDC) M/s Indian Metals and Ferro Alloys Ltd., Bomikhal, P.O. Rasulgarh, Bhubaneshwar-75 tO 10 Sub: Restriction in power supply. Ref: YourletterNo. 82/12/01-Exp. 130dated2.7.1984. Dear Sirs, B c D As requested in your letter cited above, you are permitted to draw 22.64 MW average and 2,.7.75 MW peak E from 1-7·84 to 31.7.84 for IMFAL (11 KV, 33 KV and 132 KV) and IMCL, Theruvalli taken together subject to the condition that drawal at 162 KV in excess of 10.80 MW average and 13.501 MW peak shall be billed at the tariff applicable to power supply at II KV/33 KV. This will be revised in October, 1984. F In case your drawal exceeds the energy and/or the demand as indicated above, you will be liable to pay at double the normal tariff rate. Yours faithfully, Sd/- CHIEF ENGJNEER AND MEMBER (TDS)." One of the points raised before this Court relates to the correct constmction to be placed upon this letter. We shall advert to that H +---: _._.. -----·--·--------- A B 274 SUPREME COURT REPORTS [1987] 3 S.C.R. aspc;ct later on. For the present, it is sufficient to mention that on the basis of the said letter the company was permitted to club the power supply made to its four units from July, 1984 onwards and the bills for the period from July, 1984 to December, 1984 were drawn up by the Board and served on the company on the basis that the company was entitled to the benefit of clubbing in respect of the power allotted to the four units. Though the letter stated that the position would be subject to revision in October, 1984, no revision was effected till December, 1984 and the company continued to enjoy the benefit of 1 clubbing till the end of the calendar year. ,..._ · However, on December 11, 1984, the Chief Engineer of the C Board wrote to the company stating inter alia that the combined drawal of power for purposes of flexibility of operation had been permitted to the company at its request only for the month of July, 1984 by the Board's letter dated July 12, 1984 and the clubbing could no longer be permitted since power supply to 132 KV IMF AL which was a 100% 'export oriented industry' was to be regulated separately D for purposes of energy allocation. It may be mentioned at this stage that in the agreement entered into regarding supply of power to the 132 KV IMF AL unit, there was no mention whatever of the fact that the said unit was a 100% export oriented industry. It was treated only as· a 'power intensive industry' just like the other three units of the company. The aforesaid letter was followed by another communicaE tion addressed by the Chairman of the Board to the Company stating inter alia as follows:- F G "Since it has been decided by the Government to treat allotment of power to 100% export oriented industries separately, allotment of power to your 100% export oriented unit at 132 KV cannot be permitted to be utilised for other purposes unless specific Government permission is necessary for the same. As you are aware, the allocation of power for IMFAL-11 KV, IMFAl-33 KV and IMCL had been combined together for the purpose of flexibility in operation and hence you should have no difficulty re· garding the same." It will thus be seen that the sole reason given for refusing the facility of clubbing to the company was that the ·state Government had taken a decision that 100% export oriented industries should be treated separately for the purposes of power allocation. Significantly, no H statutory order of the State Government incorporating such a policy - - - y -- !~DIAN METALS v. STATE OF ORISSA IERADI. J.] 275 decision has been placed on record either before the High Court or A before this Court. It is worthy of note that the scheme of according special priority and preferential treatment to 100% export oriented industries in the matter of supply of electric energy was evolved by the Government of India for the first time only in June, 1983 and it was implemented only in B 1984-85. AU that the said scheme envisaged was to provide for supply of additional power to such expor~ oriented industries in the event of their satisfying certain conditions relating to their export performance. On January 22, 1985, the State of Orissa i~<;ued an order under Section 22B of the Indian Electricity Act (hereinafter called the 'Act') C directing the Board to reduce supply of energy so as to allow the consumers to avail of the supply only to the extent specified in the Annexure to the said order. All the four units of the company were shown in the Annexure under the classification "power intensive in· dustries." The 11 KV IMFAL, 33 KV IMFAL and 11 KV IMCL were together allotted 57.60 million Kwh and the 132 KV IMFAL was sepaD rately allotted 52.56 million Kwh·. There was a note to the order which was in the following terms:- "Every hundred percent export oriented unit will, however, be provided additional supply of energy if: (i) It exported not less than 95% of its entire production during the preceding year or made no internal sale during the same period. (ii) It has export commitment from foreign buyers E for at least 95% of the production during the F current year. (iii) It obtains specific recommendation of the Union Commerce Ministry regarding its export performance during the previous year and export commitment during the current year." G The aforesaid order was to be effective from the commencement of the water year 1984-85, i.e. from July 1, 1984. As already stated, the petitioner-company had been permitted to enjoy the benefit of clubbing from July, 1984 tiU the end of December, 1984 on the basis of the permission granted as Board's letter dated July 12, 1984 and the bills H A B 276 SUPREME COURT REPORTS [ l9R7] 3 S.C.R. issued to the company for the said period were all on the basis that it was entitled to club the supply allotted to it in respect of the four different units. After the promulgation of the order dated January 22, 1985, grouping together only the three units of the company other than 132 KV IMF AL unit, the Board served revised bills on the company on July 8, 1985 demanding payment at the higher tariff rate for the period from October, 1984 to June, 1985 on the basis that there had been alleged excess drawal by the company due to clubbing . • Aggrieved by the said action taken by the Board the company filed Writ Petition No. OJC 1549 of 1985 in the High Court of Orissa challenging the order dated January 22, 1985 passed by the State GovC ernment m purported exercise of its powers under Section 22B of the Act, as also the letter dated January 24, 1985 of the Board refusing clubbing for the entire water year 1984-85. Besides seeking the quashing of the aforesaid letter as we!! as the revised bills of the higher tariff issued to the company on JulyS, 1985, the company also sought a writ of mandamus directing the Board and the State Government to permit D clubbing for the water year 1984-85 as well as the future years. In the counter-affidavit filed by the State of Orissa the stand taken by the State was that clubbing had been allowed to the company by the Board temporarily for the month of July, 1984 only during the water year 1984-85. It was further contended that the power allotted to the 132 KV IMFAL furnace could not be allowed to be clubbed with that E allotted to the other three units since the 132 KV IMF AL furnace was a 100% export oriented unit and, therefore, it had to be treated separately for the allocation of power. ' k While the aforesaid Writ Petition was pending, the State )- Government passed another order dated August 31, 1985, effecting P allocation of power under Section 22B of the Act for the water year 1985-86. On October 11, 1985, the company was served with a notice of disconnection by the Board for non-payment of the bills prepared at the higher tariff rate for the month of August, 1985. It may be mentioned at this juncture that the High Court of Orissa by an interim order passed in the Writ Petition No. OJC 1549 of 1985 had stayed the G demand made by the Board as per the revised bills for the months of -..(__ October, 1984 to June, 1985 and had directed the Board not to take any action to disconnect power supply to the petitioner-company. The notice dated October 11, 1985 was apparently issued by the Board on the basis that it was in respect of the subsequent water year covered by H the Government order dated August 3 L 1985. ,- - - ~- - ) \., - INDIAN METALS v. STATE OF ORISSA [EF.ADI. J.l 277 Aggrieved by the said notice dated October 11, 1985, the comA pany filed another Writ Petition OJC No. 2496 of 1985 in the High Court of Orissa challenging the Government's order dated August 31, 1985 passed for the water year 1985-86 and praying for identical reliefs in the previous Writ Petition regarding directions to allow clubbing for all the four furnaces. In the counter affidavit filed by the State of Orissa in this Writ Petition also the only reason given for refusal to B allow the benefit of clubbing to the company's 132 KV IMFAL furnace was that the said unit being a 100% export oriented unit had to be treated separately for the purpose of power allocation. On December 12, 1985, the High Court passed an interim order in the aforesaid Writ Petition directing the State Government to disC pose of the company's application dated November 9, 1985 wherein the company had requested for being allowed the benefit of..clubbing of the power allotted for all the four furnaces for the water year 198586. On December 18, 1985, the State Government through its Deputy Secretary wrote a letter to the company stating as follows:- "Sir, D In inviting a reference to your letter No. Proj. 4103/ 1920 dated 9.11.1985 on the subject noted above I am directed to say that after due consideration, Government have been pleased to reject your request for clubbing of E power allocation during the water year 1985-86. 2. You are allowed to draw only 57.60 Million K.W.H. of energy of 11 KV and 33 KV and 52.66 Million KW of energy on 132 KV as allotted in this department order No. 37477 dated 31.8.1985 for the period from F 1-7-1985 to 30-6-1986. Yours faithfully, Sd/- DEPUTY SECRETARY TO GOVT." G It will be noticed that no reason whatever was giveri by the Government in this order for rejecting the company's request for clubbing of power allocation. After receipt of the said communication, the com· pany moved the High Court by a miscellaneous petition for amending the Writ Petition OJC No. 2496 of 1985 by incorporating a challenge against the said letter of the State Government refusing clubbing for H ---·~ --- 278 SUPREME COURT REPORTS [1987] 3 S.C.R. A the water year 1985-86. That prayer for amendment was allowed by k_ the High Court. Ultimately the two Writ Petitions O.J.C. No. 1549 of 1985 and O.J.C. No. 2496 of 1985 were disposed of by the High Court by a common judgment dated August 7, 1986. The High Court held that B under Section 22B of the Act the State Government had the power to grant or refuse the request of a consumer for being allowed the facility of clubbing. The High Court negatived the contention of the company that it was beyond the power of the State Government to impose special tariff in case the allotted quoa of energy is acceeded. It however upheld the contention of the company that the State Government and the Board had no power under the Act to impose restrictions on the C use of the electric energy with retrospective effect. The demands made under tqe revised bills impugned in the first Writ Petition were, therefore, quashed by the High Court. The High Court further held that the orders passed by the State Government under Section 22B of the Act did not show that there was any application of mind by the GovernD ment on the question as to whether clubbing should be allowed or not with reference to relevant considerations. In the opinion of the High Court the plea raised in the counter-affidavits filed by the State Government and the Board that the 132 KV IMFAL should be treated separately from the other three units since the former was an export oriented unit was without any substance. The High Court held that the E only classification which appeared from the record was of "power intensive industries" and others. Since all the units of the company had been classified under the heading ''power mtensive units" and the only __ _ privilege available to an export oriented unit as indicated in the note to ~ the Government's order passed under Section 22B of the Act was that · such unit would be entitled to additional power, if it satisfied the F conditions laid down therein, there was no justification at all for refusing the benefit of clubbing in respect of the 132 KV IMF AL unit on the mere ground that it was an export oriented unit. Accordingly, the Writ Petitions were allowed to the extent of quashing the demands for additional tariff mede in the revised bills produced as Annexure-ll series in O.J.C. No. 1549 of 1985 and it was declared that the company will G be liable to pay tariff only at the c:mtractual rate for the supply made during the water year 1984-85. In respect of the water year 1985-86, --i which formed the subject matter of O.J.C. No. 2496 of 1985, the High Court directed that the company shall enjoy the benefit of clubbing till the State Government in exercise of its power under Section 22B of the Act passed an appropriate statutory order rejecting its request. The H Writ Petitions were disposed of by granting the aforesaid reliefs to the company. ----· -- -~-_ , -.,...<----~ .......... ~-"!'!. r ~ ._, - - !!'