# L.M.L. LTD v. STATE OF U.P. & ORS

- **Citation:** [2007] 13 S.C.R. 677
- **Court:** Supreme Court of India
- **Decided:** 2007-12-13
- **Case number:** Civil Miscellaneow; Writ Petition No. ... 40692 of 2000
- **Bench:** S.B. Sinha, Harjit Singh Bedi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-m-l-ltd-v-state-of-u-p-ors-22365
- **Pages:** 27

## Headnote

B
Uttar Pradesh Electricity Reforms Act, 1999-ss. 24(2) and (6)-
Electricity tariff-Fixed by Electricity Regulatory CommissionImposing surcharge on consumers using 500 hrs. continuous supply C
and consumption during peak hours-Modification in-By one of the
licencees/ suppliers (independent feeder)-After making representation
to its consumers-Subsequent withdrawal of the modification pursuant
to order of High Court opining that the modification was without
jurisdiction-Raising of bills as per the rates fixed by the Commission, D
with retrospective effect-Challenged-Held: The licencee, estopped
from raising bill with retrospective effect-No impropriety was caused
by the licencee in modifying the tariff-On violation of tariff approved
by the Commission, appropriate legal action can be taken against the
licencee, but the consumers cannot be made to suffer thereforE
Ordinarily the doctrine of promissory estoppel would not be applied
against statute-But in the instant case it would be applicable, since
the provisions of the Act empower the licencee, to modify the tariffConduct of the Commission in not responding to communication of
licencee regarding the modification may invite the doctrine of F
acceptance sub silentio-However, the principle of doctrine of
promissory estoppel would not be applicable in case of other licencees,
where no such promise was made-Administrative Law-Doctrine of
Promissory Estoppel-Applicability of-Doctrine of acceptance sub
silentio.
The licencees/suppliers of electrical energies, filed applications
before U .P. Electricity Regulatory Commission for determination of
tariff. Tariff was framed by the Commission, by a Notification dated
677
G
H
678 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A 7 .8.2000. The same was to come into force from 9.8.2000. According
to the Notification consumers connected to independent feeders
were to be charged 15% surcharge against 500 hours of assured
electric supply in a month from sub-stations of 400 KV, 220 KV and
132 KV in HV-2 rate list and that the consumers who opted for power
B supply during peak hours, an additional surcharge of 15% was to
be levied on the amount billed at the 'Rate of Charge'. Licencee/
Uttar Pradesh Power Corporation Ltd. (UPPCL) wanted some
alterations in the tariff. Commission did not take any decision despite
repeated communications by UPPCL. UPPCL keeping in view its
c capacity to provide uninterrupted electric supply, by a Circular dated
8.9.2000, called for options from its consumers, who did not intend
to have continuous power supply for 500 hours. By a further notice
dated 14.9.2000, it informed that both the categories of continuous
and non-continuous were amalgamated and it required the consumers
D to pay 15% surcharge, if they consumed the electricity during peak
hours. Appellant-consumers opted for not having supply of power
for continuous 500 hours and during peak hours. UPPCL by Circular
dated 15.J 2.2000 altered the tariff to the effect that 15% surcharge
would not be levied on the consumers who did not opt for 500 hours
E guaranteed supply.
Appellant (LML Limited) who was consumer of another
lictncee i.e. Kanpur Electricity Supply Company (KESCO) filed a
writ petition. The High Court opined that UPPCL had no jurisdiction
to make any modification in the tariff and thus the Circular dated
F 8.9.2000was invalid in law. On the basis of the judgment of the High
Court, UPPCL by a Circular dated 31.8.2001, cancelled its earlier
Circulars. It issued bills to its consumers with retrospective effect.
Appellants/consumers ofUPPCL filed writ petitions questioning the
legality and validity of the Circular dated 31.8.2001 and jurisdiction
G ofUPPCL to issue bills with retrospective effect. Various Division
Benches of High Court dismissed the petitions following the decision
in the case ofappellant (LML Ltd.). On similar questions, High Court
ofUttaranchal allowed the writ petitions. Hence the present appeals.
H
Allowing the appeal filed by Utta

## Text

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L.M.L. LTD.
A
v.
STATE OF U.P. & ORS.
DECEMBER 13, 2007
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.)
B
Uttar Pradesh Electricity Reforms Act, 1999-ss. 24(2) and (6)-
Electricity tariff-Fixed by Electricity Regulatory CommissionImposing surcharge on consumers using 500 hrs. continuous supply C
and consumption during peak hours-Modification in-By one of the
licencees/ suppliers (independent feeder)-After making representation
to its consumers-Subsequent withdrawal of the modification pursuant
to order of High Court opining that the modification was without
jurisdiction-Raising of bills as per the rates fixed by the Commission, D
with retrospective effect-Challenged-Held: The licencee, estopped
from raising bill with retrospective effect-No impropriety was caused
by the licencee in modifying the tariff-On violation of tariff approved
by the Commission, appropriate legal action can be taken against the
licencee, but the consumers cannot be made to suffer thereforE
Ordinarily the doctrine of promissory estoppel would not be applied
against statute-But in the instant case it would be applicable, since
the provisions of the Act empower the licencee, to modify the tariffConduct of the Commission in not responding to communication of
licencee regarding the modification may invite the doctrine of F
acceptance sub silentio-However, the principle of doctrine of
promissory estoppel would not be applicable in case of other licencees,
where no such promise was made-Administrative Law-Doctrine of
Promissory Estoppel-Applicability of-Doctrine of acceptance sub
silentio.
The licencees/suppliers of electrical energies, filed applications
before U .P. Electricity Regulatory Commission for determination of
tariff. Tariff was framed by the Commission, by a Notification dated
677
G
H
678 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A 7 .8.2000. The same was to come into force from 9.8.2000. According
to the Notification consumers connected to independent feeders
were to be charged 15% surcharge against 500 hours of assured
electric supply in a month from sub-stations of 400 KV, 220 KV and
132 KV in HV-2 rate list and that the consumers who opted for power
B supply during peak hours, an additional surcharge of 15% was to
be levied on the amount billed at the 'Rate of Charge'. Licencee/
Uttar Pradesh Power Corporation Ltd. (UPPCL) wanted some
alterations in the tariff. Commission did not take any decision despite
repeated communications by UPPCL. UPPCL keeping in view its
c capacity to provide uninterrupted electric supply, by a Circular dated
8.9.2000, called for options from its consumers, who did not intend
to have continuous power supply for 500 hours. By a further notice
dated 14.9.2000, it informed that both the categories of continuous
and non-continuous were amalgamated and it required the consumers
D to pay 15% surcharge, if they consumed the electricity during peak
hours. Appellant-consumers opted for not having supply of power
for continuous 500 hours and during peak hours. UPPCL by Circular
dated 15.J 2.2000 altered the tariff to the effect that 15% surcharge
would not be levied on the consumers who did not opt for 500 hours
E guaranteed supply.
Appellant (LML Limited) who was consumer of another
lictncee i.e. Kanpur Electricity Supply Company (KESCO) filed a
writ petition. The High Court opined that UPPCL had no jurisdiction
to make any modification in the tariff and thus the Circular dated
F 8.9.2000was invalid in law. On the basis of the judgment of the High
Court, UPPCL by a Circular dated 31.8.2001, cancelled its earlier
Circulars. It issued bills to its consumers with retrospective effect.
Appellants/consumers ofUPPCL filed writ petitions questioning the
legality and validity of the Circular dated 31.8.2001 and jurisdiction
G ofUPPCL to issue bills with retrospective effect. Various Division
Benches of High Court dismissed the petitions following the decision
in the case ofappellant (LML Ltd.). On similar questions, High Court
ofUttaranchal allowed the writ petitions. Hence the present appeals.
H
Allowing the appeal filed by Uttaranchal Power Corporation,
•
L.M.L. LTD. v. ST ATE
679
partly allowing the appeals filed by consumers of UPPCL, and A
dismissing that of the consumers ofKESCO, this Court
HELD: 1. The suppliers/licencees, who, keeping in view their
capacity to supply uninterrupted electrical energy, had made a
representation and pursuant thereto the consumers had altered their
position, cannot be permitted to take a different stand as the doctrine B
of promissory estoppel would apply against them. The said doctrine
is premised on the conduct of the party making a representation to
the other so as to enable it to arrange its affairs in such a manner as
if the said representation would be acted upon. It provides for a
cause of action. It need not necessarily be a defence.
C
[Para 38] (698-B-C]
Southern Petrochemical Induslries Co. Ltd. v. Electricity
Inspector and Etio and Ors., (2007] 5 SCC 447; State of Punjab v.
Nestle India Ltd. andAnr., [2004] 6 SCC 465 and Express Newspapers D
Pvt. Ltd. and Ors. v. Union of India and Ors., [1986] 1 SCC 133,
referred to.
2. The appellants-consumers did not intend to have supply of
electrical energy during peak hours. Their need in relation thereto,
therefore, was not such which would have required continuous supply E
of electrical energy. If keeping in view such a contingency, the
suppliers intended to have an assessment of their own capacity to
supply uninterrupted electrical energy by asking for option of the
consumers concerned, tlicy cannot be said to have deviated from
the tariff determined by the Commission. If one of the objects of the F
Commission was to ensure uninterrupted supply of electrical energy,
it was for the supplier itself to assess its own capacity therefor.
Surcharge may or may not be a part of tariff. Even if it is a part of
tariff in respect thereof, the levy was conditional. If the supplier was
not itselfin a position to fulfill the condition, the question ofinsisting G
on implementation of the said provision would not arise.
[Para 36] (697-E-G]
3. Ordinarily the doctrine of promissory estoppel would not be
applied against statute. Sub-section 6 of Section 24 ofUttar Pradesh
Electricity Reforms Act, 1999 inter alia empowers the holder of a H
680 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A licence, to modify the tariff. If the implementation of tariff was
dependent upon fulfillment of certain conditions precedent which in
turn would be dependent upon the capacity of the producer of
electrical energy to fulfil the same, no impropriety was caused by
the Power Corporation to ask for th'! said option. The fact that such
B an option had indeed been called for and pursuant thereto the
consumers had altered their position, is not in dispute. While dealing
with a question as to whether an action on the part of the State to
make a representation is contrary to a statute or not, distinction
should be borne in mind between an act which goes clearly contrary
c to the mandatory provisions thereof and a case where irregularities
have been committed. A circular would be binding on the State in
appropriate cases. [Paras 42 and 45] [699-F-H; 700A; HJ
D
Collector of Central Excise Vadodra v. Dhiren Chemical
Industries, [2002) 2 SCC 127, relied on.
The Paper Products Ltd. v. Commissioner of Central Excise,
[1999) 7 sec 84, referred to.
4. The Commission did not take any decision despite repeated
communications by the Power Corporation. a situation of this nature
E where the licensee wanted some alteration in the tariff, it was
expected of the Commission to take a decision forthwith. It should
not have whiled away the time and allowed the Power Corporation
to proceed with its proposal. Such a conduct on the part of the
Commission may invite the doctrine of acceptance sub silentio. The
F statute provides for a consultation and not a concurrence. It does
not provide for the consequence of any alteration of tariff applicable
to a particular category of consumer. It merely, brings about the
situation where a licensee found itself unable to supply electrical
energy uninterruptedly to the consumer. [Para 41] [699-D-E]
G
5. The proximity of issuance of the Circular vis-a-vis Notification
must also be noticed. The tariff was framed on 7th August, 2000 which
came into force from 9th August, 2000 whereas the Circular was
issued on 8th September, 2000. The consumers exercised their option
H on 31st October, 2000. The judgment of High Court in the case of
L.M.L.LTD. v. STATE
681
LML Ltd. was delivered on 25th April, 2001. The Circular dated 31st A
August, 2001 undoubtedly was issued in view of the said judgment.
The said judgment did not deal with the questions raised before this
Court. In any event if the licensee violates the tariff approved by
the Commission appropriate legal action can be taken against it. But
it would be too much to contend that for a mistake on the part of the B
Corporation, the consumers would suffer. In this view of the matter,
the doctrine of estoppel shall apply in the cases where the promise
was made. [Para 48] [702-D-F]
Association of Industrial Electricity Users v. Respondent: State
of Andhra Pradesh and Ors., [2002] 3 SCC 711; West Bengal C
Electricity Regulatory Commission v. CE.SC. Ltd. etc. etc., [2002] 8
SCC 715 and BSES Ltd. v. Tata Power Co., Ltd. and Ors., [2004] 1
sec 195, distinguished.
6. However, the principle of doctrine of promissory estoppel D
\
would, not be applicable where no such promise was made.
Respondent-Kanpur Electricity Supply Company (KESCO) would
not be bound thereby. Tariff is fixed for providing a service. Supply
of electrical energy is a public utility service. While carrying out a
function of this nature, the court of law must keep in mind the E
equitable principles also. Equity does not postulate that although the
supplier did not fulfil its obligation, still it would be entitled to the
benefits envisaged under the law. Similarly Uttaranchal Power
Corporation also does not appear to have made such a promise. The
doctrine of promissory estoppel in those cases also will have no F
application. [Paras 48, 49 and 50] [702-F-H; 703-A]
7. If any appeal is pending before the Commission on the
question ofindependent feeder, it would decide the same irrespective
of the result of this decision. The Court, therefore, permits the
appellants to agitate the same point before the Commission.
G
[Para 51] [703-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5789 of
2002.
H
682 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
From the final Judgment and Order dated 25.4.2001 of the High
Court of Judicature at Allahabad in Civil Miscellaneow; Writ Petition No.
...
40692 of 2000.
WITH
B
C.A. Nos. 1106, 1622-1628, 1716 of 2007 & SLP (C) No. 6721
of2007.
Rachmm Srivastava, Genl., M.L. Lahoti, Ravindra Shrivastava, C.S.
Vaidyanathan, T.S. Doabia, and Rakesh Dwivedi, E.C. Agrawala, Mahesh
c
Agarwal, Rishi Agrawala, Gaurav Goel, Amit Sharma, Neha Aggarwal,
Ananaya Kumar, Kuna! Verma, Raju! Shrivastva, Vibha Datta Makhija,
Arvind Kumar Shukla, Sunil Kr. Shukla, Vishal Dixit, Alok Shukla, Irshad
Ahmad, Niraj Sharma, Manpreet Singh, Doabia Vikrant Singh Bais,
Assem Chandra, Anurag Singh, C. Murlikrishna, C. Balakrishna, Ramesh
Singh, Shela Goel, R. Santhanam, RC. Gupta, Manjula Gupta, Hari
D Shankar K.E.C. Vidya Sagar, Pradeep Misra, Manoj Swarup (for Manoj
Swarup & Co,), Amit Bhandari, Vikas Mehta and Rajiv Mehta for the
appearing parties.
The Judgment of the Court was delivered by
E
S.B. SINHA, J. I. Effect of two Circular letters issued by the U.P.
Power Corporation Limited is involved in these appeals, which arise out
of a judgment and order dated 25th April, 200 I of the High Court of
Judicature at Allahabad in CMWP No.40692 of2000; judgment and
order dated 17th January, 2007 passed by the High Court ofUttaranchal
F at Nainital in WP No. 936 of2001 and judgment & order dated 19th
October, 2006 of the High Court of Judicature at Allahabad, Lucknow
Bench, Lucknow, in Appeal No.82 of2002 etc. etc.
2. State of Uttar Pradesh constituted Uttar Pradesh Electricity Board
G in terms of the provisions of the Electricity (Supply) Act, 1948. In the
year 1999 Uttar Pradesh Electricity Reforms Act, 1999 (for short, 'the
1999 Act') was enacted, in terms whereof the U.P. Electricity Regulatory
Commission (for short, 'the Commission') was constituted. Indisputably,
t
three licensees, namely, (i) U.P. Power Corporation Ltd. (for short,
H 'UPPCL ), (ii) Kanpur Electricity Supply Company (for short, 'KESCO');
L.M.L. LTD. v. ST A TE [SINHA,J.]
683
and (iii) NOIDA Power Company Ltd. (for short 'NPCL') filed A
applications before the Commission for determination of 'tariff.
3. By reason of a notification dated 07.08.2000, tariff was framed
which was to come into force from 09.08.2000, inter alia, providing
for:
"RATE SCHEDULE HV-2
LARGE AND HEAVY POWER
1.
Applicability :
B
This rate schedule shall apply to all consumers who have contracted c
load of more than 75 KW (100 BHP) for industrial and/or
processing purposes as well as to Acr/lnduction, Furnaces Rolling/
Re-Rolling Mills, Mini Steel Plants and to any other power
consumers not covered under any other rate schedule.
This rate schedule shall also apply to commercial light, fan & power D
consumers (LMV-2) and power consumers of Rate Schedule
LMV-6, subject to the condition that they opt for this Rate
Schedule.
The contracted demand shall be expressed in whole number only. E
2.
.. ........ ..
3 ........... ..
4. Rate of charge
Description
Demand Charge
Energy Charge
A. Basic Rate
Rs. 130/- per p
390
(Applicable
KV A/Month
L paise/KWH
to Urban
u
Consumers)
s
Notes:
(a) In respect of consumers who opt for power supply during
restricted/peak hours an additional surcharge of 15% on the amount
F
G
H
I
684 SUPREME COURT REPORTS
(2007] 13 (Addi.) S.C.R.
A
billed at the "Rate of Charge" under item 4-A above, i.e. Demand
Charge and Energy Charge shall be levied.
.
However, in respect of consumers getting power supply on
independent feeders emanating from 400/220/132 KV sub-stations
B
an additional surcharge of 15% on demand and energy charges
shall be charged further subject to the condition that these
consumers will get an assured supply of minimum 500 hours in a
month. In case of short fall in above guaranteed hours of supply a
rebate @ 1 % for each 10 hours short fall will be admissible on
c
the bill amount computed under "Rate of Charge".
(b)
(c)
'
(cl) In respect of supply during peak hours/restricted hours, the
D
consumers shall have to take the permission from UPPCL."
4. Appellant LML Ltd. prior to framing of the said tariff and
,
~
bifurcation ofU.P. State Electricity Board had been taking supply of
electrical energy in the form of a three phase alternatives current at
E
declared pressure of 132 K.V. and a power not exceeding 8000 K.V. in
their respective factories. Whereas in the case ofL.M.L. Limited, their
factory being situated at Kanpur, electrical energy was supplied by
KESCO, but so far as other consumers are concerned, electrical energy
was supplied to them by UPPCL
F
5. Appellants-consumers herein claimed that although they had been
I .
running a non-continuous process industry but was not to observe peak
hours restriction and in terms thereof they did not consume power from
6.00 p.m. to 11.00 p.m. (being the peak hours).
6. A confusion arose in regard to interpretation of the said purported
G levy of 15% surcharge on demand and energy charge on independent
feeders from 400/220/132 KV sub-stations having assured supply of
minimum 500 hours in a month. In the event, the consumers were to get
power supply from independent feeders, were to get supply of minimum
500 hours in a month, indisputably, they were to pay 15% surcharge on
H demand.
'
L.M.L. LTD. v. ST A TE [SINHA, J.]
685
7. UPPCL, however, on construction of the said provisions of the A
statute issued a circular letter dated 08.09 .2000 calling for options from
the consumers of electrical energy, who did not intend to have a continuous
power supply of 500 hours in a month. A copy of the said circular letter
admittedly was sent to the Secretary of the Commission, the relevant
paragraphs whereof read thus :
B
"Some other important guidelines/directions are being issued with
the request that please make aware to all your concerned
subordinate officers and ensure its strict compliance.
1.
15% surcharge will be payable for Electricity use in prohibited c
period in new rate list ofL.M.V. -6 and HV-2. Consumers
who were notified by U.P. Government under continuous
category before new tariff should be necessarily imposed 15%
surcharge in their bills. The facility of Electricity supply in
prohibited should be continued as before to consumers falling D
under this category and option letter should not be asked from
them.
In addition, consumers of non-continuous category will not be
provided the facility to use Electricity in prohibited period. But,
ifthe consumer of this category wants to use electricity in E
prohibited period, he will intimate to concerned Executive
Engineer through registered letter.
Executive Engineer within three days of receiving this letter will
issue office circular which will indicate the date from which this
facility can be provided . 15% surcharge will be payable by F
the consumer from the said date mentioned in above letter. This
option once given will not be revoked.
2(a) Consumers connected to independent feeders will be charged
15% surcharge against guarantee of 500 hours electricity supply G
from sub-stations of 400 KV, 220 KV and 132 KV in HV2 rate list. 500 hours electricity supply will be ensured to the
consumers of this category. 1 % rebate will be given on
Electricity Bill of 10 hours or its part, if they receive electricity
supply less than 500 hours. If the consumers connected to H
A
B
c
686 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
these independent feeders who do not want guaranteed supply
of 500 hours electricity supply then 15% surcharge will not
be charged on their electricity bills. These type of consumers
will intimate to Executive Engineer (Distribution) if they do not
want 500 hours guarantee of electricity supply. Executive
Engineer will issue office memo in this regard. If any consumer
of this category does not exercise this option, then he will be
guaranteed 500 hours electricity supply and will be charged
15% surcharge. It will be the responsibility of SSO/ Assistant
Engineer to ensure that consumers of this category should not
use electricity in the restricted period. In case consumers of
this category use electricity in the restricted period then they
will be charged (15+ 15) 30 % surcharge.
2(b) Normally the availability of electricity supply to the consumers
from these feeders will depend upon data of electronic meters
D
installed in their establishments and no officer will be authorized
for issuing any certificate and nor such certificate will be
acceptable.
E
F
G
H
2( c) In case electric meter is not available at consumers'
establishment or is defective, then during this period only no
employee below the level of Asstt. Engineer will issue any
certificate under his signatures under any circumstances
regarding period of electricity supply/hours etc. and in case
this is issued the same will no be accepted, and the concerned
officer/employee will be deemed guilty of indiscipline and
appropriate action will be taken against them. As per
requirement, this type of certificate can be issued by Asstt.
Engineer or above level officer and they may get the signature
of subordinate officer/employee if they wish. This certificate
will be made available to concerned Executive Engineer
(Distribution) for each month.
2( d) Every months intimation/certificates of electricity supply hours
alongwith the reason ofless supply hours will be provided by
Sub-division Officer of sub station of 400, 220 and 132 KV
to Executive Engineer (Distribution) for the purpose of issuing
<
L.M.L.LTD. v. STATE[SINHA,J.]
687
bill to consumer.
A
The supply hours should tally with the hours written in the log
book of sub station. Along with this, the sub-division officer
will provide the certificate confirming whether electricity was
supplied in peak hours or not? In case the power supply to
large and heavy power consumers is less than prescribed hours B
for two consecutive months, then, concerned Dy. General
Manager of the sub-station will review the situation at his level .
and resolve the same.
Review of power supply to small and medium consumers shall C
be done by Executive Engineer of concerned sub-station."
8. On or about the 14.09.2000, the Executive Engineer ofUPPCL
issued notices to the parties, inter alia, stating :
"As per the Extra-ordinary Gazette dated 27.07.2000 of D
Government ofU.P., the U.P.P.C. Ltd. has revised the tariff of
consumers of all the categories from 9.8.2000. Accordingly, both
the categories i.e. Continuous and non-continuous have been
amalgamated. The restriction is that they will have to submit their
separate option for use of electricity consumption in peak hours E
and restricted use of electricity that if they want to consume the
electricity in peak hours and restricted period, they will be required
to pay 15% extra surcharge on the amount worked out as per
category 4 of the tariff rate. Without permission ofU.P.P.C. Ltd.,
the consumption of electricity in this period is prohibited otherwise
action as per rules will be taken.
F
You are, therefore, hereby requested that you intimate in writing
to this office within 15 days of receipt of this letter that whether
you want to consume the electricity during the peak hours and
restricted use of electricity period or not so that you tariff rate could G
be fixed accordingly in H.V. 2 category. The consumption of
electricity during the said period will be prohibited without
permission ofU.P.P .C. Ltd. In case of violation, you will be liable ..
to financial and other losses. Option given by you shall be effective
from 9.8.2000."
H
688 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
9. Pursuant thereto and in furtherance thereof, by reason of a letter
B
c
D
E
dated 16.09.2000, the consumer opted for not having a continuous power
supply of 500 hours, a sample copy whereof is as under :
"As you already know that we are electricity consumer in the
category of Non-continuous process of 132 KV A. We have to
inform you that we shall not be consuming the same during the peak
hour restrictions. Further we are not opting for such guaranteed
supply of electricity for 500 hours per month and in default thereof
a rebate of 1 % for every 10 hours of electricity non-supply. This
does not, however, mean that you shall subject us to any
unscheduled and arbitrary cuts in the supply in future
We are sure that you shall continue to supply electricity as in
the past from the same feeder line. This letter is in compliance of
the requirement of the above notification dated 8.9.2000, and
hence the additional surcharge of Rs.6,33,898.45 shall be
withdrawn from our bill dated 5.9.2000. The payment of
Rs.53,01,727/- having been made by cheque No.207076 dated
11.9.2000 (handed over in the Court of Chief.Justice, Allahabad
on 13.9.2000). Thus the aforesaid bill stands finally paid.
We are sure that in future our bills shall not be loaded with
additional surcharge of 15%."
10. It appears that meetings were also held by and between the
consumers and Secretary and Chaim1an ofUPPCL at PHD Chambers
F of Commerce at Delhi, wherein it was decided that only thermal industries
would not be charged 15% additional surcharge who did not want to go
for assured supply of 500 hours.
G
H
11. It further appears that UPPCL issued another circular letter dated
15.12.2000, the relevant portion whereofreads thus:
"U.P Electricity Regulatory Commission in its revised tariff for
the year 2000-01 applicable to HV-2 rate schedule consumers who
are getting supply from independent feeders for levy of 15%
surcharge on the guarantee of 500 hours of power supply per
month.
+
L.M.L.LTD. v. STATE[SINHA,J.]
689
In this regard, detailed guidelines have been issued by this office A
vide letter No. 1423 dated 9.8.2000.
In this regard, it is directed that those consumers who will
exercise option, of not availing 500 hours guaranteed supply,
through a registered letter to Executive Engineer (Distribution) by
31.12.2000, they will not be charged 15% surcharge from the very B
date of its applicability i.e. 7.8.2000. For consumers, who will
submit their option after 31.12.2000, this facilitY will be applicable
from the date ofreceipt of the application."
12. Although no such circular letter was issued by KESCO, relying C
on or on the basis of circular letter issued by UPPCL, L.M.L. Limited
filed a writ petition in the Allahabad High Court.
13. Upon taking into consideration the jurisdiction of the UPPCL
to implement the tariff fixed by the Commission vis-a-vis the procedure
required to be adopted therefor, the High Court by reason of the D
impugned judgment and order dated 25.04.2001 opined that it had
absolutely no jurisdiction to make any modification in the tariff and in that
view of the matter the purported circular letter issued on 08.09.2000 was
invalid in law, inter alia, stating :
E
"The contention raised on the basis of circular dated 8.9.2000
issued from the office of Chief General Manager (Commercial),
UPPCL, is equally untenable. The provision in later part of
paragraph 2 Ka thereo{ which lays down that 15 percent surcharge
would not be levied in case a consumer getting supply from an F
independent feeder emanating from 400/220/132 KV sub-station
gave an option that he did not want a guarantee of 500 h0urs of
supply in a month, is contrary to the tariff approved by the
Commission. The Commission in its order approving the tariff had
merely provided that in case of shortfall in 500 hours of assured G
supply in a month, a rebate of 1 per cent for each 10 hours shonfall
will be admissible on the total amount computed under "Rate of
Charge". The Circular while retaining this provision has made an
additional provision to the efl:ect that if such type of consumer gave
an option that he did not want an assured supply of minimum 500 H
A
690 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
hours in a month, the 15 per cent surcharge shall be not levied.
This is a clear alteration of the approved tariff which is not
pennissible in law.
14. Relying on or on the basis of the said judgment of the Division
B Bench of the Allahabad High Court delivered in the case of L.M.L.
Limited, UPPCL issued another circular dated 31.08.2001 cancelling the
earlier circulars, stating :
"Since some confusion has arisen amongst the Field/Regional
Officers on this provision, Commercial Division vide its letter Nos.
C
1423-HC/UPPCL/Five-1974-1204 dated 8.09.2000 and No.
3046/HC /Tariff/SAMA/Nirdesh dated 15.12.2000 had issued
clarifications after discussions with U.P. Electricity Regulatory
Commission.
D
E
F
LML Kanpur had filed a Writ Petition No.40692/2000 before
the Hon'ble Allahabad High Court on this subject. Hon'ble
Allahabad High Court in its order has directed that tariff as
approved by Electricity Regulatory Commission only will be
applicable and the licensee cannot amend the tariff. Therefore, in
the light ofHon'ble Allahabad High Court's judgment Circular No.
1423 dated 8.9.2001 (Point No. 2) and letter No. 3046 dated
15.12.2000 stand rescinded from the date of their issue."
Bills were issued in October 2001 with retrospective effect from
November 2000.
15. Aprellants other than L.M.L. Limited filed several writ petitions
questioning the legality and/or validity of the said circular dated
31.08.2001.
Several contentions were raised in the writ petitions including the
G jurisdiction ofUPPCL to issue bills with retrospective effect.
H
It wa~ furthennore contended that the appellants having altered their
position pursuant to or in furtherance of the promise made by UPPCL in
terms of its circular letter dated 08.09.2000, they were estopped and
precluded from raising any bill, with retrospective effect or otherwise.
L.M.L. LTD. v. STATE [SINHA, J.]
691
Attention of the High Court in the subsequent writ petitions were A
also drawn to the fact that UPPCL had carried out extensive consultation
with the Commission on several dates.
16. It was pointed out that UPPCL itself in its counter affidavit filed
in the case of Modi Pon Fibre Company, Ghaziabad before the High Court B
had stated as under :
"4. That there was some confusion in the category of consumers
who were covered by both category (i) and (ii) above, and
who on plain reading of the tariff were liable to pay surcharge
of 15% plus 15%. To clarify the above UP Power c
Corporation Limited, hereinafter referred to in brief as
UPPCL, held discussions both with the Commission and the
Government ofUttar Pradesh through Principal Secretary,
Power. The above discussions culminated .in the passing of
CircularNo.1423-HC/UPPCL/5-1974-1204-C/2000 dated D
8.9.2000 by UPPCL. The above circular as per its Para 2(Ka)
gives an option to the consumers under category (ii) that in
case they do not want to receive supply of assured 500 hours
in a month no surcharge of 15% shall be charged from them.
It was provided in the above circular that the concerned E
consumer may give their option of waiver of assured supply
by registered post to the concerned Executive Engineer
(Distribution). It was further provided in the above circular that
in case the consumer fails to exercise the above option, he will
be assured supply of 500 hours and he shall be liable to pay F
surcharge of 15%. A copy of the above circular is endorsed
to the Secretary of the Commission for information and
necessary action. A copy of the above circular dated
8.9.2000 is appended to this Short Counter Affidavit as its
Annexure CA-I.
G
5.
By another Circular No.3046-HC/Tariff/general instruments,
dated 15.12.2000, it was provided that the consumers of
category (ii) above may exercise their option of not availing
500 hours guaranteed supply through a registered letter to
Executive Engineer (Distribution) by 31.12.2000. A copy of H
A
B
c
D
E
F
G
692 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
the above circular was endorsed to the Secretary of the
Commission for information and necessary action. A copy of
the above circular dated 8.9.2000 is appended to this Short
Counter Affidavit as its Annexure CA-2.
It was further stated therein :
7.
Since the circular dated 8.9.2000 now stands rescinded
pursuant to the orders of the Hon'ble Allahabad High Court
and since UPPCL has failed to elicit any response from the
Commission to its letters (A1mexure Nos. CA-3, 3A and 3B),
UPPCL has initiated action for charging 15% surcharge from
consumers of category (ii) above which as per the tariff order
dated 27.7.2000 passed by the Commission. A circular No.
925 HC/LML/LS-15 dated 31.8.2001 has been issued by the
respondent to the above effect. A copy of the above circular
dated 31.8.2001 is appended to this Short Counter Affidavit
as its Annexure No. cA-4"
17. Before the High Court, several other documents were brought
on record, including a letter dated 11.06.2001 which had been filed before
the Commission, which was in the following terms :
"In accordance with the rates specified by U.P.E.R.C. in its Tariff
Orders dated 27. 7.2000, it was provided in the Notification for
rate Schedule for HV-2 category issued by U.P.P.C.L. that 15%
surcharge will be levied on consumers who opt for power supply
during restricted/peak hours. It was also provided that additional
surcharge of 15% on demand and energy charges will be payable
by the consumers getting supply on independent feeders subject
to the condition that they will get assured supply of 500 hours in a
month. Subsequently, as per discussions in the Hon'ble
Commission it was clarified by UPPCL vide letter No. 1423-HC/
UPPCLN-1974-1204-C/2000 dated 8.9.2000 that the levy of
15% surcharge on consumers on independent feeder will be optional
subject to their giving the option.
A writ was filed by Mis LML, Kanpur who is a consumer of
H
KESCO claiming that 15% additional surcharge for independent
•
I(
L.M.L.LTD. v. STATE[SINHA,J.]
693
feeder should not be levied on them as provided in circular no. A
1423-HC/UPPCL dated 8.9.2000 referred to above. The Hon.
High Court, Allahabad have held that the provision of para-2(Ka)
of above referred circular dated 8.9.2000 giving option to the
consumers on independent feeders is a clear alteration of the
approved tariff They have further held that the circular ofUPPCL B
insofar as it is inconsistent with the tariff approved by the
Commission is void and wholly inoperative in law. The petitioner,
therefore, cannot get any advantage by exercising an option in
terms of circular by way of informing through the registered post
that he did not want an assured supply of 500 hours in a month. c
It may kindly be recalled that the clarification issued vide above
referred letter no. 1423 dated 8.9.2000 was subsequent to the
detailed discussions held in the Commission as well the then
Pramukh Sachiv Oorja.
It is, therefore, requested that the above facts may kindly be
brought to the notice of the Hon'ble Commission and further
directions may kindly be issued so that the same may be
implemented as ordered by the Hon. High Court, Allahabad."
D
18. The Chief General Manager, UPPCL by reason of a letter dated E
23.06.2001 drawing the attention of the Commission to the said letter
dated 11.06.2001 had requested it to issue necessary guidelines in the
light of the order dated 25.04.2001 passed by the Allahabad High Court
in W.P. No.40692 of2000.
19. Yet again, on or about 24.08.2001, the Executive Director,
UPPCL, referring to its earlier letter dated 11.06.2001 as also a reminder
letter dated 23.06.2001 requested the Secretary of the Commission to
issue necessary guidelines in regard to the levy of 15% surcharge, inter
F
alia, stating :
G
" .. .It may also be brought to the kind notice of the Commission
that at present field unit ofUPPCL are not charging 15% surcharge
from such consumers on independent feeders who have given
option for not availing 500 Hrs. of guaranteed supply during a
month."
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694 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
20. Other Division Benches of the Allahabad High Court, however,
chose to follow its earlier decision in L.ML. Limited (supra).
21. We may notice that some of the appellants herein had filed
reference applications before the Commission, which were found to be
B not maintainable. A Review Application was also filed whereafter, the First
Appeals were filed before the High Court. It may, however, be placed
on record that in regard to the meaning of 'independent feeders' some
matters are still pending before the Commission.
22. We may also note that on similar questions, the Uttaranchal High
c Court has allowed the writ applications filed before it.
23. The learned counsel appearing on behalf of the appellants, inter
alia. would submit that the High Court committed a manifest error in
passing the impugned judgment insofar as it failed to take into consideration
that in terms of sub-section (6) of Section 24 of the 1999 Act, it was for
D the licensee to modify the tariff and in view of the fact that before doing
so, they had held extensive consultation with the Commission; the
impugned judgments are wholly unsustainable.
It was also submitted that in any event, the doctrine of promissory
E estoppel could squarely be applicable in the instant case as the appellants
herein had altered their position relying on or on the basis of the
representation so made.
F
G
24. Mr. Rakesh Dwivedi, learned Senior C_ounsel appearing on behalf
of the respondents, on the other hand, submitted:
(i) No promise having been made by KESCO, the principle of
promissory estoppel will have no application.
(ii) In any event there cannot be any estoppel against the statute.
(lii) So far as UPPCL is concerned, having regard to the provisions
of the 1999 Act in terms whereof the Commission alone
possessed the power to modify the tariff, the impugned
judgments are unassailable.
25. The 1999 Act was enacted to provide for the restructuring of
H the electricity industry, the rationalization of generation, transmission,
L.M.L.LTD. v. STATE[SINHA,J.]
695
distribution and supply of electricity, regulation by an independent electricity A
regulatory Commission of the electricity industry including the purchase,
distribution, supply and utilization of electricity, the quality of service, tariff
and other charges keeping in view the interest of the consumers and utilities,
creation of an environment which will attract participation of private sector
entrepreneurs in the electricity industry in the State and generally for taking B
measures conducive to the development and management of the electricity
industry in the State in an efficient, economical and competitive manner
and for matters connected therewith or incidental thereto.
26. 'Commission' is defined in Section 2(f) of the 1999 Act to mean
the Uttar Pradesh State Electricity Regulatory Commission referred to in C
Section 3 thereof Section 10 of the 1999 Act provides for the functions
of the Commission including the one to determine the tariff for electricitywholesale, bulk, grid or retail, as the case may be.
27. Section 13 provides for formation and functions of the Uttar D
Pradesh Power Corporation.
28. Section 24 occurring in Chapter VII of the 1999 Act provides
for licensee's revenue and tariffs. Sub-section (1) of Section 24 states
that the licensee shall follow the procedure prescribed in the regulations
in calculating the expected revenue from charges which he is permitted E
to recover and in determining tariffs. Sub-section (2) of Section 24
provides for the factors which are reievant for the purpose of determining
the tariffs in the following terms :
"24. Licensee's revenues and tariffs. -
(1) ...
(2) Save as provided in sub-section (3), the Commission may
specify in regulations the terms and conditions for the determination
F
of the revenue and tariffs and, in doing so, the Commission shall G
be guided by the following, namely:-
(a) the financial principles and their application provided in
Sections 46, 57 and 57-A of the Electricity (Supply) Act, 1948
and in the Sixth Schedule thereto;
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696 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
(b) the factors which would encourage efficiency; economical
B
use of the resources, good performance, optimum investments,
observance of the conditions of the licence and other matters which
the Commission may consider appropriate for the purposes of this
Act; and
(c) the interest of the consumers."
29. Sub-section (3) of Section 24 of the Act provides that in the
event the Commission departs from the factors specified in clauses (a) to
( c) of sub-section (2), reasons therefor shall be assigned. Sub-section ( 6)
C of Section 24 read as under :
D
E
"(6) The Commission may, afternotifying its decision on the licensee
's calculations as provided in sub-section (5), determine whether
the tariff charged by the licensee is required to be modified, and if
so, require the licensee to modify the tariff or any part thereof with
immediate effect.
30. Section 27 provides for enforcement of the orders and directions
of the Commission. Section 28 provides for penal provisions. Section 36
provides for appeals from the orders of the Commission to the High Court.
31. The Commission in this case proceeded to determine the tariff
keeping in view the fact that the electricity rates for industries in the State
ofUttar Pradesh were quite high and any sharp increase in the rates would
be counter productive.