# STATE OF U.P. & ORS v. HINDUSTAN ALUMINIUM CORPN. LTD. & ORS - **Citation:** [1979] 3 S.C.R. 709 - **Court:** Supreme Court of India - **Decided:** 1979-04-17 - **Bench:** Shinghal, D. A. Desai - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-u-p-ors-v-hindustan-aluminium-corpn-ltd-ors-7667 - **Pages:** 36 ## Headnote Electricity Act (9 of 1910), s. 2(h) & Electricity (Supply) Act 1948 (64 of 1948) S. 2(b)-State Electricity Board if a licensee. Electricity Act 1910 (9 of 1910), S. 22-B (as inserted in 1959)-Scope and object of-Order under section-Factors to be taken into consideration & Elec· tricity (Supply) Act 1948 (54 of 1948), S. 26 Proviso 2-Scope of. U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order 1977- Cl. 6(a) (i) Proviso-Validity of . Words & Phrases-'Regulmlon', 'restriction', 'prohibition'-Distinction between. At the time of granting lincence to the company for the establishment of a new Aluminium factory the Government of India obtained the consent of the Government of U.P. to make available to the company in bulk clieap electricity A B c D from the Rihand Hydro-Electric Scheme. An agreement was entered into between the Company and the State Government for the bulk supply of electricity on a firm, continuous and uninterrupted basis at 1.99 odd paise per unit E for a period of 25 years. The company set up and commissioned its aluminium plant at Renukoot in April, 1962. It was granted a further licence for the expansion of its installed capacity. As the State was unable to meet the extra requirement of energy, silnction under s. 28 of the Electricity Act 1910 was granted to the Company, at its request, on NOvember 12, 1964, to set up a generating station at RenoF sagar, near Renukoot. It set up two gen·erating units of 67'.5 mw each. The first unit started generating power in 1967 and the other in 1968. In the meantime, permission was granted to increase the Company's installed capacity from 40,000 metric tonnes to 60,000 metric tonnes. The Company thought of setting up a plant for the production of 60,000 metric tonnes of aluminium in the State of Gujarat. But the Government of U.P. G entered into negotiations: with the Company and in its letter dated November 20, 1968, it stated that there could be no difficulty in meeting the interim requirements of energy for 2 to 3 years from the U.P. State Electricity Board and also for arranging for parallel running of their new power stations. The Company was granted sanction to expand the Renu Sagar Generation by 250 mw, and after negotiations with the State Government it Was agreed that the U.P.S.E.B. would meet the additional energy under a phased programme. The H U.P.S.E.B. stated in its letter dated September 2, 1972, that the supply would be without prejudice to the power of the State Government to control the A B c 710 SUPREME COURT REPORTS [1979] 3 S.C.R. distribution and consumption of energy under s. 22B of the Act. The additional energy was not made available to the Company during 1972-75 although the rate was substantially increased with retrospective effect. An agreement \Vas however entered into between the Company and the U.P.S.E.B. on November 30, 1976, in sup'ersession of the earlier agreements, and it was s-tipulated that it would be read and construed in all respects in conformity with the provisions of the Electricity (Supply) Act, 1948 and its rules and the regulations and the amendments thereto. Th~ State Government took a decision in December 1976 to reconnect some agricultural pumping sets which had been disconnected and this placed a.n additional load on the grid system of the State. On the note of the UPSEB that there was acute shortage of energy, and its suggestion for the imposition of some restrictions, the U.P. Electricity (Regulation of Distribution and Consumption) Order 1977, was issued by the Government on April 7, 1977. Under cl. 6(a)(i) of the Order, the Company could draw energy only to the extent of SO per cent of its monthly coi.1sumption. As the shortage of energy became more acute the Secretary of the Power D DepMim'ent sent a note to the Governor dated May 3, 1977 stating that there was a large gap between demand and availability of energy and that overriding public interest, particularly the need to maintain food ## Text _Characters 0–39,332 of 101,864. This is a partial read: ask again with offset=39332 for what follows._ • • ~ -. • • ·~·· • • 709 STATE OF U.P. & ORS. v. HINDUSTAN ALUMINIUM CORPN. LTD. & ORS. April 17, 1979 [P. N, SHINGHAL AND D. A. DESAI, JJ.] Electricity Act (9 of 1910), s. 2(h) & Electricity (Supply) Act 1948 (64 of 1948) S. 2(b)-State Electricity Board if a licensee. Electricity Act 1910 (9 of 1910), S. 22-B (as inserted in 1959)-Scope and object of-Order under section-Factors to be taken into consideration & Elec· tricity (Supply) Act 1948 (54 of 1948), S. 26 Proviso 2-Scope of. U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order 1977- Cl. 6(a) (i) Proviso-Validity of . Words & Phrases-'Regulmlon', 'restriction', 'prohibition'-Distinction between. At the time of granting lincence to the company for the establishment of a new Aluminium factory the Government of India obtained the consent of the Government of U.P. to make available to the company in bulk clieap electricity A B c D from the Rihand Hydro-Electric Scheme. An agreement was entered into between the Company and the State Government for the bulk supply of electricity on a firm, continuous and uninterrupted basis at 1.99 odd paise per unit E for a period of 25 years. The company set up and commissioned its aluminium plant at Renukoot in April, 1962. It was granted a further licence for the expansion of its installed capacity. As the State was unable to meet the extra requirement of energy, silnction under s. 28 of the Electricity Act 1910 was granted to the Company, at its request, on NOvember 12, 1964, to set up a generating station at RenoF sagar, near Renukoot. It set up two gen·erating units of 67'.5 mw each. The first unit started generating power in 1967 and the other in 1968. In the meantime, permission was granted to increase the Company's installed capacity from 40,000 metric tonnes to 60,000 metric tonnes. The Company thought of setting up a plant for the production of 60,000 metric tonnes of aluminium in the State of Gujarat. But the Government of U.P. G entered into negotiations: with the Company and in its letter dated November 20, 1968, it stated that there could be no difficulty in meeting the interim requirements of energy for 2 to 3 years from the U.P. State Electricity Board and also for arranging for parallel running of their new power stations. The Company was granted sanction to expand the Renu Sagar Generation by 250 mw, and after negotiations with the State Government it Was agreed that the U.P.S.E.B. would meet the additional energy under a phased programme. The H U.P.S.E.B. stated in its letter dated September 2, 1972, that the supply would be without prejudice to the power of the State Government to control the A B c 710 SUPREME COURT REPORTS [1979] 3 S.C.R. distribution and consumption of energy under s. 22B of the Act. The additional energy was not made available to the Company during 1972-75 although the rate was substantially increased with retrospective effect. An agreement \Vas however entered into between the Company and the U.P.S.E.B. on November 30, 1976, in sup'ersession of the earlier agreements, and it was s-tipulated that it would be read and construed in all respects in conformity with the provisions of the Electricity (Supply) Act, 1948 and its rules and the regulations and the amendments thereto. Th~ State Government took a decision in December 1976 to reconnect some agricultural pumping sets which had been disconnected and this placed a.n additional load on the grid system of the State. On the note of the UPSEB that there was acute shortage of energy, and its suggestion for the imposition of some restrictions, the U.P. Electricity (Regulation of Distribution and Consumption) Order 1977, was issued by the Government on April 7, 1977. Under cl. 6(a)(i) of the Order, the Company could draw energy only to the extent of SO per cent of its monthly coi.1sumption. As the shortage of energy became more acute the Secretary of the Power D DepMim'ent sent a note to the Governor dated May 3, 1977 stating that there was a large gap between demand and availability of energy and that overriding public interest, particularly the need to maintain food supply, required that units which were heavy consumers of 'energy should be subjected to further cut in the consumption of energy. It was particularly pointed out that as the Company was itself generating energy at Renusagar, it will have more than 50 per cent of en'ergy even if the Board's supply was completely withdrawn. The E Governor approved that proposal on June 1, 1977. A proviso was inserted in cl. 6(a) (i) of the U.P. Electricity (Regulation of Distribution and Consump· tion) Order, 1977 in June 2, 1977 according to which an industrial consumer having its own source of generation of energy from which it obtained 50 per cent or more of its consumption would suffer a cut of 100 per cent in the energy supplied by the UPSEB. The company was given time to bring about the total cut. G H Fr'esh elections were held to the State Legislature Assembly, and the new Cabinet was sworn in on June 23, 1977. It decided to reduce the supply of energy to the company to zero, in pursua.nce of the ameudment dated June 2, 1977 and called for a fresh note on the position regarding the generation and distribution of energy. The Chairman of the UPSEB prepared a note on August 26, 1977, in which he pointed out the shortage of energy, including Dr substantial fall in the generation of thermal energy, and in the "import" of energy. The Stad:e Government made an order on September 19, 1977 called the U.P. Electricity (Regulation of Supply Distribution, Consumption and Us'e) Order, 1977. That order was made for maintaining th'e supply and securing equitable distribution of electrical energy, and to provide for regulating the supply, distribution, consumption and use thereof. Clause 6 of the order which provided for compulsory cut in consumption of 'energy and demand, affected the company. • • • ~ I U. P. STATE & ORS. V. HINDUSTAN ALUMINIUM CORPN. 711 The clause provided as follows : A ''6(a.) (i) : In respect of electrical energy consumed by all large and heavy .,_ power industrial consumers receiving power at 33 kv. and above excepting fertilizers, from the U.P.S.E.B. a cut of 50 per tent in their monthly consumption of electricity both in respect of energy and demand shall be exercised : • • Provided that where a1.ay such indu9~rial consun1er has bis own source of generation of energy which alon'e enables him to obtain ~O per cent or more of his total consumption, then a cut of 100 per cent in the energy supplied by the UPSEB shall be exercised." Being aggrieved by the compulsory cut imposed company filed its third writ petition against the earlier ~Tit petitions were dismissed as withd1nwn. The High Court took the view :- by the Government the order. The company's (a) th~! it was the •tatutory obligation of the UPSEB to supply electrical energy to a consumer and held that the Pipri Bus Bar was a "distributing Main'' uncler s. 2(o) and was an electricity supply line as defined in s. 2(f) of the Act; (b) s. 22B of the Act did not confer power on the State Governments to cut off supply of energy to existing consumers or to iS&ue an order that certain preferences will be followed in supplying 'energy, (c) though the company deserved the writ, it could not be said that UPSEB had deliberately under utilised its generation capacity, and held tb'e first proviso to Clause 6(a) (i) of the order ultra vires, quashed it and directed the UPSEB to supply electrical energy to the comp2111y in accordance wlth law, without taking into consideration, the provisions- of th'e said proviso. Appeals were filed in this Court by the State and the Company, the State being aggrieved because the Hjgh Court had interfered with th'e U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977 dated September 19, 1977 made under s. 22B of the Electricity Supply Act, 1910 and the Company felt aggrieved on the ground that the High Court had not granted all the reliefs which it had claimed in its petition under Art. 226 of the Constitution. In the appeals it was contended : (a) Only the energy which was generated by the Board could be the subfect-matter of an order under s. 22B of the Act and it was not permissible for the State to take into account the energy generated by the Company for its own use. (b) Sub-s. ( l) of s. 22B of the Act was confined to a licensee and would not ht! applicable to the energy supplied by a sanction-holder under s. 28. (c) The only permissible preference was that under s. 22A in favour of an establishment mentionep. in it and the preference sho\vn to indivi· dual consumers was illegal, B c D E F G (d) The validity of the Order, which was by way of subordinate legislation, was open to judicial scrutiny; the subjective satisfaction of the State GovernH ment in making it was open to challenge in a court of law, the order suffered from the vice of malice in law; it had been made in the colourable exercise of 712 SUPREME COURT REPORTS [1979] 3 s.c.R. A the power under s. 228 of the Act simply to compel the con1pany to agree to the payment of a higher rate for the supply of energy to it. While making the order the State Government failed to take into consideration the facts that the production. of aluminium was of considerable importance to the national economy and that the Board was capable of generating more energy but was not doing so. The issue of the Order was really a colourable exercise of the Stnte Government's power under s. 228 of the Act as power was supplied indiscriB minately to new consumers after imposing a cut on the Company's consumption of energy. c D E F G (e) The Board had deliberately reduced its thermal generation. HELD : 1. The High Court erred in taking the view that th'e Pipri Bus B&r~ which was composed of a set of conductors which were made up of thick aluminium core steel reinforced cables, was a 'distributing main' under s. 2(e) of the Act and was an electric supply line as defined in s. 2(f) and that cl. VI of the Schedule to the Act would be fully applicable to the Board in so far as its obligation to the Company was concerned. In view of the second proviso of s. 26 of the Act of 1948, the provisions of cl. VI of the Sch'edule to the Act could apply to the U.P.S.E.B~ in reSopect of that area only where distribution mains had been laid by the Board and the supply of energy through any of them had commenced. [724B-F] The High Court, therefore, erred in taking the view that the Board was bound by the term of cl. VI of the Schedule to the Act to supply energy to the Company within one month of the making of a requisition or within such longer period as the Electrical Inspector might allow. But even if the Board was under an obligation to supply energy to every person, the fact nevertheless remained that the State Government had th'e over-riding power to provide, by order made under s. 22B of the Act, for regulating the supply, distribution, consumption or use thereof. Sub-s. (2) of that section categorically states that, y.·ithout prejudice to the generality of the power under sub-s. ( 1), the order may direct the BOard not to comply with any contract, agreement or requisition for the supply of energy. [725B-DJ 2. Sub-s. (I) of s. 28 of the Act in terms refers to and deals with, engaging by a non-licensee, in the business of supplying energy to the "public". It was, therefore, futile to contend that what was generated by the Renusagar Power Company was not meant for supply to the public, but was the Company's own energy. It is true that generation became, in the circumstances, the ucaptive" generation for the use of the Company, but that was far from saying that, in the eye of law, it was not energy meant for supply to the public or that it was not amenable to control under s 22B. It was therefore also liable to equitable distribution by an orcter unde~ s. 22B of the Act. [725G-726A] 3. The expression "energy" had been defined by cl. (g) of s. 2 of the Act to mean electrical energy, generated, transmitted or supplied for any purpose or used fur any purpose except the transmission of a message. lt was th'crefore a pervading definition and there was no reason why energy generated and sup· plied under s. 28 of the Act should not fall within its sweep. [726B-CJ H 4. Though the use of the article "the" in sub-s. (2) was not quite appropriate, there was no justification for the argument that section 22B was applicable only to licensees and not to a sanction holder under s. 28. [727C] 4 ¥ I I •_, • ) • J. ... • • • )g; "' - " • • • - ·~ "- • .Jo; • U. P. STATE & ORS. V. HINDUSTAN ALUMINIUM CORPN. 713 5. What s. 22B of the Act authorised the State Government to do, was to A make an order providing for 'regulating" the supply, distribution, consumption or use of energy. [727D] 6. A distinction between 'regulation' and 'restriction' or 'prohibition' had always been drawn. 'Regulation' promotes the freedom or the facility which is required to be regulated in the interest of all concerned, whereas 'prohibition' obstructs or shuts off, or deni'es it to those to whom it is applied. The High B Court went wrong in thinking that the order had the effect of prohibiting the supply of energy to the Company, which was an 'exciting consumer'. [727G~ 728A, 728C] Municipal Corporation of the City of Toronto v. Virgo, 1896 AC SB; Attorney General for Ontario v. Attorney-General for the Dominion and the-Distillers and Brewers' Association of Ontario, 1896 AC 348; Birmingham and i'1id!and Motor On1nibus Co. Ltd. v. Worcestershire County Council, [1967] 1 WLR 409, Tarr v. Tarr, [19721 2 WLR 1068; Tiu> Automobile Tran~port (Raias;han) ltd. v. The State of Rajasthan & Ors., [1963] 1 SCR 491; State of Mysore v. H. Sanjeeviah, [1967] 2 SCR 361; Fatehchand Himmatlal & Ors. v. State of Maharashtra etc. [1977] 2 SCR_,828 at P. 851. c 7. Whot had been ordered was no more than a cut of 50 per cent in the monthly con~·umption of electricity and not a- total prohibition of consumption D of energy. That was a. step in the direc'ion of regulating the consumption of energy, and not a total prohibition as envisaged in the proviso tr> cl. 6(a) (i) of the Order. [728E] 8. The proviso operateo;; in a special or particular field and for a particular purpose where it was considered necessary for regulating the supply etc., of the energy in the int:?Je<;t of t_he other con<;umers, for s. 22R w<1s mean to maintain the &U}Jply and secure the equitable distribution of energy to all concerned. The H~gh <..~ourt did not properly appreciate that aspect of the matter. [728F] 9. Large and heavy industrial consumers of the category in cl. 6(a) (i) are a cla:;s by themselves and it is hardly permissible for them to complain that the small preference shown to agriculturists in supplying energy for their water pumps or tube-wells. or in energising State tube-wells, supplying water to them, or the supply of energy to sn1all scale industries had really created a privileged class of consumers or brought into existence any such concept of priorities as to run counter to or defeat the objective of bringing about the equitable distribution of energy by an order under s. 22B. The l-ligh Court had no rcul ju<;tification for recording an adverse finding against the State on the question of the socalled preference or priorities. [729G-H, 730B] 10. There was no doubt that the State Government formed its opinion about the necessity and expediency of making the Order for the purpose of maintaining the supply and securing the equitable distribution of energy at a time when that was called for. and thi::; Court cannot sit as a Court of appeal to examine any and every arb'llment in an attempt to sho,v that the opinion of the State Government ~·as vitiated for one fanciful reason or the other. [731 G-H] II. Although the U.P. Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, had been made on the ground that the State Government was of the opinion that it was necessary and expedient for main7-330SCl/79 E F G H • A B 714 SUPREME COURT REPORTS (1979] 3 11.C.ll. taining the .supply and securing the equitable distribution of clectric;U e:aerc, to provide for regulating the supply, distribution, consumption and U&C thereof, it did not deal with all those matters in detail. In fact it may well be said to k an order I'elating essentially to compulsory cut in the consumption of energy. But that cannot detract from the basic fact that the order had the iianction of ~. 22B of the A.ct and subserved the main purpose thereuf. 1berefore ito; validity wa~ not open to cha.llenge as a piece of subordinate legislation. [7320 ...... 7338] 12. Malice in law is another aspect of the doctrine of ultra vires. Al. offeading Act can be condemned simply, for the reason that it is unauthorised. Bad faith has often been treated as interchangeable with unreasonableness and taking a decision on extraneous considerations. In that sense, it is not really a distinct ground of invalidity. It is well settled that if a discretionary power has been C exercised for an 'unauthorised purpose' that is enough to invite tbe Co\.irt's review. [733-D] Roncarelli v. Duplessis, [1959] SCR 121 p. 141 (Canada Law Reports); referred to. In the instant case. the Company had not been able to establish malice in law, n1erely because of what the Chief Secretary said in his press statemenU dated July D 8, 1977, or what the Minister informed the Assembly. It may well be that the new State Government was dissatisfied with the new agreement which had been entered into at the instance of the political party which was then in power, but it could not be said that the new Minister's desire to examing the validity or propriety of that agreement arose out of any extraneous or improper considem· tion so as to amount to malice in law. [734H~735r\] E 13. Although the High Court arrived at the conclusion that the company deserved, the writ which it granted, it did not find it possible· to hold that the UPSEB, had deliberately under utilised its generation capacity. That was a finding of fact which did not ca.II for interference. [736E] 14. As long ns the dominant motive "'·a_, proper and reasonable, and was not sullied by a mere pretext, the Order based on it would be valid when it was well F v1ithin the due scope and policy of the Act and was an honest attempt to deal with the situation for which the power to make the order had been granted by the Act. There was thus no justification for the argument that there was malice in law on the part of the State Gov'emmeint in making the order. [736G, F] G B i15. That distribution can be said to be "equitabl'e" which is "just and right under al1 the circumstances of the particular case". The High Court had recorded a finding that there was shortage in the generatioo of energy when th'e order w2R made The fact remains that the demand for energy was far in excess of the supply from all sources available to the UPSEB. It had also been well established that a situation had arisen when it became necessary to obtain an order from the State Government about the course of action to be adopted by the Board. Self-contained notes were therefore drawn Up in March, 1977 and on Mav 24. 1977, June 28, 1977 and August 26, 1977, which were quite detailed and objective and led to the making of the Order. The Order was a genuine ... attempt to secure equitable distribution of energy. It was true H1,1t the Coniranv was the worst sufferer under cl. 6(a) (i) of the Order, but .then it was also the greatest consumer. (737C·F] ) ' ~ ' 1- ' f-,, • ~·· • ; ~ ;>. ~ ' U. P. STATE & ORS. V. HINDUSTAN ALUMINIUM CORPN. 715 16. From the Chief Secretary's letter dated November 20, 1968 it appeared that the S0.1-te Government had assured the Company that it would meet the interim requiren1ent of the Company for 2 or 3 years from the UPSEB and facilitate the p.1t that it would be subject to the provisions of the Electricity Acts of 1910 and 1948 and the rules a.nd re~ations thereunder, including the amendments thereto. Care was also taken to provide that the UPSEB shall not be responsible for damages or diminutions ....,._ ~ in the supply of energy according to the orders issued by the State Government. ,. / similar provision was made in the earlier ~·greement of 1959. In the Board's " ( !:tter to the Company dated September 2, 1972 reference was specifically made to the State Government's power to "control the distribution and consumption of energy m1der s. 22B of the Indian Electricity Act, 1910." [739A-D] .. 17, Decisions in the matter of restrictions to be imposed on the consump~ tion of energy on account of acute shortage of 'energy in the State, were taken by the different State Governme~1ts, including the Governor's Advisor~. and it cannot be said that the cu~ were imposed suddenly, or without due regard to th'e company's difficultie~ in reducing its consumption of energy' in the manner directed by the order. It cannot therefore, be said that the State wantonly .disregarded its contractual obligai!ion to the company. [739E-F] 18. Sub-section (2) of s. 22B of the Act specifically provided that it wos permissibl'e for the State Government to direct by the order that the UPSEB sbaH not comply with the provisions inter alia of any contra'\:t n1ade by it. A direction to that effect was expressly made in cl. 11 of the Order, and so it is not permissible for the company to complain on that account. [739G] 19. Craim striking down the whole of the Order and merely declared that the provision of the first proviso to cl. 6(n) (i) was ultra vires, and quashed it. [743C-F] E 22. Even though the proviso is valid and has wrongly been qu(lshed by the High Court, it is not n'ecessary to restore it in view of the statement of the Solicitor General, so that it shall not be deemed to form part of cl. 6(a) (i) of the Order. But if there is deterioration in !he generatic1;i of energy again, or there are other sufficient reasons wiihin the purview of s. 22B of the Act to reinsert the proviso, in the present or modified form, it would be permis&ible for the State Government to do so accordingly to the l&w, [743G·H, 744C] CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 921/78 and 425/79 Appeals by Special Leave from the Judgment and Order dated 27-4-1978 of the Allahabad High Court in Writ Petition No. 3732/77. M. V. Goswami for the Appellant (In CA 921/78) S. S. Ray, D. Gupta, Shiv Dayal, N. R. Khaitan, U. K. Khaitan and G. Mitra for the Respondent in CA 921/78 and Appellant in CA 425/79. fl S. N. Kacker, Sol. Genl. of India, G. C. Dwivedi, S. C. Bhudhwar, s. Markendaya and K. Madan Moha.n Reddy for U. P. State Electri- • ) • ' • ' ;>. city Board (Appellant No. 2inCA921/78). :...- • .. • U. P. STATE & ORS. V. HINDUSTAN ALUMINIUM CORPN. 717 (Shinghal J.) The Judgment of the Court was delivered by SHINGHAL J .-These appeals by special leave ari~ from the judgment of the Allahabad High Court dated April 27, 1978. While Civil Appeal No. 921 of 1978 has been filed by the State of Uttar Pradesh, the U .P. State Electricity Board and the Executive Engineer of the Rihand Power Station, hereinafter collectively referred to as the State, Civil Appeal No. 425 of 1979 has been filed by the Hindustan Aluminium Corporation Ltd., its Vice President and Chief Accountant, ~" hereinafter referred to as the Company. We have heard the two ' appeals together and will dispose them of by a common judgment. ( Tn" controversy relates to the supply of electrical energy (for short • ' "energy") for the production of aluminium, which is the most modern of the common metals. Unlike the other common industrial metals like iron, copper, zinc and lead, pure aluminium is not produced by the direct smelting of its ores. The metal is now produced by the modern electrolytic method under the influence of direct current. It takes about 10 kilo watt-hours of electricity to produce a pound of aluminium, and the supply of cheap electric power is therefore an essential requisite or raw material for its production. The metal has many advantages and uses and has gained such importance that it is an essential commodity under the Essential Commoditk:s Act and its production is one of the scheduled industries under the Industries (Development and Regulation) Act. While the State feels aggrieved because the High Court bas interfered with the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use) Order, 1977, dated &eptember 19, 1977, hereinafter referred to as the , Order, which it made under section 22B of the Electricity Ac;t, 1910, (for short the Act), the Company's grievance is that the High Court ( lias not granted all the reliefs which it had claimed in its petition under "'-. article 226 of the Constitution. The Court's record is much too volu- • minous, but it appears to us that the appeals can be adequately disposed of o"n the basis of the important av"rments in the lists of dates drawn up by counsel for the parties about which there is no dispute before us. When the question of establishing a new aluminium factory arose for consideration by the Gov~rnment of India, it took into consideration the consent of the Government of Uttar Pradesh to make energy available for the factory from the Rihand Hydro-electric Scheme which was expected to go into operation by the end of 1960, and gra"nted an industrial licence to the Company on September 26, 1959, for the manufacture of 20,000 metric tonnes of aluminium ingots per year at Rihand. An agreement was also entered into between the State of A B c E F (;; 718 SUPREME COURT REPORTS (1979] 3 S.C.R. A Uttar Pradesh and the Company on October 29, 1959 for the 'supply of 55 m w of power on a firm, continuous and uninterrupted basis at a rate of 1.997717 paise per unit for a period of 25 years from th•o date of commencement of the supply. B The Company set up and commissioned its aluminium plant at Renukoot (near Rihand Dam) with an installed capacity of 20,000 metric tonnes per annum in April 1962. It was granted a further licence for th•o expansio"n of its installed capacity by 40,000 metric tonnes per annum. As the State was unable to meet the extra requirec ment of energy, sanction under section 28 of the Act was granted to ,'-. the Company, at its request, on November 12, 1964, to set up a gene-~ rating station at Re"nusagar, near Renukoot, through its subsidiary the ) Renusagar Pow"r Company Ltd. It had two generating units of 67.5 · D E F m w each. The first unit started generating power in 1967 and the other in 1968. Tne 40,000 metric tonnes expansion· unit was commissioned i"n 1968. In the meantime th,; Company was granbcd a licence in December 1966 for effecting a further cxpan8ion of 60,000 metric to·nnes P'"r annum in its installed capacity for the production of aluminium. The Company thought of setting up the plant for the production of 60,000 metric tonnes of aluminium in Gujarat State as it was informed· by the Gujarat State Electricity Board that it would be ab:e to meet the requirement of energy there at a rate of Rs. 320/- per kilowatt year, which was much higher than the rate at which it was receiving energy from U. P. State Electricity Board (U.P.S.E.B.). The Government of U.P. held negotiations with the Company, and it was decickd that the Company would produce the additional 60,000 metric tonnes of aluminium also in Uttar Pradesh. The Chief Secretary to the government of U.P. wrote a detailed letter to the Company on Novembzr 20, 19"8, in which the position regarding the supply of energy was stated as follows,- "Regarding the power plant, I can see no difficulty in meeting the interim requirements for 2 to 3 years from the U.P. State Electricity Board, nor do I sec any difficulty in G arranging for parallel running of your new power sta~ion, with the U.P. State Electricity Board." ' ) • ' The Company then addressed a letter to the State Government on , September 26, 1969 stating the position regarding too supply and generation of increased energy for the expansion of aluminum production as H follows,- "5(a) The Scheme, of power supply for our expansion by UPSEB is interlinked with the question of expansion of ~ • ' • ( • • .. -~ • ~ ? U. P. STATE & ORS. V. HINDUSTAN ALUMINIUM CORPN. 719 (Shinghal !.) our Renusagar power plant and its parallel operation with your system. The application for the expansion of our Renusagar Power Plant has already been submitted to your office, a copy of which is enclosed herewith for your voady reference. The necessary permission for the same is requested as early as possible. (b) The emergency assistance under parallel operation would b" required for about 100 m w and the terms and conditions for the same would have to be decided simultaneous;y with the permission for expansion of our Power Plan~." It may be mentioned that the Company was granted sanction to expand Renusagar generation by 250 m w . In 1972 the Company expanded i's installed capacity for the production of aluminium by 35,000 metric tonnes per year. On its part, the U.P.S.E.B. sanctioned 110 m w additional energy under a phased programme to be completed by June 1, 1975. It was clearly stated in the letter of the U.P.S.E.B. dated September 2, 1972, that the supply would be without prejudice to the power of the State Government to control the distribution and consumption of energy under section 22B of the Act. Reference in the Jetter was made to the acute shortage of power because of scanty rainfall in the catchment area. It so happened that additional energy was not made available to the Company during 1972-7 5 although the rate was substantially increased (to 11 paise instead of 1.997717 paise) with retrospective effect from June 30, 1975, under the new aluminium policy of the Government of India. An agreement was however entered into between the Company and the U.P.S.E.B. on November 30, 1976. for the supply of 85 m w of energy on a continuous basis, for a period of 5 years, in supersession of the earlier agreements, and it was sti· pulated that it would be read and construed in all respects in conformi'y with the provisions of the Act, the Electricity (Supply) Act, 1948, and the rules and the regula•ions and the amendments thereto The Company received that supp;y and was even promised an additional supply of 35 m w over a phased period from July 1977, but did not get it. The Company was all the same able to raise its production of aluminium to 95,000 metric tonnes by April 7, 1977, lncause of the supply of 85 m w of energy. In the meantime, the State Government took a decision by the end of December 1976 to reconnect some 70,000 pumping sets which had A B c D E F G H A 8 D E F G H 720 SUPREME COURT REPORTS (1979] 3 s.c.R. been disconnected for non-payment of the electricity dues. That placed an additional load of about 400 m w on the grid system of the State. The Chairman of U.P.S.E.B. submitted a note on the power situation which was likely to obtain from April to July 1977. He pointed out that there was acute shortage of m~rgy and suggested the imposition of some restrictions npto the end of July 1977 by when the demand for agriculture was expected to decrea&o and the Rihand and Matatila reservoirs would be filled up. That was proposed to meet the needs of agriculture and relakd iudustries and to meet the industrial demand to ·the exte'nt possible. One of the proposals was for a 50 per cent cut in the demand of the Company and some other industrial units including Kanoria Chemicals and Industries Ltd. That note came up for consideration in the State Cabinet on April 1, 1977, and was partially approved. The U.P. Electricity (Regulation of Distribution and Consumption) Ord·~r, 1977, was therefore issued on April 7, 1977. Under clause 6(a) (i) of the Order, the Company could draw energy only to the extent of 42.5 m w i.e. 50 per cent of its monthly consumption; but it was allowed to draw 55 m w for the time being. Uttar Pradesh came under the President's rule on April 30, 1977, and the Company was allowed 10 draw 55 m w until further orde-rs. It is the case of the State that the shortage of energy became more acute in the third week of May. The Company, in the meantime, filed its first writ petition [No. 1790 ( c) of 1977] on receipt of a letter of the Executive Engineer (O.&M.). Rihand, that the power supply to the Company should be cut off completely with immediate effect. The writ petition was dismissed on May 20, 1977, because of a subsequent Jetter by the Government requiring the U.P.S.E.B. to continue the supply of 42.5 m w energy instead of 55 m w in accordance with the aforesaid Order of April 7, 1977. The Secretary of the Power Department of the State government sent a note to the Governor on May 24, 1977, proposing some additional cuts in the supply of energy. Decision thcre0n was deferred until inforn1ation \vas obtained from other States in regard to availability of energy to aluminium plants. A fresh note was thereafter prepared for orders. In that note dated May 31, 1977, it was stated that there was a large gap between demand and availability of energy and that was creating a serious imbalance requiring load shedding on a large scale, and that had given rise to discontent in all sectors of the economy nnd. in particular, in the rural sector. It was also pointed out that overriding public interest, particularly the need to maintain • .. • • -"" .. ( • j. ~ • :-, ; (F • • ~ -~ • .., ~ U. P. STATE & ORS. v. HINDUSTAN ALUMINIUM CORPN. 721 (Shinghal !.) food supply 3nd the industrial production, required that units which were heavy consumers of energy should be subjected to further cut in the consumption of energy. It was particnlary poin'ed out that as the Company wa:s itself generating energy at Renusagar,, it will have more than 50 per cent of energy even if the Board's supply of 42.5 m w was completely withdrawn, and that wiJI service some 8500 pumping sets. It was, all the same, stated that the Company would continue, to have 60 m w from the U.P.S.E.B. as stand by supply as in the past. The Governor approved that proposal on June 1, 1977. A proviso was, inter alia, inserted in clause 6(a) Ii l of the U.P. Electricity (Regulation of Distribution and Consumption) Order, 1977, on June 2, 1977, according to which the industrial consumer which had its own source of generation of energy from which it obtained 50 per cent or more of its total consumption would suffer a cut of 100 per cent in the energy supplied by the U.P.S.E.B. The Company was accordingly given time to' bring about the total cut. In the meantime, the Cbmpany filed its second writ petition [No. 2160(c) of 1977] along with an application for stay. The High Court admitted the writ petition, but rejected the application for stay. The Company then moved this Court for special leave•. The Hon'ble Vacation Judge made an observation that the matter may be discussed b) the parties concerned, and the State agre