# U.P. POWER CORPORATION LTD. & ANR v. SANT STEELS & ALLOYS (P) LTD. & ORS

- **Citation:** [2007] 12 S.C.R. 1160
- **Court:** Supreme Court of India
- **Decided:** 2007-12-10
- **Case number:** Civil Appeal Nos. 1215C 1216 of2001
- **Bench:** A.K. Mathur, Markandey Kat Ju
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/u-p-power-corporation-ltd-anr-v-sant-steels-alloys-p-ltd-ors-22298
- **Pages:** 37

## Headnote

Electricity (Supply) Act, 1948-s. 49-Notification underConcession of 33.33% development rebate to new industrial units in
c hill areas for jive years from the date of commencement of supply of
electricity-Subsequent Notifications reducing the concession to
I 7'Yo-Principle of promissory estoppel-Applicability of-Held:
Notification was in the nature of delegated legislation and not an Act
.framed by State Legislature-In such delegated legislation revocation
D is permissible, if larger public interest is involved or an Act is passed
by legislature-On facts, no evidence to make out the case of public
interest to revoke the concession granted-Thus, principle of
promissory estoppel applicable-However, units entitled to such
benefits till the Act of 1999 came into force since after coming into
E force the Act of 1999 no such concession was granted-Administrative
law-Delegated legislation-UP. Electricity Reforms Act, 1999Notifications dated 18.1.1992, 15. 7.1994, 18. 6.1998 and 25.1.1999 ..
Administrative law-Promissory estoppel-Applicability of,
F
against State or its instrumentalities-Held: Depends on the facts of
each case-When State Government makes representation showing
benefits to entrepreneurs and entrepreneurs make investment, then
revocation of such benefits by State Government would be unfair and
arbitrary-Consideration of public interest and that there cannot any
estoppel against a Statute are exceptions.
G
The appellant-U.P. Power Corporation Ltd., issued Notifications
and allowed 33.33% hill development rebate in consumption of
\
energy to the new industrial units for a period of five years from the
date of commencement of the supply of the electricity. The
H
1160
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1161
ALLOYS(P)LTD.
entrepreneurs established industrial units in the hill areas after A
incurring huge investments. By subsequent Notifications, the
appellant-Corporation restructured the tariffs and the concession
was reduced from 33.33% to 17%. The entrepreneurs filed writ
petitions challenging the Notifications. The Division Bench of the
High Court allowed the writ petitions holding that the appellant was B
bound by the principle of promissory estoppel and could not revoke
the benefit of the concession in consumption of energy given to the
writ petitioners for establishing industries in the hill areas. It directed
the appellant-Corporation to issue electricity bills to the writ
petitioners after allowing 33.33% hill development rebate on the c
total amount of bill for the remaining unexpired period of five years.
Hence the present appeals by the appellants-U.P. Power Corporation
Ltd.
Appellant-U.P. Power Corporation Ltd. contended that the
notifications modifying the rebate were issued in exercise of the D
statutory provisions under section 49 of the Electricity (Supply) Act,
1948; that there was large scale theft of energy in the State ofU.P.;
that the High Court failed to consider the public interest, specifically
pleaded by filing an affidavit; that by virtue of the U.P. Electricity
Reforms Act, 1999, the new tariff was fixed from August 2000-2001 E
by the Commission and no estoppel against the Statute could be
pleaded after the Act of1999 having come into force; that it was not
in public interest to continue the benefit to these industries located
in hill areas; that the entire benefit was not withdrawn, the benefit
was rationalized and as a result the energy consumption of these units F
increased to manifold; and that the whole exercise ofrestructuring
the rebate was done in the public interest only.
Respondent-writ petitioners inter alia contended that these
concessions were given to the hill areas in pursuance to the direction G
by the State Government in exercise of power under section 78A of
/
the Act; that under section 49 of the 1948 Act, there is no such
contemplation that the exemption could be revoked; that the change
in the tariff would be unconstitutional, unfair, arbitrary to the citizens
who acted

## Text

_Characters 0–39,655 of 81,477. This is a partial read: ask again with offset=39655 for what follows._

A
U.P. POWER CORPORATION LTD. & ANR.
v.
SANT STEELS & ALLOYS (P) LTD. & ORS.
DECEMBER 10, 2007
B
[A.K. MATHUR AND MARKANDEY KAT JU, JJ.]
Electricity (Supply) Act, 1948-s. 49-Notification underConcession of 33.33% development rebate to new industrial units in
c hill areas for jive years from the date of commencement of supply of
electricity-Subsequent Notifications reducing the concession to
I 7'Yo-Principle of promissory estoppel-Applicability of-Held:
Notification was in the nature of delegated legislation and not an Act
.framed by State Legislature-In such delegated legislation revocation
D is permissible, if larger public interest is involved or an Act is passed
by legislature-On facts, no evidence to make out the case of public
interest to revoke the concession granted-Thus, principle of
promissory estoppel applicable-However, units entitled to such
benefits till the Act of 1999 came into force since after coming into
E force the Act of 1999 no such concession was granted-Administrative
law-Delegated legislation-UP. Electricity Reforms Act, 1999Notifications dated 18.1.1992, 15. 7.1994, 18. 6.1998 and 25.1.1999 ..
Administrative law-Promissory estoppel-Applicability of,
F
against State or its instrumentalities-Held: Depends on the facts of
each case-When State Government makes representation showing
benefits to entrepreneurs and entrepreneurs make investment, then
revocation of such benefits by State Government would be unfair and
arbitrary-Consideration of public interest and that there cannot any
estoppel against a Statute are exceptions.
G
The appellant-U.P. Power Corporation Ltd., issued Notifications
and allowed 33.33% hill development rebate in consumption of
\
energy to the new industrial units for a period of five years from the
date of commencement of the supply of the electricity. The
H
1160
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1161
ALLOYS(P)LTD.
entrepreneurs established industrial units in the hill areas after A
incurring huge investments. By subsequent Notifications, the
appellant-Corporation restructured the tariffs and the concession
was reduced from 33.33% to 17%. The entrepreneurs filed writ
petitions challenging the Notifications. The Division Bench of the
High Court allowed the writ petitions holding that the appellant was B
bound by the principle of promissory estoppel and could not revoke
the benefit of the concession in consumption of energy given to the
writ petitioners for establishing industries in the hill areas. It directed
the appellant-Corporation to issue electricity bills to the writ
petitioners after allowing 33.33% hill development rebate on the c
total amount of bill for the remaining unexpired period of five years.
Hence the present appeals by the appellants-U.P. Power Corporation
Ltd.
Appellant-U.P. Power Corporation Ltd. contended that the
notifications modifying the rebate were issued in exercise of the D
statutory provisions under section 49 of the Electricity (Supply) Act,
1948; that there was large scale theft of energy in the State ofU.P.;
that the High Court failed to consider the public interest, specifically
pleaded by filing an affidavit; that by virtue of the U.P. Electricity
Reforms Act, 1999, the new tariff was fixed from August 2000-2001 E
by the Commission and no estoppel against the Statute could be
pleaded after the Act of1999 having come into force; that it was not
in public interest to continue the benefit to these industries located
in hill areas; that the entire benefit was not withdrawn, the benefit
was rationalized and as a result the energy consumption of these units F
increased to manifold; and that the whole exercise ofrestructuring
the rebate was done in the public interest only.
Respondent-writ petitioners inter alia contended that these
concessions were given to the hill areas in pursuance to the direction G
by the State Government in exercise of power under section 78A of
/
the Act; that under section 49 of the 1948 Act, there is no such
contemplation that the exemption could be revoked; that the change
in the tariff would be unconstitutional, unfair, arbitrary to the citizens
who acted on the promise made by the appellant-Corporation; that H
1162
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A the State Government/Corp. is estopped from withdrawing these
..
concessions; that the concession which were given had a vested right
and it could be revoked by the same Statute; that the revocation was
not on the basis of general public interest but only on account of
losses the Corporation was trying to make up; and that there is no
B allegation of theft in the hill areas.
Disposing of the appeals, the Court
HELD: 1.1. The Court's approach in the matter of invoking the
principle of promissory estoppel depends on the facts of each case.
C But the general principle that emerges is that once a representation
has been made by one party and the other party acts on that
representation and makes investment and thereafter the other party
resiles, such act cannot be stated to be fair and reasonable. When
the State Government makes a representation and invites the
D entrepreneurs by showing various benefits for encouraging to make
investment by way of industrial development of ackvard areas or
hill areas, and the entrepreneurs on the representations so made
bonafidely make investment, and thereafter, ifthe State Government
resile from such benefits, then it certainly is an act of unfairness and
E arbitrariness. Consideration of public interest and the fact that there
cannot any estoppel against a Statute are exceptions. [Para 17)
1.2. It is true that the Authorities have a right to revoke the
benefit extended but if the other party has suffered on that account
then such representation will be against the public policy and the
F
morality. Notification issued under Section 49 of the Act of1948 for
giving the benefit of exemption for the hill areas was in the nature
of delegated legislation and not an Act framed by the State
Legislature. Therefore, a distinction has to be made between the
delegated legislation and the primary legislation framed by the
G Legislature. In Section 49 there is no specific stipulation that the
notification issued under Section 49 of the Act could be revoked at
any time. So far as the primary legislation is concerned, if the Act is
passed by State Legislature and denies the benefit by the primary
legislation then no estoppel can be applied against that Act but, so
H far as the case of delegated legislation is concerned, where delegated
'
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1163
ALLOYS (P) LTD.
authorities pass certain notification in exercise of their delegated A
authority there is no contemplation mentioned in the Act itself that
it is capable of being revoked at any time. Then such notifications
cannot be treated at par with the primary Act passed by the State
Legislature. The State is fully competent to pass an Act
prospectively as well as retrospectively but retrospectivity to the B
extent of aforesaid nature cannot stand. Therefore, this distinction
has to be borne in mind. (Para 18) [1192-G, H; 1193-A, B, C, DJ
1.3. It is highly against the public morality that the incumbent
who felt persuaded on account of the representation made by the
State Government that they will be given certain benefits and they C
acted on that representation, it docs not behove on the part of the
appellant-Corporation to withdraw the said benefit before expiry of
the stipulated period by issuing the notification revoking the same
which the respondents were legitimately entitled to avail. In such a
situation the principle of promissory estoppel which has been evolved D
by the Courts which is based on public morality cannot permit the
State to act in such an arbitrary fashion. [Para 18) [1193-E, F, G)
1.4. The grounds for the purpose of public interest which have
been pleaded; hardly involve any public interest. They were more E
of a nature oflosses which the Corporation suffered and in order to
make these losses, these methods were evolved to reduce and to
make good of the losses. Restructuring benefitto 17% of the Tariff
4(A) (demand charges) were the factors which were aimed atto make
the losses good for the Corporation. This was not a case in which F
serious public repercussion was involved. As regards, theft of the
energy, if it was proved by cogent datas that as a result of giving
this benefit to the entrepreneurs in the hill areas, they were misusing
it or there was theft of the energy at a large scale by these persons
to whom the concession had been given then, of course, such factors, G .
if all the datas were brought on record, could have persuaded the
1
Court to take a different view of the matter. But simply because there
was theft of energy, it cannot be held that the revocation of such
concession could be said to be in public interest. Since the benefit
was given to these units in the hill areas, there should have been
H
1164
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A ovenvhelming evidence to show some malajide on the part of these
consumers which persuaded the Corporation to revoke it. If there
was no misuse of the energy by these units in the hill areas to whom
the concession had been granted then in that case it cannot be taken
that there was really public interest involved which persuaded the
B Corporation to revoke the same.
[Para 18) [1193-G; 1194-A, B, C, D, EJ
1.5. No person can be permitted to misuse the concession or
benefit and invoke promissory estoppel. Promissory estoppel is not
one sided affair, it is rather two sided affair. If one party abuses the
C concession then it is always open to the other party to revoke such
concession but if one party avails the benefit and is acting on the
same representation made by the other party then the other party
who has granted the said benefit cannot revoke the same under the
garb of public interest. Therefore, the revocation Notification cannot
D be upheld on the grounds that the revocation notification was issued
in public interest and that same has the flavour of the statute.
[Para 18) (1194-E, F, GJ
1.6. It is true that a detailed statement was given in various
paragraphs of the written statement filed by the appellantE Corporation before the High Court and unfortunately, the High
Court did not advert to these details. But, even on examining these
details and the points raised by the appellant justifying modification
of rebate, a contrary view from that taken by the High Court cannot
be arrived at. There is no gain saying that the public interest js
F paramount and the private interest has to be sacrificed for the larger
interest. But, after a survey of all the cases *on the subject, the
judicial consensus that emerges is that whenever the State has made
a representation to the public and the public has acted on that
representation and suffered economically or othenvise, then in that
G case the State should be estopped from withdrawing such benefit to
the detriment of such people except in public interest or against the
Statute. So far as the public interest as involved in the instant case,
it is found that there was no ovenvhelming evidence to revoke the
benefit granted to the industrial units in the hill areas. So far as the ·
H Statute is concerned, the notification was issued under Section 49
\
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1165
ALLOYS (P) LTD.
of the Act of 1948 and the same was revoked under Section 49 of A
the Act of 1948 though there was no such provision contained in
Section 49 that it will be open to the Corporation to revoke the same
but that could be possible by invoking the principle of General
Clauses Act. However, in such a delegated legislation the withdrawal
could only be permitted iflarger public interest is involved or if the B
Act is passed by legislature. [Para 18J (1194-G; 1195-A, B, C, DJ
* Pawan Alloys & Casting Pvt. Ltd., Meerut v. UP.State
Electricity Board & Ors., (1997J 7 SCC 251; Kasinka Trading& Anr.
v. Union of India & Anr., [1995J 1SCC274; Sales Tax Officer & Anr
v. Shrijee Sales Corporation & Anr. v. Union of India, [1997J 3 SCC C
398; Shree Durga Oil Mills & Anr., [1998J 1 SCC 572; State of
Rajasthan & Anr. v. Mahaveer Oil Industries & Ors., [1999J 4 SCC
357; Mis. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar
Pradesh & Ors., [1979J 2 SCC 409; MRF Ltd., Kottayam v. Asstt.
Commissioner (Assessment) Sales Tax & Ors., [2006J 8 SCC 702; State D
of Punjab v. Nestle India Ltd. & Anr., [2004J 6 SCC 465 and Mahabir
Vegetable Oils (P) Ltd. & Anr. v. State of Haryana & Ors., [2006J 3
sec 620, referred to.
1. 7. There cannot be estoppel against a statute. Since the E
benefits in question have not been recognised by the Act of 1999,
therefore, upto the date of coming into force of the Act of 1999, all
the benefits which were being given to the respondent- entrepreneurs
shall be protected by invoking the principle of promissory estoppel
but after coming into force of the Act of 1999, which is a primary F
legislation enacted by the State Legislature the benefits from the
date the Act has come into force, cannot be made available to the
respondents. [Paras 18 and 19J (1195-F, G, HJ
1.8. The action taken by the appellant-Corporation in revoking
the benefits given to the entrepreneurs in the hill areas will sadly G
,,
reflect their credibility and people will not take the word of the
Governme.nt. That will shake the faith of the people in the
governance. Therefore, in order to keep the faith and maintain good
governance it is necessary that whatever representation is made by
the Government or its instrumentality which induces the other party H
1166
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A to act, the Government should not be permitted to withdraw from
that. This is a matter of faith. [Para 20] [ 1196-B, C, D]
1.9. The view taken by the Court on invoking the principle of
promissory estoppel is correct and the respondent- units would be
entitled to such benefits till the U.P. Electricity Reforms Act, 1999
B came in to force. Since after coming into force the Act of 1999 no
such concession has been granted, therefore, the concession would
survive till the Act of1999 came into force. [Para 21] [1196-D, E]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1215C 1216 of2001.
From the Judgment and Order dated 25.05.2000 of the High Court
of Judicature at Allahabad, in Writ Petitio Nos. 15292 and 15293of1999.
Dr. AM. Singhvi and Ratnakar Dash, Pradeep Misra, Amit Bhandari,
D Daleep Dhayani, Dinesh Kumar Garg and Anuvarat Sharma for the
Appellants.
E
Shanti Bhushan, R.F. Nariman, S. Ganesh, M.L. Bhat, Sudhir Kumar
Gupta, Anurag Pandey, Mihir Kumar Chaudhary, M.L. Lahoty, Paban
K. Sharma, Poonam Lahoty, Ramesh Singh, RaJ·eev Sharma, R.
Santanam, Manjula Gupta, Irshad Ahmad, R.C. Verma and Pradeep Misra
for the Respondents.
The Judgment of the Court was delivered by
A.K. MA THUR, J. 1. These appeals are directed against the order
F dated 25.5.2000 passed by the Division Bench of the Allahabad High
Court whereby the Division Bench has allowed the writ petitions and
Clause 9(a) of the notification dated 25.1.1999 (Annexure-8 to the writ
petition) and clause 8(a) of the notification dated 18.6.1998 (Annexure -
7 to the writ petition ) were struck down. It was further directed that the
G writ petitioners were entitled to get hill development rebate of33.33%
on the total amount of the bill till the period of5 years from the date of
commencement of supply of the electricity to them and the appellantCorporation was directed to issue electricity bills to the 'A-Tit petitioners
after allowing 33.33% hill development rebate on the total amount of bill
H
U.P.POWERCORPORATIONLTD. v. SANTSTEELS&
1167
ALLOYS(P)LTD. [A.K.MATHUR,J.]
for the remaining unexpired period of five years. Aggrieved against this A
order, the present appeals were filed by U.P. Power Corporation
Ltd.(hereinafter referred to as Corporation.)
2. In order to dispose of these appeals brief facts may be detailed
below. Pursuant to industrial policy of the State ofUttar Pradesh, U .P .State B
Electricity Board (now U.P. Power Corporation Limited) [hereinafter to
be referred to as the ''Corporation'']- the appellant herein framed its tariffs
vide notifications dated 18.1.1992 & 15.7.1994. By these notifications
33.33% hill development rebate was allowed to the new industrial units
for a period of five years from the date of commencement of the supply
of the electricity. The above concession was initial! y valid till 31.3 .1995. C
It was later on extended up to 31.3.1997. It was alleged that all the writ
petitioners established industrial units in the hill areas after huge investments
and after executing agreement with the appellant~Corporation. But
subsequently, by notifications dated 18.6.1998 and 25.1.1999 the
concession which was earlier given was reduced by the appellant- D
Corporation from 33.33% to 17% which is arbitrary and not permissible
according to principle of promissory estoppel and in that connection
reliance was placed on a decision of this Court in Pawan Alloys &
Casting Pvt. Ltd., Meerut v. UP.State Electricity Board & Ors.,
[ 1997) 7 SCC 251. Written statement was filed by the appellant- E
Corporation and the appellant took the stand that the impugned tariffs
were new structured tariff in respect of HV-1 category of consumers and
it was empowered to frame tariff under the provisions of Section 49 of
the Electricity (Supply) Act, 1948 (hereinafter to be referred to as the
Act of 1948). It was also contended that this restructuring was necessitated F
in order to avoid loss to the Corporation due to theft of electricity and it
was done in the public interest.
3. In order to appreciate the controversy involved in the matter, it
will be appropriate to refer to the relevant tariff notification issued from G
time to time by the appellant- Corporation. The first in point of time is
the tariff vide notification dated 18.1.1992. Relevant provisions of clauses
read as under:
"4. Rate of Charge (Energy Charges):
H
A
B
1168
SUPREME COURT REPORTS
[2007] 12 S.C.R.
All KWH consumed in the month
200 paise per KWH.
5. Extra Charge or Rebate:
(i) In case of supply given at 400 volts, the consumer shall be
required to pay an extra charge of 10 per cent on the amount
calculated at the rate of charge under item ( 4 ).
(ii) If supply is given at voltage more than 11 KV, rebate mentioned
below will be admissible on the amount calculated at the rate
of charge under item (4).
c
(a) Above 11 KV upto 66 KV
5%
(b) Above 66 KV upto 132 KV
7.5%
D
E
F
G
H
(c) Above 132 KV
10%.
xx
xx
xx
8.
Concessions:
In respect of connections as may be located in any of the eight
hill districts in U.P. whose names are given below but excluding
those existing at a height of less than 610 mts (2,000feet)
above M.S.L. in Dehradun and National districts a
development rebate of 33 1/3% on the amount of the bill as
computed under item 4 & 5 above will be given to new
connections for a period of five years from the date of
commencement of supply. This rebate will also be admissible
for the unexpired period of five years to those existing
connections which have not completed five years from the
date of commencement of supply. This development rebate
shall not be admissible to the Departments/ Corporations/
Undertaking of State/ Central Government and Local Bodies."
1. Name of eight Hill Districts:
2. Almora district
3. Chamoli district
4. Pauri Garhwal district
:
'
U.P.POWERCORPORATIONLTD. v. SANT STEELS& ll69
ALLOYS(P)LTD. [A.K.MATHUR,J.]
5. Pithoragarh district
6. Uttar Pradesh district
7. Tehri Garhwal district
8. Uttarkashi district
9. Dehradun district.
A
B
In respect of connections as may be located in Bundelkhand
region, comprising Jhansi, Lalitpur, Hamipur, Jalaun and Banda
districts a development rebate of 50% on the amount of the
bill as computed under item 4 & 5 above will be given to new C
Industrial units for a period of five years from the date of
commencement of supply. This rebate will also be admissible
for the unexpired period of five years to those existing
Industrial units of the above district ofBundelkhand region who
have not completed five years from the date of commencement D
of supply. This development rebate shall however not be
allowed to the Department/ Corporations/ Undertakings of the
State/ Central Government and Local Bodies. "
Therefore, this concession was extended to the entrepreneurs in the hill
districts including Dehradun who established their industries at the height E
of610 metres (2000 feet) above M.S.L.for a period of five years. Then
on 15. 7.1994 another notification was issued. Relevant provisions of
Clauses 4,5 & 8 read as under :
"4. Rate of Charge (Energy Charges):
F
All KWH consumed in 3 month
280 paise per KWH.
5.Extra Charge or Rebate:
(iii) In case of supply given at 400 volts, the consumer shall be
required to pay an extra charge of 10 per cent on the amount G
calculated at the rate of charge under item ( 4).
(iv) If supply is given at voltage more than 1 IKV, rebates
mentioned below will be admissible on the amount calculated
at the rate of charge under item ( 4).
H
A
B
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SUPREME COURT REPORTS
[2007] 12 S.C.R.
(a) Above 11 KV upto 66 KV
5%
(b) Above 66 KV upto 132 KV
7.5%
© Above 132 KV
10%.
xx
xx
xx
8. Concessions:
(a) In respect of connections as may be located in under mentioned
areas of the hill districts in U.P., a development rebate of33 1/3
percent on the amount of the bill as computed under item 4 & 5
C
above will be given to new connections for a period of five years
from the date of commencement of supply. This rebate will also
be admissible for the unexpired period of five years to those existing
connections which have not completed five years from the date of
D
E
connnencement of supply.
Provided that the above development rebate shall not be
admissible to the Departments/ Corporations/ Undertakings of
State/ Central Government and local bodies.
Description of Area of Hill Districts:
1. Almora district
2. Pithoragah district
3. Chamoli district
F
4. Uttarkashi district
G
H
5. Pauri Garhwal district excluding Nagarpalika area ofKotdwara.
6. Tehri Garhwal district excluding Muni Ki Reti and Dhalwala
Blocks.
7. Nainital district excluding Haldwani, Rudrapur, Gadarpur,
Kashipur, Bajpur, Ram Nagar, Jaspur, Khatima and Sitarganj
Block.
8. Dehradun district excluding Doiwala, Rampur, Sahaspur and
•
'
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1171
ALLOYS(P)LTD. [A.K.MATHUR,l]
Vikas Nagar Blocks.
A
(b) In respect of connections as may be located in Bundelkhand
region, comprising Jhansi, Lalitpur, Hamipur, Jalaun and Banda . ,.-
~
districts a development rebate of 50% on the amount of the bill as
computed under items 4 & 5 above will be given to new Industrial
units for a period of five years from the date of commencement of B
supply. This rebate will also be admissible for the unexpired period
of five years to those existing Industrial units of the above district
ofBundelkhand region who have not completed five years from
the date of commencement of supply. This development rebate of
50% in Bundelkhand region shall, however, not be allowed to the C
Railways and Departments/ Corporations/ Undertakings of the
State/ Central Government and Local Bodies.
The development rebates under this clause shall be allowed
subject to the condition that the net amount payable after allowing D
these rebates would not be less than the amount of minimum
consumption guarantee under item 6 above."
Meaning thereby that the energy charges were increased from 200 paise
to 280 paise and the concession granted to the hill areas continued.
Thereafter, in supercession of earlier notifications another notification was E
issued in which energy charges were increased from 280 paise to 308
paise per KW. But the concession granted earlier continued. Relevant
provision reads as u~der :
"4. Rate of Charge (Energy Charges):
All KWH consumed in one month
5. Extra Charge or Rebate:
F
308 paise per KWh.
(i) In case of supply given at 400 volts, the consumer shall be
required to pay an extra charge of l 0 per cent on the amount G
calculated at the rate of charge under item ( 4).
(ii) If supply is given at voltage more than l lKV, rebate mentioned
below will be admissible on the amount calculated at the rate
of charge under item (4).
H
l
1172
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A
(iii) Above 1 J KV upto 66 KV
5%
(iv) Above 66 KV upto 132 KV
7.5%
(v) Above 132 KV
10%.
xx
xx
xx
B
8.Concessions:
The concessions mentioned hereunder shall be applicable to
consumers connected upto 31.3. 97.
c
(a) In respect of connections as may be located in under
mentioned areas of the hill districts in U.P., a development
rebate of 33 1/3 % on the amount of the bill as computed
under item 4 & 5 above will be given to new connections for
a period of five years from the date of commencement of
D
supply. This rebate will also be admissible for the unexpired
period of five years to those existing connections which have
not completed five years from the date of commencement of
supply.
Provided that the above development rebate shall not be
E
admissible to the Departments/ Corporations/ Undertakings of
State/ Central Government and local bodies.
Description of Area of Hill Districts:
l .Almora district
F
2.Pithoragah district
3.Chamoli district
4.Uttarkashi district
5.Pauri Garhwal district excluding Nagarpalika area of
G
Kotdwara.
6.Tehri Garhwal district excluding Muni Ki Reti town area and
'
Dhalwala villae under Narendra Nagar Block.
7.Nainital district excluding Haldwani, Rudrapur, Gadarpur,
H
Kashipur, Bajpur, Ram Nagar, Jaspur, Khatima and Sitarganj
U.P.POWERCORPORATIONLTD. v. SANTSTEELS& 1173
ALLOYS(P)LTD. [A.K.MATHUR,J.]
Blocks.
8.Dehradun district excluding Doiwala, Rampur, Sahaspur and
Vikas Nagar Blocks.
A
(b) In respect of connections as may be located in
Bundelkhand region, comprising Jhansi, Lalitpur, Hamipur, B
Jalaun and Banda districts a development rebate of 50% on
the amount of the bill as computed under items 4 & 5 above
will be given to new Industrial units for a period of five years
from the date of commencement of supply. This rebate will
also be admissible for the unexpired period of five years to c
those existing Industrial units of the above districts of
Bundelkhand region who have not completed five years from
the date of commencement of supply. This development rebate
of 50% in Bundelkhand region shall, however, not be allowed
to the Departments/ Corporations/ Undertakings of the State/ D
Central Government and Local Bodies.
The development rebates under this clause shall be allowed
subject to the condition that the net amount payable after
allowing these rebates would not be less than the amount of
minimum consumption guarantee under item 6 above."
Thereafter, on 18.6.1998 a new notification came to be issued, which is
relevant for our purpose. By this notification the bills were divided into
two parts, i.e. demand charge plus energy charge. Relevant provisions of
Clauses 4, 5 & 8 read as under:
"4. RATE OF CHARGE:
(A) Demand Charge
1. Induction Furnaces
2. ARC Furnaces
3. Rolling/
Rs.700/- per KV Al month
Rs.615/- per KV Al month
Re-rolling Mills
Rs.440/- per KV A/month
E
F
G
(b) Plus Energy Charge
H
1174
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A
All KWH consumed in
100 Paise per month.
the month
Notes:
(i) Any consumer availing the supply for more than one process
B
oflnduction Furnace, ARC furnace or Rolling/ Re-rolling Mill,
will be charged at the applicable rate of demand charge
whichever is higher.
c
D
E
F
G
(ii) The recording of demand and energy shall be done through
static Trivector Meters.
5. EXTRA CHARGE OR REBATE:
(i)
In case of supply given at 400 volts, the consumer shall be
required to pay an extra charge of 10 per cent on the amount
calculated at the rate of charge under item (4).
(ii) If supply is given at voltage more than 11 KV, rebate
mentioned below will be admissible on the amount calculated
at the rate of charge under item (4).
(a) Above 11 KV upto 66 KV
5%
(b) Above 66 KV upto 132 KV
7.5%
(c) Above 132 KV
10%
xx
xx
xx
8. CONCESSION:
The concessions mentioned hereunder shall be applicable to
consumers connected upto 31. 03 .1997.
(a) In respect of connections as may be located in under
mentioned area of hill districts in U.P. a development rebate
of 17% on the demand charges only as computed under item
(4) above will be given during the unexpired period of five
years to those existing connections which have not completed
five years from the date of commencement of supply.
H
Provided that the above development rebate shall not be
'
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1175
ALLOYS(P)LTD. [A.K.MATHUR,J.]
available to the Department/ Corporations/ Undertaking of A
State/ Central Government and Local Bodies.
DESCRIPTION OF AREA OF HILL DISTRICTS:
1. Almora district
2. Pithoragah district
3. Chamoli district
4. Pauri Garhwal district excluding Nagarpalika area of
Kotdwara.
5. Uttarkashi district
6. Tehri Garhwal district excluding Muni Ki Reti town area .
and Dhalwala villae under Narendra Nagar Block.
B
c
7. Nainital district excluding Haldwani, Rudrapur, Gadarpur,
Kashipur, Bajpur, Ram Nagar, Jaspur, Khatima and Sitarganj D
Blocks.
8. Dehradun district excluding Doiwala, Rampur, Sahaspur and
Vikas Nagar Blocks.
(b) In respect of connections as may be located in E
Bundelkhand region, comprising Jhansi, Lalitpur, Hamipur,
Jalaun and Banda districts a development rebate of 25% on
the demand charges only as computed under item 4 above will
be given during the unexpired period of five years to those
existing industrial units of the above districts ofBundelkhand F
region who have not completed five years from the date of
commencement of supply. This development rebate shall
however not be allowed to the Departments/ Corporations/
Undertakings of the State/Central Government and Local
Bodies .. "
G
Similar is the notification dated 25. l. l 999which is identical to the
notification dated 18.6.1998. But in this notification dated 25.1.1999 the
concession was not in clause 8 but the concession has been re-numbered
from clause 8 to clause 9 which is identical and as such need not be
H
1176
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A reproduced again. As a result of these two notifications i.e. notifications
dated 18.6.1998 & 25.1.1999 two significant things happened, that the
tariff was divided into two parts i.e. demand charge plus energy charge.
The energy charge was charged earlier at 308 paise per KV was reduced
to 100 paise KV A per month but the demand charge i.e. induction furnace,
B ARC furnace, rolling/re-rolling mills etc. which were fixed charges,
concession was given at the rate of 17 % computed under item No.4(A)
i.e. induction furnace @Rs.700/- per KV Al month, ARC furnace@
Rs.615/- per KV A/month and Rolling/ Re-rolling Mills @Rs.440/- per
KV Al month. Therefore, as a result of restructuring of tariff, the demand
C charges under item 4(A) were made fixed but the energy charges were
reduced from 308 paise to 100 paise per month. It is not the case that
the appellant has completely revoked the concession. It is the case that
appellant- Corporation has reduced the energy charges from 308 paise
per KV A to I 00 paise but the demand charges have been fixed per KV Al
D month and the concession has been re-scheduled instead of giving them
33.33% the energy charges have been reduced which is applicable to all
but in the case of demand charges for hill areas it has been reduced to
17 % in respect of demand A charges and that was allowed to be
continued for the unexpired period of five years to its existing connections
E which have not completed five years from the date of commencement of
supply. At the same time the appellant- Corporation has denied this benefit
to the State Departments/ Corporations, Undertakings of the State/
Central Government and local Bodies. Therefore, so far as the private
consumers are concerned, this has been kept in tact.
F
4. Now, in this factual controversy, we have to examine whether the
concession in the consumption of energy which has been given to the writ
petitioners for establishing the industries in the hill areas can be revoked
or modified by the appellant-corporation or not. The High Court has taken
the view that the appellant is bound on the principle of promissory estoppel
G and it cannot revoke the benefit.
5. Dr.A.M.Singhvi, learned senior counsel for the appellant has given
nine reasons that this modification of the rebate is fully justified for the
following r_easons:
H
(i) That the notifications have been issued in exercise of the
U.P.POWERCORPORATIONLTD: v. SANT STEELS& 1177
ALLOYS (P)LTD. [A.K.MATHUR,J.]
statutory provisions under section 49 of the Act of 1948, A
therefore, it has statutory flavour.
(ii) That there is complete change of tariff i.e. it has two parts,
(a) demand charge and (b) energy charge.
(lii) That there has been reduction in the energy consumption B
charges i.e. from 308 paise to 100 paise per unit.
(iv) That there was large scale theft of energy in the State ofU.P.
(v) That units were closing on account of these concessions.
(vi) That there is no total withdrawal of the rebate but by C
restructuring concession at the rate of 17% continues in the
demand charges.
(vii) That the High Court has failed to consider the public interest
which was specifically pleaded by filing a detailed affidavit.
(viii) That no malafide is attributed.
(lx) That actual cost of energy production has shoot up to Rs.2.50.
D
Therefore, learned senior counsel for the appellant submitted that the
appellant-corporation is fully within its right to modify the rebate and the E
principle of promissory estoppel cannot estop. Dr.Singhvi also submitted
that the Division Bench of the High Court has relied on a decision in
Pawan Alloys & Casting Pvt. Ltd. (supra) in which no affidavit was
filed. This was not appreciated by the High Court and therefore, the whole
situation has turned on that count. Dr.Singhvi has also raised the question F
oflaches, estoppel, waiver and acquiesance and submitted that the earlier
writ petition was filed challenging the notification dated 18.6.1998 and it
was withdrawn with liberty and thereafter on 4.11.1999 application to
recall the order was filed which was rejected. Again, another writ petition
has been filed without permission of the High Court. Dr.Singhvi submitted
that by virtue of the U .P. Electricity Reforms Act, 1999, (hereinafter to G
be referred to as the Act of 1999) now the new tariff has been fixed from
August, 2000-2001 by the Commission because now the power to
determine the tariff has been given to the Commission and no estoppel
against the Statute can be pleaded after the Act of 1999 having come
H
1178
SUPREME COURT REPORTS
[2007] 12 S.C.R.
A into force. Dr.Singhvi, learned senior counsel submitted that in view of
the affidavit filed by Shri C.R.Goswami, Executive Engineer, Electricity
Distribution Division, Kotdwar, Uttarakhand on behalfofthe appellant and
a comparative chart has been annexed to indicate that in fact after
introduction of two part tariff, energy consumption of these units has
B considerably increased. The chart has been filed along with the affidavit
in respect of all the writ petitioners except Shree Sidhbali Steels Ltd.
c
6. As against this, Mr.Shanti Bhusan, learned senior counsel for the
respondent-writ petitioners submitted that these concessions were given
to the hill areas in pursuance to the direction by the State Government in
exercise of power under Section 78A of the Act of 1948 and submitted
that the State Government was fully competent to do so. The State/
Corporation. has made a representation on which the private entrepreneurs
have made huge investments and therefore, the State GovernmentCorporation cannot wriggle out from it and the State Government-Corp.
D is estopped from withdrawing these concessions. Mr.S.Ganesh, learned
senior counsel appearing for some of the writ petitioners has also submitted
that the concession which has been given has a vested right and it can
only be revoked by the same Statute.
E
7. Both the learned senior counsel appearing for the parties relied
on number of decisions of this Court on the subject. Since the High Court
has relied primarily on the decision of this Court in Pawan Alloys &
Casting Pvt. Ltd. (supra), therefore, it would be profitable to first
examine the said decision. In this case, the U.P.State Electricity Board
F by notifications issued in exercise of po we~ under Section 49 of the Act
of 1948 held out promises to the industrial units established in different
parts of the State ofU.P. and they were given concession in the electricity
charges to the extent of 10 per cent of rebate for a period of three years
for the first time and the same was prematurely withdrawn by subsequent
G notification which gave rise to number of writ petitions being filed in the
High Court and the principle of promissory estoppel was invoked. In the
writ petitions it was contended that when rebate was given to the new
'
industrial units for a period of three years, the Board could not have
arbitrarily withdrawn the same prior to the expiry of a period of three
H years. It was contended that such withdrawal of concession is applicable
;
U.P.POWERCORPORATIONLTD. v. SANT STEELS& 1179
ALLOYS (P) LTD. [ A.K. MA THUR,J.]
prospectively and cannot have retrospective effect to the earlier existing A
industrial units. The Board contested the matter. The Allahabad High Court
framed the following three questions. (i) Whether the Board is estopped
from withdrawing the said rebate before the completion of the 3/5 year
period, by virtue of the doctrine of promissory estoppel? (ii) Whether
the agreement executed by the petitioners bars them from questioning the B
impugned notification ? (iii) Whether the impugned notification has no
application to existing consumers and does it apply to only those
consumers who receive the supply on or after 1-8-1986 ? The High Court
after hearing the contesting parties came to the conclusion that the
respondent-Board was estopped by virtue of the doctrine of promissory c
estoppel from withdrawing the development rebate before the completion
of the period of three years. On second point, the High Court came to
the conclusion that the writ petitioners were barred from questioning the
impugned notification on the express terminology found i,n the agreements
entered into by them with the Board for supply of electricity and under D
those agreements the Board was given full play to revise the tariff rates
which included development rebate also from time to time and consequently
the impugned notification was not illegal. On the third issue, it was held
that the notification dated 31-7-1986 could not be said to be retrospective
and consequently, the High Court dismissed all the writ petitions. E
Aggrieved against this, the matter came up before this Court by Pawan
Alloys & Casting Pvt. Ltd. This Court after review of all the earlier
decisions observed as follows :
"34.Consequently it must be held that relying upon the
representations held out by the Board in these earlier notifications
F
assuring grant of incentive rebate of I 0% on the total bill of
electricity consumption charges these new industries being assured
that for three years this concession will be available had burnt their
boats and spent large amounts and had established their industries
in the area falling in the operative jurisdiction of the Board in the G
State ofU.P.
,
35.