2006 (12) TMI 483 - SC - Indian Laws

Whether the opinion that the principle of promissory estoppel will apply where an entrepreneur has altered its position pursuant to a promise made by the State, but the application thereof would depend upon the facts and circumstances of each case? Whether High Court committed a manifest error in proceeding on the premise that the appellants were not entitled to grant of such exemption as they had started commercial production after the period envisaged in the said notification?

Issues Involved:
1. Applicability of the doctrine of promissory estoppel.
2. Compliance with the conditions laid down in the notification dated 6.2.1992.
3. Obligations of the Kerala State Electricity Board (KSEB) to supply electrical energy within a reasonable time.
4. Consequences of delay in power allocation on the eligibility for concessional tariff.
5. The effect of withdrawal and review of writ petitions on the appellant's rights.

Detailed Analysis:

1. Applicability of the Doctrine of Promissory Estoppel:
The appellants argued that they altered their position based on the representations made by the State of Kerala and the KSEB, invoking the doctrine of promissory estoppel. The court acknowledged that the doctrine applies when an entrepreneur changes their position based on a promise made by the state. However, its application depends on the specific facts of each case. The court cited precedents, including *Union of India & Ors. vs. M/s. Indo-Afgan Agencies Ltd.* and *M/s. Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors.*, affirming that promissory estoppel can be invoked against the state to prevent it from going back on its promise if the entrepreneur has acted upon it to their detriment.

2. Compliance with the Conditions Laid Down in the Notification Dated 6.2.1992:
The notification provided exemptions from enhanced power tariffs for new industrial units starting production between 1.1.1992 and 31.12.1996. The High Court found that the appellants did not comply with the terms and conditions of the notification. The court emphasized that mere submission of an application was insufficient; the appellants needed to fulfill all conditions to avail the benefits. The court referenced *Hitech Electrothermics & Hydropower Ltd. vs. State of Kerala & Ors.*, where it was held that the benefit of concessional tariffs could be extended if the delay in power supply was due to the board's inaction.

3. Obligations of the Kerala State Electricity Board (KSEB) to Supply Electrical Energy Within a Reasonable Time:
The appellants contended that the KSEB was statutorily obligated to supply electrical energy within a reasonable time, and the delay in doing so deprived them of the concessional tariff. The court noted that the KSEB's delay in power allocation was partly due to the lack of adequate transformer capacity and other infrastructural issues. However, the High Court found that the appellants also contributed to the delay by not remitting the required amounts promptly and taking time to complete the necessary work.

4. Consequences of Delay in Power Allocation on the Eligibility for Concessional Tariff:
The court examined whether the appellants were entitled to concessional tariffs despite starting production after the stipulated period due to the delay in power allocation. The court referred to *Southern Ispat Ltd. vs. State of Kerala & Ors.*, which emphasized that the eligibility for concessional tariffs depended on whether the entrepreneur had started commercial production within the specified period. The court found that the appellants' failure to start production by 31.12.1996, due to their own delays and non-compliance, disqualified them from availing the concessional tariff.

5. The Effect of Withdrawal and Review of Writ Petitions on the Appellant's Rights:
In the case of M/s. A.P. Steel Re-Rolling Mill Ltd., the High Court permitted the withdrawal of the writ petition and dismissed the review application. The court held that the appellant still had other remedies available and could pursue them. The decision to withdraw the writ petition and the subsequent dismissal of the review application did not entitle the appellant to any relief in the present appeal.

Conclusion:
The court concluded that the principle of promissory estoppel applies where an entrepreneur has altered their position based on a promise by the state. However, its application depends on the specific facts and circumstances of each case. The High Court's findings of fact, including the appellants' delays and non-compliance, justified the denial of concessional tariffs. The appeals were dismissed, with no order as to costs.

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