2008 (5) TMI 679 - SC - Indian Laws

Doctrine of Promissory Estoppel - Withdrawal of concessions - Interpretation of notification dated 14.02.1997 - Grant of concessional tariff for a period of three years @ 60%, 70% and 80% of the consumption charges - expression set up - High Tension Industries - Whether by reason of the notification dated 31.01.1995, the entrepreneurs who had set up new high tension industries after the said date have acquired any right pursuant thereto? - Retrospective effect. HELD THAT - We may notice that concessional tariffs, however, were to be granted only for three years. Those three years of concessional tariffs, therefore, were available to any industry which had been set up after 3.01.1989 till the concession is withdrawn. A promise was made to grant the concessional tariff not only for the new industries which were to be set up thereafter but also to the pre- existing industries. The right accrued to them is sought to be taken away w.e.f. 15.02.1997. Those who were eligible upto 14.02.1997 to avail the benefit of the notification dated 31.01.1995 became ineligible. An accrued right ordinarily cannot be taken away with retrospective effect. It is not a case where the notification has a retroactive operation. A person may apply on a particular date for grant of electrical connection. He may get the electrical connection within a few days or a few weeks or a few months. According to the State Electricity Board, keeping in view the role played by all the three players, namely, the consumer, the Board and the State, an outer limit of 18 months is taken for grant of supply. A statute, even a subordinate legislation, may have to be construed reasonably. A subordinate legislation ordinarily would not be given a retrospective effect. Retrospective effect can be granted only if there exists any power in that behalf. There is nothing to show that such a power has been conferred upon the State in terms of the Act. The proviso is an exception to the main clause whereas all industries which were set up on or after 15th February become wholly ineligible for any tariff concession but those who had set up prior thereto shall continue to avail themselves of the said tariff concession. Legally, those who had not become consumer of electrical energy, but were the potential consumers, they had not only applied for it but they were and, in fact, some of them has also been gone into commercial production. Once they have set up the high tension industries and who had gone up for commercial production must be held to have set up the high tension industries. Once they have set up the high tension industries after 31st March, 1995, they became entitled to the benefit of concessional tariff for a period three years. Such concession was to be availed by them from the date of grant of service connection. If they had already been granted service connection, they would continue to avail themselves of the said tariff concession. However, the difficulty arises only in cases where despite applying for grant of electrical communication, actual service connection had not been granted. If a literal interpretation of the proviso is taken recourse to, the same may result in an anomaly in the sense that in one case, connection may be granted in one day and in another case, connection may not be granted for a long time. Because of the acts of discrimination on the part of the officers of the Board or the State, the entrepreneurs would suffer. It is in the aforementioned limited sense, the doctrine of promissory estoppel will have application. If doctrine of promissory estoppel applies, the right accrued in terms thereof cannot be withdrawn with a retrospective effect. See Mahabir Vegetable Oils (P) Ltd. 2006 (3) TMI 234 - SUPREME COURT , Southern Petrochemical Industries Co. Ltd. 2007 (5) TMI 591 - SUPREME COURT It is not a case where decisions were altered pursuant to any representation made by the State. Concessions in tariff had been granted by reason of a statutory provision. Such concessions could also be withdrawn. If the appellants have not altered their position pursuant to any promise, the doctrine of promissory estoppel would not apply. If that be so, the question of any right being vested in the appellants would also not apply. In Kasinka Trading Anr. v. Union of India Anr. 1994 (10) TMI 64 - SUPREME COURT , the power of the State to change its policy decision in public interest was emphasized. It was held that the power which can be used for grant of concession, namely, Section 25(1) of the Customs Act itself is the source to rescind the earlier notification We have noticed that some of the industries had even installed generators. They had to do it. They inevitably had to do it because the Board would not supply power. We think that for the said purpose, the proviso has to be read down. It must be made applicable to them who not only had started commercial production before the said date, namely, 14.02.1997 but also had applied and were otherwise ready to take electrical connections having deposited the amount asked for, wherefor their industries were otherwise ready for consuming electrical energy. We, therefore, held 1. As the concession had been granted by the State, it had the power to withdraw the same. 2. It is not a case where in view of the doctrine of promissory estoppel, the State could not have in law amended the Schedule. 3. In view of existence of public interest the doctrine of promissory estoppel would have no application. 4. Even otherwise the appellants having not preferred appeals against the judgment of the Division bench of the High Court, the said questions cannot be permitted to be raised before us. 5. Proviso appended to the main provision should be read down as stated in paragraphs 44 and 45 supra. 6. In view of our findings aforementioned, we have not gone into the merit of the matter involved in each case separately. We direct accordingly. The matters would now be examined by the Appropriate Authority of the Board, as directed by the High Court in individual cases - Appeals are allowed.

Summary

Issues Involved:
1. Connotation of the expression "set up" in the context of concessional tariff for High Tension Industries.
2. Construction of the expression "set up" in the context of continued tariff concession.
3. Interpretation of "set up" in relation to the date of service connection.
4. Ensuring certainty among consumers regarding the tariff concession.
5. Liberal construction of the Notification conferring tariff concessions.

Detailed Analysis:

Issue 1: Connotation of "set up" in the context of concessional tariff
The Supreme Court examined the meaning of "set up" in the context of concessional tariffs granted to High Tension Industries. The term "set up" was debated whether it should mean the date of obtaining the service connection or the date when the industry is ready to commence business. The Court referenced the decision in *Commissioner of Wealth Tax v. Ramaraju Surgical Cotton Mills, Ltd.*, where "set up" was interpreted to mean when the unit is ready to discharge its function. The Court concluded that "set up" should be understood as the date when the industry is ready to commence business, not merely when the service connection is obtained.

Issue 2: Construction of "set up" in the context of continued tariff concession
The Court analyzed whether the expression "set up" should be construed in the context of the continued tariff concession until the expiry of three years from the date of service connection. It was determined that the term "set up" should be interpreted to ensure that industries which had already been established and were ready for commercial production before the cut-off date should continue to avail the concessional tariff.

Issue 3: Interpretation of "set up" in relation to the date of service connection
The Court deliberated on whether the expression "set up" should take its meaning from the context that the continued tariff concession could be availed by the High Tension Industries until the expiry of three years from the date of service connection. The Court emphasized that the date of service connection is crucial as it provides certainty about when the concession period starts. The notification dated 31.01.1995 specified that the concessional tariff would apply from the date the consumer is given a service connection, thus linking "set up" to the readiness to consume electrical energy.

Issue 4: Ensuring certainty among consumers regarding the tariff concession
The Court stressed the importance of ensuring certainty among consumers who could continue to avail of the tariff concession. The date on which the consumer is given a service connection provides such certainty. The Court noted that the benefit of concession in tariff rates could only be availed once the service connection is granted, thereby ensuring a clear and definite starting point for the concessional period.

Issue 5: Liberal construction of the Notification conferring tariff concessions
The Court discussed whether the Notification conferring tariff concessions should be construed liberally to extend the benefit by interpreting the expression "set up" and introducing the element of uncertainty. The Court concluded that while exemption notifications should receive a strict construction, once it is found that the industry is entitled to the benefit of the exemption, it should receive a broad construction. The Court also noted that the State has the power to withdraw or modify the concession in public interest, and such decisions should be balanced against the hardship caused to the consumers.

Conclusion:
The Supreme Court held that:
1. The State had the power to withdraw the concession.
2. The doctrine of promissory estoppel did not bar the State from amending the Schedule.
3. Public interest justified the amendment, negating the doctrine of promissory estoppel.
4. The proviso to the main provision should be read down to include industries that had started commercial production and were ready for service connection before the cut-off date.
5. Individual cases should be examined by the Appropriate Authority of the Board as directed by the High Court.

The appeals were allowed with these directions, ensuring that the interpretation of "set up" aligns with the readiness to commence business and the date of service connection, providing clarity and fairness to the consumers.