1987 (5) TMI 384 - SC - Indian Laws

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the State Government and the Orissa State Electricity Board (the Board) had the authority under Section 22B of the Indian Electricity Act to deny the benefit of clubbing power allocations to the four units of the petitioner company.
The validity of the retrospective application of orders issued under Section 22B of the Act.
Whether the classification of the petitioner's 132 KV IMFAL unit as a 100% export-oriented unit justified the denial of clubbing benefits.
Whether the denial of clubbing amounted to arbitrary discrimination, violating Article 14 of the Constitution.

2. ISSUE-WISE DETAILED ANALYSIS

Authority under Section 22B of the Indian Electricity Act:

Legal Framework and Precedents: Section 22B of the Act allows the State Government to regulate the supply, distribution, consumption, or use of energy to ensure equitable distribution.
Court's Interpretation and Reasoning: The Court interpreted Section 22B as permitting the State Government to lay down policy guidelines for equitable energy distribution, but the implementation should be carried out by the Board. The State Government's direct involvement in allocating power to individual units was seen as overstepping its role.
Conclusions: The Court concluded that while the State Government could decide on policy matters such as clubbing, the execution of these policies should be left to the Board.

Retrospective Application of Orders:

Legal Framework and Precedents: The retrospective application of orders under Section 22B was challenged.
Court's Interpretation and Reasoning: The Court acknowledged the difficulty in predicting power availability accurately at the start of a water year and accepted the need for mid-year adjustments. However, it held that benefits already granted, like clubbing, could not be retrospectively revoked, imposing financial burdens on the consumer.
Conclusions: The Court held that retrospective revocation of clubbing benefits was invalid.

Classification of the 132 KV IMFAL Unit:

Legal Framework and Precedents: The classification of the 132 KV IMFAL unit as a 100% export-oriented unit was central to the denial of clubbing benefits.
Court's Interpretation and Reasoning: The Court found no legal basis for treating export-oriented units differently regarding clubbing, especially when no additional power allocation was granted based on export performance.
Conclusions: The Court ruled that the classification did not justify denying clubbing benefits.

Arbitrary Discrimination and Article 14:

Legal Framework and Precedents: Article 14 of the Constitution prohibits arbitrary discrimination.
Court's Interpretation and Reasoning: The Court found that denying clubbing to export-oriented units, while allowing it for other power-intensive units, constituted arbitrary discrimination.
Conclusions: The Court held that such differential treatment violated Article 14 and was impermissible.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes and Core Principles:

"The denial of clubbing to such industrial units has very serious implications and repercussions, both economic and otherwise, on the viable functioning of the industry."
The Court emphasized that the benefit of clubbing, once granted, could not be revoked retrospectively.
The classification of export-oriented units did not justify differential treatment in the absence of additional power allocation based on export performance.

Final Determinations:

The Court quashed the State Government's order denying clubbing benefits to the petitioner company and directed the Board to allow clubbing for the petitioner's units.
The Court upheld the High Court's decision to quash the revised bills demanding additional tariffs based on the retrospective revocation of clubbing benefits.
The Court dismissed the Special Leave Petitions filed by the State Government and the Board, affirming the High Court's judgment.

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