PETITIONER: M/S. ESTER INDUSTRIES LTD. Vs. RESPONDENT: U.P. STATE ELECTRICITY BOARD & ORS. DATE OF JUDGMENT: 17/09/1996 BENCH: K. RAMASWAMY, G.B. PATTANAIK ACT: HEADNOTE: JUDGMENT:
O R D E R
This special leave petition arises from the judgment
and order of the Division Bench of the Allahabad High Court
at Lucknow made on May 8, 1996 in writ Petition No.10195/89.
The admitted position is that the Government of Uttar
Pradesh had laid down a sanction for grant of 10%
developmental rebate in supply of electricity to the newly
set up industries on July 16, 1986 and that was to be in
Vogue till 1990. It is the claim of the petitioner that
pursuant to that policy, the petitioner had set up his
industry in Nainital District. Consequently, he is entitled
to the rebate. When the bill was issued, the Board imposed
its tariff rates contrary to the rebate. Resultantly, they
filed the writ petition. The High Court in the impugned
judgment has held that Section 78A of the Indian Electricity
(Supply) Act, 1984 (Act 54 of 1948) (for short, the ‘Act’)
being a legislative policy, the Board was not automatically
bound by the directions issued by the State Government. The
Board is entitled to revise tariff in accordance with its
procedure. Therefore, writ could not be issued compelling
the Board to follow the directions issued by the State
Government. Thus, this special leave petition.
It is contended for the petitioner that in view of the
law laid down by this Court in Real Food Products Ltd. &
Ors. vs. A.P. State Electricity Board & Ors. [AIR 1995 SC
2234] in particular paragraph 8, the Board is bound by the
directions issued by the State Government. The view taken by
the High Court is, therefore, not correct in law. We find no
force in the contention. It is well settled legal position
that the fixation of the tariff is a legislative policy and
the Board is entitled to revise unilaterally the tariff from
time to time. The consumer is bound by the revision of the
tariff duly notified in accordance with the procedure
prescribed under the Act. The question is: whether contrary
to the conditions of the tariff entered into by the parties,
the policy direction issued by the State would be interposed
and be revised by the Electricity Board in consonance with
the directions issued by the State Government? In this
regard, the observations of this Court in paragraph 8 are
worth recapitulation:
“The only surviving question is
with regard to the nature and
effect of the direction given by
the State Government under Section
78 A of the Act. The question has
to be examined in the context of
the confined to thee charging of a
flat rate per H.P. for agricultural
pump sets. The nature of the
function if the Board in the fixing
the tariffs and the manner of its
exercise has been considered at
length in the earlier decisions of
this Court and it does not require
any further elaboration in the
present case. Section 78 A uses the
expression “the Board shall be
guided by such directions on
question of policy as may be given
to it by the State Government”. It
does appear that the view expressed
by the State Government on a
question of policy is in the nature
of a direction to be followed by
the Board in the area of the Policy
to which it relates. In the context
of the function of the Board of
fixing the tariffs in accordance
with Section 49 read with Section
59 and other provisions of the Act,
the Board is to be guided by any
such direction of the State
Government, as in the present case,
was to fix a concessional tariff
for agricultural pump sets at a
flat rate per H.P., it does relate
to a question of Policy which the
Board must follow. However, in
indicating the specific rate in a
given case, the action of the State
Government may be in excess of the
power of giving a direction on the
question of Policy, which the
Board, if its conclusion be
different, may not bee obliged to
be bound by. But where the Board
considers even the rate suggested
by the State Government and finds
it to be acceptable in the
discharge of its function of
decision of the Board would not be
vitiated merely because it has
accepted the opinion of the State
Government even about the specific
rate. In such a case the Board
accept the suggested rates because
that appears to be appropriate on
its own view. If the view expressed
by the State Government in its
direction exceeds the State of
policy, the Board may not be bound
by it unless it takes the same view
on merits itself.”
Section 78A(1) of the Act postulates that in the
discharge of its functions, the Board shall be guided by
such directions on questions of policy as may be given to it
by the State Government. In other words, the Electricity
Board has a statutory function to discharge in determination
of the rates of tariff and terms and conditions subject to
which the electrical energy be supplied to the consumers and
enforcement thereof. This being a legislative policy, while
exercising the power under Section 78A policy directions
issued by the Government may also be taken into
consideration by the Electricity Board which has a statutory
duty to perform. But so long as the policy direction issued
by the Government is consistent with the provisions of the
Act and tariff policy laid down by the Board, it may be open
to the Board to either accept it or may not accept the
directions as such. It is for the State Government to
consider whether the Board has laid down the policy or
whether the direction issued by the State Government has not
been properly implemented. The Court cannot give a direction
to implement the directions issued by the State Government
exercising the power under Article 226 of the Constitution
to direction the Board to exercise its power under Section
78A(1) of the Act. Sub-section (2) has no application for
the reason that if the Board feels any doubt as to whether
the direction issued by the Government is in the realm of a
policy or otherwise, then it shall be referred to the
authority constituted under the Act whose decision shall be
final, i.e., de hors the question in this case.
The learned counsel for the petitioner has brought to
our notice that this Court has granted leave against the
judgment of another Division Bench on the question of
applicability of the promissory estoppel. In this case, that
question does not arise for the reason that the promissory
estoppel would apply only in a case where there was no
contract executed between the parties. In this case, since
there exists a contract duly executed by law between the
petitioner and the Board which binds them, unless it is
revised, the question of promissory estoppel does not arise.
Considered from this perspective, we are of the view that
the High Court has not committed any manifest error of law
warranting interference.
The special leave petition is dismissed.