Reliance Industries Limited vs The State Of Maharashtra on 7 November, 2009

Bombay High Court
Reliance Industries Limited vs The State Of Maharashtra on 7 November, 2009
Bench: B.H. Marlapalle, R. S. Dalvi
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    pdp




                                                                               
                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                               CIVIL APPELLATE SIDE




                                                       
                            WRIT PETITION NO. 7453 OF 2007




                                                      
    1. Reliance Industries Limited
       a Company registered under the
       provisions of the Companies Act, 1956
       having its registered office at Maker
       Chambers IV, 222, Nariman Point,




                                                   
       Mumbai - 400 021 and having its
       Petrochemical Division at MIDC
                                 
       Industrial Estate Area, Patalganga -
       410 220, Rasayani 410 207
       District - Raigad.
                                
    2. Mr. V.K. Chandran
       Shareholder of the 1st Petitioner,
       having its office at 3rd Floor,
       Maker Chambers IV, Nariman Point
            

       Munbai - 400 021.                              .. Petitioners

           Vs.
         



    1. The State of Maharashtra
       through Principal Secretary
       Industry (Industries, Energy & Labour)





       Mantralaya, Mumbai - 400 032.

    2. Principal Secretary (Energy)
       Government of Maharshtra,
       Ministry of Industries, Energy and
       Labour Department,





       Mantralaya, Mumbai - 400 032.

    3. Deputy Secretary (Energy)
       Government of Maharashtra,
       Mantralaya, Mumbai - 400 032.

    4. The Electrical Inspector
       Electricity and Labour Department




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     Inspection Division No.1
     Wagle Industrial Estate, Road No.11,




                                                                                
     Thane (W) - 400 604.                              .. Respondents




                                                        
                                         WITH
                             WRIT PETITION NO. 897 OF 2008


    1. The Hindoostan Spinning & Weaving




                                                       
        Mills Limited.
        A Company incorporated under the
       Companies Act, 1956, having its
       registered office at Sir Vithaldas
       Chambers, 16, Bombay Samachar




                                                   
       Marg, Mubai - 400 001.
                                
    2. Shri Chandrahas K. Thackersey
       adult Indian inhabitant, the Director
       of Petitioner No.1 having its office
                               
       at Sir Vithaldas Chambers, 16, Bombay
       Samachar Marg, Mumbai 400 001.                  .. Petitioners

                  Vs.
         

    1. The State of Maharashtra
       through its Secretary to the Department of
       Industry, Energy & Labour having office at
      



       Mantralaya, Mumbai.

    2. The Chief Engineer (Electrical)
       Government of Maharashtra having office





       at PWD Administration Building, 3rd floor,
       Ramkrishna Chemburkar Marg, Chembur,
       Mumbai - 400 071.

    3. The Electrical Inspector
       PMT Commercial Building No.1, 3rd Floor,





       Swargate, Pune - 411 042.                       .. Respondents


                                         WITH
                             WRIT PETITION NO. 1960 OF 2007

    1. Eurotex Industries and Exports Ltd.
       A Company incorporated under




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      the Companies Act, 1956, having
      its Regd. Office at




                                                                                
      Raheja Chambers, 12th floor, 213,
      Nariman Point, Mumbai - 400 021.




                                                        
    2. R.K. Agrawal
       Adult Indian inhabitant residing at
       B-19/20 Omlata Jain Tower,
       Anand Nagar, Vasai Road West,
       Dist. Thane 401 202.                            .. Petitioners




                                                       
                   Vs.

    State of Maharashtra




                                                 
    having its office at Mantralaya,
    Mumbai - 400 032.              ig                  .. Respondent


                                         WITH
                                 
                             WRIT PETITION NO. 1962 OF 2007


    1. M/s. Lupin Limited
       formerly known as Lupin Chemicals Ltd.
          

       Being a Company registered under the
       Companies Act, 1956 and having its
       registered office at 159, CST Road,
       



       Kalina, Santacruz (E), Mumbai - 400 098.
       Having one of it's manufacturing
       locations at T-142, M.I.D.C. Tarapur,
       District - Thane, Maharashtra 400 506





    2. Rajvardhan Vishnu Satam
       an Indian inhabitant, residing at
      B/1507, Shree Prabha CHS Ltd.
      Sejal Park, Next to Goregaon Bus Depot
      Link Road, Goregaon (W),





      Mumbai - 400 104.                                .. Petitioners

                   Vs.

    State of Maharashtra
    having its office at Mantralaya
    Mumbai 400 032.                                    .. Respodent




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                                          WITH




                                                                                 
                              WRIT PETITION NO. 2003 OF 2007

    1. M/s. Amit Spinning Industries Ltd.




                                                         
       A Company incorporated under the
       Companies Act 1956, having its registered
       office at Lotus House, 5th floor, 33-A
       New Marine Lines, Mumbai - 400 020.




                                                        
    2. Ranjan Mangtani, an Indian
       Inhabitant, Director of 1st Petitioner,
       his office at A-60, Okhla Industrial Area,
       Phase II, New Delhi - 20.




                                                   
                   Vs.

    State of Maharashtra
    having its office at Mantralaya
                                  
    Mumbai 400 032.                                     .. Respondent
                                 
                                          WITH
                              WRIT PETITION NO. 2262 OF 2007
          


    1. M/s. Standard Industries Ltd.
       



       Being a Company registered under the
       Companies Act, 1956 and having its
       registered office at 59, Arcade,
       World Trade Centre, Cuffe Parade,





       Mumbai - 400 005.

    2. Mrs. T.B. Panthaki, an Indian
       Inhabitant working at 59, Arcade World
       Trade Centre, Cuffe Parade, Mumbai - 5.          .. Petitioners





                   Vs.

    State of Maharashtra
    having its office at Mantralaya,
    Mumbai - 400 032.                                   .. Respondent




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                                         WITH
                             WRIT PETITION NO. 2364 OF 2007




                                                                                
                                                        
    1. M/s. Mukand Limited,
       being a Company registered under the
       Indian Companies Act, 1913 and having
       its registered office at Bajaj Bhavan,
       Jamnalal Marg, 226, Nariman Point,




                                                       
       Mumbai - 400 021.

    2. Vinod Shah, an Indian Inhabitant,
       Working as Director and Advisor
       (Special Project) at Mukand Ltd.




                                               
       Thane-Belapur Road, Dighe,
       P.O. Kalwe, Dist. Thane - 400 605
                                   ig                  .. Petitioners

                   Vs.
                                 
    State of Maharashtra
    having its office at Mantralaya,
    Mumbai 400 032.                                    .. Respondent
          


                                         WITH
                             WRIT PETITION NO. 5954 OF 2007
       



    1. NRC Limited, a Company incorporated
       under the Indian Companies Act, 1913,





       and having its registered office at
       Ewart House, Homi Modi Street,
       Mumbai 400 001 and its plant at Post
       Mohone, Taluka Kalyan, Dist. Thane.

    2. Jayantkumar Hirachand Killedar





       Deputy Manager Engineering and
       shareholder of Petitioner No.1 and
       residing at CN-2/2, NRC Colony, Mohone
       Kalyan - 421 102.                               .. Petitioners

                   Vs.

    1. The State of Maharashtra




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     through Ministry of Industries, Energy and
     Labour Department, Mantralaya,




                                                                                
     Mumbai - 400 032.

    2. The Electrical Inspector




                                                        
       Electricity and Labour Department
       Inspection Division No.1
       Kalyan.                                         .. Respondents




                                                       
                                         WITH
                             WRIT PETITION NO. 2204 OF 2007

    1. Indo Count Industries Ltd.
       A Company incorporated under the




                                                 
       Companies Act, 1956, having its
       Regd. Office at D-1, M.I.D.C.
                                 
       Gokul Shirgaon Kolhapur.

    2. Ghanshyam Sen, aged 46 years,
                                
       of Bombay, Indian Inhabitant,
       residing at Siddhi Apts. B-203,
       Shripratha Comlex Nallasopara,
       (W), Room No.1, Dist.
       Thane - 400 023.                                .. Petitioners
          


                   Vs.
       



    1. State of Maharashtra
       having its office at Mantralaya,
       Mumbai - 400 032.





    2. The Secretary (Energy)
       Government of Maharashtra having
       its office at Mantralaya,
       Mumbai - 400 032.

    3. The Deputy Secretary





       (Industries, Energy & Labour Dept.)
       Government of Maharashtra,
       having his office at Mantralaya,
       Mumbai - 400 032.                               .. Respondents




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                                         WITH
                             WRIT PETITION NO. 2245 OF 2007




                                                                                
    1. SI Group-India Limited




                                                        
       A Limited Company, having registered
       office at Plot No. 2/1, TTC Industrial
       Area, Thane-Belapur Road, Navi
       Mumbai - 400 703.




                                                       
    2. Pradip S. Paradkar, aged 51 yrs.
       Shareholder of the Petitioner No.1
       of Bombay, Indian Inhabitant
       residing at S/27 Jai Satyam-B,
       Shiv Mandir Path, Ramnagar,




                                                   
       Dombivli (East) - 421 201.                      .. Petitioners

                   Vs.
                                 
    1. State of Maharashtra
                                
       having its office at Mantralaya,
       Mumbai - 400 032.

    2. The Secretary (Energy)
       Government of Maharashtra having
          

       its office at Mantralaya,
       Mumbai - 400 032.
       



    3. The Deputy Secretary
       (Industries, Energy & Labour Dept.)
       Government of Maharashtra,
       having his office at Mantralaya,





       Mumbai - 400 032.                               .. Respondents



                                         WITH
                             WRIT PETITION NO. 2443 OF 2007





    1. Graphite India Ltd.
       A Limited Company, having registered
       office and Factory at 88, MIDC
       Industrial Area, Satpur, Nashik
       Pin - 422 007.




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    2. Shiva Balan, adult aged 48 yrs.
       Of Bombay, Indian Inhabitant,




                                                                                
       residing at A-3/102, Gangotri
       Bangur Nagar, Goregaon (W),
       Mumbai - 400 090.                               .. Petitioners




                                                        
                   Vs.


    1. State of Maharashtra




                                                       
       having its office at Mantralaya,
       Mumbai - 400 032.

    2. The Secretary (Energy)
       Government of Maharashtra having




                                                
       its office at Mantralaya,
       Mumbai - 400 032.         
    3. The Deputy Secretary
       (Industries, Energy & Labour Dept.)
                                
       Government of Maharashtra,
       having his office at Mantralaya,
       Mumbai - 400 032.                               .. Respondents
          


                                         WITH
                             WRIT PETITION NO. 5966 OF 2007
       



    1. Jindal Poly Films Limited
       previously known as





       Jindal Polyesters Limited
       a company incorporated under the
       Companies Act, 1956, having its
       Regd. Office at 19th K.M. Hapur,
       Bulandshahar Road, P.O. Gulauthi
       Dist. Bulandshahar, U.P.





    2. Rangbehari Bhoot
       Shareholder of the Company, having
       his address at 602, Radha Kunj "B"
       Navetia Road, Malad (East),
       Mumbai 400 097.                                 .. Petitioners




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                   Vs.




                                                                                
    1. State of Maharashtra
       having its office at Mantralaya,
       Mumbai - 400 032.




                                                        
    2. The Secretary (Energy)
       Government of Maharashtra having
       its office at Mantralaya,
       Mumbai - 400 032.




                                                       
    3. The Deputy Secretary
       (Industries, Energy & Labour Dept.)
       Government of Maharashtra,
       having his office at Mantralaya,




                                                
       Mumbai - 400 032.
                                 
    4. The Controller of Electricity
       Industries, Energy and Labour
       Division, 21, Rawal Bungalow,
                                
       Tidke Colony, Nasik 422 002.                    .. Respondents


                                         WITH
                             WRIT PETITION NO. 4962 OF 2007
          
       



    M/s. Pudumjee Pulp and Paper Mills Limited
    A Company Registered under the provisions
    of Companies Act, 1956
    [Act No.1 of 1956]





    having its Registered Office and Factory
    at Thergaon Chinchwad,
    Pune - 411 033.                                    .. Petitioner


                   Vs.





    1. State of Maharashtra
       [Summons to be served on the learned
       Government Pleader appearing for
       State of Maharashtra under Order XXVII,
       Rule 4, of the Code of Civil
       Procedure, 1908].




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    2. The Secretary
       Industries, Energy and Labour Department




                                                                               
       Government of Maharashtra
       Mantralaya,
       Mumbai - 400 032.




                                                       
     [Summons to be served on the learned
      Government Pleader appearing for
      State of Maharashtra under Order XXVII,
      Rule 4, of the Code of Civil




                                                      
      Procedure, 1908].

    3. The Electricity Inspector,
       PMT Commercial Building No.1,
       3rd Floor, Swargate,




                                                  
       Pune - 411 042.                                .. Respondents
                                 ig     WITH
                            WRIT PETITION NO. 8260 OF 2007
                               
    1. Soma Textiles & Industries Limited
       A Company incorporated under the
       Companies Act, 1956, having its
         

       Registered Office at D-49, MIDC
       Baramati, District Pune.
      



    2. Shri Shrikant Bhat, Adult, Indian
       Inhabitant, resident of 702 B, Patel
       Terrace, Jijamata Road Pump House,
       Andheri (East), Mumbai - 400 093.              .. Petitioners





                         Vs.

    The State of Maharashtra
    Through Government Pleader,





    Appellate Side, High Court,
    Bombay.                                           .. Respondent




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                                     WITH
                   ORIGINAL SIDE WRIT PETITION NO. 1508 OF 2007




                                                                                      
    M/s. Nagreeka Exports Ltd.,




                                                              
    Having factor at village Yavaluj,
    Taluka Panhala, Dist. Kolhapur,
    Kolhapur - 416 008 and having
    office at 7, Kala Bhavan,
    3, Mathew Road, Mumbai - 400 004.                        .. Petitioner




                                                             
                  Vs.

    1. State of Maharshtra
       Through Govt. Pleader,




                                                
       High Court, Bombay.
                                
    2. The Secretary (Energy) and Labour
       Department, Government of
       Maharashtra, Mantralaya,
                               
       Mumbai - 400 032.                                     .. Respondents


    Mr. Milind Sathe, Senior Advocate with Mr. Apsi Chinoy, Senior Advocate with Mr.
    Chirag Balsara and Mr. C.D. Patel i/by M/s. Junnarkar and Associate for petitioners in
         

    Writ Petition No. 7453 of 2007.

    Mr. Z. T. Andhyarujina a/w Mr. Parag Patil i/by Hariani & Co. for the petitioners in
      



    W.P. No. 897/08.

    Mr. Haresh Jagtiani, Senior Advocate a/w Mr. Anil D'Souza & Mr. Siddesh Bhole i/by
    M/s. Haresh Jagtiani & Associate for petitioners in W.P. Nos. 1960, 1962, 2003, 2262





    and 2364 of 2007.

    Mr. Satish Shah, Senior Advocate a/w Ms. Gauri Gandhi Kothari, Ms. Savita Sawalkar,
    Khurhnood Akhtar, Mrs.Suryawanshi i/by Mr. Vigil Juris for the petitioners in W.P. No.
    5954/07.





    Mr. Satish Shah, Senior Advocate with Ms. Gauri Gandhi Kothari with Ms.Savita
    Sawalkar i/by M/s. Tamhane and Co. for petitioners in W.P. Nos.2204, 2245, 2443,
    5966 of 2007.

    Mr. A.V. Anturkar i/by Mr. S.B. Deshmukh for petitioners in W.P. No. 4962/07.

    Mr. Anoshak Daver a/w Mr. Nikhil Rajani i/by M/s. V. Deshpande & Co. for petitioners
    in W.P. No. 8260/07.




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    None for the parties in O.S. W.P. No. 1508/07.




                                                                                        
    Mr. V.A. Sonpal, "A" Panel Advocate for State all the matters.




                                                                
                     CORAM: B.H.MARLAPALLE & SMT. ROSHAN DALVI, JJ.
           Reserved On         : September 24, 2009.




                                                               
           Pronounced On       : November 07, 2009.




                                                    
    JUDGMENT (Per B.H. Marlapalle,J.).
                                  
                                 

1. The factual matrix, leading to the filing of these petitions in the

second round, could, in briefly, be set out as follows:-

The Government of Maharashtra announced its Industrial Policy

sometimes in early 1993 and proposed not to charge electricity duty on the

power generated by the captive power plants and its utilization. Clause 5.3.3.1

of the said policy reads as under:-

“5.3.3.1 – On the power front, the State has always accorded a

very high priority to this sector. Nearly one fourth of its plan
outlay is earmarked for this purpose. Today, our installed capacity
is 9,300 mega watts. In the next 5 years, we propose to add 5,500
mega watts to this capacity. Maharashtra was the first State in
which private sector participation has been permitted in power

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projects. We have now been able to seek participation of an
international power company which is planning to set up a large

power plant based on liquefied natural gas in Ratnagiri at a total
investment of Rs.8,000 crore. We will also welcome captive

generation of power by any unit so as to augment the overall
power availablity in the State. To encourage such captive power
generation, it is proposed not to charge electricity duty to the

extent of such captive power generation and its utilization.”

2. In keeping with the Industrial Policy so announced, the State

Government issued a notification dated 22/6/1993 in exercise of the powers

conferred by Section 5A of the Bombay Electricity Duty Act, 1958 (“the Act”

for short) and exempted from July 1993 the consumption of energy in respect of

any industrial purpose in the whole of the State of Maharashtra from payment of

the whole of the electricity duty payable under Part – F of the schedule to the

said Act subject to the following conditions, namely,

(i) The exemption shall be available only in respect of energy

generated in generating station installed on or after 1/7/1993 by

the person carrying on the Industry and consumed by himself for

such industry.

(ii) The exemption shall not be available in respect of any

energy consumed for residential or office purpose in any industry.

3. On 1/9/1994, the Government issued a fresh notification in

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supersession of its earlier notification dated 22/6/1993 in exercise of the powers

conferred by Section 5A of the Act and exempted with effect from 1/9/1994 the

consumption of energy generated in a generating station by a person carrying on

the industry and consumed by himself for such industry, in the whole of the State

of Maharashtra, from the payment of the whole electricity duty payable under Part

– F of the schedule to the Act. On 30/10/1996 the State Government issued a fresh

notification in supersession of the earlier notification dated 1/9/1994 in exercise of

the powers conferred by Section 5A of the Act and exempted with effect from the

billing month of October, 1996, the consumption of energy generated in a

generating station by a person carrying on an industry and consumed by himself

for such industry, in the whole of the State of Maharashtra from payment of the

whole electricity duty payable under clause (b) of Part – G of the schedule

appended to the said Act. However, on 1/4/2000, the State Government issued a

notification and withdrew the exemption on the payment of electricity duty on the

power generated by the captive power plants and decided to charge 30 paise per

unit as electricity duty with effect from the billing month of April, 2000 in

supersession of all the earlier notifications. On the very same day, the State

Government issued yet another notification in exercise of the powers conferred by

Section 5A of the Act and in supersession of the earlier notification dated

30/10/1996 and exempted with effect from the billing month of April, 2000, the

consumption of energy generated through non-conventional sources by a person

carrying on an industry in the Co-operative sector and consumed by himself for

such industry, in the whole of the State of Maharashtra from payment of the whole

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electricity duty payable under clause (b) of Part – G of the schedule appended to

the said Act. On 4/4/2001, the State Government issued yet another notification in

exercise of the powers conferred by Section 5A of the Act and reduced the

electricity duty from 30 paise per unit to 15 paise per unit payable under clause (b)

of Part – G of the schedule to the said Act, subject to the condition that the

generating set is installed in pursuance of the Government of Maharashtra policy

prior to the revised policy regarding captive generation declared vide GR dated

25/4/2000. Thus, the captive power plants installed after the Government

Resolution dated 25/4/2000 were not entitled for the electricity duty payment at

the reduced rate of 15 paise per unit, as per the notification dated 4/4/2001.

4. The notifications dated 1/4/2000 and 4/4/2001 came to be

challenged in a group of Writ Petitions before this Court i.e. Writ Petition Nos.

652/01, 2604/01, 2849/01, 3005/01, 3006/01, 4847/01, 4848/01, 380/02,

558/02, 864/02, 1295/02, 1336/02, 1636/02, 2940/02, 3132/02, 3716/02 and

4711/05 and these petitions were filed by the present petitioners. The petitions

were admitted and either stay to the recovery was granted or some conditional

orders were passed so as not to take any coercive action against the petitioners.

While these petitions were pending, the Maharashtra Electricity Regulatory

Commission passed an order on 18/9/2004 and rendered an advice to the

Government of Maharashtra regarding exemption in electricity duty in the

following words:-





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     "ADVICE TO THE GOVERNMENT OF MAHARASHTRA




                                                                                
     Electricity Duty




                                                      
     1.105          State   taxation   is   outside      the    domain      of

determination by the Commission. However, the Commission
notes that the Government of Maharashtra currently levies an

Electricity Duty (ED) on the consumption of the units generated
from the Captive Power Plant, under the Bombay Electricity Duty
Act 1958, at the rate of 30 Paise per unit on CPPs commissioned

after 01.04.2000, and at the rate of 15 paise per unit on CPPs
commissioned before 1st April, 2000.

1.106 An important aspect of the philosophy behind this

Order on Fossil Fuel based Captive Power Plants is to gainfully
utilise the excess saleable capacity of the Captive Power Plants.
This is important especially in the context of the considerable

demand-supply gap prevailing in the State, which could be
partially bridged through surplus CPP power.

1.107 Given the above, to encourage and promote sale of
available surplus captive power within the State and to avoid

unduly overburdening the Captive Power Plants with further levy
of Electricity Duty, the Commission, in exercise of the powers
vested in it under Section 86(2), advises the Government of

Maharashtra to abolish the Electricity Duty on the self-
consumption by Fossil Fuel based Captive Power Plants in the
State. The Commission also recommends that Tax on Sale of
Electricity should not be levied in the case of CPPs.”

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4A. The Government conceded to the said advice and issued the

notification dated 16/6/2005 in exercise of the powers conferred by Section 5A

of the Act and in supersession of the Government notification dated 4/4/2000 and

exempted, for a period of five years with effect from 1/5/2005, the consumption

of energy, generated in a captive power generating station, by a person carrying

on an industry, for his industry, from payment of whole of the electricity duty

payable under clause (b) of Part – G of the Schedule appended to the said Act.

The said notification was placed on record in the above mentioned pending writ

petitions and, therefore, on 6/6/2006 a Division Bench of this Court disposed off

all the pending writ petitions and by granting liberty to the petitioners to submit a

representation for exemption of electricity duty in its entirety for the period from

1/4/2000 to 30/4/2005 to the State Government and if such a representation was

submitted, the State Government was directed to decide the same as early as

possible and preferably in four weeks. The interim orders granted earlier were

directed to be continued till the decision on the representations to be taken by the

State Government. The Captive Power Producers Association, in the meanwhile,

had submitted a representation dated 27/4/2006 to the Secretary, Industries,

Energy and Labour Department, Government of Maharashtra. Some of the

petitioners had also submitted similar representation in May, 2006 to the State

Government. It appears on 5/6/2006 there was a meeting held by the Secretary

(Engery) with the representatives/officials of the Captive Power Producers

Association and Reliance Industries Ltd. and the minutes of the said meeting

were reduced in writing. The last paragraph of the said minutes read as under:-

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“On hearing the representations made by the
representatives/officers present for the meeting, Secretary

(Energy) clarified that, in 2005, when the proposal for granting
concessions to CPPs was submitted to the Cabinet, it was pointed
out that the Captive Power Producers Association and other

industries units have already filed a petition in the High Court, to
waive off all the electricity duty from the year 2000 itself.
However, it was agreed by the representatives of Captive Power
producers, that then the said petition shall be withdrawn, if Govt.

waives off Electricity duty on Captive power generation, Govt.

shall examine this and shall take a decision on the present request
of the Association. It is expected that this process would take

some time. It would therefore be appropriate to inform the High
Court, that about 3 months time would be required to arrive at a
decision on the issue. The representatives agreed to the said
proposal.”

On account of these intervening developments, the order dated

6/6/2006 came to be passed by this court directing the State Government to

decide the representations for total exemption from the payment of electricity

duty by the Captive Power Producers. On 25/1/2007, the Government of

Maharashtra in the Department of Industry, Energy and Labour addressed a letter

to the President of CPPA and informed that the request for exemption from

payment of electricity duty could not be accepted. The CPPs were advised to

immediately pay their electricity duty dues together with interest thereon to the

Governemnt. The CPPs submitted yet another representation to the Minister for

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Energy and Higher Technical Education on 6/2/2007 and 23/2/2007 some of the

petitioners received notices demanding payment of electricity duty arrears for the

period from April 2000 to May, 2005 and it is under these circumstances that

these petitions came to be filed in the fresh round. The petitioners have prayed

for quashing and setting aside the notification dated 4/4/2001 and the demand

notices issued from time to time for the recovery of arrears in the payment of

electricity duty for the period from 1/4/2000 to 30/4/2005 as well as the

communication/order dated 25/1/2007.

4B.

Writ Petition Nos. 6414/2000, 495/01 and 5207/01 came to be

decided by us as per the common judgment dated 5/10/2009 and they were partly

allowed. The notifications dated 1/4/2000 and 4/4/2001 were quashed and set

aside and it was held that the petitioners were entitled for exemption in payment

of electricity duty in terms of the notification dated 30/10/1996 for the period

from 1/4/2000 to 30/4/2005. The demand notices for the recovery of arrears in

electricity duty for the period from 1/4/2000 to 30/4/2005 were quashed and set

aside.

5. The relief prayed for in this group of petitions is on the lines of

the relief granted by us by our common judgment dated 5/10/2009. However,

some additional grounds, in addition to the grounds raised in Writ Petition Nos.

6414/2000, 495/01 and 5207/01 have been set out in these petitions and,

therefore, this separate judgment to deal with those additional grounds, which

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ought to be treated as an extension of our common judgment dated 5/10/2009.

6. The petitioners have, in addition, invoked the doctrines of

promissory estoppel and legitimate expectations while praying for the exemption

in payment of electricity duty in its entirety for the period from 1/4/2000 to

30/4/2005. It has been submitted that the petitioners, on the basis of the

industrial policy announced by the State Government in early 1993 and the said

policy having been translated in terms of the notification dated 22/6/1993, they

have set up their captive power plants at huge investments in crores of rupees

and, therefore, the State Government ought not to be permitted to resile from the

same and it must be bound by the promises made. In addition, the petitioners

contend that while rejecting their representations as per the communication dated

25/1/2007, the State Government did not seek the advice from the Maharashtra

Electricity Regulatory Commission which is a statutory body created under the

Electricity Act, 2003 and on that ground the denial of total exemption in the

payment of electricity duty is vitiated. It is further contended that the

communication dated 25/1/2007 rejecting the representations submitted by the

petitioners or their Association is without any reasons and that by itself is a

sufficient ground to set aside the same. Pursuant to the Industrial Policy

announced by the State Government, it had made an unequivocal

representation/assurance/promise to exempt captive power generation from

electricity duty payment in order to induce an incentive to industrial units

without setting up a particular period and, in fact, it was open ended. Moreover

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by its subsequent resolution dated 20/12/1995 framing guide-lines / directions to

the MSEB to freely give permission to new industrial units to set up CPPs, the

exemption from electricity duty was continued to remain in force thereafter, as

per clause (vi) of the said GR. It is specifically stated that the exemption from

electricity duty which is at present available to the electricity generated from

captive power generation would continue to remain in force hereafter. The

minimum life of a captive power plant is 15 years as per the notification dated

29/3/1994 issued by the Ministry of Power under the Electricity Supply Act,

1948 and the petitioners worked out the costing of their plant on the basis that

the exemption for payment of electricity duty would be available for at least 15

years. On these facts, the Government is required to be held accountable to its

assurances/promises on the well settled principle of promissory estoppel and in

support of these contentions the petitioners have relied on the following

decisions:-

(a) Union of India vs. Indo-Afghan Agencies Ltd. [AIR 1968

SC 718].

(b) M/s. Motilal Padampat Sugar Mills Co. Ltd. vs. The State

of Uttar Pradesh and ors. [AIR 1979 SC 621]

(c) Madan Mohan Pathak and anr. vs. Union of India and ors.

[(1978) 2 SCC 50]

(d) State of Madhya Pradesh and ors. vs. Orient Paper Mills

Ltd. [(1990) 1 SCC 176].

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(e) Pawan Alloys & Casting Pvt. Ltd., Meerut vs. U.P. State

Electricity Board and ors. [(1997) 7 SCC 251].

(f) State of Punjab vs. Nestle India Ltd. & anr. [(2004) 6 SCC

465].

(g) Mahabir Veg Oils vs. State of Haryana [(2006) 3 SCC

620].

6A. In the case of M/s. Indo-Afghan Agencies Ltd. (Supra), it was

held,

“Under our jurisprudence the Government is not exempt from

liability to carry out the representation made by it as to its future

conduct and it cannot on some undefined and undisclosed ground

of necessity or expediency fail to carry out the promise solemnly

made by it, nor claim to be the judge of its own obligation to the

citizen on an ex parte appraisement of the circumstances in which

the obligation has arisen.”

In the case of Shrijee Sales Corporation and anr. vs. Union of

India [(1997) 3 SCC 398], the Supreme Court laid down the following two

propositions, namely,

(a) The determination of applicability of promissory estoppel

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23

against public authority/Government hinges upon balance of

equity or “public interest”, and

(b) It is the Court which has to determine whether the

Government should be held exempt from the liability of the

“promise” or “representation”.

In the case of Motilal Padampat Sugar Mills (Supra), the Supreme

Court stated, inter alia,

“….It would not be enough for the Government just to say that
public interest requires that the Government should not be

compelled to carry out the promise or that the public interest
would suffer if the Government were required to honour it. The

Government cannot, as Shah,J., pointed out in the Indo-Afghan
Agencies case, claim to be exempt from the liability to carry out
the promise “on some indefinite and undisclosed ground of

necessity or expediency”, nor can the Government claim to be the
sole judge of its liability and repudiate it “on an ex parte
appraisement of the circumstances”. If the Government wants to
resist the liability, it will have to disclose to the Court what are the

subsequent events on account of which the Government claims to
be exempt from the liability and it would be for the Court to
decide whether those events are such as to render it inequitable to
enforce the liability against the Government. Mere claim of
change of policy would not be sufficient to exonerate the

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Government from the liability; the Government would have to
show what precisely is the changed policy and also its reason and

justification so the Court can judge for itself which way the public
interest lies and what the equity of the case demands. It is only if

the Court is satisfied, on proper and adequate material placed by
the Government, that overriding public interest requires that the
Government should not be held bound by the promise but should

be free to act unfettered by it, that the Court would refuse to
enforce the promise against the Government. The Court would
not act on the mere ipse dixit of the Government, for it is the

Court which has to decide and not the Government whether the
Government should be held exempt from liability……”

In the case of U.P. Power Corporation Ltd. and anr. vs. Sant Steels

& Alloys (P) Ltd. and ors. [(2008) 2 SC 777], while dealing with the principle of

promissory estoppel, the Supreme Court observed as under:-

“35. In this 21st century, when there is global economy, the
question of faith is very important. The Government offers certain
benefits to attract the entrepreneurs and the entrepreneurs act on

those beneficial offers. Thereafter, the Government withdraws
those benefits. This will seriously affect the credibility of the
Government and would show the short-sightedness of governance.
Therefore, in order to keep the faith of the people, the Government

or its instrumentality should abide by their commitments……..”

In the case of Southern Petrochemical Industries Co. Ltd. vs.

Electricity Inspector and E.T.I.O. & ors. [(2007) 5 SCC 447], the doctrine of

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promissory estoppel was highlighted in the following words:

” The doctrine of promissory estoppel would undoubtedly be

applicable where an entrepreneur alters his position pursuant to or
in furtherance of the promise made by a State to grant inter alia
exemption from payment of taxes or charges on the basis of the

current tariff. Such a policy-decision on the part of the State shall
not only be expressed by reason of notifications issued under the
statutory provisions but also under the executive instructions…..”

7. The State Government has filed affidavit in reply opposing the

petitions. It has been pointed out that the notifications issued by the State

Government and relied upon by the petitioners regarding exemption from the

payment of electricity duty do not state that the exemption shall continue

permanently and indeed no specific period for exemption has been set out in any

of these notifications. The meaning of the word “hereafter” means “henceforth”

and not for an indefinite period. The decisions relied upon by the petitioners on

the doctrine of promissory estoppel arise from the cases where there was a

promise for exemption for a particular period. The promise of exemption can be

assailed only when the notification exempting duty is withdrawn retrospectively

in a case where no time period is mentioned. There is no statutory or

fundamental right to claim exemption and financial crunch leading to withdrawal

of exemption is a good and reasonable ground to withdraw the exemption. The

exemption was already enjoyed for about five years and it was not a case of

premature withdrawal. The duty exemption was already reduced by 50% in as

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much as the duty chargeable at the rate of 30 paise per unit of electricity generated

by the CPPs came to be reduced to 15 paise per unit with effect from 1/4/2000 and

thus the difficulties pointed out by the petitioners or their Association were

considered by the State Government. The subordinate legislative actions have

force of law and, therefore, there cannot be estoppel against the statute. The

petitioners have not given any statistics as to their annual benefit of duty

exemption which has been eroded by withdrawal of the exemption. The CPPs

have been installed irrespective of the exemption granted and for ensuring

uninterrupted power supply. At the same time, the petitioners have not clarified

whether the CPPs are a standby or the grid power is standby or the CPPs supply

power continuously. The power of granting exemption is coupled with the power

to withdraw the exemption and the withdrawal of exemption in the instant cases is

on the ground of policy of the Government and it has been withdrawn

prospectively. In support of these contentions, the State Government has relied

upon the following decisions:

(a) Kasinka Trading and anr. vs. Union of India and anr. [(1995) 1

SCC 274.

(b) Sales Tax Officer and anr. vs. Shree Durga Oil Mills and anr.

[(1998) 1 SCC 572].

(c) Shrijee Sales Corporation and anr. vs. Union of India [(1997)

3 SCC 3980.

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7A. It is evident from the following chart that the petitioners have set

up the CPPs post the notification dated 15/6/1993 and all of them have contended

that the investment on the CPPs was made mainly by taking into consideration the

policy announced by the State Government of exemption in payment of electricity

duty on the power generated by the CPPs and utilized for captive consumption.

The submissions made by Mr. Sonpal that none of them have indicated as to

whether the installation of CPPs was post the exemption policy of the State

Government:

———————————————————————————————

       W.P. No.      Date / Year of                             Capacity of           Amount
                     installation of CPP                          CPP                 Invested
                                       
                                                                                       (Crores)

———————————————————————————————

7453/07 1995 to 1997 68 MW 252

897/08 01/07/1996 860 KVA 2

1960/07 Post 1998 7 MW 18

1962/07 Post 1998 6 MW 20

2003/07 Post 1997 2.7 MW 8

2262/07 Post 1996 23 MW 105

2364/07 Post 1997 35 MW 75

5954/07 1999 50

2204/07 1996 6 MW 15

       2245/07          Beginning of
                            1998                                  5 MW                   30

       2443/07        March, 2000                              7.50 MW                 22




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       5966/07         Jan. 1998                              3.84 MW                8.60




                                                                                                     
       4962/07        Dec. 1998                               6.25 MW                  17

       8260/07         1/4/1994                       2270x3, 2300x1 KVA             8.78




                                                                             
       1508/07               1995                             1720 KVA                1.25
                             1997                              860 KVA                 80 lacs

——————————————————————————————-

7B. In Writ Petition No. 4962 of 2007, Mr. Anturkar the learned

counsel for the petitioner has raised some additional issues. As per him a person

like the petitioner, who generates electricity and uses it for himself is not a

consumer within the meaning of Section 2(a) of the Act to the extent of energy so

generated and used by himself. Consequently, the act of the person generating

and using the electricity is not “consumption” and, therefore, Part -G (b) of the

Act is otios and it becomes meaningless. It is further submitted that under these

circumstances the petitioner cannot be levied electricity duty under Section 3 of

the Act and, therefore, the demand notices are required to be quashed and set

aside. This additional issue raised by Mr. Anturkar is no more res integra in view

of the judgment of the Supreme Court in the case of Jiyajeerao Cotton Mills

Limited vs. State of Madhya Pradesh [AIR 1963 SC 414]. The Supreme Court

observed,

“Section 2(a) of the Act defines “consumer”. The

definition, so far as relevant, runs thus: ‘Consumer’ means any

person who consumes electrical energy sold or supplied by a

distributor of electrical energy or a producer ……” ‘Producer’ as

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defined in Section 2(d-1) of the Act means “a person who

generates electrical energy at a voltage exceeding hundred volts for

his own consumption or for supplying to others”. If we read the

two definitions together, omitting the non-essentials, ‘consumer’

would include “any person who consumes electrical energy

supplied by a person who generates electrical energy for his own

consumption”. Under Section 3 a person who generates electrical

energy over hundred volts for his own consumption is liable to pay

duty on the units of electrical energy consumed by himself. A

producer consuming the electrical energy generated by him is also a

consumer, that is to say, he is a person who consumes electrical

energy supplied by himelf…..”

Thus the additional ground raised by Mr. Anturkar is unsustainable and, therefore,

we proceed to consider the limited issue, along with other petitioners, as to

whether the petitioner is eligible for full exemption from the payment of

electricity duty for the period from 1/4/2000 to 30/4/2005.

In Writ Petition No. 897 of 2008, it appeared at the threshold that

the petitioner-company has not installed the captive power plant and it has

installed only Diesel Generating sets as and by way of a standby arrangement so

as to provide uninterrupted power supply to its manufacturing activity. However,

the additional affidavit filed on 10/9/2009 has clarified our doubts and additional

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documents have been brought on record pointing out that the Maharashtra State

Electricity Board (MSEB) by its letter dated 10/4/1996, while granting

permission to install three Diesel Generating sets of the capacity of 860 KVA at its

factory premises called upon the petitioner to use the generating sets as CPPs and

the Board has recognized the installation by the petitioner as a captive power

plant.

8. It is to be noted that the notifications issued by the State

Government in exercise of its power under Section 5A of the Act from June 1993

to 30/10/1996 granting exemption of electricity duty on the power generated by

the CPPs, the State Government has not mentioned any specific period for which

the said exemption would continue to operate and, therefore, the impugned

notification dated 1/4/2000 or 4/4/2001 does not amount to a premature resile

from the exemption granted by the State Government. The term “hereafter”

signifies the time present and to come and from the period at which they are used.

As per the Law Lexicon the word “hereafter” used as an adverb, does not

necessarily refer to unlimited time and it is not used in common parlance as a

synonym for the term “forever”. The duration of the “hereafter” is usually

expressed by some other word, or is inferred from the context. In the

construction of statutes the word “hereafter” shall mean any time after the day on

which the statute takes effect. Thus the State Government did not make a

commitment or promise for an indefinite period to come and it is well settled that

the power to grant exemption is coupled with the power to withdraw the same.

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However, the withdrawal cannot be arbitrary and the Government cannot be

allowed to change its position without justifications. At the same time, it is for the

State Government to justify the discontinuation of such withdrawal and it is not

enough to say that exemption is being withdrawn as a matter of policy or in public

interest. Mr.Sonpal emphasized before us, like in the connected writ petitions,

that the exemption was warranted on account of budgetary deficit and the

Government wanted to collect more revenue. This issue has been already dealt

with by us in the common judgment dated 5/10/2009 by holding that the

budgetary deficit cannot be termed as public interest so as to justify the

discontinuation of exemption.

9. What is relevant in these cases is that the State Government on the

advice of the MERC, issued the notification dated 16/6/2005 in exercise of the

powers conferred by Section 5A of the Act and restored the exemption in its

entirety with effect from 1/5/2005 and all the petitioners before us are the

beneficiaries of the said notification. The only issue that requires consideration is

whether the Government has justified its decision to deny the full exemption for

the period from 1/4/2000 to 30/4/2005 and instead of charging electricity duty at

the rate of 15 paise per unit on the power generated by the CPPs. It is fairly

conceded that State Government did not seek the advice of MERC before issuing

the impugned communication dated 25/1/2007. It has been submitted by Mr.

Sonpal that the term “tariff” and “duty” are different and the tariff is regulated by

the MERC under the Electricity Act, 2003, whereas the imposition of levy or

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exemption thereunder is under the exclusive domain of the State Government and

it is not obligatory for the State Government to seek advice from the MERC for

granting exemption. This submission has been repelled by us in the common

judgment dated 5/10/2009 and in any case, such an advice could have been an

additional ground either to support or otherwise the impugned communication

dated 25/1/2007.

10. When the Government wanted to deny exemption for the period

from 1/4/2000 to 30/4/2005, it was imperative to set out the reasons in the

impugned communication dated 25/1/2007 and admittedly no such reasons have

been set out. This clearly indicates lack of application of mind on the part of the

State Government and its failure to set out just and proper reasons to deny the

benefit of exemption for the intermittent period vitiates the order dated 25/1/2007

and this is more relevant because in its own wisdom the Government has restored

full exemption by the notification dated 16/6/2005. The communication dated

25/1/2007, therefore, smacks of arbitrariness on the part of the State Government

and in any case the State Government has not been able to justify its decision to

deny the full exemption for the intervening period as has been noted by us in the

common judgment dated 5/10/2009. The minutes of the meeting dated 5/6/2006

and reproduced in para 4A hereinabove clearly indicated that the proposal for

granting concession to CPPs was submitted to the cabinet and the cabinet could

not take any decision presumably because the pendency of the petitions in the first

round was pointed out. The representative of the petitioners had agreed to

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withdraw the petitions if the Government would waive of electricity duty on

CPPs. The Government had agreed to examine the same and take a decision on

the request of the Association. It was, therefore, imperative that after the petitions

in the first round were disposed off as per the order dated 6/6/2006, the issue of

granting exemption for the period from 1/4/2000 to 30/4/2005 was placed before

the cabinet and the cabinet decided against the petitioners. As noted in our

common judgment dated 5/10/2009 we had called upon Mr.Sonpal to submit the

original files so as to find out whether the issue was placed before the cabinet

before the impugned order dated 25/1/2007 was passed and whether the noting

placed before the cabinet indicated any reasons to deny full exemption in the

payment of electricity duty to the CPPs. Despite adjournments, no such record

was placed before us and it was stated that the record was misplaced.

11. For the reasons set out hereinabove and in addition to the reasons

set out in our common judgment dated 5/10/2009, these petitions succeed. We

hereby quash and set aside the notification dated 4/4/2001 and the

communication/order dated 25/1/2007 and we hold that the petitioners are entitled

for full exemption in the payment of electricity duty for the period from 1/4/2000

to 30/4/2005. Consequently, the impugned demand notices are also quashed and –

set aside. Rule is made absolute accordingly with no order as to costs.

    (SMT. ROSHAN DALVI,J.)                              (B.H. MARLAPALLE,J.)




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