{"id":22454,"date":"1993-02-25T00:00:00","date_gmt":"1993-02-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/a-p-state-electricity-board-and-vs-sarada-ferro-alloys-ltd-on-25-february-1993"},"modified":"2015-02-28T06:23:41","modified_gmt":"2015-02-28T00:53:41","slug":"a-p-state-electricity-board-and-vs-sarada-ferro-alloys-ltd-on-25-february-1993","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/a-p-state-electricity-board-and-vs-sarada-ferro-alloys-ltd-on-25-february-1993","title":{"rendered":"A.P. State Electricity Board And … vs Sarada Ferro Alloys Ltd on 25 February, 1993"},"content":{"rendered":"
Supreme Court of India<\/div>\n
A.P. State Electricity Board And … vs Sarada Ferro Alloys Ltd on 25 February, 1993<\/div>\n
Equivalent citations: 1993 AIR 1521, \t\t 1993 SCR (2) 114<\/div>\n
Author: K Singh<\/div>\n
Bench: Kuldip Singh (J)<\/div>\n
           PETITIONER:\nA.P. STATE ELECTRICITY BOARD AND ORS.\n\n\tVs.\n\nRESPONDENT:\nSARADA FERRO ALLOYS LTD.\n\nDATE OF JUDGMENT25\/02\/1993\n\nBENCH:\nKULDIP SINGH (J)\nBENCH:\nKULDIP SINGH (J)\nKASLIWAL, N.M. (J)\n\nCITATION:\n 1993 AIR 1521\t\t  1993 SCR  (2) 114\n 1993 SCC  (2) 425\t  JT 1993  Supl.     37\n 1993 SCALE  (1)712\n\n\nACT:\nPromissory  estoppel-Electricity  Board-Grant of  rebate  in\ndemand\tand energy charges-Subsequent withdrawal of  rebate-\nIndustry  established during the period when concession\t was\nnot  operative--Held  not entitled  to\trebate--Doctrine  of\npromissory estoppel held inapplicable.\n\n\n\nHEADNOTE:\nThe Andhra Pradesh State Electricity Board granted rebate of\n25  per cent in demand and energy charges for  High  Tension\nindustries and asked the Director of Industries to  identify\nthe  industries which would be eligible for the rebate.\t  By\nits order dated July 13, 1976 the State extended the  rebate\nto   certain  industries.   The\t Board\talso  issued   order\nextending  the concession to the notified industries  for  a\nperiod\tof  three years from the date of  their\t going\tinto\nregular production.  By an order dated August 23, 1985,\t the\nconcession already granted was extended for two more  years,\ni.e.  a\t total of five year.  However, by  its\torder  dated\nDecember  8,  1987 the Board withdrew the  concession.\t The\nState  Government also issued similar order dated  July\t 27,\n1989  withdrawing the rebate.  The respondent-company  which\nestablished a Ferro Chrome industry and commenced production\non  regular basis on August 11, 1990 claimed concession\t but\nthe  same  was refused by the Board on the ground  that\t the\nsaid  concession  had already been withdrawn.\t'Me  company\nfiled  a writ petition before the Andhra Pradesh High  Court\nseeking\t a  declaration that it was entitled  to  rebate  as\ndeclared by the State Government in its letter dated  August\n23,  1985.   A Single Judge of the High\t Court\tallowed\t the\npetition  on the ground that the  respondent-company  having\nacted  upon  the representation made by the  Board  and\t the\nState  Government  the doctrine of promissory  estoppel\t was\nattracted  and\tas such the Board and the  State  Government\nwere bound to grant rebate for a period of five years.\t The\nwrit  appeal  preferred\t by the Board  was  dismissed  by  a\nDivision  Bench\t of the High Court.  The  Electricity  Board\nriled an appeal in this Court.\nAllowing  the appeal and setting aside the judgment  of\t the\nHigh Court, this Court,\n115\nHELD-  1. The High Court was not justified in  applying\t the\ndoctrine   of\tpromissory  estoppel  to   the\t facts\t and\ncircumstances of this case.\n[117H,118A]\n2.   Only  those industries were entitled to the benefit  of\nthe  incentive\twho fulfilled the  requirements\t during\t the\nperiod\t the   incentive  was  operative  The\tpromise\t  or\nrepresentation\tmade by the Board In Its letter\t dated\tJuly\n13,  1976,  if\tany, was directly linked with  the  date  of\ncommencement  of  production  by the  company.\t It  is\t not\ndisputed that the respondent-company commenced production on\ncommercial  scale  on August 11, 1990.\t The  incentive\t was\nwithdrawn  by  the  Board on December 8,  1987\tand  by\t the\nGovernment  on July 27, 1989.  Whichever date Is taken\tinto\naccount the company was not entitled to the incentive as  it\nhad  not commenced production tin or before either of  these\ntwo dates. [119A-B, D]\n2.1. Even if it is assumed that a promise or  representation\nwas made by the Board the doctrine of promissory estoppel is\nnot attracted in this case as the company failed to act upon\nthe   said   representation.   Therefore,   the\t  assumption\nentertained by the High Court that once the company  started\nthe  process  or  setting up an industry  and  had  incurred\nexpenditure, the Board was bound to keep its incentive\topen\nfor  the company till it started production is not  correct.\n[119B-C]\nUnion  of  India v. Godfrey Phillips India  Ltd.,<\/a>  119851  4\nS.C.C. 369, relied on.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 766 of 1993.
\nFrom  the  Judgment  and Order dated 7.2.92  of\t the  Andhra
\nPradesh High Court in W.A. No. 1271 of 1991.
\nShanti\tBhushan, K.  Rajendra Chowdhary and R.K. Sharma\t for
\nthe Appellants.\n<\/p>\n
G.L. Sanghi, Duba Mohan Rao, Y.P. Rao, Dhruv Mehta, T.V.S.N.
\nChari,\tMs. Suruchi Aggarwal and Ms. Bharati Reddy  for\t the
\nRespondent.\n<\/p>\n
The Judgment of the Court was delivered by
\n116<\/span>
\nKULDIP SINGH, J. Special leave granted.\n<\/p>\n
The  Andhra Pradesh State Electricity Board (the Board),  in
\nexercise  of its powers under Section 49 of the\t Electricity
\nSupply Act, 1948 (the Act) issued order dated September\t 17,
\n1975 granting rebate of 25% in demand and energy charges for
\nHigh  Tension  Industries.  It\twas  specifically  mentioned
\ntherein\t that the rebate was to be allowed from the date  of
\ngoing  into regular production on or after January 1,  1976.
\nThe  Board, thereafter, asked the Director of Industries  to
\nidentify the High Tension Industries which would be eligible
\nfor  the  25%  rebate  declared by  the\t Board.\t  The  State
\nGovernment  issued the order dated July 13,  1976  extending
\nthe  rebate to all the industries except 65 notified in\t the
\nGovernment order dated March 9, 1976.  Thereafter the  Board
\nissued order dated August 10, 1976 extending the  concession
\nto all the High Tension Industries except the 65 excluded by
\nthe State Government.\n<\/p>\n
The  State  Government issued order dated  August  23,\t1985
\nspecifying certain incentives available to the industries in
\nthe  three backwards districts of the Sate.  The  concession
\nof 25% tariff already granted by the Board was extended\t for
\ntwo more years i.e. a total of five years.\n<\/p>\n
The Board withdrew the concession of 25% rebate to the\tHigh
\nTension Industries by its order dated December 8, 1987.\t The
\nState  Government also issued similar order dated  July\t 27,
\n1989 withdrawing the rebate.\n<\/p>\n
The respondent M\/s.  Sarada Ferro Alloys Ltd. (the  Company)
\ndecided\t to establish an industry to produce  Ferro  Chrome.
\nAccording to the company it obtained a small scale  industry
\ncertificate  on September 5, 1986.  It further obtained\t ‘no
\nobjection’  certificate from Andhra Pradesh Pollution  Board
\non  November 12, 1986.\tThe case of the company\t further  is
\nthat  it  purchased  4.01 acres of land\t during\t the  period
\nSeptember  1986\t to May, 1989.\tThe Board  called  upon\t the
\ncampany by its letter dated December 9, 1987 to deposit\t Rs.
\n8,  40, 200 towards service-lines. the company entered\tinto
\nan agreement with the Board on August 21,1989 for the supply
\nof  the electricity.  It is the case of the company that  it
\ncommenced production on regular basis on August 11, 1990.
\nThe company requested the Board by its letter dated June 29,
\n1991<\/span>
\n117<\/span>
\nto  extend  concession of 25% rebate for a  period  of\tfive
\nyears  from  the date it started  production.\tThe  company
\nbased its demand on the State Government order dated  August
\n23,  1985.  The\t Board\tby its letter  dated  July  9,\t1991
\ndeclined to give the concession to the company on the ground
\nthat  the said concession had already been withdrawn by\t the
\nBoard by its order dated December 8, 1987.
\nThe company challenged the communication of Board dated July
\n9, 1991 by way of a writ petition before the Andhra  Pradesh
\nHigh  Court.  The company further sought a declaration\tthat
\nit was entitled to 25% power rebate as declared by the State
\nGovernment in its letter dated August 23, 1985.\t The learned
\nSingle\tJudge  of  the\tHigh Court  by\tits  judgment  dated
\nNovember 8, 1991 allowed the writ petition.  The writ appeal
\npreferred by the Board was dismissed by a Division beach  of
\nthe High Court by its judgment dated February 7, 1992.\tThis
\nappeal\tby way of special leave is against the\tjudgment  of
\nthe High Court.\n<\/p>\n
The  High Court allowed the writ petition of the company  on
\nthe  sole  ground that the respondent-company  having  acted
\nupon  the  representation made by the Board  and  the  State
\nGovernment,   the  doctrine  of\t promissory   estoppel\t was
\nattracted  and\tas such the Board and the  State  Government
\nwere  bound to grand 25% rebate for a period of five  years.
\nThe  Division Bench of the High Court based its\t conclusions
\non the reasoning which is reproduced hereunder:-\n<\/p>\n
\t      “The material now before us clearly shows that
\n\t      by   30.6.87  the\t company  had  incurred\t  an
\n\t      expenditure of Rs. 11,07,328 towards  purchase
\n\t      of land and other expenditure including  civil
\n\t      works.   Even  if\t we  take  8.12.87  as\t the
\n\t      relevant\tdate it cannot be disputed  that  by
\n\t      that date considerable expenditure was already
\n\t      incurred by the petitioner for setting up\t the
\n\t      industry and this was done on the basis of the
\n\t      promise held out by the Government in G.O. Ms.
\n\t      No.  375 dated 23.8.85 and  the  consequential
\n\t      B.P.  Ms. No. 689 dated 17.9.75, B.P. Ms.\t No.
\n\t      691  dated 10.8.76 and B.P. Ms. No. 152  dated
\n\t      13.2.78.\t Whichever  date  was\ttaken\tinto
\n\t      account,\teither 27.7.89 of 8.12.87, there  is
\n\t      no  valid reason for the Electricity Board  to
\n\t      withdraw the concessions earlier granted.\t  As
\n\t      we   have\t found\ton  facts  that\t the   first
\n\t      respondent  had acted on the promise held\t out
\n\t      by  the Government and the Electricity  Board,
\n\t      both of them arc bound by that promise.”\n<\/p><\/blockquote>\n
118<\/span><\/p>\n
We have given our thoughtful consideration to the  reasoning
\nand  the conclusions reached by the High Court.\t We  are  of
\nthe  view that the High Court was not justified in  applying
\nthe  doctrine  of  promissory  estoppel\t to  the  facts\t and
\ncircumstances of this case.  This Court in Union of India v.
\nGodfrey Phillips India Ltd.,<\/a> [1985] 4 SCC 369 explained\t the
\nprinciples of promissory estoppel in the following words-\n<\/p>\n
\t      “The true principal of promissory estoppel  is
\n\t      that  where  one\tparty has  by  his  word  or
\n\t      conduct\tmade  to  the  other  a\t clear\t and
\n\t      unequivocal promise or representation which is
\n\t      intended to create legal relations or effect a
\n\t      legal  relationship  to arise in\tthe  future,
\n\t      knowing  or intending that it would  be  acted
\n\t      upon by the other party to whom the promise or
\n\t      representation  is made and it is in  fact  so
\n\t      acted upon by the other party, the promise  or
\n\t      representation  would be binding on the  party
\n\t      making  it and he would not be entitled to  go
\n\t      back  upon it, if it would be  inequitable  to
\n\t      allow  him  to  do so, having  regard  to\t the
\n\t      dealings\twhich have taken place\tbetween\t the
\n\t      parties.”\n<\/p><\/blockquote>\n
We  may\t now examine the promise or representation  said  to
\nhave  been  made  by the appellant and\tacted  upon  by\t the
\ncompany.   The\toperative part of the order dated  July\t 13,
\n1976 issued by Board is as under
\n\t      “The revised power tariff notified by the A.P.
\n\t      State  Electricity  Board\t with  effect\tfrom
\n\t      20.10.1975  offers a rebate of 25%  on  demand
\n\t      and   energy   charges  for   specified\tH.T.\n<\/p>\n
\t      consumers\t as an incentive to  new  industries
\n\t      for  the\tfirst three years from the  date  of
\n\t      their   going   into   production\t   (emphasis
\n\t      supplied).”\n<\/p>\n
The  High Court has primarily based its conclusions  on\t the
\nGovernment letter dated August 23, 1985.  The relevant\tpart
\nof the said order is as under:-\n<\/p>\n
\t      “Power :- At present the Andhra Pradesh  State
\n\t      Electricity Board offers 25% tariff concession
\n\t      for   the\t first\tthree  years   for   certain
\n\t      industries.  This concession would be extended
\n\t      for two more years i.e. a total of five years.
\n\t      Twenty-five
\n\t      119<\/span>
\n\t      per  cent concession tariff would be  met\t for
\n\t      the  additional  2  years\t from  out  of\t the
\n\t      Industries budget.”\n<\/p><\/blockquote>\n
It is clear from the Government order reproduced above\tthat
\nthe  Government extended the concession already\t granted  by
\nthe Board for three years for a further period of two years.
\nWe  have,  therefore,  to see what is  the  promise  or\t the
\nrepresentation\theld out to the company in the order of\t the
\nBoard dated July 13, 1976 reproduced above.
\nWe  are of the view that the promise or representation\tmade
\nby the Board in its letter dated July 13, 1976, if any,\t was
\ndirectly linked with the date of commencement of  production
\nby  the\t company.  It is not disputed that  the\t respondent-
\ncompany\t commenced production on commercial scale on  August
\n11,  1990.   The  incentive was withdrawn by  the  Board  on
\nDecember  8,  1987 and by the Government on July  27,  1989.
\nWhichever  date\t is taken into account the company  was\t not
\nentitled to the incentive as it had not commenced production
\non  or\tbefore\teither of these two dates.  Even  if  it  is
\nassumed\t that  a promise or representation was made  by\t the
\nBoard  in  its letter dated July 13, 1976, the\tdoctrine  of
\npromissory  estoppel  is not attracted in this case  as\t the
\ncompany\t failed to act upon the said representation.  We  do
\nnot agree with the assumption entertained by the High  Court
\nthat  once the company started the process of setting up  an
\nindustry  and had incurred expenditure, the Board was  bound
\nto  keep its incentive open for the company till it  started
\nproduction.   We are of the view that only those  industries
\nwere entitled to the benefit of the incentive who  fulfilled
\nthe  requirements  during  the\tperiod\tthe  incentive\t was
\noperative.\n<\/p>\n
Mr.  Shanti Bhushan, learned counsel for the  appellant\t has
\nfurther\t contended that the orders dated July 13,  1976\t and
\nDecember  8, 1987 were issued by the Board in its  statutory
\npower  under Section 49 of the Act.  According to him  these
\norders\tbeing statutory there can be no promissory  estoppel
\nagainst the Board.  He further contended that there were  no
\ndirections by the State Government under Section 78A of\t the
\nAct.   The view we have taken on the question of  promissory
\nestoppel  it  is not necessary to go into  these  additional
\ngrounds urged by Mr. Shanti Bhushan.\n<\/p>\n
We  allow  the\tappeal\tand set\t aside\tthe  judgment  dated
\nNovember 8,
\n120<\/span>
\n1991 of the learned Single Judge and dated February 7,\t1992
\nof the Division Bench of the High Court in writ appeal.\t The
\nwrit  petition filed by the respondent-company in  the\tHigh
\nCourt is dismissed.  We leave the parties to bear their\t own
\ncosts.\n<\/p>\n
T.N.A.\n<\/p>\n
Appeal allowed.\n<\/p>\n
121<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India A.P. State Electricity Board And … vs Sarada Ferro Alloys Ltd on 25 February, 1993 Equivalent citations: 1993 AIR 1521, 1993 SCR (2) 114 Author: K Singh Bench: Kuldip Singh (J) PETITIONER: A.P. STATE ELECTRICITY BOARD AND ORS. Vs. RESPONDENT: SARADA FERRO ALLOYS LTD. DATE OF JUDGMENT25\/02\/1993 BENCH: KULDIP SINGH (J) […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-22454","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nA.P. 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