Holding

The concessional tariff orders did not grant immunity from payment of minimum charges, and the appellants' pleas of natural justice, promissory estoppel and legitimate expectation were unsupported.

Summary

The appellants, owners of mini steel plants, were granted a concessional electricity tariff by the Andhra Pradesh Government in 1977. The State Electricity Board later imposed minimum consumption charges and raised the tariff, prompting the Government to issue clarifications in December 1978 and January 1980 regarding the effect of the concessional tariff on minimum charges. The appellants contended that the Board could not levy minimum charges, that the clarifications should prevail, and that principles of natural justice, promissory estoppel and legitimate expectation barred the withdrawal of the concession. The Supreme Court held that the concessional tariff orders did not expressly or implicitly exempt the plants from paying minimum charges, that the clarifications did not alter this position, and that the appellants had not established any breach of natural justice or a valid claim of promissory estoppel or legitimate expectation. Consequently, the Board’s imposition of minimum charges was upheld and the appeals were dismissed.

Issues considered

The concessional tariff orders exempted the mini steel plants from paying minimum charges?
The validity and effect of the Government's clarification orders of 5 December 1978 and 16 January 1980 on the earlier concessional tariff orders.
Whether the withdrawal of the concessional tariff violated principles of natural justice.
Whether the doctrine of promissory estoppel or legitimate expectation barred the State Government from withdrawing or modifying the concession.
Whether a direction under Section 78A of the Electricity Supply Act is compulsory and binding on the Board regarding tariff and minimum charges.
Whether the Board could lawfully levy minimum consumption charges despite the concessional tariff.

Legislation cited

Electricity (Supply) Act, 1948s. 48, s. 49, s. 78A

Subjects

concessional tariffminimum chargesElectricity Supply Actnatural justicepromissory estoppellegitimate expectationadministrative lawsection 78Amini steel plants

Judgment

ANDHRA STEEL CORPORATION LTD. ETC.
A
v.
ANDHRA PRADESH STATE ELECTRICITY
BOARD AND ORS.

MAY 2, 199 I . -· ~

B
[M.N. VENKATACHALJAH, J.S. VERMA AND
N.D. OJHA, JJ.]

Electricity Supply Act, 1948: Sections 48 and 78-A-Mini steel
plants-Electricity supply-State Government fixing concessional tariff
and directing the Electricity Board to supply electricity at such rates-
c Whether amounts to granting of immunity to the plants from payment of ·-
minimum charges-Concessional tariff and minimum supply-Imposi-
tion of conditions by Electricity Board-Validity of.

Administrative Law: Establishment of mini steel plants-Supply
D of electricity at concessional tariff-Applicability of principles of
natural justice, doctrine of promissory estoppel and doctrine of legiti-
mate expectation.
·'-
The appellants owning mini steel plants have been getting supply
of electricity from the Respondent-Board. The Board revised its terms
E and conditions for supply of electricity, and concessional tariff of 11
paise per unit for 3 years from 1.11.1977 was applied to five steel
plants. This tariff was subsequently enhanced to 12.S paise per unit.
However, the concessional tariff was not extended to one of the appel-
!ants viz. M/s. Andhra Steel Corporation since a Writ Petition had been
filed hy it claiming that the agreement entered into with the Res- .-
F pondent-Board for availing high tension electric supply was no longer in
force. In respect of the other steel plants, the Board extended the con-
cessional tariff subject to escalations and other terms and conditions "
and fixed a certain minimum consumption. However, the tariff was
revised to 16 paise without reference to the maximum demand charges
from 1.3.1978. In reply to a clarification sought by the Respondent-
G Board, the State Government clarified that the Government order did
not preclude the Board from applying the normal terms and conditions
of supply and prescribing the monthly minimnm charges and the work- ••
ing out of the escalated rate from time to time. Subsequently the State
Government withdrew the concessional tariff. The State Government
made a further clarification that its intention was to allow the conces-
H _sional tariff without limiting the concession by imposition of minimum

624
ANDHRA STEEL v. A.P.S.E.B. 625

consumption charges till the end of March, 1979.
A
Aggrieved hy the withdrawal of the concessional tariff, the mini
steel plants flied Writ Petitions before the High Court contending that it
was not open to the Electricity Board to have levied minimum charges
and it was bound to supply electricity to them at the concessional tariff
fixed by the State Government. It was also contended that the State B
Government's subsequent clarification should prevail over the earlier
one. Violation of principles of natural justice, doctrine of promissory
estoppel and right based on doctrine of legitimate expectation were also
contended.

It was further contended that the directions were issued under
section 78A of the Electricity Supply Act and hence they were of a C
compulsory nature and binding on the Board.

The Andhra Steel Corporation contended that while applying the
concessional tariff to other mini steel plants, the Electricity Board was
not justified in refusing the same to it thereby singling it out and hence D
its action was discriminatory and mala fide.

The High Court rejected the various contentions and dismissed
the Writ Petitions.

Aggrieved by the dismissal of their Writ Petitions, the mini steel E
plants flied appeals before this Court, raising the same contentions as
were advanced before the High Court,
-· Dismissing the appeals, this Court,

HELD: 1. In granting concessional tariff obviously it does not F
appear to be the purpose to compel the Electricity Board to maintain
the supply of the contracted load of electricity to the appellants hy
incurring losses. The only purpose in directing supply of energy at
concessional rates was to reduce the charges of actual energy consumed
by the appellants and this purpose could not be frustrated till the
Electricity Board complied with the direction of supplying electricity to G
them at the concessional rate. Though the order dated 16.1.80 in subs-
tance amounts to a clarification of the earlier order of clarification
dated 5th December, 1978, it states nothing as to why the clarification
contained in the order dated 5th December, 1978 in categorical terms .
did not express the real intention of the State Government in issuing the
earlier Government orders granting concessional tariff. The orders H
626 SUPREME COURT REPORTS [1991] 2 S.C.R.

granting concessional tariff, did not either expressly or by necessary
A
implication grant immunity to the mini steel plants from their obliga-
tion to pay minimum charges and this having been categorically stated .~

by the State Government in its clarificatory order dated 5th December,
1978 there was apparently no basis for issuing the second clarificatory
order dated 16th January, 1980. It was issued on some representation
B made by the mini steel plants at a point of time when Writ Petition on
their behalf had already been filed in the High Court and the matter
was sub-judice. In such a situation, apart from the propriety of issuing
the second clarificatory order on 16th January, 1980 it is obvious that
what was contained in this order is analogous to an averment made by
the State Government in reply to the Writ Petitions filed on behalf of
the appellants and it has no bearing in finding out the true import of the
c orders of the State Government granting~ tariff. [6.UC-D; 636A-E]

Amalgamated Electricity Co. v. Jalgaon Borough Municipality,
[ 1975] 2 SCC 508 and Bihar State Electricity Board v. Green Rubber
Industries, [1990] 1sec731, referred to.
D
2. By the Government Orders dated 2nd November, 1977 and '-
26th November, 1977 concession was granted to the appellants. This is
manifest from the Government Orders themselves which expressly used
the expression "concessional power tariff" or "concessional tariff''. At
no stage, the appellants disputed that what was extended to them by the
E said Government Orders was by way of concession. In view of the
settled law, neither of the two orders viz., orders dated 5.12.78 and
12 .3. 79 can be said to be illegal on the ground that they were passed in
violation of principles of natural justice. [633F-H]

Shri Baku/ Oil Industries v. State of Gujarat, [ 1987] I SCC 31;
F relied on.

3. With regard to the plea of promissory estoppel, it is not the
case of the appellants that they established their mini plan!S after the
grant of concessional Tariff by the said two Government Orders and
but for the grant of such concessional tariff they would not have
G established their mini steel plants. The necessary facts so as to sustain
the plea of promissory estoppel are not pleaded or established by the
appellants. [6358-D]

4. There is nothing on record to substantiate the plea of doctrine
of legitimate expectation on the basis of which the appellants could he
H held entitled to any relief. [635G]
ANDHRA STEEL v. A.P.S.E.B. [OJHA, J.) 627

5. On the facts of the present appeals it is not necessary to go into
A
the question whether the power of fixing tariff under section 49 of the
... Eiectricity Supply Act could be regulated by a direction under section
·- ' 78A thereof. The Electricity Board proceeded to implement the direc-
tions with regard to fixation of concessional tariff issued by the State
Government and resolved to realise electricity charges from the appel-
lants only at the concessional tariff of 12.2 p. as fixed in the Govern- B
ment Order dated 26th November, 1977, It, however, took the further
view that the directions issued by the Government did not have any
bearing on the obligation of the appellants to pay minimum charges
--.:i which they were bound to pay under the agreements executed by them
even though such minimum charges were to be c.alculated at the rate
of 12.2 p. per unit subject to escalation as indicated in the Govern-
ment Orders in question. Such minimum charges were payable even if c
no electricity was consumed by the appellants for any reason what-
soever. [63 lB-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1454
-63 & 1642-45 of 1981. D

From the Judgment and Order dated 10.4.1981 of the Andhra
Pradesh High Court in Writ Petition No. 3720 of 1979.

G. Ramaswamy, M.S. Ganesh, S. Murlidhar, Sanjeev Ahuja
and B. Parthasarthy for the Appellants. E

C. Sitaramaiya, T.V.S.N. Chari and Mrs. B. Sunita Rao for the
- . Respondents.

The Judgment of the Court was delivered by
F
OJHA, J. These appeals are directed against the judgment of
the Andhra Pradesh High Court dated 10th April, 1981 rendered in a
batch of writ petitions, reported in M/s. Poddar Projects Ltd. (Multi
Steels) v. A. P. S. E. Board, AIR 1982 Andhra Pradesh 189. For the
~ sake of convenience, these appeals are being decided by a common
judgment. In order to appreciate the respective submissions made by G
learned counsel for the parties necessary facts may be s.tated in brief.

The appellants are some of the mini steel plants of Andhra
Pradesh. Revised terms and conditions of electricity supply were
notified by the Andhra Pradesh State Electricity Board (for short the
Electricity Board) in B.P. Ms. No. 690 (Com!.) on 17.9.75 to be effec· H
628 SUPREME COURT REPORTS I 1991) 2 S.C.R.

A tive from 20th October, 1975. Subsequently, G.O. Ms. No. 832 dated
2nd November, 1977 was issued by the State Government whereby
concessional tariff of 0. 11 p. per unit for the period of three years
commencing from !st November, 1977 and ending with 31st October, . - ....
1980 was applied in respect of the following five consumers:

B !. Andhra Pradesh State Corporation Limited 2. Poddar Pro-
jecls Limited 3. A.K. Corporation Limited 4. Andhra Steels,
Vishakapatnam 5. A.K. Corporation, Vishakapatnam.

This concessional tariff was subsequently enhanced to 12.5 p. by 1--
the State Government vide G.O. Ms. No. 876 dated 26th November,
1977. The concessional tariff referred to above, however, was not
c extended to M/s. Andhra Steel Corporation by the Electricity Board
by passing a resolution in its meeting held on 26th November, 1977
inasmuch as the Andhra Steel Corporation had already filed a writ
petition inter alia claiming that the agreement which it had entered
into with the Electricity Board for availing high tension electric supply
D was no longer, in force. In respect of the remaining four steel plants
'
referred to above the Electricity Board extended the concessional l~

tariff of 12.2 p. subject to escalations and other terms and conditions
of supply and fixed minimum consumption of 403.325 units/KV A. This
was done by issuing B.P. Ms. No. 78 dated 20th January, 1978. These
four mini·steel plants were, however, subsequently directed by the
E Electricity Board vide B.P. Ms. No. 436/Coml. dated 3rd May, 1978 to -
be charged at a tariff rate of 16 p. per unit instead of 12.2 p. without
reference to the maximum demand charges from 1st March, 1978. The
Electricity Board also sought clarification from the State Government
vide its letter No. DE (Com!.) 1205-11/76-32 dated 27th November,
·-
1978 with regard to fixation of minimum consumption of 403.325 units/
F KV A and fixation of concessional tariff at 0.16 p. per unit in view of
the new levy of central excise duty and in view of the increased cost of
generation. The State Government vide G.O. Ms. No. 697 dated 5th
December, 1978 issued a clarification that the aforesaid G.O. Ms.
Nos. 832 and 876 did not preclude the Electricity Board from applying
the normal terms and conditions of supply and prescribing the monthly
G minimum charges and the working out of the escalated rate from time '
to time. Subsequently the State Government vide G.O. Ms. No. 146
dated 12th March, 1979 withdrew the concessional tariff contemplated
by G.O. Ms. Nos. 832 and 876 referred to above. This was done on the
representation of the Electricity Board which in its turn through its
B.P. Ms. No. 830 dated 2nd April, 1979 cancelled B.P. Ms. Nos. 78
H and 436 with effect from 12th March, 1979. The State Government
ANDHRA STEEL v. A.P.S.E.B. IOJHA, J .1 629

subsequently also issued G.O. Ms. No. 10 dated 16th January, 1980 A
whereby it was clarified that its intention in issuing the earlier G.O.
. ~.
Ms. No. 697 dated 5th December, 1978 was to allow the concessional
tariff rate notified in G.O. Ms. No. 876 without limiting the concession
by imposition of minimum consumption charges till the end of March,
1979. The Electricity Board felt aggrieved by this G.O. and requested
B
the Government to cancel it for the reasons set out in its letter dated
28th January, 1980.

One of the grievances of the Andhra Steel Corporation in its writ
-J
petition before the High Court was that the Electricity Board while
applying the concessional tariff to the other mini steel plants was not
justified in refusing the said concession to it merely because it had filed c
a writ petition. The action of the Electricity Board in singling it out
was, according to the Andhra Steel Corporation, discriminatory and
mala fide. This plea has been reiterated before us also and is confined
to the appeal preferred by the Andhra Steel Corporation.
'
D
The pleas common to all the appellants which were raised before
_,
the High Court as also before us may now be enumerated. It has been
asserted that in view of the direction issued by the State Government
fixing concessional tariff for the appellants it was not open to the
Electricity Board to have levied minimum charges and it was bound to
supply electricity to the appellants on the concessional tariff alone as
fixed by the State Government. As regards the order of the State E
Government dated 5th December, 1978 which clarified that its earlier
orders fixing concessional tariff did not preclude the Electricity Board
from levying inter alia minimum charges it has been asserted that the
said order is illegal. In the alternative, it is asserted that if clarificatory
orders could be issued by the State Government with regard to its
F
orders fixing concessional tariff the subsequent clarification made by
order dated 16th January, 1980 had to prevail over the earlier clarifica·
tion dated 5th December, 1978.

The order of the State Government dated 12th March, 1979 with·
drawing the concessional tariff with effect from that date had also been
" assailed on the ground that it was passed on the representation of the G
Electricity Board without giving any opportunity to the appellants to
show cause against the said representation and consequently the said
order was in violation of principles of natural justice. Pleas of promis·
sory estoppel and right based on the doctrine of legitimate expectation
have also been raised. ·
H
630 SUPREME COURT REPORTS [ 1991) 2 S.C.R.

As regards the submission made on behalf of the Andhra Steel
A Corporation about singling it out in the matter of grant of concessional
tariff on the basis of the order issued by the State Government for the
period ending 12th March, 1979 Shri Shanti Bhushan, learned counsel
. -·
for the Electricity Board has very fairly stated that the Electricity
Board would extend to the Andhra Steel Corporation also the same
B benefit which was extended to the other four mini steel plants in the
matter of grant of concessional tariff for the said period ending 12th
March, 1979. In this view of the matter it is not now necessary to deal
with this plea.

As regards' the plea that in view of the direction issued by the
State Government fixing concessional tariff for the appellants it was
c not open to the Electricity Board to have levied minimum c' ·:cs as it
was bound to supply electricity to the appellants on the concessional
tariff alone as fixed by the State Government it was submitted by
learned counsel for the appellants that not only it was specifically
stated in the G.O. dated 26th November, 1977 that the directions
o contained therein were issued under Section 78A of the Act, it was
accepted even by the Electricity Board to be a direction under Section ,_
78A of the Act as is apparent from its proceedings dated 20th January,
1978. According to learned counsel for the appellants a direction
issued under Section 78A of the Act was of a compulsive nature and
was binding on the Electricity Board. The only dispute which the
E Electricity Board could raise was as envisaged and in the manner pro-
vided by Section 78A(2) of the Act about the direction being a matter
of policy. The Electricity Board according to learned counsel not
having taken recourse to the procedure contained in Section 78A(2) of
the Act was precluded from asserting before the High Court that the
Government orders granting concessional tariff to the appellants did
F not fall within the purview of Section 78A of the Act. The contention
of the learned counsel for the Electricity Board on the other hand has
been that a direction under Section 78A of the Act can be only with
regard to a matter of policy vis-a-vis the consumers generally or of a
particular class or category as distinguished from individual consumers
and even such a direction does not have a binding force and is °'
G calculated only to guide the Electricity Board in the discharge of its
statutory functions. Learned counsel for the parties were at variance
even on the question as to whether the power of fixing tariff under
Section 49 of the Act could be regulated by a direction under Section
78A thereof. In support of the submission that a direction issued by
the Government is compulsive in nature learned counsel appearing for
H the appellants and the State of Andhra Pradesh drew our attention to
ANDHRA SIBEL v. A.P.S.E.B. [OJHA, J.I 631

certain decisions and principles. of administrative law laying down the
A
scope of a direction.
~

-- . Having considered the respective submissions of learned counsel
for the parties on this point we are 'of the opinion that on the facts of
the instant appeals it is not necessary to go into the rival contentions
referred to above on this point. Here, the Electricity Board as is appa- B
rent from its proceedings dated 20th January, 1978 proceeded to
implement the directions with regard to fixation of concessional tariff
issued by the State Government and resolved to realise electricity
_, charges from the appellants only at the concessional tariff of 12.2 p. as
fixed in the Governme;;i Order dated 26th November, 1977. It, how-
ever, took the further view in the said proceedings that the directions
issued by the Government did not have any-bearing on the obligation c
of the appellants to pay minimum charges which they were bound to
pay under the agreements executed by them even though such
minimum charges were to be calculated at the rate of 12.2 p. per unit
subject to escalation as indicated in the Government Orders in ques-
tion. Such minimum charges were payable even if no electricity was D
_, consumed by the appellants for any reason whatsoever. It is in this
context that we are of the opinion that the question with regard to
the nature of a direction issued under section 78A of the Act is only of
academic value in these appeals. The basic question which falls for our
consideration, however, is as to whether the obligation of the appel-
!ants to pay minimum charges under the agreements executed by them E
ceased to be operative on account of the directions issued by the State
Government fixing concessional tariff as has been asserted by learned
counsel for the appellants. As indicated earlier the case of the Electri-
city Board in this behalf has been that the directions in question did
not have any bearing on the obligation of the appellants to continue to
pay minimum charges, of course, to be calculated on the basis of the ;F'
concessional tariff of 12.2 p. per unit. A plain reading of the Govern-
men! Orders dated 2nd November, 1977 and 26th November, 1977
makes it clear that there is no specific direction contained therein that
the appellants would not be bound to pay minimum charges or that the
~
obligation to pay minimum charges under the agreements executed by
them would remain suspended during the period when the conces- G
sional tariff would be operative. What was, however, urged by learned
counsel for the appellants was that the very purpose of fixing conces-
sional tariff by the State Government would be frustrated if the appel-
!ants are held to be bound to continue to pay minimum charges in
pursuance of the agreements entered into by them. With regard to this
submission it is at the outset necessary to appreciate the genesis of H
632 SUPREME COURT REPORTS [1991] 2 S.C.R.

prescription of minimum charges. To put it succinctly the purpose of
A
prescribing minimum charges is to ensure that no undue loss is caused
to the Electricity Board because the absence of minimum charges is
likely to create a tendency in a prospective consumer to have connec-
tion for an inflated requirement and having agreed to meet such
requirement the Electricity Board would be under an obligation to
B maintain the supply upto that requirement even if no or very little
energy is consumed. In Amalgamated Electricity Co. v. Jalgaon
Borough Municipality, [1975] 2 SCC Page 508 it was held in paragraph
9 of the Report:

"Moreover it is obvious that if the plaintiff company was to
give bulk supply of electricity at a concessional rate of 0.5
c anna per unit it had to lay down lines and to keep the power
ready for being supplied as and when required. The con-
sumers could put their switches on whenever they liked and
therefore the plaintiff had to keep everything ready so that
power is supplied the moment the switch was put on. In
D these circumstances it was absolutely essential that the
plaintiff should have been ensured the payment of the ,_
minimum charges for the supply of electrical energy
whether consumed or not so that it may be able to meet the
bare maintenance expenses."

E In Bihar State Electricity Boara v. Green Rubber Industries, [1990]
1 S.C.C. Page 731 while dealing with the question whether the stipula-
tion to pay minimum guarantee charges irrespective of whether energy
was consumed or not is reasonable and valid it was inter alia held that
considered by the test of reasonableness it cannot be said to be
unreasonable inasmuch as the supply of electricity to a consumer
F involves incurring of overhead installation expenses by the Board
which do not vary with the quantity of electricity consumed and the
installation has to be continued irrespective of whether the energy is
consumed or not.

The purpose of prescribing minimum charges being, as stated
G above, can it be said that while issuing the direction to the Electricity
Board to supply electricity to the five mini stee) plants at concessional
rate the State Goverrunent was oblivious of the said purpose and
required the Electricity Board not only to supply electricity on the
concessional rate but also incur undue loss in maintaining the required
bulk of energy stipulated in the various agreements even if the con-
H cerned mini plants either used no energy or used v".ry little energy.
ANDHRA STEEL v. A.P.S.E.B. [OJHA, J.J 633

In our opinion, on the material placed before us it is not possible
A
to take the view that such was the intention of the State Government in
directing supply to be made to the appellants on concessional tariff.
,\... That it was not the intention of the State Government to do so was
subsequently clarified by the State Government itself vide Govern-
ment Order dated 5th December, 1978. In this view of the matter the
submission made on behalf of the appellants that with the grant of B
concessional tariff the agreements in so far as they required the appel-
lants to pay. minimum charges ceased to be operative or that the
purpose of granting concessional tariff was likely to be frustrated if
they were required to continue to pay minimum charges cannot, there-
fore, be accepted. In granting concessional tariff obviously it does not
appear to be the purpose to compel the Electricity Board to maintain C
the supply of the contracted load of electricity to the appellants by
incurring losses in the manner stated above. The only purpose in
directing supply of energy at concessional rates was to reduce the
charges of actual energy consumed by the appellants and this purpose
could not be frustrated till the Electricity Board complied with the
direction of supplying electricity to them at the concessional rate. In D
this view of the matter it is apparent that the direction of the State
Government to the Electricity Board to supply electricity to the appel-
lants at concessional rate did not either expressly or by necessary
implication grant immunity to the appellants from payment of
minimum charges.
E
In support of the plea that the order of the State Government
dated 5th December, 1978 which clarified that its earlier orders fixing
concessional tariff did not preclude the Electricity Board from levying
minimum charges and the subsequent order dated 12th March, 1979
withdrawing the concessional tariff were invalid it was submitted by
learned counsel for the appellants that those orders were in violation F
of principles of natural justice as also the doctrine of promissory estop-
pel. In so far as this submission is concerned what is of significance is
that by the Government Orders dated 2nd November, 1977 and 26th
November, 1977 concession was granted to the appellants. This is
manifest from the aforesaid Government Orders themselves which
o expressly used the expression "concessional power tariff" or "conces- G
sional tariff'. At no stage, does it appear to have been disputed by the
appellants that what was extended to them by the said Governm~nt
Orders was by way of concession. In the context·of gr~tmg exe'."pt10n
from sales tax certain observations were made by this Court m Shn
Baku! Oil Industries v. State of Gujarat, [1987\ 1 s.c.~. P~ge 31 which H
would, keeping in view the principle laid down therem with regard to
634 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

the grant of concession, be, in our opinion, useful in considering the
A
above stated submission made by the learned counsel for the appel-
lants. It was held:
'_.;,
....
"Viewed from another perspective, it may be noticed that
the State Government was under no obligation to grant
B exemption from sales tax. The appellants could not, there- •
fore, have insisted on the State Government granting
exemption to them from payment of salex tax. What conse-
"'
quently follows is that the exemption granted by the
government was only by way of concession. Once this posi- .,...
tion emerges it goes without saying that a concession can be
withdrawn at any time and no time limit can be insisted r
c upon before the concession is withdrawn. The notifications
of the government clearly manifest that the State Govern-
ment had earlier granted the exemption only by way of
concession and subsequently by means of the revised notifi-
cation issued on July 17, 1971, the concession had been l
D withdrawn. As the State Government was under no obliga-
tion, in any manner known to law, to grant exemption it
,_
was fully within its powers to revoke the exemption by
means of a subsequent notification. This is an additional
factor militating against the contentions of the appellants."

E It was further held:

"The exemption granted by the government as already ,_
stated, was only by way of concession for encouraging
entrepreneurs to start industries in rural and undeveloped
areas and as such it was always open to the State Govern-
F ment to withdraw or revoke the concession. We must, how-
ever, observe that the power of revocation or withdrawal
would be subject to one limitation viz. the power cannot be
exercised in violation of the rule of promissory estoppel. In
other words, the government can withdrawn an exemption
granted by it earlier if such withdrawal could be done with-
G out offending the rule of promissory estoppel and depriving ~

an industry entitled to claim exemption from payment of
tax under the said rule. If the government grants exemp-
tion to a new industry and if on the basis of the representa-
tion made by the government an industry is established in
order to avail the benefit of exemption, it may then follow
H that the new industry can legitimately raise a grievance that
'

}·;'·
•.•c>
ANDHRA STEEL v. A.P.S.E.B. [OJHA, J.J 635

the exemption could not be withdrawn except by means of
A
legislation having regard to the fact that promissory estop-
pel cannot be claimed against a statute."
.'>-.
This being the law with regard to grant of concession we are of
the opinion that neither of the two orders mentioned above can be said
to be illegal on the ground that they were passed in violation of princi- B
ples of natural justice. Who only question in this connection which
survives is that of promissory estoppel. With regard to this plea it
would be seen that it is not the case of the appellants that they
established their mini plants after the grant of concessional tariff by
the two Government Orders referred to above and but for the grant of
such concessional tariff they would not have established their mini
plants. The necessary facts so as to sustain the plea of promissory c
estoppel are not, in our opinion, to be found to have been either
pleaded or established by the appellants. To take it by way of an
illustration reference may be made to the special leave petition giving
rise to Civil Appeal Nos. 1454-1463 of 1981 filed by M/s. Andhra Steel
Corporation Ltd. The plea with regard to promissory estoppel is to be' D
found in ground no. (i) which reads:
--""
"Whether in view of the fact that the Petitioner had acted
upon the Government orders dated 2.11.1977 and
26.11.1977 and thus altered its position (as without the
concessions being granted to the Petitioner they would not E
have possibly run the industry, since it was bound to suffer
huge (losses) is the State Government estopped from
revoking, or modifying the same before the full period of
concession had run out of efflux of time that is, by 31-10-
1980?"
(emphasis supplied) F
. I
Almost indentical is ground no. (i) in the special leave petition
giving rise to Civil Appeal Nos. 1642-1645 of 1981. The use of the word
"possibly" is obviously indicative of lack of specific averrnent with
regard•to principle of estoppel. Even such an averment has not been
_. made qua the Electricity Board. With regard to the plea based on the G
doctrine of legitimate expectation suffice if to say that except invokfog
the said doctrine nothing substantial was brought to our notice on the
basis of which the appellants could be held entitled to any relief.

In so far as the Government Order dated 16th January, 1980 on
which reliance has been placed by learned counsel for the appellants in H ,
636 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

A the alternative is concerned it may be pointed out that the said order
even though in substance amounts to a clarification of the earlier order
of clarification dated 5th December, 1978, states nothing as to why the
clarification contained in the order dated 5th December, 1978 in . -L.
categorical terms did not express the real intention of the State
Government in issuing the earlier Government Orders granting con-
B
cessional tariff. As already indicated above, the orders granting con-
cessional tariff, in our opinion, did not either expressly or by necessary
implication grant immunity to the mini steel plants from their obliga-
tion to pay minimum charges and this having been categorically stated
by the State Government in its clarificatory order dated 5th Decem-
ber, 1978 there was apparently no basis for issuing the second
c clarificatory order dated 16th January, 1980. Further, the said order
dated 16th January, 1980 had been issued on some representation
made on behalf of the mini steel plants at a point of time when writ
petitions on their behalf had already been filed in the High Court and
the matter was subjudice. In such a situation, apart from the propriety
D of issuing the second clarificatory order dated 16th January, 1980 it is
obvious that what was coritained in this order is analogous to an aver-
ment made by the State Government in reply to the writ petitions filed
on behalf of the appellants. In our opinion, in the circumstances
pointed out above the order dated 16th January, 1980 has no bearing
in finding out the true import of the orders of the State Government
granting concessional tariff.
E
In view of the foregoing discussion, we do not find any substance
\
in these appeals. They are accordingly dismissed. No costs.

G.N. Appeals dismissed. ·--