Holding

The appellant is not entitled to the exemption because it failed to start commercial production within the period prescribed by the notification and did not fulfil the scheme’s conditions, rendering promissory estoppel inapplicable.

Summary

The Supreme Court considered appeals by A.P. Steel Re‑Rolling Mill Ltd. against the State of Kerala and the Kerala State Electricity Board. The State had issued a 1992 notification exempting new industrial units from the enhanced power tariff if commercial production began between 1 January 1992 and 31 December 1996. The appellant applied for power allocation in 1995, received sanction only in 1997, and started commercial production in October 1998, well after the deadline. It claimed entitlement to the concessional tariff, invoking the doctrine of promissory estoppel on the ground that it had invested heavily based on the State’s representation. The High Court dismissed the writ petition, finding the appellant had not complied with the scheme’s conditions, and the appellant later withdrew its writ. The Supreme Court held that the appellant was not entitled to the exemption because it failed to start production within the stipulated period and did not satisfy the notification’s conditions; the doctrine of promissory estoppel did not apply. Consequently, the appeals were dismissed.

Issues considered

Whether the appellant is entitled to the concessional power tariff under the 1992 exemption notification despite commencing commercial production after 31 December 1996.
Whether the doctrine of promissory estoppel can be invoked against the State when the appellant altered its position based on the State’s representation.
Whether the appellant’s delay and failure to comply with the terms of the scheme bar it from obtaining the benefit.
Whether the High Court erred in its factual findings and in refusing relief.

Legislation cited

Electricity (Supply) Act, 1948s. 46, s. 49, s. 78A

Subjects

exemption notificationconcessional power tariffpromissory estoppelelectricity supplyindustrial policydelaystatutory interpretationKerala State Electricity Boardcommercial productionwrit petition

Judgment

<
MIS. A.P. STEEL RE-ROLLING MILL LTD. A
v.
STATE OF KERALA AND ORS.

DECEMBER 14, 2006

[S.B. SINHA AND MARKANDEY KA TJU, JJ.] B

Electricity Supply Act, 1948-Notification granting benefit of a
concessional power tariff to new units which start production between 1. 1. I 992
and 3 I. I 2. I 996-Production not started by 31. I 2. I 996-High Court held that
appellant was not entitled to benefit of Notificatio~orrectness of -Held,
c
Correct as appellant-unit had failed to comply with terms/conditions of
scheme and in obtaining sanction for electrical connection within a
·reasonable time- Doctrine of promissory estoppel not applicable.

Delay/latches in filing writ petition-Relief sought by placing reliance D
on a Judgment passed in another case-Held, appellant approached the Court
after a long delay, hence not entitled to obtain discretionary relief-Benefit of

..
judgment not exten~ed automatically-While granting relief in a writ petition,
High Court required to consider fact situation in each case including conduct
of petitioner-Court to consider as to whether the writ petitioner chose to sit
over the matter and then woke up after decision of this Court. E
Interpretation of statutes-Exemption Notification-Held, generally, to
he construed strictly, but once it is found that the entrepreneur fulfils the
conditions laid down therein, liberal construction would be made.

Doctrine ofpromissory estoppel-Beneficent scheme made by the State- F
Applicability ofthe doctrine-Held, applicable if entrepreneur had altered his
position pursuant to or in furtherance ofa promise made by the State to grant
benefit.

Pursuant to the Industrial Policy adopted in 1992, the State of Kerala
issued a Notification dated 6.2.1992 granting exemption from payment of G
enhanced power tariff to the new industrial units, which start production
between 1.1.1992 and 31.12.1996.

The said Industrial Policy was accepted by the Electricity Board.
1057 H
k
1058 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A The case of appellant-Victory Paper and Boards India is that pursuant to
or in furtherance of the representation made by the State of Kerala and/
or the respondent-Board they altered their position by investing a huge
amount by setting up factories/new units. The State at the district level
constituted a 'Green Channel Clearance Committee' (GCC). The
B appellant had applied for grant of electric power allocation to the extent
of 2500 KV A. It obtained loan on 19; 1.1995. As the application of the
appellant had not allegedly been processed, GCC issued several reminders
to the Board. On or about 17.11.1995, Appellant informed the Board that
the project was at an advanced stage. It was recorded that despite
recommendations by GCC, sanction for grant of electrical connection had
C not been issued. It, allegedly, imported machinery from abroad, which fact
was intimated to the Board by a letter dated 24th June, 1996. The response
of the Board thereto is to be found in the letter dated 11.2.1997, whereby
sanction for power allocation was sought for by the Deputy Chief Engineer
from the Chief Engineer of the Board. Having regard to the fact that there
D was no adequate transformer capacity, the allocation could not be granted,
as was informed to the appellant by the Board in terms of its letter dated
21.4.1997. Electrical energy was allocated for six months on trial-run basis
on 24.12.1997 and a final sa.nction was granted on 21.12.1998. Appellant
started commercial production on 10.3.1999. It was denied the benefit of
the said incentive scheme dated 6.2.1992. Appellant filed writ petition,
E which was dismissed.

In case of appellant-A.P. Steel Re-Rolling Mill Ltd., its writ petition
was permitted to be withdrawn by the High. Court. A review application
filed by the said appellant was also dismissed. An application for grant
of electrical connection was filed by it in November, 1995 and actual
F commercial production started in or about October, 1998. It was also
denied the benefit of exemption Notification. Hence these appeals.

Dismissing the appeals, the Court

HELD: 1.1. Generally, an exemption notification is to be construed
G strictly, but once it is found that the entrepreneur fulfils the conditions
laid down therein, liberal construction would be made. A question as to
whether, in a given situation, an entrepreneur was entitled to the benefit
under an exemption notification or not, thus, would depend upon the fact
of each case. A bare perusal of the notification dated 6.2.1992 issued by
H the 1st respondent would show that the purport and object thereof was
A.P. STEEL RE-ROLLING MILL LTD. v. STATE OF KERALA 1059
to grant benefit of a concessional power tariff which came into force on and A
from 1.1.1992. The phraseology used in the said notification postulates that
the benefit was to be granted in regard to the 'enhanced power tariff'. Thus,
where the new units had started production between 1.1.1992 and 31.12.1992,
such exemption was available to the entrepreneurs. (1074-B, C, F, G)

Mis. Ashoka Smokeless Coal Ind. P. Ltd. & Ors. v. Union of India & B
Ors., Civil Appeal No. 5302 of 2006 disposed of by Supreme Court on 1st
December, 2006, relied on.

Union of India & Ors. v. Mis. lndo-Afgan Agencies Ltd, (1968) 2 SCR
366; Mis. Motilal Padampat Sugar Mills Co. Ltd v. State of Uttar Pradesh & C
Ors., (19791 2 SCC 409; Pournami Oil Mills & Ors. v. State of Kera/a &
Anr., (1986) Supp SCC 728; Assistant Commissioner of Commercial Taxes
(Asst.) Dharwar & Ors. v. Dharmendra Trading Company & Ors., (19881 3
SCC 570; Mangalore Chemicals and Fertilizers Limited v. Deputy
Commissioner of Commercial Taxes & Ors., (1992) Supp 1 SCC 21; Pawan
Alloys & Casting Pvt Ltd v. U.P. State Electricity Board & Ors., (1997) 7 D
SCC 251; State of Punjab v. Nestle India Ltd & Anr., (2004) 6 SCC 465;
Jai Narain Parasurampuria (Dead) & Ors. v. Pushpa Devi Saraf & Ors.,
(20061 7 SCC 756; Shrijee Sales Corporation & Anr. v. Union ofIndia, ( 1997)
3 SCC 398; *Hitech Electrothermics & Hydropower Ltd. v. State of Kera/a
& Ors., (2003) 2 SCC 716; Kera/a State Electricity Board v. Hitech
Electrothermics & Hydropower Ltd. & Ors., [2005) 6 SCC 651; Dr. Ashok E
Kumar Maheshwari v. State of U.P. & Anr., (1998) 2 SCC 502; State Level
Committee & Anr. v. Morgardshammar India Ltd, [1996) 1 SCC 108; Mis.
O.N.G.C. Ltd. v. Commnr. Of Customs, Mumbai, (2006) 8 SCALE 551; CCE
v. Parle Exports (P) Ltd, (1989) 1 SCC 345 and Southern !spat Ltd. v. State
of Kera/a & Ors., (200414sec68, referred to. F
1.2. In cases where there has been a substantial failure on the part
of the industrial unit to obtain such benefit owing to acts of omission and
commission on its part no such benefit can be given. The High Court has
arrived at a finding of fact that the appellant had failed and/or neglected
to comply with the terms and conditions of the scheme or contributed to G
a large extent in not being able to obtain such sanction within a reasonable
time. The appellant applied for grant of electrical connection on 9.11.1994.
It, however, on its own showing did not receive any sanction till 17.11.1995.
But even on that date the project was not complete. It was only at an
advanced stage. (1074-H; 1075-A-CJ
H
~
1060 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A 1.3. From the appellant's letter dated 24th June, 1996, it would appear
that it merely had been complaining of about non-grant of sanction, but then,
evidently, it was not ready for commencing commercjal production.
Machineries were obtained by it only on 4.6.1996. How much time was taken
for installation of machinery and completion of the project, is not known.
Sanction, evidently, had been allocated on 24.2.1997. It accepted the same
B without any demur. It had been making payments in terms of the new tariff.
It filed the writ petition only in the year 2003, i.e., only after this Court
rendered its decision in *Hitech Electrothermics on 17th December, 2002.
(1075-C-E)

c While1.4.granting
The benefit of a judgment is not extended to a case automatically.
relief in a writ petition, the High Court is entitled to
consider the fact situation obtaining in each case including the conduct of
the petitioner. In doing so, the Court is entitled to take into consideration
the fact as to whether the writ petitioner had chosen to sit over the matter
~nd then wake up after the decision of this Court. If it is found that the
D appellant approached the Court after a long delay, the same may disentitle
him to obtain a discretionnry relief. The principle of promissory estoppel
will apply where an entrepreneur has altered its position pursuant to a
promise made by the State, but the application thereof would depend upon '
the facts and circumstances of each case. Having regard to the findings
of fact arrived at by the High Court, it cannot be said to have committed
E
any illegality in passing the impugned judgment. (1075-F-H; 1076-A)

Chairman, U.P. Jal Nigam & Anr. v. Jaswant Singh & Anr., (2006) 12
SCALE 347, relied on.

F
2. So far as the case of Mis. A.P. Steel Re-Rolling Mill Ltd. is concerned, . .('

evidently the question involved therein was a disputed question of fact.
~
Although, the High Court could have entertained a writ petition, as has been
done in the case of Mis. Victory Papers and Boards India Ltd., but as Mis.
A.P. Steel Re-Rolling Mill Ltd. withdrew its writ application, no case has been

G
made out for interference with the impugned judgment As the appellant has
still its remedies open, it may avail the same. (1076-A-BI
'
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5814 of2006. .
~

From the Final Judgment and Order dated 24.11.2003 of the High Court
ofKerala at Emakulam in OP No. 31033/03 and dt. 25.5.04 in R.P. No. 286/2004.
H
AP. STEEL RE-ROLLING MILLL TD. v. STA TEOF KERALA [S.B. SINHA, J.) l 061

Venkataramani, Ranjit Kumar, R. Sree Kumar, Ramesh Babu M.R., T.G. A
Narayanan Nair and Romy Chacko for the Appellant.

G. Prakash and M.T. George for the Respondents.

The Judgment of the Court was delivered by
B
S.B. SINHA, J. Leave granted.

These two appeals, involving common questions of fact and law, were
taken up for hearing together and are being disposed of by this common
judgment.

We will, however, notice the fact of the matter from Mis. Victory
c
Papers and Boards India Ltd. 's case.

The State of Kerala adopted an industrial policy in the year 1992 and
in the light thereof a notification bearing No.G.O.(MS)No.4/92/PD dated
6.2.1992, was issued, which reads as under : D
"ORDER

In the light of the statement of Industrial Policy approved for
implementation by Government the following incentives in respect of
electricity are ordered : E
l. New industrial units will be exempted for 5 years from payment
of enhanced power tariff which came into effect on 1. 1. 92. This
concession will be available.

i. to new units from the date of commercial production, which start F
such production between 1.1.92 and 31.12.96.

ii to manufacturing units only and not to service and entertainment
units.

iii. To existing units for substantial expansion/ modernization/
diversification the concession in such cases will be available only for G
the consumption of the new machinery and equipments which adds
to the capital asset, by not less than 25% of the exiting fixed capital
investment excluding land and building, the installation of which is
to be certified by the competent authority.
H
A
1062 SUPREME COURT REPORTS ff006] SUPP. 10 S.C.R.

iv. for modernization, to industrial units having a contract demand not
-
exceeding 500 KV A. In such cases, new equipments alone will be
eligible for the concession."

The said industrial policy of the State was accepted by the Kerala State
Electricity Board, which is a body constituted and incorporated under the
B provisions of the Electricity (Supply) Act, 1948, in respect of which a
notification was issued on 27 .3. l 992. By reason of the said notification,
some guidelines were also issued. The appellant herein contended that pursuant
to or in furtherance of the representation made by the State of Ketala and/
or the respondent-Board, they altered their position by investing a huge
C amount by setting up factories/new units.

The State, admittedly, at the district level constituted a 'Green Channel
Clearance Committee' (GCC).

The appellant had applied for grant of electric power allocation to the
D extent of 2500 KV A. It obtained loan on 19.1.1995. As the application of
the appellant had not allegedly been processed, GCC issued several reminders
to the Board. On or about 17.11.1995, Appellant informed the Board that
the project was at an advanced stage. It was recorded that despite
recommendations by GCC, sanction for grant of electrical connection had not
been issued, stating :
E
"We wish to add at this juncture that the Government is inviting
entrepreneurs to start their industrial units in the State and are offering
Power, Water and other infrastructural facilities availability so easily.
But on the contrary the concerned authorities are reluctant to sanction
the necessary infrastructural facilities to the units. Our case is one of
F the examples; Your goodself will appreciate that without electric
power we cannot start out production as schedule, which will hamper
the work and finally affect the production of the unit. The delay in
implementing the project will, finally, escalate the cost of the project.

Since more than one year has lapsed after submitting our appliCation
G to the KSEB, we have so far not received sanction of Power to our
unit. Hence we request to your goodself to kind enough to prevail
upon the authority to sanction Electric Power to out unit to the extent .•
of our requirement."

It, allegedly, imported machinery from abroad, which fact was intimated
H
A.P. STEEL RE-ROLLING MILL LTD. v. STATE OF KERALA [S.B. SINHA, J.) 1063

to the Board by a letter dated 24th June, 1996, stating : A
"Under the circumstances, our Bankers are reluctant to clear term
loan because of non-sanctioning of Power to the Project. Presently,
the total machinery worth Rs.3.5 Crore have already arrived at site
and th~ erection is in progress. Any further delay in receiving the
power allocation will affect our total project which will lead to a B
financial constraint. It is really unexpected from the authorities such
a situation by the entrepreneur who is taking initiative to install a
factory in Kerala.

Since we have already invested a huge amount for land, building
and machinery, we do not have other alternative other than to complete C
the project and start production at the earliest.

We have informed these facts and figures to the previous Ministry
vide our letter dated 22nd February, 1996, addressed to Hon'ble Minister
of Electricity. We are sorry to inform you that so far we have not
received any favourable decision. D
According to our schedule, we are planning to start production in
the month of August, 1996. Of the huge investment ofRs.12.5 crore,
75% of the total cost of the project has already been invested and any
more delay in power allocation will effect our project very seriously.
E
To avoid unnecessary delay in starting the production, we need
the sanction of power a/location urgently.

We understand that our file is pending with the Chief Engineer,
World Bank Projects, Vaiduthy Bhavanam, Thiruananthapuram and
with the Secretary; Kerala State Electricity Board, Trivandrum vide No. F
TSI/PANictory Paper/95-96/3019 dated 7.8.1995."

[Emphasis supplied]

The response of the Board thereto is to be found in the letter dated
l l.2.1997, whereby sanction for power allocation was sought for by the G
Deputy Chief Engineer from the Chief Engineer of the Board. Having regard
to the fact that there was no adequate transformer capacity at Kanjiokode Sub
Station, the allocation could not be granted, as was informed to the appellant
by the Board in terms of its Jetter dated 2104.1997. Electrical energy was
allocated for six months on trial-run basis on 24.12.1997 and a final sanction
H
1064 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A was granted on 21.12.1998. Appellant started commercial production on
10.3.1999. It evidently denied the benefit of the said incentive scheme dated
6.2.1992. A writ petition was filed by the appellant, which has been dismissed
by reason of the impugned judgment of the High Court, inter alia, stating

B " ..... The only question to be considered is.whether the Petitioner had
satisfied the various terms and conditions laid down in the order
dated 6.2.1992. Facts would eloquently show that Petitioner had not
satisfied the various conditions laid down in the order. Petitioner
might have submitted an application during the year 1994. Mere

c submission of application would not be sufficient to hold that Petitioner
had complied. with all the terms and conditions. Power allocation
was issued by the fourth Respondent on 24.12.1997 with specific
condition that the connection would be effected. only after providing
a separate 22 KV feeder with outlet from the sub-station to the factory
under OYEC scheme. Respondent could start the work of drawing
D at 2.8 km of22 KV line only after the Petitioner remitting the OYEC
amount. Even though allocation was given on 24.12.1997 Petitioner
took his own time to remit the amount. Petitioner has taken
considerable time to complete the work and was not ready for availing
power supply. Petitioner has produced energization sanction order
under Rule 63 of the Indian Electricity Rules, 1956 from the Chief
E Electrical Inspector only during December 1998 even though power
allocation was sanctioned on 24.12.1997. Petitioner had executed the
H.T. agreement only on 22.1.1999 and the unit was energised on
10.3.1999, by the time period fixed for concessional tariff was already
over. We are of the view, ext. Pl order of the apex court would not
F apply to the facts of this case where power allocation was made from
the year 1991 but the power could not be supplied. Hence commercial
production could not be started by 31.12.1996. Hence Petitioner had
not complied with the formalities so as to get the benefit of the
concession orders. The principle of promissory estoppel in the facts
and circumstances of the case cannot be put against the Board. Above
G being the factual situation, we are of the view Petitioner is not entitled
to get concessional tariff."

So far as case ofM/s. A.P. Steel Re-Rolling Mill Ltd. is concerned, we
need not go into the factual aspect of the matter. Suffice it to notice that its
H writ petition was permitted to withdrawn by the High Court by an order dated
A.P. STEEL RE-ROLLING MILL LTD. v. STATE OF KERALA (S.B. SINHA, J.] l 065

24th November, 2:103. A review application filed by the said appellant was A
also dismissed by an order dated 25th May, 2004. We may, however, note
that an application for grant of electrical connection was filed by it in November,
1995 and actual commercial production started in or about October, 1998.

The principal contentions which have been raised by Mr. Ranjit Kumar
and Mr. Venkataramani, learned Senior counsel appearing on behalf of the B
appellants, are : -

(i) Appellants having altered their position pursuant to or in furtherance
of the representation made by the State of Kerala as also the Board,
.the doctrine of promissory estoppel would squarely apply in the instant C
cases;

(ii) The High Court committed a manifest error in proceeding on the
premise that the appellants were not entitled to grant of such exemption
as they had started commercial production after the period envisaged
in the said notification;
D
(iii) The Board was statutorily obligated to supply electrical energy
to the appellant within a reasonable time.

(iv) Had electrical energy been supplied to the appellants within a
reasonable time, they would have been able to obtain the benefit of
the said exemption. E
Mr. Venkataramani added :

(v) A concession made by the Counsel on a question of law being not
binding on the client, the High Court should have allowed the
application for review of its earlier order permitting to withdraw its F
writ petition.

Mr. M.T. George, learned Counsel appearing on behalf of the Board,
on the other hand, would urge that the appellants themselves were guilty of
. serious delay and latches on their part in complying with the statutory
requirements and thus, it is idle to put the blame on the Board. It was submitted G
that the langliage of the notification dated 6.2.1992 being clear and explicit,
the same does not envisage grant of any benefit beyond 31.12.1996.

Before adverting to the rival contentions raised on behalf of the parties,
we may notice that construction of the notification in question came up for
consideration before a Bench of this Court in Hitech Electrothermics & H
1066 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A Hydropower Ltd v. State ofKera/a & Ors., [2003] 2 SCC 716, wherein this
Court opined :

"On a perusal of the industrial policy of the government,
unequivocally indicting that concessional tariff rate would be given
as well as the order of the Electricity Board adopting the same, it can
B be safely held that such concession could be availed of by the industrial
units for a period of five years from the date, they start such production
between l. l .1992 and 31.12.1996. In this context the stand of the
Board as well as the State Government cannot be held to be devoid
of any substance when admittedly the commercial production of the

c appellant's unit did not start till 31.12.1996. But the question for
consideration is when the government has itself come forward alluring
industrial units to set up their industries and when under the provisions
of the Electricity Act, every consumer has the right to get the supply
of power and in the case in hand, when power allocation has been
made in favour of the appellant as early as in 1995, and yet the same
D power could not be supplied for such non-supply of power, the
commercial production could not start by 31.12.1996, would it at all
be equitable to deny the relief to the appellant by giving a literal
interpretation to the incentive scheme of the government as adopted
by the Board? Our answer to this question must be in the negative.
There are several documents on record, which were produced before
E us .to indicate that the appellant ha5 been communicating with the
Board, seeking power connection at an early date so that it would be
able to start commercial production by 31.12.1996. In making such
communication, the appellant has been bringing it to the notice of the
Board but for supply, the appellant has made all other arrangements
F to set the production, but yet there has been inaction on the part of
the Board in providing power to the appellant. Mr. Rohatgi, appearing
for the Board no doubt brought to our notice a Jetter from the appellant
to the Board and contended that it could not have been possible for
the appellant to start production by 3 l.l2.96 but we are unable to
accept this submission nor are we making deeper probe into the matter.
G Suffice it to say that the appellant has been denied power supply by
the Board in appropriate time, which has prevented the appellant
from starting the commercial production by 31.12.1996. This being
the position, and having regard to the gamut of the circumstances,
starting from the government policy resolution and culminating in
H setting up of the factory by the appellant in Kerala and commencing
A.P. STEEL RE-ROLLING MILL LTD. v. STATE OF KERALA [S.B. SINHA, J.] 106 7
the production of ferro alloys, though not by 31.12.1996, we are of the A
considered opinion that granting the concessional tariff for a period
of three years instead of five years, as indicated in the policy resolution
would meet the ends of justice and we, accordingly, so direct."

A review application filed by the Kerala State Electricity Board, in the
said matter again fell for consideration of this Court in Kera/a State Electricity B
Board v. Hitech Electrothermics & Hydropower Ltd & Ors. [2005] 6 SCC
651, The said review application was dismissed, stating :

"This Court has referred to several documents on record and also
considered the documentary evidence brought on record. This Court
on a consideration of the evidence on record concluded that the C
respondent had been denied power supply by the Board in appropriate
time which prevented the respondent from starting the commercial
production by 31.12.1996. This is a finding of fact recorded by this
Court on the basis of the appreciation of evidence produced before
the Court. In a review petition it is not open to this Court to re- D
appreciate the evidence and reach a different conclusion, even if that
is possible. Learned counsel for the Bo3rd at best sought to impress
us that the correspondence exchanged between the parties did not
support the conclusion reached by this Court. We are afraid such a
submission cannot be permitted to be advanced in a review petition.
The appreciation of evidence on record is fully within the domain of E
the appellate court. If on appreciation of the evidence produced, the
Court records a finding of fact and reaches a conclusion, that
conclusion cannot be assailed in a review petition unless it is shown
that there is an error apparent on the face of the record or for some
reason akin thereto. It has not been contended before us that there F
is any error apparent on the face of the record. To permit the review
petitioner to argue on a question of appreciation of evidence would
amount to converting a review petition into an appeal in disguise.''

Applicability of doctrine of promissory estoppel in a case where
entrepreneur alters his positiOn pursuant to or in furtherance of a promise G
made by the State to grant exemption from payment of charges on the basis
of current tariff is not in dispute. The State made its policy decision. The
said policy decision could be made by the State in exercise of its power
.under Section 78A of the Electricity (Supply) Act, 1948. The Electricity
Board framed tariff for supply of electrical energy in terms of Sections 46
and 49 of the 1948 Act. While framing its tariff, the Board could take into H
1068 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A consideration the policy decision of the State.

Uwas, therefore, permissible both for the State to issue a policy decision
and for the Board to adopt the same in exercise of their respective statutory
powers under the 1948 Act.

B When a beneficent scheme is made by the State, the doctrine of
promissory estoppel would undoubtedly apply.

In Union of India & Ors. v. Mis. lndo-Afgan Agencies Ltd. [1968] 2
SCR 366, this Court opined :

c "We hold that the claim of the respondents is appropriately founded
upon the equity which arises in their favour as a result of the
representation made on behalf of the Union of India in the Export
Promotion Scheme, and the action taken by the respondents acting
upon that representation under the belief that the Government would
carry out the representation made by it. On the facts proved in this
D case, no ground has been suggested before the Court for exempting
the Government from the equity arising out of the acts done by the
exporters to their prejudice relying upon the representation .... "

In Mis. Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh
& Ors., [1979] 2 SCC 409, this Court rejected the plea of the State to the
E effect that in the absence of any notification issued under Section 4-A of the
U.P. Sales Tax Act, the State was entitled to enforce the liability to sales tax
imposed on the petitioners thereof under the provisions of the Sales Tax Act
and there could be no promissory estoppel against the State so ?: to inhibit
it from formulating and implementing its policy in public interest.
F
The question came up for consideration before this Court also in
Pournami Oi! Mills & Ors. v. State of Kera/a & Anr., [1986] (Supp) SCC
728, wherein it was held:

"Under the order dated April 11, 1979, new small scale units were
G invited to set up their industries in the State of Kerala and with a
view to boosting of industrialisation, exemption from sales tax and
purchase tax for a period of five years was extended as a concession
and the five-year period was to run from the date of commencement
of production. If in response to such an order and in consideration of
the concession made available, promoters of any small scale concern
H
. "
A.P. STEEL RE-ROLLING MILL LTD .. v. STATE OF KERALA [S.B. SINHA, J.] ) 069

have set up their industries within the State of Kerala, they would A
certainly be entitled to plead the rule of estoppel in their favour when
the State of Kerala purports to act differently. Several decisions of
this Court were cited in support of the stand of the appellants that in
similar circumstances the plea of estoppel can be and has been applied
and the leading authority on this point is the case of M.P. Sugar B
Mills. On the other hand, reliance has been placed on behalf of the
State on a judgment of this Court in Baku! Cashew Co. v. STO. In
Bakul Cashew Co. case this Court found that there was no clear
material to show any definite or certain promise had been made by
the Minister to the concerned persons and there was no clear material
also in support of the stand that the parties had altered their position C
by acting ~pon the representations and suffered any prejudice. On
facts, therefore, no case for raising the plea of estoppel was held to
have been made out. This Court proceeded on the footing that the
notification granting exempticn retrospectively was not in accordance
with Section 10 of the State Sales Tax Act as it then stood, as there
was no power to grant exemption retrospectively. By an amendment D
that power has been subsequently conferred. In these appeals there is
no question of retrospective exemption. We also find that no reference
was made by the High Court to the decision in M.P. Sugar Mills'
case. In our view, to the facts of the present case, the ratio of M.P.
Sugar Mills' case directly applies and the plea of estoppel is E
unanswerable."

Yet again in Assistant Commissioner of Commercial Taxes (Asst.)
Dharwar & Ors. v. Dharmendra Trading Company & Ors. [1988] 3 SCC
570, this Court, on the factual matrix obtaining therein, rejected the contention
of the State that any misuse of the concessions granted was committed by the F
respondent therein and thus the State cannot go back on its promise.

It was further observed:

"The next submission of learned counsel for the appellants was that
the concessions granted by the said order dated 30-6-1969 were of no G
legal effect as there is no statutory provision under which such
concessions could be granted and the order of 30-6-1969 was ultra
vires and bad in law. We totally fail to see how ~n Assistant
Commissioner or Deputy Commissioner of Sales Tax who are
functionaries of a State can say that a concession granted by the
H
1070 SUPREME COURT REPORTS [2006) SUPP. 10 S.C.R.

A State itself was beyond the powers of the State or how the State can
say so either. Moreover, if the said argument of learned counsel is
correct, the result would be that even the second order of 12-1-1977
would be equally invalid as it also grants concessions by way of
refunds, although in a more limited manner and that is not even the
case of the appellants."
B
Mangalore Chemicals and Fertilisers Limited v. Deputy Commissioner
of Commercial Taxes & Ors., [1992] Supp J SCC 21, is a case where this
Court had the occasion to consider as to whether subsequent change in the
eligibility criteria can undo the eligibility for the condition stipulated in the
C earlier notification and answered the same in the negative.

This Court reaffirmed the legal position in Pawan Alloys & Casting
Pvt. Ltd, Meerut v. U.P. State Electricity Board & Ors., [1997] 7 SCC 251,
holding:

"As a result of the aforesaid discussion on these points the conclusion
D become.s inevitable that the appellants are entitled to succeed. It must.
be held that the impugned notification of 31-7-1986 will have no
adverse effect on the right of the appellant-new industries to get the
development rebate of I 0% for the unexpired period of three years
from the respective dates of commencement of electricity supply at
E their units from the Board with effect from 1-8-1986 onwards till the
entire three years' period for each of them got exhausted. This result
logically follows for the appellants who have admittedly entered into
supply agreements with the Board as new industries prior to 1-8-
1986."

F The question yet again came· up for consideration before this Court
recently in State of Punjab v. Nestle India ltd & Anr. [2004) 6 SCC 465,
wherein this Court surveyed the growth of the said doctrine and held the
doctrine to be applicable to legislative action also.

In Jai Narain Parasurampuria (Dead) & Ors v. Pushpa Devi Saraf &
G Ors., [2006) 7 sec 756, this Court held :
"The doctrine of estoppel by acquiescence was not restricted to
cases where the representor was aware both of what his strict rights
were and that the representee was acting on the belief that those
rights would not be enforced against him. Instead, the court was
H
A.P. STEEL RE-ROLLING MILL LTD. v. STATEOFKERALA [S.B. SINHA,J.] 1071

required to ascertain whether in the particular circumstances, it would A
be unconscionable for a party to be permitted to deny that which,
knowingly or unknowingly, he had allowed or encouraged another
to assume to his detriment. Accordingly, the principle would apply
if at the time the expectation was encouraged"

In Shrijee Sales Corporation & Anr. v. Union of India (1997) 3 SCC B
398, this Court referring to Motilal Padampat (supra), it was stated :

"Two propositions follow from the above analysis:

(I) The determination of applicability of promissory estoppel
against public authority/Government hinges upon balance of equity C
or "public interest".

(2) It is the Court which has to determine whether the Government
should be held exempt from the liability of the "promise" or
"representation".
D
In the present case, the first Notification exempting the customs duty
on PVC itself recites " ....Central Government being satisfied that it
is necessary in public interest to do so ... ". In the Notification issued
later which gave rise to the present cause of action, the same recitation
is present."
E
An exemption notification, however, can be withdrawn only if it is
permissible to do so in public interest.

Yet again, in Dr. Ashok Kumar Maheshwari v. State of U.P. & Anr.,
[1998) 2 sec 502, it was held :
F
"There are many aspects of "Promissory Estoppel", but in the
instant case we are concerned only with one aspect which is to the
effect that if any "promise" has been made contrary to law, can it
still be enforced by invoking this rule.

The basic principle is that the plea of estoppel cannot be raised G
to defeat the provisions of a Statute. (See: G.H.C. Ariff v. Jadunath
Majumdar Bahadur; Mathra Parshad & Sons v. State ofPunjab and
Ors., and Rishabh Kumar & Sons v. State of U.P.

This principle was reiterated in Union of India v. R. C D 'Souza,
where a retired army officer was recruited as Assistant Commandant H
1072 SUPREME COURT REPORTS (2006] SUPP. IO S.C.R.

A on temporary basis and was called upon fo exercise his option for
regularisation contrary to the statutory rules. It was held that it would
not amount to estoppel against the Department.

Whether a Promissory Estoppel, which is based on a 'promise'
contrary to law can be invoked has already been considered by this
B Court in Kasinka Trading and Anr. v. Union of India and Ors., as also
in Shabi Construction Co. Ltd v. City & Industrial Development
Corporation and Anr., wherein it is laid down that the Rule of
"Promissory Estoppel" cannot be invoked for the enforcement of a
"promise" or a "declaration" which is contrary to law or outside the
authority or power of the Government or the person making that
c promise."

{See also Mis. Ashoka Smokeless Coal Ind. P. Ltd. & Ors. v. Union of
India & Ors., [Civil Appeal No.5302 of 2006@ SLP(C)No.20471 of 2005
and batch, disposed of on lst December, 2006].}
D We may notice that a somewhat different view viz. strict construction
of such notification was advocated in the case of State Level Committee &
Anr. v. Morgardshammar India Ltd.,[1996] I SCC 108, wherein, B.P. Jeevan
Reddy, J., referring to CCE v. Parle Exports (P) Ltd., [1989] I SCC 345,
opined:
E "We agree with the above statement of law except insofar as it
states that where two views of the exemption notification are possible,
it should be construed in favour of the subject since it is contrary to
the decisions aforementioned including the three-Judge Bench decision
in Novopan India Ltd. It may be noted that this decision was referred
F to in Mqngalore Chemicals and Fertilizers and yet a slightly different
principle enunciated. So far as decision in Hindustan Aluminium
Corporation (referred to in Parle Export), rendered by a Bench
comprising Tulzapurkar and R.S. Pathak, JJ., is concerned, it only
holds that the expression "metal" occurring in a notification issued
under U.P. Sales Tax Act should be understood in its primary sense,
G i.e., in the form in which it is marketable as a primary commodity. The
learned Judges held that the subsequent forms evolved from the
primary form constituted distinct commodities marketable as such and
must be regarded as new commercial commodities and not included
within the four comers of the notification. This decision cannot therefor
H be understood as supporting the proposition enunciated in Parle
A.P.STEELRE-ROLLINGMILLLTD. v. STATEOFKERALA[S.B.SINHA,J.] 1073

Exports with which we have disagreed. Be that as it may, the occasion A
for applying the said proposition arises only where there is "real
difficulty, in ascertaining the meaning of a particular enactment"
(statement in Parle Exports). In the case before us, there is neither
any ambiguity in the language nor does the clause in question present
a real difficulty in ascertaining its meaning."
B
We may, however, also notice that in Southern /spat Ltd. v. State of
Kerak & Ors., [2004] 4 SCC 68, this Court took somewhat different view
then Hitech Electrothermics & Hydropower Ltd v. State of Kera/a & Ors.,
[2003] 2 sec 716, stating :

"As the Division Bench rightly pointed out, the question to be C
decided in this case is essentially a question of fact, namely, whether
the appellant had started 'commercial production' between 1.1.1992
and 31.12.1996 so as to be entitled to power supply at concessional
tariff rates. As a rule, it is not the practice of this Court to interfere
with factual findings which have been concurrently recorded by two D
courts below. Both the learned single Judge and Division Bench have
concurrently answered all factual findings against the appellant. On
that ground itself the appellant must fail. Nonetheless, as the appeal
was argued with some seriousness, we propose to deal with the facts
and examine the factual findings only from the point of view of
interference under our special jurisdiction under Article 136. E
The Division Bench of the High Court rightly pointed out that
though the policy of granting concessional tariff was announced by
the State Government on 6.2.1992; followed by the KSEB order dated
0

27 .3 :1992; the appellant did nothing ·till or about June 1995. It is only
in June 1995 that the appellant company was incorporated and an F
application for power allocation was made on 17.7.1995. The
appellant's factory had yet to be constructed and machinery to be
transported and installed after the construction of the factory building.
Undoubtedly, the application was moved on 17.7.1995 in anticipation.
The material on record suggests that there was acute shortage of G
electricity as a result of which even domestic power connections
were being refused. The high tension power supply required by the
appellant had to be specially arranged by drawing the electrical lines
on OYEC basis by construction of PSC polls along the line at the
Appellant's cost. This amount was deposited on 11.12.1996, only a
few days before the concession was about to lapse. Having examined H
1074 SUPREME COURT REPORTS [2006] SUPP. IO S.C.R.

A the correspondence on record, we are not in a position to accept the
contention of the appellant that the respondents had acted with undue
tardiness or lethargy. Further, the remittances of Rs. 8,54, 700/- and
Rs.3,45,200/- made by way of security deposit for executing the power
supply agreement were actually made on 1.2.1997 and 4.2.1997, after
the expiry of the period of concession."
B
The general principles with regard to construction of exemption
rotification are not of much dispute. Generally, an exemption notification is
to be construed strictly, but once it is found that the entrepreneur fulfils the
conditions laid down therein, liberal construction would be made.

c In Mis: O.N.G.C. Ltd v. Commnr. Of Customs, Mumbai, [2006] 8
SCALE 551, this Court held :

"This Court, times without number, has construed such exemption
notifications in liberal manner. [See Commissioner of Customs
(Imports), Mumbai v. Tullow India Operations Ltd., [2005] 13 SCC
D 789, [See Tata Iron & Steel Co. Ltd. v. State of Jharkhand and
Others, [2005] 4 SCC 272, Government of India and Ors. v. Indian
Tobacco Association, [2005] 7 SCC 396, Commnr. Of Central Excise,
Raipur v: Hira Cement, JT (2006) 2 SC 369, and P.R. Prabhakar v.
Commnr. Of Income Tax, Coimbatore, [2006] 7 SCALE 191, . If,
E thus, the Appellant was entitled to the same, it should not be denied
the benefits thereof. It is directed accordingly."

A question as to whether, in a given situation, an entrepreneur was
entitled to the benefit under an exemption notification or not, thus, would
depend upon the fact of each case. A bare perusal of the notification dated
F 6.2.1992 issued by the 1st respondent would show that the purport and object
thereof was to grant benefit of a concessional power tariff which came into
force on and from l. l.1992. The phraseology used in the said notification
postulates that the benefit was to be granted in regard to the 'enhanced power
tariff'. Thus, where the new units had started production between 1.1.1992
G and 31.12.1992, such exemption was available to the entrepreneurs.

Evidently, except in a situation as might have been existing in Hitech
Electrothermics (supra) that any application filed by the entrepreneur had not
been processed within a reasonable time, in which case benefit might not be
denied on equitable ground; in cases where there has been a substantial
H failure on the part of the industrial unit to obtain such benefit owing to acts
A.P. STEEL RE-ROLLING MILL LTD. v. STA TE OF KERALA {S.B. SINHA, J.] J075

of omission and commission on its part, in our opinion, no such benefit can A
be given.

The High Court has arrived at a finding of fact that the appellant herein
had failed and/or neglected to comply with the terms and conditions of the
scheme or contributed to a large extent in not being able to obtain such
sanction within a reasonable time. B
The appellant applied for grant of electrical connection on 9.11.1994.
It, however, on its own showing did not receive any sanction till 17. l l .1995.
But even on that date the project was not complete. It was only at an
advanced stage.
c
From the appellant's letter dated 24th June, 1996, as noticed supra, it
would appear that it merely had been complaining of about non-grant of
sanction, but then, evidently, it was not ready for commencing commercial
production. Machineries were obtained by it only on 4.6.1996. How much
time was taken for installation of machinery and completion of the project, D
is not known.

Sanction, evidently, had been allocated on 24.2.1997. It accepted the
same without any demur. It had been making payments in terms of the new
tariff. It filed the writ petition only in the year 2003, i.e., only after this Court
rendered its decision in Hitech Electrothermics (supra) on 17th December, E
2002.

The benefit of a judgment is not extended to a case automatically.
While granting relief in a writ petition, the High Court is entitled to consider
the fact situation obtaining in each case including the conduct of the petitioner.
In doing so, the Court is entitled to take into consideration the fact as to F
whether the writ petitioner had chosen to sit over the matter and then wake
up after the decision of this Court. If it is found that the appellant approached
the Court after a long delay, the same may disentitle him to obtain a
discretionary relief. {See Chairman, U.P. Jal Nigam & Anr. v. Jaswant
Singh & Anr., [2006] 12 SCALE 347.}
G
We are, thus, of the opinion that the principle of promissory estoppel
will apply where an entrepreneur has altered its position pursuant to a promise
made by the State, but the application thereof would depend upon the facts
and circumstances of eachca~ ....Having regard to the findings of fact arrived
at by the High Court, we are of the opinion that it cannot be said to have H
1076 SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A committed any illegality in passing the impugned judgment.

So far as the case of M/s. A.P. Steel Re-Rolling Mill Ltd. is concerned,
evidently the question involved therein was a disputed question of fact.
Although, the High Court could have entertained a writ petition, as has been
done in the case of M/s. Victory Papers and Boards India Ltd., but as M/s.
B A.P. Steel Re-Rolling Mill Ltd. withdrew its writ application, in our opinion,
no case has been made out for interference with the impugned judgment. As
the appelhmt has still its remedies open, it may avail the same.

For the reasons aforementioned, there is no merit in these appeals which
C are dismissed accordingly. However, in the facts and circumstances of the
case, there shall be no order as to costs.

D.G. Appeal dismissed.

'