M/S. ESTER INDUSTRIES LTD.versusU.P. STATE ELECTRICITY BOARD AND ORS.

A                       M/S. ESTER INDUSTRIES LTD.
                                         v.
               U.P. STATE ELECTRICITY BOARD AND ORS.

                              SEPTEMBER 17, 1996

B              [K. RAMASWAMY AND G.B. PATTANAIK, JJ.)

          Indian Electlicity (Supply) Act, 1948 :

          S. 78-A-Grant of 10% develop~nent rebate in supply of electlicity to
C newly set-up industlies-:Policy of State Govemment-High Cowt holding that
    the Electlicity Board not automatically bound by the directions of State
    Govemment-On appeal held : So long as the policy direction issued by the
    Govemment is consistent with the provisions of the Act and the taliff policy
    laid down by the board, it may be open to the Board to either accept it or not
    to accept the directions as such-It is for the State Govemment to consider
D   whether the Board has laid down the policy or whether the direction issued
    by the State Govemment has not been properly implemented-Court cannot
    give a direction to implement the directions issued by the State Govemment
    exercising the power under Article 226 of the Constitution to direct the Board •
    to exercise its power under Section 78A(l) of the Act-Sub-section (2) has
E   no application for the reason that if the Board feels any doubt as to whether
    the direction issued by the Govemment is in the realm of a policy or othe1wise,
    then it shall be refeJTed to the authority constituted under the Act whose
    decisions shall be final, i.e., de hors the question in this case-Doctrine of
    promiss01y estoppef-Held not applicable in the //Jets and circumstances of
    the case.
F
         Real Food products Ltd. & Ors. v. A.P. State Electricity Board & Ors.,
    AIR (1995) SC 2234, referred to.
                                                                                       I

       CIVIL APPELLATE JURISDICTION: Special Leaves Petition (C)
G No. 18156 of 1996.
         From the Judgment and Order dated 8.5.96 of the Allahabad High
    Court in W.P. 10195 of 1989.

         R. Santhanam, Ashok Kumar Singh and Rajinder Singhvi for the
H   Appellants.
                                         444
            ES1ER INDS. LID. v. U.P. STAIB ELECTRICITYBD.                  445

      The following Order of the Court was delivered :                             A
       This special leave petition arises from the judgment and order of the
 Division Bench of the Allahabad High Court at Lucknow made on May 8,
"1996 in Writ Petition No. 10195/89.

       The admitted position is that the Government of Uttar Pradesh had B
laid down in sanction for grant of 10% developmental rebate in supply of
electricity to the newly set up industries on July 16, 1986 and that was to
be in vogue till 1990. It is the claim of the petitioner that pursuant to that
policy, the petitioner had set up his industry in Nainital District. Conse-
quently, he is entitled to the rebate. When the bill was issued, the Board C
imposed its tariff rates contrary to the rebate. Resultantly, they filed the
writ petition. The High Court in the impugned judgment had held that
Section 78A of the Indian Electricity (Supply) Act, 1948 (Act 54 of 1948)
(for short, the 'Act') being a legislative policy, the Board was not automat-
ically bound by the directions issued by the State Government. The Board
is entitled to revise tariff in accordance with its procedure. Therefore, writ D
could not be issued compelling the Board to follow the directions issued
by the State Government. Thus, this special leave petition.

       It is contended for the petitioner that in view of the law laid down
by this Court in Real Food Products Ltd. & Ors. v. A.P. State Electricity          E
Board & Ors., AIR (1995) SC 2234 in particular paragraph 8, the Board is
bound by the directions issued by the State Government. The view taken
by the High Court is, therefore, not correct in law. We find no force in the
contention. It is well settled legal position that the fixation of the tariff is
a legislative policy and the Board is entitled to revise unilaterally the tariff
from time to time. The consumer is bound by the revision of the tariff duly        F
notified in accordance with the procedure prescribed under the Act. The
question is : whether contrary to the conditions of the tariff entered into
by the parties, the policy direction issued by the State would be interposed
and be revised by the Electricity Board in consonance with the directions
issued by the State Government? In this regard, the observations of this           G
Court in paragraph 8 are worth recapitulation :

         "The only surviving question is with regard to the nature and effect
         of the direction given by the State Government under Section 78A
         of the Act. The question has to be examined in the context of the
         facts of the present case which is confined to the charging of a flat     H
    446                   SUPREME COURT REPORTS [1996] SUPP. 6 S.C.R.

A            rate per H.P. for agricultural puinp sets. The nature of the function
             of the Board in the fixing the tariffs and the manner of its exercise
             has been considered at length in tll;e earlier decisions of this Court
             and it does not require any further elaboration in the present case.
             Section 78 A uses the expression "the Board shall be guided by
             such directions on question of policy as may be given to it by the
B            State Government". It does appear that the view expressed by the
             State Government on a question of policy is in the nature of a
             direction to be followed by the Board in the area of the Policy to
             which it relates. In the context of the function of the Board of
             fixing the tariffs in accordance with Section 49 read with Section
c            59 and other provisions of the Act, the Board is to be guided by
             any such direction of the State Government, as in the present case,
             was to fix· a concessional tariff for agricultural pump sets at a flat
             rate per H.P., it does relate to a question of policy which the Board
             must follow. However, in indicating the specific rate in a given
             case, the action of the State Government may be in excess of the
D
             power of giving a direction on the question of policy, which the
             Board, if its conclusion be different, may not be obliged to be
             bound by. But where the Board considers even the rate suggested
             by the State Government and finds it to be acceptable in the
             discharge of its function of fixing the tariffs, the ultimate decision
E            of the Board would not be vitiated merely because it has accepted
             the opinion of the State Government even about the specific rate,
             In such a case the Board accepts the suggested rates because that
             appears to be appropriate on its own view. If the view expressed
             by the State Government in its direction exceeds the State of policy,
             the Board may not be bound by it unless it takes the same view
F
             on merits itself."

       . Section 78A(l) of the Act postulates that in the discharge of its
  functions, the Board shall be guide<.l by such directions on questions of
  policy as may be given to it by the State Government. In other words, the
G Electricity Board has a statutory'function to discharge in determination of
  the rates of tariff and terms and conditions subject to which the electrical
  energy be supplied to the consumers and enforcement thereof. This being
  a legislative policy, while exercising the power under Section 78A policy
  directions issued by the Government may also be taken into consideration
H by the Electricity Board which has a statutory duty to perform. So long as
            ESTER INDS. LTD. v. U.P. STATE ELb.... fRICITY BD.         447

the policy direction issued by the Government is consistent with the A
provisions of the Act and the tariff policy laid down by the Board, it may
be open to the Board to either accept it or not to accept the directions as
such. It is for the State Government to consider whether the Board had
laid down the policy or whether the direction issued by the State Govern-
ment has not been properly implemented Court cannot give a direction to
implement the directions issued by the State Government exercising the
                                                                             B
power under Article 226 of the Constitution to direct the Board to exercise
its power under Section 78A (1) of the Act. sub-section (2) has no applica-
tion for the reason that if the Board feels any doubt as to whether the
direction issued by the Government is in the realm of a policy or otherwise,
then it shall be referred to the authority constituted under the Act whose    c
decision shall be final i.e., de hors the question in this case.

        The learned counsel for the petitioner has brought to our notice that
this Court has granted leave against the judgment of another Division
Bench on the question of applicability of the promissory estoppel. In this
case, that question does not arise for the reason that the promissory D
estoppel would apply only in a case where there was no contract executed
between the parties. In this case, since there exists a contract duly executed
under law between the petitioner and the Board which binds them, unless
it is revised, the question of promissory estoppel does not arise. Considered
fmm this perspective, we are of the view that the High Court has not E
committed any manifest error of law warranting interference.

       The special leave petition 'is dismissed.

G.N.                                                    Petition dismissed.