M/S S.V.A. STEEL RE-ROLLING MILLS LTD. ETC. ETC.versusSTATE OF KERALA & ORS. ETC. ETC.

                        [2014) 2 S.C.R. 336


A    MIS S.V.A. STEEL RE-ROLLING MILLS LTD. ETC. ETC.
                                v.
            STATE OF KERALA & ORS. ETC. ETC.
            (Civil Appeal Nos. 10103-10106 of 2010)
                       FEBRUARY 06, 2014
B
              [ANIL R. DAVE AND A.K. SIKRI, JJ.]

       Administrative law: Policy decision - State of Kera/a
  declared a policy to give uninterrupted 100% electricity supply
C at exempted rate for a period of 5 years to newly set up
  manufacturing units - Pursuant to the said policy, the
  appellants set up their manufacturing units in the State -
  However, there were frequent power cuts which adversely
  affected these units - Respondent-State passed order
o whereby it granted extension of period of assured power
  supply to the new units by number of days during which supply
  of electricity to them was cut to the extent of 50% or more -
  Challenged on the ground that whenever there was power cut,
  even if the cut was 50% or less, the said period should have
E been added to the period of 5 years, for the reason that for
  proper functioning of the manufacturing units, uninterrupted
  100% supply of electricity is a sine qua non - Held: Framing
  such policies and doing the needful for its implementation are
  administrative functions of the State and therefore, normally
F
  interference with its policies is not called for - But looking at
  the peculiar facts of the case, where an assurance was given
  for uninterrupted supply of electricity, respondent-State .ought
  to have made necessary arrangements to provide 100%
  uninterrupted supply of electricity for 5 years to the new units
G - Without proper appreciation of all the relevant factors, the
  State should not give any assurance, not only because that
  would be in violation of the principles of promissory estoppe/
  but it would be unfair and immoral on the part of the State not
  to act as per its promise - The benefit extended by the

H                                336
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 337
                   KERALA

respondent State is not sufficient - The respondent-State       A
ought to have extended the period even for the days when
supply of electricity was more than 50% but not 100% as
assured - Therefore, the respondents are directed to give the
said benefit by extending the period of incentive - Doctrine
of promissory estoppel - Electricity Act, 1910 - s.228.         B

     The respondent-State in order to encourage and
invite businessmen to set up their manufacturing units
in the State of Kerala declared a policy to give continuous
electricity supply at a particular rate to certain              C
manufacturing units. Pursuant thereto, the respondent-
State issued order dated 27 .5.1990 whereby it assured
the new manufacturing units exemption from power cut
for a period of 5 years from the date of commencement
of commercial production. Such new units were also
given certain exemption from payment of electricity duty        D
for a period of 5 years.

     Pursuant to the said policy, the appellants set up
their manufacturing units in the respondent-State. On
6.2.1992, further order for exemption to new units for 5        E
years from payment of enhanced power tariff on certain
condition was passed. However, there were frequent
power cuts which adversely affected these units. The
respondent-State passed order on 26.10.1999, whereby
it granted extension of period of assured power supply          F
to the new units who were adversely affected because
of power cut. Under the said order it was decided and
declared to extend the benefit which had been given
under G.O. dated 25.5.1990 and 6.2.1992 to the new units
by number of days during which supply of electricity to         G
them had been cut to the extent of 50% or more. The
respondent-State also decided to reimburse the Board
with the amount of benefit which was given to the new
units on account of power cut beyond 50%.
    338      SUPREME COURT REPORTS             [2014] 2 S.C.R.


A        The appellants filed writ petitions on the ground that
    the benefits assured were not given. The High Court
    dismissed the writ petitions. The instant appeals were
    filed challenging the order of the High Court.

          Allowing the appeals, the Court
B
        HELD: 1. It is not in dispute that the appellants had
   set up their new units in the State of Kerala only upon
   knowing the policy with regard to uninterrupted m>wer
   supply and that too at the same tariff for a period of 5
C years from the date of commercial production. In the
   instant case, no case was made out by the respondent-
   State that the appellants had committed any breach or
   were not entitled to any of the benefits or concessions
   which had been offered to them by the respondent-State.
D. In the circumstances, the respondent-State was bound
   to give the benefits which had been assured to the
   appellants. Though the respondent-State was bound to
   supply uninterrupted 100% electricity required by the
   appellants, one cannot lose sight of the fact that at times
E there would be circumstances which would put the
   respondent-State and the Board into such a difficulty that
   they would not be in a position to fulfill the assurance
   given to the -new units. It is not in dispute that the State
   of Kerala is not generating enough electricity to cater the
F needs of all its consumers in the State of Kerala. The
   respondent-State is not having a magic wand which
   would enable the State to generate more electricity. There
   might be several factors which might be adversely
   affecting the respondents in generating sufficient
G electricity. [paras 24 to 26] [350-D-H; 351-A-B]

         2. The respondent-State came out with Government
    Order dated 26th October, 1999, whereby it had decided ·
    that the period when there would be reduction or cut in
    supply of power to the extent of 50% or more, such
H
M/S S.V.A; STEEL RE-ROLLING MILLS v. STATE OF 339
                   KERALA
period of power cut would be added to the period of 5 A
years, duril'lg which the appellants and other similarly
situated persons were to be given continuous power
supply. The respondents could not show justifiable
reason for deciding as to why the respondent-State
decided to give the benefit of extended period only when B
the power cut was 50% or more. The cases where the
consumer is having a continuous process industry, even
power cut below 50% would adversely affect the
manufacturing unit. It is a matter of common knowledge
that in several industries, the manufacturing process c
cannot be stopped abruptly. Many a times, restarting of
the machines or boilers take lot of time and energy, which
results into loss to the manufacturer. The said fact ought
to have been considered by the State while taking the
said decision. The decision with regard to giving
                                                           0
extension of time to such a limited extent is not
reasonable and that would have surely affected the new
units adversely. [paras 28, 29) [351-C-H]

    3. Section 228 of the Electricity Act, 1910 enables the
State Government to regulate the supply, distribution and E
consumption of electricity for the purpose of
maintenance and supply of equitable distribution of
energy but, provisions of the said section are not much
relevant for the reason that in the instant case, the
respondent State had given an assurance with regard to F
uninterrupted supply of electricity and therefore, the
respondents ought to have made provision for
uninterrupted supply of electricity to the appellants and
other similarly situated persons by regulating electricity
supply in a proper manner. [Para 30) [351-H; 352-A-C)       G

     4. Framing such policies and doing the needful for
its implementation are administrative functions of the
respondent-State and therefore, normally this Court
would not like t-0 interfere with its policies but looking at
                                                                H
    340     SUPREME COURT REPORTS               [2014] 2 S.C.R.


A   the peculiar facts of the case, where an assurance had
    been given for uninterrupted supply of electricity, one
    would presume that the respondent-State must have
    made necessary arrangements to provide 100%
    uninterrupted supply of electricity for 5 years to the new
B   units. If for any reason it was not possible to supply
    electricity as assured, the respondent-State ought to have
    extended the period of 5 years by the period during
    which assured electricity was not supplied. By doing so,
    the respondent-State could have made an effort to fulfill
c   its promise and satisfied the persons who had acted on
    an assurance given by the State and set up their
    manufacturing units in the State of Kerala. [para 31) [352-
    C-F]
         5. Before laying down any policy which would give
D   benefits to its subjects, the State must think about pros
    and cons of the policy and its capacity to give the
    benefits. Without proper appreciation of all the relevant
    factors, the State should not give any assurance, not only
    because that would be in violation of the principles of
E   promissory estoppel but it would be unfair and immoral
    on the part of the State not to act as per its promise. [Para
    32) [352-F-G]

       6. In the instant case, the respondent-State was
F conscious about the fact that there was a problem with
  regard to supply of electricity in the State of Kerala and
  possibly for that reason industries which depended
  much upon electricity as a source of power were not
  inclined to establish new industries in the State of Kerala.
G Before setting up an industry, the entrepreneur or the
  industrialist considers several factors and thereupon
  takes several decisions like place of business, capacity
  at which production should be made, type of raw-
  material, etc. After considering all these factors, a final
H decision is taken with regard to setting up of an industry.
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 341
                   KERALA
 For a new entrepreneur, such a decision is of vital A
 importance because if he fails in his estimates or in
 consideration of all the relevant factors, there are all
 chances that he would fail not only in his business but
 he would completely ruin himself. Thus, one can very well
 appreciate that the appellants must have thought about B
 all relevant factors, including the incentives offered by the
'respondent-State and might have decided to set up their
 industries in the respondent-State. While deciding this
 case, this Court would invariably keep in mind the
 circumstances in which the appellants had set up their c
 industries in the State of Kerala. In view of the incentives
 and assurances given to the appellants along with others,
 who were desirous of setting up new industries, the
 appellants set up their new units which were much
 dependant upon continuous supply of electricity. One of
                                                               0
 the appellants is a Steel Re-rolling Mill. When the industry
 is concerned with making of steel or re-rolling of steel, it
 requires lot of power and energy, and electricity being
 one of the important sources of power, the appellant was
 much dependent on continuous supply of electricity, E
 which had been assured to it by the respondent-State.
 [Para 33, 34] [352-H; 353-A-F]

    7. If an assurance was given to the appellants and
similarly situated persons that they would be given 100%
electricity supply for five years, the respondents can not F
wriggle out of their liability by making a policy to the
effect that the benefit by way of incentive would be
extended only if the electricity supply was reduced to less
than 50% on a particular day. A steel industry, for
example, would be put to enormous inconvenience and G
loss if the power supply is not continuous. So as to
reactivate or to restart the machines or to start the
process afresh, the industry has to spend something
more than what it would have spent if the supply or .
power namely, electricity was uninterrupted. Stoppage of. H
    342    SUPREME COURT REPORTS              (2014] 2 S.C.R.


A manufacturing process would mean losses under
  several heads. The labour employed has to be paid even
  when the employer does not get work from the labour
  force. Very often, so as to bring a required temperature
  for the purpose of carrying on certain processes, more
B fuel is to be injected so as to attain the condition which
  was prevailing prior to electricity supply being
  disconnected. Moreover, there would be several overhead
  expenses which one has to incur even if there is no
  production or stoppage of manufacturing process. [Para
C 35] [353-G-H; 354-A-D]
      8. In the instant case, by compensating the aggrieved
  appellants, no harm would be caused to the State of
  Kerala except that it will have to compensate the
  appellants by supplying assured electricity for some
D extended period at a specified tariff. The respondent-State
  was not wholly fair when it extended benefit to the
  appellants only for the period during which electricity
  supply was reduced to less than 50% on certain days.
  Therefore, the benefit extended by the respondent State
E is not sufficient. The respondent-State ought to have
  extended the period even for the days when supply of
  electricity was mor.e than 50% but not 100% as assured
  under G.O. dated 21.5.1990 and 6.2.1992. Therefore, the
  respondents are directed to give- the said benefit by
F extending the period of incentive. The respondents are
  directed to calculate the period during which 100%
  electricity supply was not given to the appellants and
  extend the period of incentive accordingly. The
  calculation shall be made and consequential orders shall
G be passed within two months from today. [Paras 36 to
  39] [354-E-H; 355-B]
         State of Haryana & Ors. v. Mahabir Vegetable Oils Pvt.
    Ltd. 2011 (3) sec 778: 2011 (4) SCR 944; State of
    Rajasthan & Anr. v. Mis Mahaveer Oil Industries & Ors.
H   1999(4) SCC 357: 1999 (2) SCR 798 - referred to.
 M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 343
                    KERA LA
                      Case Law Reference:                            A
     2011 (4) SCR 944referred to                       Para 23

     1999 (2) SCR 798referred to                       Para 23

     CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.                B
 10103-10106 of 2010.

    From the Judgment and order dated 24.02.2005 of the
High Court of Kerala at Emakulam in W.P. (C) No. 5795, 5877,
5984 of 2004 and CP No. 9816 of 2001.
                                                                     c
                                WITH
. C.A. Nos. 10107-10108, 10110-10114, 10116-10121, 10123
  of 2010 and C.A. No. 4035 of 2007.

     C.A. Sundaram, V. Giri, S. Sukumaran, Anand Sukumaran,          o
 Bhupesh K1,.1fnar Pathak, K. Rajeev, Meera Mathur, P.V. Dinesh,
 Romy Chacko, Varun M., C.N. Sree Kumar, Resmitha R.
 Chandran, Amrita Amoos, Ajit Kumar Pande, Ramesh Babu
 M.R., for the Appellants.

     M.T. George, R. Harikrishnan for the Respondents.               E

     The Judgment of the Court was delivered by

     ANIL R. DAVE, J. 1. Being aggrieved by the common
 Judgment dated 24th February, 2005 delivered by the High            F
 Court of Kerala at Ernakulam in W.P.(C) No.5795/2004,
 W.P.(C) No.5877/2004, W.P.(C) No.5984/2004 and O.P.
 No.9816/2001, the appellants, original petitioners before the
 High Court have approached this Court by way of these
·appeals.
                                                                     G
      2. The facts giving rise to the present appeals, in a nut-
 shell, are as under:

      The appellants are businessmen having their manufacturing
 units in the State of Kerala and they are manufacturing different   H
    344         SUPREME COURT REPOqTS                [2014] 2 S.C.R.


A articles with the helo of electricity, wfiich is generated/supplied
  by the Kerala State Electricity Board (hereinafter referred to as
  'the Board'). The respondent- Government was desirous of
  having industrial development in the State of Kerala and
  therefore, it had framed certain policies so as to encourage and
B invite businessmen for setting up their manufacturing units in
  the State of Kerala. Due to shortage of electricity supply in the
  State of Kerala, interested entrepreneurs were not inclined to
  set up their units in the State of Kerala. In view of the aforestated
  circumstances, the State Government had laid down a policy
C whereby it declared to give continuous electricity supply at a
  particular rate to certain new manufacturing units.

        3. So as to put the aforestated policy in practice, the
    respondent- State had issued a Government Order dated 21st
    May, 1990 which read as under:
D
          "Government have been considering the question of giving
          some incentives to new industries in the matter of power
          connection. Taking into consideration the announcements
          made by the Minister (Finance) in the current year's budget
E         speech and after discussions with all concerned,
          Government are now pleased to issue the following orders
          in this context which will have effect from 1-4-1990.

           1.     Power connection will be given on completion of
                  any project irrespective of whether a general power
F                 cut is in force or not.

           2.     New units commencing industrial production will be
                  exempted from power cut for a period of 5 years
                  from the date of commercial production.
G
           3.     Exemption from payment of electricity duty for a
                  period of 5 years from the date of commencement
                  of commercial production will be given to the new
                  units.
H
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 345
            KERALA [ANIL R. DAVE, J.]

      4.    In future the electricity duty will not be collected from   A
            the industries if they are eligible for exemption.

      5.    Service connection charges will not be levied if no
            extension is required or if the additional line to be
            provided is less than 500 meters in length."                B

The aforestated State Government Order had been adopted
by the Board by its Order dated 19th June, 1990.

      4. By virtue of the aforestated policy declared under the
order dated 21st May, 1990, the respondent-State had assured            C
the manufacturing units to be set up in the State of Kerala that
electricity connection would be given to the projects which might
be set up and they would be exempted from power cut for a
period of 5 years from the date of commencement of
commercial production. Such new units were also given certain           o
exemption in relation to payment of electricity duty for a period
of five years.

     5. It is not in dispute that in pursuance of the aforestated
policy the appellants had established their manufacturing units
(hereinafter referred to as 'the new units') in the respondent-         E
State. It is also not in dispute that the requisite conditions, which
had been imposed upon such new units, had been fully
complied with by the appellants and therefore, the appellants
were entitled to an uninterrupted electricity supply for a period
of 5 years from the date on which they had commenced their              F
commercial production.

      6. The respondent-State had thereafter passed a further
order on 6th February, 1992, whereby the new units were
exempted for 5 years from the payment of enhanced power                 G
tariff on certain conditions. According to the appellants, they
were also entitled to benefit under the aforestated G.O. dated
6th February, 1992.

     7. In spite of the assurance given by the respondent-State
to the new units that they would not suffer any power cut,              H
    346     SUPREME COURT REPORTS                  [2014] 2 S.C.R.


A because of certain difficulties faced by the Board with regard
  to supply of electricity to new units, there used to be power cuts
  which adversely affected the new units. In view of the said fact,
  to alleviate the difficulties of the units set up under the
  aforestated policy, the respondent-State passed further order
B on 26th October, 1999, whereby it granted extension of period
  of assured power supply to the new units, who were adversely
  affected because of the power cut in certain circumstances.
  Under the aforestated order. it was decided and declared to
  extend the benefit which had been given under G.O. dated 25th
C May, 1990 and 6th February, 1992 to the new units by number
  of days during which supply of electricity to them had been cut
  to the extent of 50% or more. The respondent-State also
  decided to reimburse the Board with the amount of benefit
  which was given to the new units on account of power cut
D beyond 50%.

       8. In the aforestated admitted facts and circumstances, the
  respondent-State should have given the benefits which had
  been assured to the new units but for the reasons beyond
  control of the State as well as the Board, the benefits assured
E to the new units could not be given and therefore, along with
  other industrial units, the present appellants had filed writ
  petitions before the High Court of Kerala praying that- the
  benefits which had been assured to them should be given and
  they should not be constrained to pay tariff at the enhanced rate.
F
       9. Thus, according to the appellants, in fact, they did not
  get real benefit of the policy because their production was
  adversely affected whenever there was power cut and the five
  years' period of exemption from power cut was not extended
G by the Government which was in violation of the promise given
  to the appellants and other similarly situated new units.

         10. All these grievances were ventilated before the High
    Court by filing different petitions which were ultimately rejected
    by the High Court by virtue of the impugned order.
H
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 347
            KERALA [ANIL R. DAVE, J.]
     11. The learned counsel appearing for the appellants had A
vehemently submitted that it was unfair on the part of the
respondent -State not to adhere to the promise given to the
appellants with regard to uninterrupted 100% electricity supply.
The appellants had set up their industries in the State of Kerala
because of the promise given by the respondent- State that at B
least for a period of first 5 years from the date of
commencement of the commercial production," there would be
uninterrupted power supply and there would not be any increase
in the tariff and therefore, the respondent-State was bound by
the said policy. The principle of promissory estoppel was also       c
invoked by the appellants.

     12. The learned counsel had further submitted that if for
some reason it was not possible for the respondent- State to
give uninterrupted 100% electricity supply to the appellants on
a particular day, the said period or the said day should have D
been added to the period of 5 years for which the respondent-
State had promised uninterrupted 100% electricity supply to the
new units. According to the learned counsel, though, the period
had been extended, but not in a fair and reasonable manner
because the days during which there was cut of electricity supply E
to the extent of 50% or more, were added to the period of 5
years. According to the learned counsel, whenever there was
any reduction in power supply, even if the reduction or cut was
50% or less, the said period should have been added to the
period of 5 years, for the reason that in case of continuing F
process industries, for proper functioning of the manufacturing
units, uninterrupted 100% supply of electricity is a sine qua non.

     13. The learned counsel had shown us some material
whereby it was shown that out of first 5 years during which the      G
appellants were to be given benefit, there was electricity cut for
921 days and out of those 921 days there were 214 days when
the cut in electricity supply was for more than 50%. It had been
further submitted that the period during which even the
electricity cut was less than 50%, the new units could not work
                                                                     H·
    348      SUPREME COURT REPORTS                   [2014] 2 S.C.R.


A   at its optimum level, which had resulted into several problems
    for the appellants.

          14. He had further added that the respondent Board had
    accepted the policy of the State with regard to giving benefit
B   to the new units for uninterrupted power supply on same tariff
    and therefore, the Board could not have asked for additional
    tariff during the period of 5 years, as extended by the period
    during which there was power cut.

         15. The learned counsel had also alleged that the
C   respondent- State had given discriminatory treatment to the
    appellants by not giving uninterrupted 100% electricity supply
    because the State had given uninterrupted 100% electricity
    supply to certain other manufacturing units like Malabar Cement
    and the industries set up within the Export Processing Zone. It
o   had been asserted that if the above stated manufacturing units
    could be given 100% uninterrupted electricity supply, there was
    no reason for denying the same benefit to the appellants.

         16. So as to substantiate the submission with regard to
E   promissory estoppel, the learned counsel had relied upon
    certain judgments delivered by this Court.

          17. On the other hand, the learned counsel appearing for
    the respondent -State had submitted that the prayers made by
    the appellants before the High Court were unjust and therefore,
F   their petitions and other petitions, praying for similar relief had
    rightly been rejected by the impugned order of the High Court.

         18. It had been also submitted that Section 22 B of the
    Indian Electricity Act, 1910 (hereinafter referred to as 'the Act')
G   enables the respondent-State to impose control on distribution
    and consumption of energy. Section 22 B of the Act reads as
    under:

          "Sector 228. (1) Power to control the distribution and
          consumption of energy:- If the State Government is of
H         opinion that it is necessary or expedient so to do, for
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 349
            KERALA [ANIL R. DAVE, J.]
    maintaining the supply and securing the equitable                A
    distribution of energy, it may by order provide for regulating
    the supply, distribution, consumption or use thereof."

      19. The aforestated provision, according to the learned
counsel, enables the respondent-State to regulate the supply, 8
distribution or consumption of electricity and as there was
shortage of electricity supply, the respondent-State had to
impose some electricity cut, so as to see that least problems
were created to the residents and industrial units set up in the
respondent-State. The Government authorities had to use their C
discretion in the matter of supply of electricity. The discretion
which the respondent-State used was quite reasonable as it
was not possible to give 100% electricity supply to all the
consumers of electricity in the State. In the aforestated
circumstances, the respondent-State had to regulate the supply
by imposing some power cut, and unfortunately it resulted into D
some difficulties to the appellants.

      20. It had been further submitted by the learned counsel
that, so as to reduce the difficulties of the appellants, the
Government had issued an order whereby the days, during              E
which electricity supply was cut beyond 50%, had been added
to the period of 5 years during which the appellants were
entitled to the concession declared by the State of Kerala. Thus,
sufficient efforts were made to see that the benefits assured
to the appellants were provided.                                     F

     21. It had been further submitted that the appellants cannot
expect benefit of extension of period simply because there was
negligible cut in the supply for very less period. Therefore, the
respondent-State had decided that as and when the cut was
50% or more, the period for which such the cut had been G
effected would be added to the period of 5 years and the said
decision was just and fair.

    22. The learned counsel had also submitted that all
consumers of electricity, including the appellants were informed     H
    350     SUPREME COURT REPORTS                    [2014] 2 S.C.R.


A   well in advance about the stoppage of electricity supply and
    thus, all possible efforts were made to see that the appellants
    and other similarly situated consumers were not put to much
    hardship.

         23. The learned counsel had further submitted that looking
8
    at the facts of the case, there would not be any promissory
    estoppel as submitted by the learned counsel appearing for the
    appellants. The learned counsel had relied upon the judgments
    delivered in the case of State of Haryana & Ors. v. Mahabir
    Vegetable Oils Pvt. Ltd., [2011 (3) SCC 778] and State of
C   Rajasthan & Anr. v. Mis Mahaveer Oil Industries & Ors.,
    [1999(4) sec 357] to substantiate their case to the effect that
    there could not be any promissory estoppel in such cases.

         24. We had heard the learned counsel at length and
D   perused the impugned judgment and the judgments referred to
    in the course of hearing and the relevant material placed on
    record of this Court. It is not in dispute that the appellants had
    set up their new units in the State of Kerala only upon knowing
    the policy with regard to uninterrupted power supply and that
E   too at the same tariff for a period of 5 years from the date of
    commercial production.

         25. In the instant case, no case had been made out by the
    respondent-State that the appellants had committed any breach
    or were not entitled to any of the benefits or concessions which
F   had been offered to them by the respondent-State. In the
    circumstances, the respondent-State was bound to give the
    benefits which had been assured to the appellants.

          26. Though the respondent-State was bound to supply
G   uninterrupted 100% electricity required by the appellants, one
    cannot lose sight of the fact that at times there would be
    circumstances which would put the respondent-State and the
    Board into such a difficulty that they would not be in a position
    to fulfill the assurance given to the new units. It is not in dispute
H   that the State of Kerala is not generating enough electricity to
 MIS S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 351
              KERALA [ANIL R. DAVE, J.]
cater the needs of all its consumers in the State of Kerala. The A
respondent-State is not having a magic wand which would
enable the State to generate more electricity. There might be
several factors which might be adversely affecting the
respondents and as a result thereof, the respondents might not
be generating sufficient electricity so as to fulfill the needs of B
the appellants and other residents of the State.

       27. The question, thus, arises as to how the adversely
 affected persons who had been assured by a promise with
 regard to continuous supply of electricity for five years can be   C
 fairly compensated.

      28. It is true that the respondent-State came out with
 Government Order dated 26th October, 1999, whereby it had
 decided that the period when there would be reduction or cut
 in supply of power to the extent of 50% or more, such period       D
 of power cut would be added to the period of 5 years, during
 which the appellants and other similarly situated persons were
 to be given continuous power supply.

        29. The learned counsel appearing for the respondents E
- could not show us any justifiable reason for deciding as to why
  the respondent-State decided to give the benefit of extended
  period only when the power cut was 50% or more. It is pertinent
  to know that the cases where the consumer is having a
  continuous process industry, even power cut below 50% would F
  adversely affect the manufacturing unit. It is a matter of common
  knowledge that in several industries, the manufacturing process
  can not be stopped abruptly. Many a times, restarting of the
  machines or boilers take lot of time and energy, which results
  into loss to the manufacturer. The said fact ought to haw:! been
  considered by the State while taking the aforestated decision. G
  The decision with regard to giving extension of time to such a
  limited extent is not reasonable and in our opinion, that would
  have surely affected the new units adversely.

     30.lt is true that Section 228 of the Act enables the State    H
    352      SUPREME COURT REPORTS                    [2014] 2 S.C.R.


A   Government to regulate the supply, distribution and
    consumption of electricity for the purpose of maintenance and
    supply of equitable distribution of energy but in our opinion,
    provisions of the said section are not much relevant for the
    reason that in the instant case, the respondent State had given
B   arrassurance with regard to uninterrupted supply of electricity
    and therefore, the respondents ought to have made provision
    for uninterrupted supply of electricity to the appellants and other
    similarly situated persons by regulating electricity supply in a
    proper manner.
c        31. Framing such policies and doing the needful for its
    implementation are administrative functions of the respondent-
    State and therefore, normally this Court would not like to
    interfere with its policies but looking at the peculiar facts of the
    case, where an assurance had been given for uninterrupted
D   supply of electricity, one would presume that the respondent-
    State must have made necessary arrangements to provide
    100% uninterrupted supply of electricity for 5 years to the new
    units. If for any reason it was not possible to supply electricity
    as assured, the respondent-State ought to have extended the
E   period of 5 years by the period during which assured electricity
    was not supplied. By doing so, the respondent-State could
    have made an effort to fulfill its promise and satisfied the
    persons who had acted on an assurance given by the State and
    set up their manufacturing units in the State of Kerala.
F
         32. Before laying down any policy which would give
    benefits to its subjects, the State must think about pros and
    cons of the policy and its capacity to give the benefits. Without
    proper appreciation of all the relevant factors, the State should
    not give any assurance, not only because that would be in
G   violation of the principles of promissory estoppel but it would
    be unfair and immoral on the part of the State not to act as per
    its promise.

        33. In the instant case, the respondent-State was conscious
H   about the fact that there was a problem with regard to supply
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 353
            KERALA [ANIL R. DAVE, J.]

of electricity in the State of Kerala and possibly for that reason A
industries which depended much upon electricity as a source
of power were not inclined to establish new industries in the
State of Kerala. Before setting up an industry, the entrepreneur
or the industrialist considers several factors and thereupon
takes several decisions like place of business, capacity at which B
production should be made, type of raw-material, etc. After
considering all these factors, a final decision is taken with
regarcHo setting up of anIndustry. For a new entrepreneur, such
a decision is of vital importance because if he fails in his
estimates or in consideration of all the relevant factors, there  c
are all _chances that he would fail not only in his business but
he would completely ruin himself. Thus, one can very well
appreciate that the appellants must have thought about all
relevant factors, including the incentives offered by the
respondent-State and might have decided to set up their 0
industries in the respondent-State. Whije deciding this case, this
Court would invariably keep in mind the circumstances in which
the appellants had set up their industries in the State of Kerala.

     34. In view of the incentives and assurances given to the
appellants along with others, who were desirous of setting up E
new industries, the appellants set up their new units which were
much dependant upon continuous supply of electricity. One of
the appellants is a Steel Re-rolling Mill. In Steel industry, when
the industry is concerned with making of steel or re-rolling of
steel, it requires lot of power and energy, and electricity being F
one of the important sources of power, the appellant was much
dependent on continuous supply of electricity, which had been
assured to it by the respondent-State.

     35. If an assurance was given to the appellants and G
similarly situated persons that they would be given 100%
electricity supply for five years, the respondents can not wriggle
out of their liability by making a policy to the effect that the
benefit by way of incentive would be extended only if the
electricity supply was reduced to less than 50% on a particular H
    354     SUPREME COURT REPORTS                  [2014] 2 S.C.R.


A   day. A steel industry, for example, which cannot function without
    electricity or power in any other form, would be put to enormous
    inconvenience and loss if the power supply is not continuous.
    So as to reactivate or to restart the machines or to start the
    process afresh, the industry has to spend something more then
8   what it would have spent if the supply or power namely,
    electricity was uninterrupted. Stoppage of manufacturing
    process would mean losses under several heads. The labour
    employed has to be paid even when the employer does not get
    work from the labour force. Very often, so as to bring a required
C   temperature for the purpose of carrying on certain processes,
    more fuel is to be injected so as to attain the condition which
    was prevailing prior to electricity supply being disconnected.
    Moreover, there would be several overhead expenses which
    one has to incur even if there is no production or stoppage of
    manufacturing process.
D
        36. The judgments cited by the counsel appearing for the
    respondents would not help them for the reason that in the
    cases referred to, the Government had to change the policy in
    public interest. In the instant case, by compensating the
E   aggrieved appellants, no harm would be caused to the State
    of Kerala except that it will have to compensate the appellants
    by supplying assured electricity for some extended period at a
    specified tariff.

         37. For the aforestated reasons, in our opinion, the
F
    respondent-State was not wholly fair when it extended benefit
    to the appellants only for the period during which electricity
    supply was reduced to less than 50% on certain days.

         38. We, therefore, hold that the benefit extended by the
G   respondent State is not sufficient. The respondent-State ought
    to have extended the period even for the days when supply of
    electricity was more than 50% but not 100% as assured under
    G.O. dated 21.5.1990 and 6.2.1992. We, therefore, direct the
    respondents to give the said benefit by extending the period
H   of incentive.
M/S S.V.A. STEEL RE-ROLLING MILLS v. STATE OF 355
            KERALA [ANIL R. DAVE, J.]
      39. We, therefore, allow the appeals by quashing and A
setting aside the impugned order passed by the High Court and
direct the respondents to calculate the period during which
100% electricity supply was not given to the appellants and
extend the period of incentive accordingly. The calculation shall
be made and consequential orders shall be passed within two B
months from today. The appeals are allowed with no order as
to costs.

D.G.                                       Appeals allowed.