Holding

The Supreme Court held that the factual finding that the appellant did not commence commercial production within the concession period was not perverse, and therefore no interference under Article 136 was warranted.

Summary

The State of Kerala announced a policy exempting industrial units from enhanced power tariff if they began commercial production between 1 January 1992 and 31 December 1996. Southern Ispat Ltd. applied for power allocation, faced delays, installed a 125 kVA diesel generator and claimed it had started commercial production on 14 December 1996, seeking the concessional tariff. The Kerala High Court dismissed the writ petition, holding the appellant had not complied with the conditions, and the Division Bench upheld that decision. On appeal to the Supreme Court under Article 136, the appellant relied on invoices, a Kerala Financial Corporation certificate and other documents to prove commercial production. The Supreme Court held that the issue was a factual one, the concurrent factual findings of the lower courts were not perverse, and the evidence did not establish commercial production within the stipulated period; consequently, no interference was warranted. The appeal was dismissed.

Issues considered

Whether Southern Ispat Ltd. commenced commercial production within the period 1 January 1992 to 31 December 1996 to qualify for the concessional tariff.
Whether the Supreme Court can interfere with the factual findings of the lower courts under Article 136 of the Constitution.
Whether the documents produced by the appellant (invoices, KFC certificate, diesel generator installation) are sufficient to prove commercial production.

Legislation cited

Constitution of Indias. Article 136
Electricity (Supply) Act, 1948s. 44
Indian Electricity Rules, 1956s. Rule 65

Subjects

concessional tariffcommercial productionelectricity supplyArticle 136factual findingsdiesel generatorpower allocationKerala industrial policyinterference with lower courts

Judgment

A MIS. SOUTHERN ISPA T LTD.
v.
STATE OF KERALA AND ORS.

MARCH 25, 2004

B (K.G. BALAKRISHNAN AND B.N. SRIKRISHNA, JJ.]

Constitution of India, 1950 :

Article 136-Concurrent findings offact-Inte1ference with-Held: As a
C rule, Supreme Court does not inteifere with concurrent findings of/act recorded
by two courts below-But in the special case, the factual findings were examined
and the view taken by the Division Bench was found not so perverse as to
require interference-Practice and Procedure.

Electricity (Supply) Act, I 948 :
D
Concessional power tariff-State Govemment introduced a policy of
exempting industrial units from enhanced power tariff if it started "commercial
production" between 1.1.1992 and 3 I.12. I 996-Entit/ementto--Held: Whether
the industrial unit commenced "commercial production" within this period
E was a question offact-Since the concurrent findings on this question offact
arrived at by the courts below was not perverse, no interference was called
for under Art. 136 of the Constitution.

Electricity Rule, 1956:

p Rule 65-lnstaflation of diesel generating set-Permission of Chief
Electrical Inspector-Applicability of-Held : Such a diesel generating set
could not be installed without the permission of the Chief Electrical inspector.

The respondent-State issued a policy exempting industrial units,
which commenced "commercial production" between 1.1.1992 and
G 31.12.1996 from payment of enhanced power tariff. The appellant-
company intended to manufacture 24,000 tons of iron and steel ingots and
24,000 tons of iron and steel bars, coil etc. The appellant made an
application to the State Electricity Board for allocation of certain quantity
of power. However, the appellant's factory was yet to be constructed and

H 570
SOlJTllERN !SPAT LTD. 1· SlATF 571

machinery was to be transported and installed thereafter. Subsequently, A
the State Electricity Board sanctioned the power allocation but actual
power supply did not cori1mence due to various reasons.

Apprehending that the State Electricity Board was deliberately
delaying the matter, so that the appellant would not be able to carry out
commercial production before the cut off date of 31.12.1996, the appellant B
submitted a scheme to the State Government for generation of 125 KVA
electrical energy by installation of a diesel power generating set in its
factory. The said scheme was sanctioned by the State Government subject
to certain conditions. The electric wiring was completed in the factory of
the appellant and the Electrical Inspector accorded his sanction C
only in the year 1998.

The appellant filed a writ petition before the High Court challenging
the bill for charges for electrical energy supplied to the appellant's
industrial unit at rates in excess of the pre-1992 tariff rates. A single Judge
dismissed the writ petition holding that the appellant had not complied D
with the conditions subject to which power supply at concessional tariff
rates was to be made. The Division Bench upheld this judgment. Hence,
the appeal.

On behalf of the appellant, it was contended that despite the delay
in sanction and supply and of electricity, the appellant had installed its E
own diesel generating set and commenced "commercial production" on
14.12.1996. To substantiate its claim the appellant relied on certain invoices
for sales made to customers in the month of December 1996, a certificate
issued by the State Finance Corporation, the copies of the 'nil' return made
to the Commercial Taxes Department, the declaration made to the Excise F
Department and certain other documents.

Dismissing the appeal, the Court

HELD : I. The question to be decided in this case is essentially a
question of fact, namely, whether the appellant had started "commercial G
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 finding, which have been concurrently
recorded by two courts below. Both the single Judge and the Division
Bench have concurrently answered all factual findings against the
appellant. On that ground, itself the appellant must fail. Nonetheless, as H
572 SUPREME COURT REPORTS [20041 3 S.C.R.

A the appeal was argued with some seriousness, the factual findings have
been examined only from the point of view of interference under the special
jurisdiction under Article 136. 1580-C-EI

2. The contention of the appellant that "commercial production" had
commenced in December, 1996 can hardly be accepted. The appellant was
B setting up the factory for manufacturing of alloy steel M.S. Sections, C.T.D.
bars, Steel ingots and so on with a planned production of 24,000 tons of
iron and steel ingots and 24,000 tons of iron and steel bars, coils etc. It
hardly stands to reason that "commercial production" of such a factory
could have commenced by using a 125 KVA diesel generator set. There is A
C also no material on recorded to show that the appellant had run the factory
by using the 125 KVA generator set during the period December 1996 to
February 1999. Even the diesel unit could also not be used until permission
was obtained under Rule 65 of the Electricity Rules, 1956, from the Chief
Electrical Inspector. Such permission was obtained from the Chief
Electrical Inspector only in 1998. (581-D-FI
D
3. The High Court rightly held that it was not sufficient for showing
"commercial production" that some small items were sold by the appellant
in December 1996 and 'nil' assessment of sales tax was made and a small
excise duty payment was also made. The High Court also rightly held that
the documents relied on by the appellant were all self-serving documents
E created as evidence for "commercial production" prior to the cut off date
of 31.12.1996. 1582-F-GI

4. Upon an overall assessment of the facts on record, the view taken
by the Division Bench of the High Court on facts is not so perverse that it
F requires interference by this Court under Article 136 of the Constitution.
1582-H; 583-A[

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5343 of2002.

From the Judgment and Order dated 27.2.2002 of the Kerala High
G Court in W.A. No. 2614 of 2001.
R. Venkataramani, Ms. Lansinglo Rongmei, Ashok Panigrahi and Mrs.
B. Sunita Rao for the Appellant.

T.L. Viswanatha Iyer, M.T. George ang Ramesh Babu M.R. for the
H Respondents.
SOUTHERN ISPAT LTD. v. STATE [SRIKRISHNA. J) 573
The Judgment of the Court was delivered by A
SRIKRISHNA, J. The judgment of the Division Bench of the Kerala
High Court dismissing writ appeal no.2614/2001 of the appel Iant is challenged
before us in this appeal. The writ appeal itself was to impugn the judgment
of the single Judge dismissing O.P. No.9007/1999 by the appellant. With a
view to encouraging the industrial process in the State of Kerala, and as a B
measure of incentive, the State Government decided as a matter of policy that
new industrial units established in the State would be exempted for a period
,,
-. of 5 years from payment of enhanced power tariff which had come into effect
on 1.1.1992. This policy was reflected in the G.O. (MS) No.4/92/ID dated
6.2.1992 which indicated that the concession would be available:
c
"i. to the units from the date of commercial production which start
such production between 1.1.1992 and 31.12.1996.
ii. To manufacturing units only and not to service and entertainments
units;
D
iii. To existing units for substantial expansion/ modernisation. I
diversification. The concession in such cases will be available
only for the consumption of the new machinery and equipment
which add to the capital asset, by not less than 25 % of the
existing fixed capital investment excluding land and building the
installation of which is to be certified by the competent authority. E
iv. For modernisation, to industrial units having a contract demand
not exceeding 500 KVA. In such cases, new equipments alone
will be eligible for the concession."

The Government order also indicated that the eligibility for the F
concessions would have to be certified by the Kerala State Industrial
Development Corporation (KSIDC)/Kerala Financial Corporation (KFC) in
respect of units funded by them, or by the- Director of Industries and Commerce
in other cases, and by the concerned General Manager, District Industries
Centres in respect of Small Scale Industrial units. It was also declared in
Government order that the industrial units which set up their captive power G
generating units for their own consumption would be exempted from payment
of electricity duty to the extent to which they generate power for their own
consumption. The said concession was made available to the units which
may have started commei:_cial pro~uction or set up captive power generating
units between 23.9.1991 and 31.12.1991.
H
) ..

574 SLIJ'l<.l'.ME COURT REPORTS 12004] 3 S.C.R.

A On 26/27.6.1995 the appellant company was registered with the Registrar
of Companies office at Palakkad in Kerala State. The company intended to
manufacture alloy steel M.S. Sections. C.T.D. Bars. Steel Castings and allied
products. The company had an authorised capital of Rs.550 lakhs out of
which shares wo11h Rs.205 lakhs were issued to and subscribed by the Directors
B and their friends and rest were issued to and subscribed by the public. The
appellant company also raised loans from the Kerala State Industrial
Development Corporation and the Kerala Financial Corporation for setting
up the unit. According to the appellant, the total project cost was Rs.820
lakhs. Land was purchased in Kottai village in Palakkad District of Kerala
and construction of buildings and ,installation of machinery for steel melting
C and re-rolling was commenced.
On 17. 7.1995 the appellant made an application to the Chief Engineer,
Kerala State Electricity Board (' KSEB ') for allocation of 2450 KV A of power.
The appellant requested for registration of its application and sought a
feasibility certificate for the allocation of power at the earliest to facilitate
D sanction of loan from KFC /KSIDC and working capital from South Indian
Bank Ltd.

On or about 17 .6.1996 the appellant made a representation to the
Ministry of Steel, Government of India to persuade the KSEB to expedite the
sanction of power. The Regional Development Commissioner for Iron and
E Steel, Government of India, Ministry of Steel, addressed a D.O. letter dated
3.7.1996 to the Chairman KSEB, strongly recommending the urgent sanction
of the power to the appellant. By a letter dated 16.7.1996 the Chairman,
KSEB, informed the Regional Development Commissioner for Iron and Steel,
Madras that the State of Kerala was facing acute shortage of electrical energy
F and that the KSEB was resorting to all possible ways to tide over the situation.
As a part of their efforts to bring down the energy consumption, they had
even banned new domestic connections. Hence, the Chairman said, "in the
present scenario I am not in a position to think of giving power'allocation to
a power intensive industry like steel producing unit" and said "if the situation
improves, the application of Mis Southern !spat Ltd., can be taken up''. The
G said reply was forwarded to the appellant by the office of the Regional
Development Commissioner for Iron and Steel.

By a letter dated 10.9.1996 addressed to the appellant the KSEB
sanctioned power allocation to the extent of I 950 ~VA at I_ I KV with contract
H demand of 1950 KV to the appellant's factory. The allocation was made
SOUTHERN !SPAT LTD. 1·. STATE [SRIKRISllNA. J.] 575

subject to the following conditions: A
* "I. Supply is liable to be restricted or cut of during power shortage
period after giving notice.
)
Power should not be used for industrial purpose between 6 P.M.
to I 0 P.M. or any other restrictions necessitated by local condition
or otherwise when imposed should be strictly complied with.
B
0
), Charges payable as minimum will have to be paid even if power
is not availed of within three months from the date on which the
~
readiness of the Board to supply power to you is intimated.
4. Specific provision regarding the above condition will be c
incorporated in the service connection agreement.
5. You have to execute a power supply agreement in the form to be
specified by the Deputy Chief Engineer, Ele. Circle, Palakkad
and agree to pay the tariff and other charges specified by the
Board ·from time to time as per rules in force in the Board within D
6 months from the date of this letter failing which the allocation
sanctioned will stand cancelled.
6. You have to request remit the required amount under OYEC
scheme which may be ascertained from the Assistant Executive
Engineer, Electrical Major section, Parali. E
7. The power allocated can be availed only after drawing separate
11 KV feeder from Parali Sub Station (Extentsion of 1.12 KM
of SIC line and duplicating 2.3 KM of the Kottayi feeder) for
which OYEC amount has to be remitted by the applicant.
8. The power allocated can be given only after providing separate F
outlet in the 110 KC Sub Station, Parali and the cost of work has
to be met by the application under OYEC Scheme."

The Executive Engineer KSEB Palakkad informed the appellant by a
letter dated 3.10.1996 that an estimate amounting to Rs.8,73,200 had been
sanctioned for the power allocation work to the appellant under Own Your G
Electric Connection (OYEC) basis. The appellant was called upon to remit a
sum of Rs. 8,73,200 in cash, at the earliest, to the electrical section. On
-j. 11.11.1996 the appellant wrote a letter to the Executive Engineer, Electrical
Division, KSEB Palakkad informing him that it had completed all civil works
at the site and erected over 50% of plant and machinery and that other
H
576 SUPRl:MF COllRl REPORTS [2004] 3 S.C.R

A machines were in transit and were expected to reach very shortly. He, therefore. -t·
requested that instructions be issued to the Executive Engineer Electrical,
Parali to accept the amount of Rs.8,73,200 so that the KSEB electrical work
may stm1 to meet the requirements. On 12.11.1996 the Executive Engineer
Electric Division Palakkad addressed a letter to the Deputy Chief Engineer,
Electrical Circle, Palakkad on the subject He pointed out that an estimate for
B Rs.8,73,200 towards construction of 1.12 Kms 11 KV overhead line and
duplicating 2.3 KM of Kottayi feeder from 110 KV sub station Parali for
giving high tension connection under OYEC basis had been sanctioned in
favour of the appellant He also stated that the appellant was ready to rem it A.
the amount on OYEC basis and requested further instructions in the matter.
c On or about 14.11.1996 the appellant sent a letter to the Deputy Chief
Engineer, Electrical Circle, Palakkad thanking him for the inspection of the
work site on 12.11.1996. It also enclosed a Charted Accountant's certificate
detailing the investment of Rs.379.68 lakhs and a photocopy of KSIDC's
letter dated 11.11.1996 giving full details. Finally, the letter requested
D permission to deposit the amount of Rs.8,73,200 at. Electrical Major Section,
Parali so that the construction of line may begin. A copy of the letter from
KSIDC requesting expedition and commission of the project was also
forwarded.

Apprehending that the KSEB was deliberately delaying the matter, so
E that the appellant would not be able to carry out commercial production
before the cut off date of 31.12.1996, the appellant submitted a scheme to the
Government of Kerala for generation of 125 KVA electrical energy by
installation of a diesel power generating set in its factory. By the letter dated
6.12.1996 of the Chief Electrical Inspector to the appellant sanction for the
F scheme was granted subject to the following conditions:

"I. Copy of Power allocation sanction for additional loads if required
should be obtained from the K.S.E.Board/ Licensee and a copy
of the same forwarded to Electrical Inspector.
2. Installation of all switch boards and distribution boards should
G be in conformity with Rule 51 (1) (c) of I.E. Rules, 1956.
3. Fuses should be graded properly and selected based on the rating
of cables. Low watt loss fuses shall be selected.
4. Earthing of the installation should conform to provisions in
I.S.3043/87.
H
SOUTHl::RN !SPAT LTD. 1·. STATE [SRIKRISHNA . .I] 577

'+ 5. Isolation facility should be provided for all equipments within a A
distance of 3 meters from equipments confonning to Rule 50( I)( ct)
of I.E. Rules, 1956.

6. M. V. installation should conform to l.S. 732.

7. Installation of all cables should be as per standards ..
B
8. An energy meter should be provided in the generator circuit
which should be got tested and sealed by Kerala State Electricity
Board/ Standards Laboratory attached to this Department and a
......
copy of the test report should be forwarded to Electrical Inspector.
9. Sanction from K.S.E.B. under Section 44 of Supply Act 1948 c
should be obtained and copy forwarded to the Electrical Inspector.

10. Only materials with l.S. certification as required under QCO
should be used. The Electrical Inspector should ensure this.

11. Only energy efficient equipments shall be used in the installation.
D
12. Completion report should be submitted to this office for arranging
inspection.
13. The voltmeter and frequency meter may be provided before the
breaker in the generator control panel."

On 6.12.1996 the appellant also applied to the Secretary of Kottayi E
Gram Panchayat for permission to install and utilise a diesel generator set of
125 KVA for its factory with the help of which it was proposed to use a 10
HP motor.

On 11.12.1996 the appellant forwarded a cheque for Rs.8,73,200 to the
.,... Assistant Executive Engineer, Electrical Major Section, Parli and requested F
him to accept it towards the estimate for the construction work to be carried
out. He was also requested to draw up an agreement so th~t it can be executed
and the security amount be deposited.

According to the appellant, it purchased stamp papers for executing the
G
agreement with KSEB for supply of electricity on 9.12.1996. On 11.12.1996
the Assistant Executive Engineer, Parali accepted the cheque of Rs.8,73,200
towards the cost of construction of electric line. By an order made by the
" Chief Engineer Transmission (North) Kozhikode, on 12.12.1996 sanction
was accorded for an estimate amounting to Rs.13, 1'(),000 for modification of
sub-station for providing 11 KV Outlet at 110 KV sub-station, Parali and H
578 SUPREME COURT REPORTS (2004] 3 S.C.R.

A registered as 21/96-97. It was directed by the order that the cost on account
of this had to be met from the deposit to be made by the beneficiary under
OYEC Scheme.

On 13.12.1996 the appellant gave a declaration to the KSEB that the
private generator set installed at the premises of its factory would not be
B synchronised with KSEB board mains and that a meter wou Id be installed.
On the same day the agreement on stamp paper of Rs.60 was forwarded to
the Assistant Executive Engineer, Electrical Major Section, Parli, Palakkad
for being processed. He was also requested to intimate the amount to be
deposited towards security. On 16.12.1996 the appellant deposited a sum of
C Rs. 13, I0,000 with the KSEB as directed in the order of the Chief Engineer.

The appellant moved the High Court of Kerala by O.P. No.6456/1997
seeking a writ of Mandamus directing the KSEB and its officers to take
urgent and immediate steps to give sanctioned power connection to the
appellant's factory at Kottayi and also sought an interim order for grant of
D power connection temporarily from the feeder line to the neighbouring
industrial unit, Mis Elgi Tyre & Treads Ltd. Kottayi, so as to enable the
petitioner to maintain nominal production and marketing of its products and
reduce the overheads and other losses. This petition was disposed of by a
learned single Judge of the Kerala High Court by an order dated 11.4.1997
with the direction to the Deputy Chief Engineer, Electrical Circle, Vydyuthi
E Bhavan, Palakkad, to consider and take a decision on Exhibit P-15 (the
appellant's representation dated 23.12.1996) addressed to him highlighting
the grievances of the appellant, with notice to the petitioner, within a period
of three weeks.

F Pursuant to the directions made by the High Court, the KSEB considered
the grievances made by the appellant and the appellant was informed as
under by letter dated 23.5.1997 :

"I have been directed by the Secretary/ K.S.E.B. Trivandrum-4 to
intimate you the decision regarding your representation vide Ex. P-
G 15 in the above OP. Accordingly I may inform that:

(I) Power allocation to the extent of 1950 KV A was granted to you
by the Chief Engineer (Dist!. North), Kozhikode on 12.9.1996
on the specific conditions that
(a) The power can be availed only after drawing separate 11
H
)
SOUTHERN ISPAT LTD. v. STATE ISRIKRISHNA. J.] 579

KV feeder from Parli Sub-Station under OYEC; and A
(b) The power can be given only after providing separate outlet
in the 110 KV Sub-Station I Par Ii under OYEC.

The above conditions were stipulated taking into consideration
all technical aspects such as loading on 11 KV feeder, Voltage B
regulation, flexibility of 11 KV lines, existing Power system/ line
capacity etc. As you have already remitted the OYEC for all the
above works (a) & (b) above, action has been taken by the Executive
Engineer/ Elec. Division/ Palakkad to finalise the tenders for the
construction of 11 KV new feeder.

Taking into account the existing consumers in the 11 KV Elgi
c
Feeder and all technical aspects, I regret to inform that it is not
technically feasible to connect your factory load from the existing
Elgi feeder.

Further, I may inform that due to acute Power shortage, the Board D
has ordered a total ban on new connections to the Power Intensive
units during the period of Power cut, w.e.f. 30.7.1996.
Yours faithfully
Sci/-
EXECUTIVE ENGINEER IN/C." E
For a period of almost two years the appellant made no grievance, nor
took any other steps. The appellant moved a writ petition No.OP 9007/1999
before the High Court of Kerala challenging the bill for charges for electrical
energy supplied to the appellant's industrial unit at rates in excess of the pre-
1992 tariff rates. This writ petition was moved on 31.3.1999 and challenged
the invoice no. 23602 dated 23 .3 .1999 by which the appellant was called F
upon to pay a sum of Rs. 2,28,578 towards consumption of electricity during
the month of February, 1999. By a judgment dated 3.7.2001 the learned
single Judge who heard the writ petition dismissed the writ petition holding
generally that appellant had not complied with the conditions subject to which
power supply at concessional tariff rates have to be made. Being aggrieved G
thereby, the appellant filed writ appeal no.2614/2001 which was dismissed
by the Division Bench by the judgment impugned before this Court.

It is contended by the appellant that the delay in sanction and supply
of electric supply was only on account of the tardy manner in which the
KSEB functioned. It is also urged that, despite the lethargy shown by the H
580 SUPREME COURT REPORTS 12004] 3 S.CR.

A KSEB, to meet the deadline the appellant had installed its own diesel generator
set <)nd commenced ·'commercial production" on 14.12.1996. The appellant
relied on certain invoices for sales made to customers in the month of
December, 1996. a certificate dated 11.9.1998 issued by the KSFC, the copies
of the nil return made to the commercial taxes department, declaration made
B to the superintendent of Central Excise and Register of daily stock in support
of its contention that it had commenced 'commercial pro\luction' in the month
of December, 1996. Reference was also made to the assessment order issued
by the Sales Tax Department and the Balance Sheet of the company as on
31.3 .1997 for th is purpose. ~

C The respondents strongly refute the contentions urged and support the
judgment of the Division Bench of the High Court as being correctly decided
on the facts of the case.

As the Division Bench rightly pointed out, the question to be decided
in this case is essentially a question of fact, namely, whether the appellant
.D 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 courts below. Both the learned single Judge
and Division Bench have concurrently answered all factual findings against
E 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 unrjer Article 136.

The Division Bench of the High Court rightly pointed out that though
F the pol icy of granting concessional tariff was announced by the State
Government on 6.2.1992, followed by the KSEB order dated 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 applieation for power alloc;ation
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
G factory building. Undoubtedly, the application was moved on 17.,7.1995 in
anticipation. The material on record suggests that there was acute shortage of
electricity as a result of which even domestic power connections were being
refused. The high tension power supply required by the appellant had to b~
specially arranged by drawing the electric?! lines on the OYEC basis by
H construction of PSC polls along the line at the Appellant's cost. This amount
-
SOUTHERN !SPAT LTD. v. STATE I SRI KRISHNA . .I.] 581

was deposited on 11.12.1996. only a few days before the concession was A
about to lapse. Having examined 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 B
the expiry of the period of concession.

The KSEB made the power allocation on the specific condition that
power would be supplied subject to drawing of 11 KVA exclusive feeder line
""-- from 110 KV Parali station under the OYEC scheme. The electric wiring was
completed in the factory of the appellant and the wiring contractor submitted
completion certificate on 29.8.1998. There were some deficiencies which
c
were rectified by the appellant only on 1.12.1998. The electrical inspector is
required to sanction the electrical wiring, and this was done on 14.12.1998.
Power supply commenced only on 19.2.1999. Thus, upto and including
19.2.1999 the appellant had not functioned with the power supplied by the
KSEB either temporarily or on permanent basis. D
The contention of the appellant that commercial production had
commenced in December 1996 can hardly be accepted. The appellant was
setting up the factory for manufacturing of alloy steel M.S. Sections, C.T.D.
bars, Steel ingots and so on with a planed production of 24000 tons of iron
and steel ingots and 24000 tons of iron and steel bars, coils etc .. It hardly E
stands to reason that "commercial production" of such a factory could have
commenced by using of a 125 KV A diesel generator set. There is also no
material on record to show that the appellant had run the factory by using
125 KVA generator set during the period December 1996 to February 1999.
It is pointed out by the High Court, and rightly in our view, that even the F
diesel unit could also not be used until permission was obtained under Rule
~
65 of the Indian Electricity Rules, 1956, from the Chief Electrical Inspector.
Such permission was obtained from the Chief Electrical Ihspector only on
14.12.1998. Thus, it is clear that even the order for energisation of the 125
KVA diesel generator set was accorded to the appellant only in 1998.
G
In these circumstances, we find it difficult to accept the contention of
the appellant that 'commercial production" had started in December 1996 by
using diesel generator set as alleged.
-..I..
The appellant contends that the certificate issuect"by the Kerala Financial
Corporation dated 11.9.1998 is conclusive evidence of the fact that the H
582 SUPREME COURT REPORTS [2004] 3 S.C.R.

A appellant had commenced '·commercial production" in December I996.
Interestingly, the KFC's certificate is very guarded and states:

"This is to certify that Southern !spat Limited has commenced its
commercial production of C.i. Shot and grits with the help of Generator
set as Kottayi in Palakkad district on the 14th day of December. 1996
B as per records submitted by the company."

(Emphasis is ours)

In the first place, we are unable to accept that the certificate issued by _,.'
the KFC is conclusive in the matter. At the highest, it may be one of the facts
c to be considered by the KSEB in the light of all other relevant material.

The High Court has pointed out a series of difficulties in accepting this
certificate as conclusive. Firstly, the certificate has been issued only on
11.9.1998. The certificate is issued 'To whom so ever it may concern". There
is no reference to the electrical inspector's findings on the matter of conditions
D of appellant's high tension installations, which was a pre-requisite for the
KFC to issue a proper ce1tificate for the purpose of entitl~ment to the pre-
1992 tariff concessions. There is nothing to show that the KFC had made any
inquiry of their own. On the contrary, as the certificate shows, the certificate
appears to have been issued merely on the basis of record produced by the
E company. The record produced by the company could not have shown that
the appellant company had started commercial production. The High Court
has also disbelieved and rejected the other documents relied upon in support
of the appellant's case of commencing of commercial production prior to
31.12.1996.

F The High Court points out the fact that promoters of the appellant
company had a factory at Raipur in Madhya Pradesh and the possibility of
the Appellant having bought manufactured goods from there and sold them
""'
within the State or Kerala to create documents to show that the production
s~rted before 1996 could not be ruled out. Even the documents produced by
th appellant do not show any continuous 'commercial production' during
G the period December 1996 to February 1999. We agree with the conclusion
of the High court that it was not sufficient for showing 'commercial production'
that some small items were sold.by the appellant in December 1996 and 'nil'
assessment of sales tax was made and a small excise duty payment was also >-
made. We agree with the High Court's view that these were all self-serving·
H documents created as evidence for commercial production prior to the cut off
SOUTHERN !SPAT LTD. v. STATE [SRIKRISHNA, J.] 583

date of 31.12.1996. A
Upon an overall assessment of the facts on record, we are not satisfied
that the view taken by the Division Bench of the High Court on facts is so
perverse that it requires interference by this Court under Article 136 of the
Constitution.
B
In the result, the appeal is dismissed. However, there shall be no order
as to costs.

v.s.s. Appeal dismissed.