Supreme Court of India
TAMIL NADU ELECTRICITY BOARD & ANR.versusSTATUS SPINNING MILLS LTD. & ANR.
- Citation
- 2008 INSC 733
- Decided
- 16 May 2008
- Disposal
- Appeal(s) allowed
- Bench
- S B SINHA
Holding
The State may amend the tariff concession schedule and withdraw the benefit for industries set up after 15‑02‑1997; the doctrine of promissory estoppel does not apply, and the proviso must be read down.
Summary
The Tamil Nadu Electricity Board and the State of Tamil Nadu appealed against a Madras High Court order that upheld tariff concessions for high‑tension industries set up before 15‑02‑1997. The dispute centered on the meaning of "set up" in the 1995 and 1997 government notifications and whether the doctrine of promissory estoppel barred the State from withdrawing the concession. The Supreme Court held that the word must be read in its statutory context, meaning the industry must be ready to consume electricity, i.e., have a service connection, and that the State retained the power to amend the schedule and withdraw the benefit for industries set up after the cut‑off date. Consequently, the doctrine of promissory estoppel did not apply, the proviso was read down, and the appeals were allowed.
Issues considered
- The proper construction of the term "set up" in the tariff concession notifications.
- Whether the doctrine of promissory estoppel can restrain the State from amending the tariff schedule.
- Whether the 1997 amendment can have retrospective effect withdrawing accrued rights.
- Whether the proviso to the 1978 Act should be read liberally or strictly.
Legislation cited
- Customs Act, 1962s. 25(1)
- Electricity Act, 1910s. 2(1)(c), s. 37
- Electricity (Supply) Act, 1948
- Indian Electricity Rules, 1956s. Rule 63
- Tamil Nadu Revision of Tariff Rates on Supply of Electrical Energy Act, 1978s. 3, s. 4
Subjects
tariff concessionhigh tension industriesset uppromissory estoppelstatutory interpretationsubordinate legislationretrospective effectpublic interestelectricity board
Judgment
[2008) 9 S.C.R. 870
A TAMIL NADU ELECTRICITY BOARD & ANR.
v.
STATUS SPINNING MILLS LTD. & ANR.
(Civil Appeal No. 3940 of 2008)
MAY 16, 2008
B
[S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.]
Tamil Nadu Revision of Tariff Rates on supply of Electri-
cal Energy Act, 1978: Ss 3, 4 and GO.Ms.No. 29 dated
c 31.01.1995 and GO.Ms. dated 14.2.2007 making amendment
in the schedule appended to 1978 Act:
Government Order/Notification providing for tariff conces-
sion for High Tension Industries - Amendment made restrict-
ing the benefit to industries set up only upto the specified date
D - Challenge to - Dismissing the petition High Court held that
Industries which either informed or made application to Elec-
tricity Board for getting power connection before the due date
or industries established before the specified date would be
entitled to get tariff concession - But benefit of the tariff con-
E cession would not be available on the basis of principle of
promissory estoppel - Correctness of- Held: Incorrect - High
Court did not go into fact of case but proceeded on the basis
that the word 'set up' as in the proviso of Schedule of the 1978
Act should be given its dictionary meaning - Notification
F amending the Schedule to 1978 Act was issued providing
some tariff concession - It was further amended disallowing
the concession in tariff to Industries set up on or after 15. 2. 1997
-A word in a statute has to be read in the context in which it has
been used - Schedule to the Act is a piece of subordinate
G legislation and it has to be read in the same manner as the
Act - In terms of Notification grant of service connection to
industries was considered to be a pre-requisite for grant of con-
cession - It is in this context impugned amendment has to be
construed - Notification in question is a broad based one as
H 870
TAMIL NADU ELECT BOARD & ANR. v. STATUS 871
SPINNING MILLS LTD. & ANR.
concession was a/so given to pre-existing industries - Appel- A
/ant-Board did not alter its position pursuant to any promise,
the doctrine of promissory estoppel would not apply - In the
facts and circumstances of the case, provisio to schedule of
1978 Act applicable to industries, which not only started com-
mercial production before the specified date but also to those, B
which had applied for service connection by depositing the
requisite amount therefor - Interpretation of statute.
Doctrine/Principles:
(ij Principle of contemporaneous exposito - Applicability of c
(ii) Doctrine of promissory estoppe/ - Applicability of
Words and phrases:
'Exemption Notification' - Construction of- Held: Exemp-
tion Notification requires construction depending upon the D
tenor of the statute - It could be withdrawn in public interest
'Statute' and 'policy decision' - Distinction between in the
context of subordinate legislation.
The questions arose for determination before this E
Court in the instant appeals were as to what is the conno-
tation of the expression 'set up' in the context of
concessional tariff provided in terms of the Government
Notification providing for tariff concession for High Ten-
sion Industries; as to whether the expression 'set up' F
+
would have to be construed in the context of the expres-
sion 'shall continue to avail themselves of the tariff con-
cession' appearing in the proviso to the schedule of the
Tamil Nadu Revision of Tariff rates on supply of Electrical
Energy Act, 1978 and the concession could be availed by G
the High Tension Industries upto three years from the date
the consumer was given the service connection; and as
to whether the Notification conferring tariff concession
could be construed liberally to extend the benefit thereof
by construction of the expression 'set up' and by intro- H
872 SUPREME COURT REPORTS [2008] 9 S.C.R.
A ducing the element of uncertainty.
Appellant-Board contended that the State of Tamil
Nadu intended to confer benefit on a class of people. Such
classes of people having been identified as consumers
of High Tension Electrical Energy, it was permissible for
8 the State not only to fix a cut-off date but also to specify
the same so as to enable the industries to take the benefit
only from the date when they start consuming electrical
energy; that the Division Bench of the High Court com-
mitted a serious error insofar as it failed to take into con-
e sideration that a High Tension industry gets ready to dis-
charge the functions for which it was set up, only with
certain formalities as provjded for in the Indian Electricity
Act, 1910 and the Rules framed thereunder; that an in-
dustry starts functioning only when it is ready to
D operationalise its machinery which can only be done when
the power connection is granted. One of the essential pre-
requisite therefor is certification and approval by the In-
spector in terms of Section 37 of the 1910 Act and Rule 63
of the 1956 Rules and compliance of Rule 63 of the 1956
E Rules is a definite parameter to assess the readiness of
industry to discharge the functions for which it had been
set up; that the Government letter dated 1.08.1997 being
clarificatory in nature, the same should be given effect
to; and that the subsequent notification dated 7.01.2000
F whereby two Explanations were introduced is also
clarificatory in nature as a bare perusal of Explanation 1
would demonstrate that it merely clarified what was in-
hered/ implied in the said proviso which also reflects the
undertaking of the government which alone was compe-
G tent to grant exemptions to concerned industries and/or
to withdraw or modify the same; and that the operative
part of the order of the Division Bench of the High Court
should be suitably modified to reflect that the setting up
of an industry prior to 15.02.1997 implies that such indus-
try was ready to discharge all the functions for which it
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 873
SPINNING MILLS LTD. & ANR.
..._
had been set up and that it has already become a con- A
sumer having obtained High Tension service connection
from 15.02.1997 and only those industries which have
been set up before 15.02.1997 shall continue to avail them-
selves of the said tariff concession until the expiry of the
period of three years from the date on which the consumer B
is given a service connection.
Respondent-Industries submitted that that the
amendments to the Schedule carried out by the notifica-
tions are unreasonable being in contravention of the stat-
-# ute; that the word "set up" having been interpreted by c
•
this Court holding that the said word is in contra-distinc-
tion of the word "commence"; that some of the High Ten-
sion industries having already set up their business and
having gone for commercial production by reason of gen-
erators, it cannot be said that they had not been set up. D
For the said purpose, not only the doctrine of promissory
estoppel should be applied, the wordings of the Section
should be read down to mean that those industries are
entitled to the tariff concession which were not only
granted connection but which ought to have been E
granted connection; that in most of the cases, not only
the entrepreneurs altered their position pursuant to or in
furtherance of the promise made by the State in terms of
the notification dated 31.01.1995. They had applied for
grant of communication much prior to the cut off date fixed F
by the notification dated 14.02.1997. The entrepreneurs
who had acted pursuant to the promise made by the State
should not be allowed to suffer for no fault on their part;
and that although no appeals have been preferred from
the judgment of the Division Bench of the High Court, this
G
Court in exercise of its jurisdiction under Order 41, Rule
_._ 33 of the Code of Civil Procedure may permit the respon-
dents to raise the said contention.
Allowing the appeals, the Court
H
874 SUPREME COURT REPORTS [2008] 9 S.C.R.
A HELD: 1.1 The High Court did not go into the fact of
each case. It proceeded on the basis that the word "set
up" should be given its dictionary meaning, i.e., erect or
establish in view of a decision of this Court in Ramaraju
Surgical Cotton Mills Ltd. [para 18] [893-F,G]
B Commissioner of Wealth Tax v. Ramaraju Surgical Cot-
ton Mills, Ltd. 1967 (1) SCR 761 and Kabini Minerals (P) Ltd.
and another v. State of Orissa and others (2006) 1 sec 54 -
referred to
c 1.2 The Tamil Nadu Revision of Tariff Rates on sup-
ply of Electrical Eneryy Act, 1978 overrides the provisions
of the 1948 Act. It empowered the State Government to
amend the provisions contained in the Schedule to the
Act prescribing tariff rates payable by different classes of
consumers for supply of electrical energy by the Board
0
taking into account the cost of production of energy and
such other matters as may be prescribed by notification.
[para 20] [894-A-C]
2.1 The notification dated 31.01.1995 was issued
E amending the Schedule. It for all intent and purport sub-
stituted the then existing Schedule; Part A thereof dealt
with tariff for High Tension supply. It is only in that notifi-
cation some concession had been granted. The conces-
sion was to apply to both unit rates and maximum de-
F mand charges. Certain limitations for grant of the said
concession had also been specified. [para 20] [894-C,D]
2.2 The Schedule was further amended by the notifi-
cation dated 14.02.1997 reflecting the operation of grant
of concession tariff to those who had set up the new High
G Tension industries on or after 15.02.1997. What is, there-
fore, significant is the meaning of the word "set up" vis-a-
vis "commencement". [para 21] [894-E]
2.3 A word cannot be assigned a meaning in vacuum.
It has to be read in the context in which it has been used.
H
TAMIL NADU ELECT BOARD & ANR. v. STATUS 875
SPINNING MILLS LTD. &ANR.
A decision which has been rendered on a different Act A
dealing with a different subject matter may not be appo-
site while construing the same term in another statute.
[para 22] [894-F]
Commissioner of Wealth Tax v. Ramaraju Surgical Cot-
ton Mills Ltd. 1967 (1) SCR 761 - referred to B
2.4 What is necessary to take into consideration is
that the Schedule appended to Section 3 of the 1978 Act
is a part of the Act. It prov.ides for High Tension tariff. It
fixes up cut-off dates. It is a piece of subordinate legisla- c
tion. A subordinate legislation validly made may have to
be read in the same manner as if it is a part of the Act. [
para 23] [895-F,G]
Bombay Dyeing & Mfg. Co. Ltd. (3) v. Bombay Environ-
mental Action Group and Others (2006) 3 SCC 434; Vasu Dev D
Singh and Others v. Union of India and Others (2006) 12 sec
753 and State of Kera/a and Others v. Unni and Another (2007)
2 sec 365 - relied on
2.5 The notification dated 31.01.1995 postulated con-
cession to the new High Tension industries "to be set up" E
for the first three years from the date the consumer is given
a service connection. It did not speak of commencement
of production. It intended to attain a certainty as to from
which date such concession would be available. Grant of
service connection was considered to be a pre-requisite F
for grant of the concession. It is in this context, the im-
pugned amendment will have to be construed. It fixes a
cut off date beyond which the concession shall not be
available to the industries, viz., those who had set up in
any area on or after 15.02.1997. [para 24] [896-B,C,D] G
2.6 The proviso appended to Schedule of 1978 Act,
~
however, saves the cases of those who had availed them-
selves of the said tariff concession and they who would
continue to get the benefit thereof until expiry of the pe-
H
876 SUPREME COURT REPORTS [2008] 9 S.C.R.
A riod of three years from the date on which the consumer ..
is given service connection. The date on which the ser-
vice connection is given, therefore, plays an important
role. The clarification issued by the State during pendency
of the appeals should have, therefore, been considered
B by the High Court in its proper perspective. If it is
clarificatory in nature, it could be given a retrospective
operation. [para 25] [896-D,E,F] ..
2.7 When a subordinate legislation is made by the
State Government, it must be done in terms of the consti-
c tutional provision. An executive order is also issued keep-
ing in view the rule~ and executive business. It may not
have the force of law but the same may come within the
purview of the well-known principle of contemporaneous
exposito. Rules of executive construction are also relevant.
D [para 25] [896-G, 897-A]
3.1 It is not a case where the opinion of the Chief Sec-
retary and/or for that matter the State was decisive. In the
matter of interpretation of statute, the Court has the last
say. [para 27] [897-E,F]
E
3.2 In terms of the Notification concession is to be
given in respect of payment of the charges for electrical
energy. When can it be given would be a question of fact.
When it has been given would be known to everybody.
F The bills are required to be paid only after electrical en-
ergy is consumed. Question of availing the benefit of con-
cession would not arise unless a service connection is
granted. For the said purpose, the definition of consumer,
as contained in Section 2(1)(c) of the 1910 Act would be
relevant. The benefit can be availed by the consumer keep-
G
ing in view the nature of concession granted. Exemption
notifications, therefore, require construction depending
-~
upon the tenor of the statute/ notification. Whether it
should undergo a strict construction or a liberal construe-
tion is one thing but it is another thing that whether a per-
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 877
SPINNING MILLS LTD. & ANR.
son is entitled to concession on a plain reading of the A
notification. [para 28] [897-G, 898-A,B]
3.3 It may be true that the exemption notification
should receive a strict construction. But it is also true that
once it is found that the industry is entitled to the benefit
of exemption notification, it would receive a broad con- 8
struction. [para 28] [898-C,D]
Tata Iron & Steel Co. Ltd. v. State of Jharkhand (2005) 4
SCC 272; A.P Steel Re-Rolling Mill Ltd. v. State of Kera/a
(2007) 2 SCC 725 and Novopan India Ltd. Hyderabd v. Co/- C
/ector of Central Excise and Customs, Hyderabad 1994 Supp.
(3) S.C.C. 606 - referred to
3.4 A notification granting exemption can be with-
drawn in public interest. What would be the public inter-
est would, however, depend upon the facts of each case. D
[para 28] [898-D,E]
3.5 The word "set up" was required to be construed
keeping in view the provisions of the statute operating in
the field, viz., the 1910 Act, the 1948 Act and the 1956 Rules. E
[para 30] [899-B]
State of Jharkhand v. Tata Cummins Ltd. (2006) 4 SCC
57 - referred to
4. For the purpose of declaring a statute unconstitu-
tional, foundational facts have to be laid therefor. Grounds F
are required to be raised therefor. In absence thereof it
would not be possible for this Court to enter into the de-
bate of constitutionality of the said provisions. The Divi-
sion Bench of the High Court had rightly or wrongly opined
that the doctrine of promissory estoppel has no applica- G
tion. The fact that the said doctrine may apply even in rela-
tion to a statute is beyond any dispute. [para 31] [899-C,D,E]
Mis. Seema Silk & Sarees & Anr. v. Directorate of En-
forcement & Ors. Criminal Appeal@ SLP (Crl.) No. 6812 of H
878 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 2007 decided on 121h May, 2008; Mahabir Vegetable Oils
..
(P) Ltd. and Another v. State of Haryana and Others (2006) 3
SCC 620; A.P Steel Re-Rolling Mill Ltd. (supra); Pawan Al-
toys and Casting Pvt. Ltd. v. UP State Electricity Board and
others (1997) 7 SCC 251 and Southern Petrochemical Indus-
B tries Co. Ltd. v. Electricity Inspector & ET/O and Others (2007)
5 sec 447 - referred to
5. Applicability of the doctrine of promissory estop-
pel would depend upon various factors including the na-
ture and purport of the Statute, the object it seeks to
c achieve, the purpose for grant of concession/exemption
etc. It, therefore, depends on the nature of the statute as
also applicability of the doctrine. Even such a question
had not been raised before the High Court. [paras 32 and
33] [901-F,G]
D
6.1 The GOMs dated 31.01.1995 granted concession
for the new high tension industries to be set up. The eligi-
bility for grant of concession therefore was for the indus-
tries which were to be set up after the said date. The ex-
emption does not stop at that. It is given a retrospective
E effect. It is extended to those industries which were set
up after 3.05.1989. However, exception therefor is sought
to be curved out in respect of those industries which had
been utilizing power from their own generating units or
making other arrangements for production for the pur-
F poses and utilizing the power supplied by the Board in
auxiliary purposes only. The said notification, therefore
is a broad based one. It not only is to apply to those in-
dustries which were to be set up on or from 31.01.1995
but also to those which were set up after 3.05.1989. [para
G 34 ] [902-D,E,F]
7.1 The respondents in the instant case have started 'I
setting up their industries after the said date. It is on the
aforementioned backdrop, the impugned notification
dated 14.02.1997 requires interpretation. Those who had
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 879
SPINNING MILLS LTD. & ANR.
set up their industries have acquired a right, viz. the right A
to obtain the tariff concession once a right is accrued in
their favour. What was promised to them was that they
would be granted the tariff concession for a period of three
years @ 60%, 70% and 80% of the consumption charges.
[para 34] [902-F,G] B
7.2 The notification dated 31.01.1995 must be inter-
preted in a broad based manner, as a promise was made
to grant the concessional tariff not only for the new in-
dustries which were to be set up thereafter but also to the
pre-existing industries. The right accrued to them is C
sought to be taken away w.e.f. 15.02.1997. Those who
were eligible upto 14.02.1997 to avail the benefit of the
notification dated 31.01.1995 became ineligible. It is in the
aforementioned context, the proviso appended to clause
(a) of the Notification is required to be interpreted. It has D
used the term 'set up' in any area other than Chennai Met-
ropolitan area before 15.02.1997. However, the rule of lib-
eral interpretation should not be applied. An accrued right
ordinarily cannot be taken away With retrospective effect.
It is not a case where the notification has a retroactive E
operation. [para 35] [903-B,C,D]
7.3 A statute, even a subordinate legislation, may have
to be construed reasonably. A subordinate legislation or-
dinarily would not be given a retrospective effect. Retro-
spective effect can be granted only if there exists any F
power in that behalf. There is nothing to show that such a
power has been conferred upon the State in terms of the
Act. While saying so, this Court is not oblivious of the situ-
ation that the State has a statutory power to fix the tariff. It
may also be true that when a statutory power is conferred, G
the State would have power to amend, alter, modify or
rescind the same. The Court must also bear in mind that
it may not cause undue hardship. If construction of a stat-
ute is possible as a result of hardship is avoided, vis-a-
vis, an undue hardship would be created, the court will H
880 SUPREME COURT REPORTS [2008] 9 S.C.R.
A prefer the former interpretation. The proviso is an excep-
tion to the main clause whereas all industries which were
set up on or after 151h February become wholly ineligible
for any tariff concession but those who had set up prior
thereto shall continue to avail themselves of the said tar-
s iff concession. Legally, those who had not become con-
sumer o~ electrical energy, but were the potential consum-
ers, they had not only been applied for it but they were
and, in faG.t, some of them have also been gone into com-
mercial pro.d.uction. Once they have set up the high ten-
C sion industries and who had gone up for commercial pro-
duction must be held to have set up the high tension in-
dustries. Once th_ey have set up the high tension indus-
tries after 31s1 March, 1995, they became entitled to the ben-
efit of concessional tariff for a period three years. Such
concession was to be availed by them from the date of grant
0
of service connection. If they had already been granted
service connection, they would continue to avail them-
selves of the said tariff concession. However, the difficulty
arises only .in cases where despite applying for grant of
electrical communication, actual service connection had
E not been granted. If a literal interpretation of the proviso is
taken r~course to, the same may result in an anomaly in
the sense that in pne case, connection may be granted in
one day and in another case, connection may not be
granted for a long time. Because of the acts of discrimina-
F tion on the part of the officers of the Board or the State, the
entrepreneurs would suffer. It is in the aforementioned lim-
ited sense, the doctrine of promissory estoppel will have
application. If doctrine of promissory estoppel applies, the
right accrued in terms theieof cannot be withdrawn with a
G retrospective effect. [para 37] [903-G, 904-A-H, 905-A]
8. It is not a case where decisions were altered pur-
suant to any representation made by the State. Conces-
sions in tariff had been granted by reason of a statutory
provision. Such concessions could also be withdrawn. If
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 881
SPINNING MILLS LTD. & ANR.
the appellants have not altered their position pursuant to A
any promise, the doctrine of promissory estoppel would
not apply. If that be so, the question of any riEJht being
vested in the appellants would also not apply. In any event,
the reasonableness of the statute was not the subject
matter of the writ petition. [para 42] [907-A-C] B
Mahabir Vegetable Oils (P) Ltd. and Anr v. State of
Haryana & Ors. (2006) 3 SCC 620; Southern Petrochemical
Industries Co. Ltd. v. Electricity Inspector & ETIO & Ors. (2007)
5 SCC 447; MRF Ltd., Kottayam v. Asstt. Commissioner (As-
sessment) Sales Tax and others (2006) 8 sec 702; Tata c
Teleservices Ltd. v. Commissioner of Customs (2006) 1 SCC
746; State of Orissa and Others v. Tata Sponge Iron Ltd. (2007)
8 SCC 189 and State of Kera/a and Others v. Kurian Abraham
(P) Ltd. and Another (2008) 3 SCC 582 - referred to
D
9. A distinction must be made between a policy deci-
sion and a statute. Whereas prima facie a policy decision
may not have any retroactive operation, a statute may
have. Only because it affects a past transaction the same,
by itself, would not come in the way of the legislature in
enacting an enactment or the executive government to E
exercise its power of subordinate legislation. [para 44 ]
[909-8,C]
10. Some of the industries had even installed gen-
~
erators. They had to do it. They inevitably had to do it be- F
cause the Board would not supply power. It would be too
much to contend that even those industries have not
been set up as they have not become consumers. It is for
, the said purpose, the proviso has to be read down. It must
be made applicable to them who not only had started com-
G
mercial production before the said date, namely, 14.02.1997
.,. but also had applied and were otherwise ready to take elec-
trical connections having deposited the amount asked for,
wherefor their industries were otherwise ready for cons um-
ing electrical energy. [para 45] [909-C,D,E]
H
882 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 11. The matters have to be examined by the Appro-
priate Authority of the Board, as directed by the High Court
in individual cases. [para 46] [910-C]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3940
of 2008
B
From the final Judgment and Order dated 19/7/2005 of
the High Court of Judicature at Madras in W.A. No. 1735/1999
WITH
c C.A. Nos. 3941, 3942, 3943, 3944, 3945, 3946, 3947,
3948,3949,3950,3951,3952,3953,3954,3955,3956,3957,
3958,3959,3960,3961,3962,3963,3964,3965,3966,3967,
3968, 3969,3970,3971, 3972, 3973,3974,3975,3976, 3978,
3979,3980,3981,3982,3983,3984,3985,3986,3987,3988,
3989,3990,3991,3992,3993,3994,3995,3996,3997,3998,
D
3999,4000,4001,4002,4003,4004,4005,4006,4007,4008,
4009,4010,4011,4012,4013,4014,4015,4017,4018,4019,
4020,4021,4023,4024,4025,4026,4027,4028,4029,4030,
4031,4032,4033,4036,4035,4034,4037,4038,4039,4040,
4041,4042,4043,4044,4045,4046,4047,4048,4049,4050,
E 4051,4052,4053,4054,4055,4056,4057,4058,4060,4061,
4062,4063,4064,4065,4066,4067,4068,4070,4071,4072,
4073, 4075, 4076, 4077, 4078, 4080, 4081, 4083 and 4084 of
2008
F A.K. Ganguli, K. Ramamoorthy, K. Parasaran, S. Ganesh,
lndu Malhotra, E. Padmanabhan, G. Anoop Choudhary, Ramji
Srinivasan, T. Harish Kumar, V. Vasudevan, K.K. Senthilvelan,
Rakesh K. Sharma, V. Balaji, Narendra Kumar, Shashi M.
Kapila, Sandeep Mahapatra, Abhinav Agnihotri, Vikas Mehta,
M.A. Krishna Kumar, M.A. Chinaswamy, T.S. Shanthi, P.
G
Narashimhan, R.S. Paliwal, Punish Arora, Pranab Kumar
Mullick, K. Krishna Kumar, Chowhan, K.K. Mani, V.M. Shivkumar, ...
R.K. Pandey, Mayur R. Shah, B. Ragunath, P. Venkataraman,
Vijay Kumar, E.R. Kumar, Rukhmini Bobde, Shivshankar, Lalit 1-
Chauhan (for Mis. Parekh & Co.) V. Balachandran, V.
H
TAMIL NADU ELECT BOARD & ANR. v. STATUS 883
SPINNING MILLS LTD. &ANR. [S.B. SINHA, J]
Prabhakar, Ramjee Prasad, Revathy Raghavan, K.V. A
Viswanathan, V. Mohana, Hari Shankar K., Vikas Singh Jangra,
S. Nanda Kumar, G. Ananda Selvam, Satish Kumar, Tarun
Trivedi, V.N. Raghupathy, K. Swami, Yousa Lachampa, Prabha
Swami, P.H. Parekh, Naresh Kumar, Gaurav Agrawal, A.TM.
Sampath, S. Ravi Shankar, Guru Krishnakumar, Srikala B
Gurukrishna Kumar, Senthil Jagadeesan for the Appearing
Parties.
The Judgment of the Court was delivered by
S.B. SINHA, J : 1. Leave granted. c
2. These appeals at the instance of the Tamil Nadu Elec-
tricity Board (for short "the Board") and State of Tamil Nadu are
directed against a judgment and order dated 19.07.2005
passed by a Division Bench of the Madras High Court dismiss-
ing the writ appeals filed by the appellants herein arising out of D
a judgment and order dated 23.04.1999 passed by a learned
Single Judge of the said Court.
3. The basic fact of the matter is not in dispute.
4. The State of Tamil Nadu despite the Parliamentary en- E
actment of the Electricity (Supply) Act, 1948 (for short "the 1948
Act") enacted the Tamil Nadu Revision of Tariff Rates on Supply
of Electrical Energy Act, 1978 (for short "the 1978 Act"); the rel-
evant provisions whereof are as under:
"3. Tariff rates for consumption ~ electrical energy F
Not-withstanding anything contained in the Tamil Nadu
Essential Articles Control and Requisitioning (Temporary
Powers) Act, 1949 (Tamil Nadu Act XXIX of 1949), the
tariff rates payable to the Tamil Nadu Electricity Board by G
any consumer on the electrical energy supplied by the
Board shall be as specified in the Schedule to this Act.
4. Power of the State Government to amend the Schedule-
The State Government may after taking into account the H
884 SUPREME COURT REPORTS [2008] 9 S.C.R.
~
A Cost of production of energy, and such other matters as
may be prescribed by notification, amend the provisions
of the Schedule to this Act."
5. Pursuant thereto and in furtherance thereof, High Ten-
sion Supply tariff was prescribed. The State issued a G.O. bear-
B ing No. G.O.Ms No. 29 dated 31.01.1995 providing for tariff con-
cession for High Tension industries; the relevant portions
.J...
whereof are as under:
"a) In the case of new High Tension Industries to be set up
c in the areas other than the Madras Metropolitan areas,
the following concessional tariffs shall be charged for the
first three years from the date, the consumer is given
service connection under high tension tariff -1-
For the first year 60 per cent of the
D
High Tension rates.
For the second year 70 per cent of the
High Tension rates.
E For the third year 80 per cent of the
High Tension rates.
For the fourth year Full Tariff.
The above concession shall apply to both unit rates and
F maximum demand chares. This concession shall not
however, be applicable to an industry set up before the 3rd
May, 1989. The concession shall not also be applicable to
a consumer, who utilizes power from his own generating
units or makes other arrangements for production purposes
G and utilizes the power supplied by the Board for auxiliary
purposes only."
6. A memorandum was issued on or about 23.08.1995 to .,,
specify the time limit required for dealing with the applications
for grant of electrical connections as and when applications
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 885
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
therefor are filed which are in the following terms: A
.4-
"Adverting to the above, the following further instructions
are issued regarding disposal of H.T. applications.
i) The Superintending Engineers of all Elecy. Dist. Circle
are requested to bestow their efforts and thrive for B
clearing pending applications wherever possible.
ii) The delays in processing the H .t. applications should
be strictly avoided at all stages. The revised flow
chart showing the various stages of processing of
the H.T. applications is enclosed. c
iii) While scrutinizing the applications the defects
observed in the application may be conveyed to the
applicants at the first instance itself and not on piece
meal with a view to speed up the disposal.
D
iv) It is further to be reiterated that those H.T. applications
y
for which supply could not be extended within 18
months may be returned immediately to the
applications with a request to renew after a specific
date. E
v) If supply could be extended to applicants within 18
months but requires enhancement of transformer
capacity, improvement of existing lines etc., the load
sanction may be accorded pending execution of such
improvement works stipulating the above conditions. F
Depending on the readiness reported and also based on
the merits of the each case of H. T. extension, supply may
be effected to H.T. applicants using the powers delegated
to the Chief Engineers (Distribution) vide memo.no.SE/ G
IEMC/EE3/AEE1/802/91 dated 8.11.91.
All Superintending Engineers/Elecy. Distn. Circle are once
again informed to ensure that delays do not occur beyond
a reasonable time for r.irocessing the H.T applications as
HT services constitute major source of revenue for the H
886 SUPREME COURT REPORTS [2008] 9 S.C.R.
A Board and to bestow all efforts to achieve the target fixed
for the year 95-96 without fail."
7. The flow chart annexed thereto specified the maximum
period of 18 months' time to be taken from the date of filing of
the application till the date of grant of connection.
B
8. The G.O. dated 31.01.1995 was amended on
14. 02.1997 in the following terms:
"H.T. Tariff - I
c There is increase in both demands and energy charges.
For consumption of energy during peak hours viz. 6.00
AM to 9.00 AM and 6.00 PM to ~.00 PM, the energy
charges are to be billed at 20% extra. This will be
implemented on installation of 'Time of Day' meters.
D
New industries set up on or after 15.2.97 are not eligible
for any tariff concession. However, in respect of H.T.
industries set up in areas other than Chennai Metropolitan
area before 15.2 .97 shall continue to avail the tariff
concession until the expiry of 3 years period reckoned
E from date of service concession."
By a G.O. issued on 14.02.1997, the Schedule appended
to the 1978 Act was amended as under:
"(a) New High Tension Industries set up in any area on or
F after 15th February 1997, shall not be eligible for tariff
concession:
Provided that the High Tension Industries set up in any
area other than Chennai Metropolitan area before 15th
G February 1997 shall continue to avail themselves of the
said tariff concession until the expiry of the period of three
years from the date on which the consumer is given service
connection.
(b) New industry to be set up in the areas other than the
H Chennai Metropolitan area which will work night shift only
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 887
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
and existing industry which has only night shift between A
· 9.30 p.m. of a day and 5.30 a.m. of the next day, shall be
given a concession of 40 per cent of the appropriate rate
for energy consumed during night shift only for a period of
seven months from July to January during a period of five
years from the date of giving service concession. This B
concession shall apply to energy rate arrived at after fixing
the concession if any:
Provided that in respect of those having one day shift and
one night shift, the night shift concession shall stand
reduced from 40 per cent to 20 per cent." C
9. By a letter dated 1.08.1997 addressed to the Chair-
man of the Board, the State Government purported to clarify the
meaning of the word "set up", stating:
"I am to state that the words "set up" would mean "obtained D
service connection". The "New High Tension Industries
set up in any area or after 15th February, 1997 would
mean new High Tension Industries for which power service
connection was actually extended on or after 15.2.97."
10. Questioning the validity of the said notification dated E
14.02.1997 as also the letter dated 1.08.1997, a large number
of writ applications were filed contending that the same was
barred uru;ler the doctrine of promissory estoppel. Writ petitions
were also file9 contending that the petitioners had set up their
industries'p&ifore 14.02.1997 and they were entitled to the ben- F
efit of !~riff concession in terms of the proviso appended to
Clause (a) of High Tension Tariff - I. By a judgment and order
dated 23.04.1999, a learned Single Judge of the High Court
disposed of the said batch of writ applications directing:
G
a) Writ petitions which challenged the validity of the
· Notification dated 14.2.1997 withdrawing the
concessions were dismissed.
b) Those petitioners who had informed the Electricity
Board on or before 14.2.1997 about their readiness H
888 SUPREME COURT REPORTS [2008] 9 S.C.R.
A for getting power connection or made applications
to the Board would be entitled to enjoy the tariff
concessions for the full period of three years, from
the date of power connection as stipulated in the
Notification dated 31.1.1995.
B
c) Those writ petitioners who had not made applications
or sent intimation to the Electricity Board regarding
their readiness to got power connection on or before
14.2.97 but have altered their position by establishing
the industry on or before 14.2.97 would be entitled to
c the tariff concessions as stipulated in the Notification
dated 31.1.95 "provided if they are able to establish
the same before the 2nd respondent - Electricity
Board.
D 11. Appeals were preferred thereagainst both by the Board
and the State Government. Some of the industries who have
challenged the notification on the plea of applicability of the
doctrine of promissory estoppel also preferred appeals. Indis-
putably, during pendency of the said appeals before the Divi-
sion Bench of the High Court, the Schedule to the 1978 Act was
E further amended by a notification dated 7.01.2000 whereby and
whereunder the following Explanations were added:
"Explanation 1. - For the purpose of this clause, an
industry may be considered to be set up on the date of
F obtaining High Tension Service Connection.
Explanation 2. - For the purpose of this clause "Existing
Industry" means an industry, which has not completed five
years from the date, the consumer is given service
connection and which is still eligible to the concessional
G tariff rate."
12. The Division Bench of the High Court dispos.ing of the
said batch of appeals by a judgment and order dated
19.07.2005 opined that it was not necessary to discuss the in-
dividual fact of each of the respondents' case on the premise
H
TAMIL NADU ELECT. BOARD & ANR v. STATUS 889
SPINNING MILLS LTD. & ANR [S.B. SINHA, J]
... that the Secretary to the Government could not clarify the amend- A
ments to the Schedule which were made by the Governor. The
said appeals were disposed of holding:
i) " ... In the present case, the meaning of the words
"set up is clear. These words mean "erect or
establish", as pointed out by the Supreme Court. If B
the high tension industry has been erected or
established before 15.02.1997, then it is entitled to
the benefit of the tariff concession, even though
electricity connection may not have been given to it
prior to 15.02.1997. c
ii) We do not agree that it is the date on which the
application for electricity supply is received by the
electricity board that is the relevant date. An
application can be made even before setting up the
D
industry or it can be made after setting up the industry,
but that is wholly irrelevant. It is the date when the
industry has been set up that is the relevant date.
iii) We also do not agree that where the industries have
not been set up, but are in the process of being set E
up, yet, the benefit of the concession will be available,
on the basis of the principle of promissory estoppel.
There is no question of promissory estoppel because
> the language of the Notification is very clear and
there is no estoppel against a Statute." F
+
13. It is, thus, evident that two points were determined
against the respondents. No appeal has been preferred there-
from by the industries in question.
14. The core questions which arise for our consideration
G
are as under:
i) What is the connotation of the expression "set up" in
' the context of the concessional tariff granted in favour
of High Tension Industries for the first three years
"from the date, the consumer is given service H
890 SUPREME COURT REPORTS [2008] 9 S. C.R.
A connection?. -;..
ii) Whether the expression "set up" appearing in the
proviso to clause (a) of High Tension Tariff would
have to be construed in the context of the expression
"shall continue to avail themselves of the said tariff
B concession" appearing in the proviso?
iii) Whether the expression "set up" would also takes its j..
colour from the context that the continued tariff
concession could be availed by the High Tension
c Industries "until the expiry of the period of three years
from the date on which the consumer is given service
connection.?
iv) Whether the expression "set up" be not construed to
ensure certainty amongst the consumers who could
D continue to avail of the tariff concession and whether
the date on which the consumer is given a service
"(
connection provides such certainty?
v) Whether the Notification conferring tariff concessions
could be construed liberally to extend the benefit
E
thereof by construction of the expression "set up"
and by introducing the element of uncertainty?
15. Mr. A.K. Ganguly, learned senior counsel appearing
on behalf of the appellants would submit that the State of Tamil
F Nadu intended to confer benefit on a class of people. Such ~
classes of people having been identified as consumers of High
Tension Electrical Energy, it was permissible for the State not
only to fix a cut-off date but also to specify the same so as to
enable the industries to take the benefit only from the date when
they start consuming electrical energy. It was, however, submit-
G
ted that there can be some exceptional cases where despite
filing of applications for grant of electrical connection, there had
been some avoidable delays on the part of the Board. '
It was urged that for the purpose of grant of benefit of con-
H cession in tariff rate, the Board must know who the beneficia-
TAMIL NADU ELECT BOARD & ANR. v. STATUS 891
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
ries were. A
The learned counsel further submitted that the Division
Bench of the High Court committed a serious error insofar as it
failed to take into consideration that a High Tension industry
gets ready to discharge the functions for which it was set up,
only with certain formalities as provided for in the Indian Elec- 8
tricity Act, 1910 (for short "the 1910 Act") and the Rules framed
thereunder, viz, the Indian Electricity Rules, 1956 (for short "the
1956 Rules") are complied with. An industry starts functioning,
according to the learned counsel, only when it is ready to
operationalise its machinery which can only be done when the C
power connection is granted. One of the essential pre-requisite
therefor is certification and approval by the Inspector in terms
of Section 37 of the 191 OAct and Rule 63 of the 1956 Rules.
The said Rule reads as under:
D
"63. Approval by lnspector.-
(1) Before making an application to the Inspector for
permission to commence or recommence supply after an
installation has been disconnected for one year and above
at high or extra-high voltage to any person, the supplier E
shall ensure that the high or extra-high voltage electric
supply lines or apparatus belonging to him are placed in
position, properly joined and duly completed and examined.
The supply of energy shall not be commenced by the
supplier unless and until the Inspector is satisfied that the F
provisions of rules 65 to 69 both inclusive have been
complied with and the approval in writing of the Inspector
has been obtained by him:
Provided that the supplier may energise the aforesaid G
electric supply lines or apparatus for the purpose of tests
specified in rule 65 ... "
Compliance of Rule 63 of the 1956 Rules, Mr. Ganguly
submitted, is a definite parameter to assess the readiness of
industry to discharge the functions for which it had been set up. H
892 SUPREME COURT REPORTS [2008) 9 S.C.R.
A The Government letter dated 1.08 .1997 being clarificatory in
nature, the same should be given effect to. It was furthermore
contended that the subsequent notification dated 7.01.2000
whereby two Explanations were introduced is also clarificatory
in nature as a bare perusal of Explanation 1 would' demonstrate
B that it merely clarified what was inhered/ implied in the said pro-
viso which also reflects the undertaking of the government which
alone was competent to grant exemptions to concerned indus-
tries and/ or to withdraw or modify the same.
It was urged that the operative part of the order of the Divi-
C sion Bench should be suitably modified to reflect that the set-
ting up of an industry prior to 15.02.1997 implies that such in-
dustry was ready to discharge all the functions for which it had
been set up and that it has already become a consumer having
obtained High Tension service connection from 15.02.1997 and
D only those industries which have been set up before 15.02.1997
shall continue to avail themselves of the said tariff concession Y
until the expiry of the period of three years from the date on
which the consumer is given a service connection.
16. Mr. K. Parasaran and Mr. S. Ganesh, learned senior
E counsel and other learned counsel appearing on behalf of some
of the respondents, on the other hand, would contend that the
amendments to the Schedule carried out by the notification are
unreasonable being in contravention of the statute. The word
"set up" having been interpreted by this Court in Commissioner
F of Wealth Tax v. Ramaraju Surgical Cotton Mills, Ltd. [1967
(1) SCR 761] which in turn having been followed in Kabini Min-
erals (P) Ltd. and another v. State of Orissa and others [(2006)
1 sec 54], it must be held that the said word is in contra-dis-
tinction of the word "commence". Some of the High Tension in-
G dustries having already set up their business and having gone
for commercial production by reason of generators, it cannot
be said that they had not been set up. For the said purpose, not
only the doctrine of promissory estoppel should be applied, the
wordings of the Section should be read down to mean that those
H industries are entitled to the tariff concession who were not only
~
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 893
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
,;..
granted connection but who ought to have been granted con- A
nection.
It was pointed out that in most of the cases, not only the
entrepreneurs altered their position pursuant to or in furtherance
of the promise made by the State in terms of the notification
dated 31.01.1995. They had applied for grant of communica- B
ti on much prior to the cut off date fixed by the notification dated
14.02.1997. The entrepreneurs who had acted pursuant to the
promise made by the State should not be allowed to suffer for
no fault on their part.
c
17. The learned counsel in most of these matters have
drawn our attention to the factual matrix involved in each of the
cases to contend that it is the Board and/or the State who is
responsible for delay in granting electric energy. They have not
only set up the industry and ready for commercial production
D
y
but, in fact, some of them, pursuant to or in furtherance of the
permission granted by the State Electricity Board in terms of
the provisions of the Indian Electricity Rules, 1956 had set up
diesel generating sets for the purpose of running the factory
which even stands accepted by the Board.
E
It was urged that although no appeals have been preferred
from the judgment of the Division Bench of the High Court, this
Court in exercise of its jurisdiction under Order 41, Rule 33 of
the Code of Civil Procedure may permit the respondents to raise
the said contention. Reliance in this behalf has been placed on F
UCO Bank v. Rajinder Lal Cooper ((2007) 6 SCC 694].
18. The High Court unfortunately did not go into the fact of
each case. It proceeded on the basis that the word "set up"
should be given its dictionary meaning, i.e., erect or establish
in view of a decision of this Court in Ramaraju Surgical Cotton G
Mills Ltd (supra). The effect for a clarificatory order has also not
,, been considered stating that the Secretary of the Government
cannot clarify an amendment to the Schedule which has been
made by the Governor.
H
894 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 19. We wish that the Division Bench would have bestowed
serious considerations on the issues, as has beEin done by the
learned Single Judge.
20. The validity of the 1978 Act is not in question. It over-
rides the provisions of the 1948 Act. It empowered the State
B Government to amend the provisions contained in the Sched-
ule to the Act prescribing tariff rates payable by different classes
of consumers for supply of electrical energy by the Board tak-
ing into account the cost of production of energy and such other
matters as may be prescribed by notification. Indisputably, the
C Schedule appended to the Act had been amended from time to
time. The notification dated 31.01.1995 was issued amending
the Schedule. It for all intent and purport substituted the then
existing Schedule; Part A thereof dealt with tariff for High Ten-
sion supply. It is only in that notification some concession, as
D noticed hereinbefore, had been granted. The concession was
to apply to both unit rates and maximum demand charges. Cer-
tain limitations for grant of the said concession had also been
specified.
21. The Schedule was amended by the notification dated
E 14.02.1997 refle6:ting the operation of grant of concession tariff
to those who had set up the new High Tension industries on or
after 15.02.1997. What is, therefore, significant for our purpose
is the meaning of the word "set up" vis-a-vis "commencement".
F 22. A word cannot be assigned a meaning in vacuum. It
has to be read in the context in which it has been used. A deci-
sion which has been rendered on a different act dealing with a
different subject matter may not be apposite while construing
the same term in another statute. We may, however, at the out-
G set notice the decision of this Court in Ramaraju Surgical Cot-
ton Mills, Ltd. (supra) wherein this Court in the context of inter-
pretation of Section 5(1 )(xxi) of the Wealth Tax Act held:
" ... A unit cannot be said to have been set up unless it is
ready to discharge the function for which it is being set up.
H It is only when the unit has been put into such a shape that
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 895
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
it can start functioning as a business or a manufacturing A
organisation that it can be said that the unit has been set
up ... "
The decision centered round an exemption provision in
respect of a portion of net wealth of a company established
with the object of carrying on an industrial undertaking in India, B
a
as is employe~ by it in new and separate unit set up after the
commencement of the Act. Although different terms "setting up"
and "commencement" were used, this Court opined that the word
"set up" is equivalent to the word "established" and that a busi-
ness is established when it "is ready to commence business". It C
was furthermore opined that an establishment could not be set
up to be ready to commence business if it not "set up".
The said view was reiterated by this Court in Kabini Min-
erals (P) Ltd. (?upra) stating:
D
"9. The expression "setting up" means, as is defined in
the Oxford English Dictionary, "to place on foot" or "to
estal!>lish", and is in contradistinction to "commence". The
distinction is this that when a business is established and
is ready to commence business, only then it can be said E
of that business that it is set up. But before it is ready
to commence business it is not set up. (See CWT v.
Ramaraju Surgical Cotton Mills Ltd.)
10. In the said case. it was further held that the word "set
up" is equivalent to the word "established" but operations F
for establishment cannot be equated with the
establishment of the unit itself of (sic or) its setting up."
23. What is necessary to take into consideration is that
the Schedule appended to Section 3 of the 1978 Act is a part of G
the Act. It provides for High Tension tariff. It fixes up cut-off dates.
It is a piece of subordinate legislation. A subordinate legislation
validly made may have to be read in the same manner as if it is
a part of the Act. For the said purpose, although the same would
be amenable to constitutional challenge on well-settled prin- H
896 SUPREME COURT REPORTS [2008) 9 S.C.R.
A ciples of law, as noticed by this Court in Bombay Dyeing & ...
Mfg. Co. Ltd. (3) v. Bombay Environmental Action Group and
Others [(2006) 3 SCC 434), Vasu Dev Singh and Others v.
Union of India and Others [(2006) 12 SCC 753) and State of
Kera/a and Others v. Unni and Another [(2007) 2 SCC 365),
8 the validity thereof is not under challenge.
24. The notification dated 31.01.1995 postulated conces-
sion to the new High Tension industries "to be set up" for the
first three years from the date the consumer is given a service
connection. It did not speak of commencement of production. It
c intended to attain a certainty as to from which date such con-
cession would be available. Grant of service connection was
considered to be a pre-requisite for grant of the concession. It
is in the aforementioned context, the impugned amendment will
have to be construed. It fixes a cut off date beyond which the
D concession shall not be available to the industries, viz., those
who had set up in any area on or after 15.02.1997.
25. The proviso appended thereto, however, saves the
cases of those who had availed themselves of the said tariff
concession and they who would continue to get the benefit
E thereof until expiry of the period of three years from the date on
which the consumer is given service connection. The date on
which the service connection is given, therefore, plays an im-
portant role.
F The clarification issued by the State during pendency of
the appeals should have, therefore, been considered by the High
Court in its proper perspective. If it is clarificatory in nature, it
could be given a retrospective operation. Such a question, how-
ever, should have been posed and answered. Furthermore, the
letter dated 1.08.1997 was issued as some confusion arose.
G
When a subordinate legislation is made by the State Govern-
ment, it must be done in terms of the constitutional provisiolil.
An executive order is also issued keeping in view the rules and
executive business. It may not have the force of law but the same
may come within the purview of the wel:-known principle of con-
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 897
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
temporaneous exposito. Rules of executive construction are A
also relevant.
26. The Government placed the entire record before the
learned Single Judge. In his judgment, the learned Single Judge
recorded:
B
"14. The learned Senior Counsel has produced the note
file of the Government. From the file, I am able to see that
the Chairman, Electricity Board himself while constructing
the said expression 'set up' has stated that 'withdrawal of
tariff concession to the industries set up with respect to c
the industries during 1994 the date of load sanction was
taken into account'. The Chairman has also recommended
to the effect that tariff concession which prevailed prior to
14.2.1997 can be extended to consumers who have
informed readiness on or before 14.2.1997 and certified
D
as such all Field Superintending Engineers on inspection
of the industry after receipt of readiness report, and after
15.2.1997, due to the reason that it was not informed prior
to 14.2.1997."
27. It does not appear that the Chief Secretary of the State E
\.
had issued the letter in question upon following the procedure
laid down in the Rules of Executive Business framed under Ar-
ticle 166 of the Constitution of India. We are, however, not much
concerned therewith. It is not a case where the opinion of the
Chief Secretary and/or for that matter the State was decisive. In F
the matter of interpretation of statute, the Court has the last say.
We have, therefore, to consider the issues raised before
us independently.
28. Furthermore, concession is to be given in respect of
G
payment of the charges for electrical energy. When can it be
,, given would be a question of fact. When it has been given would
be known to everybody. The bills are required to be paid only
after electrical energy is consumed. Question of availing the
benefit of concession would not arise unless a service connec-
H
898 SUPREME COURT REPORTS (2008],9 S.C.R.
A tion is granted. For the said purpose, the definition of consumer, •
as contained in Section 2(1 )(c) of the 1910 Act would be rel-
evant. The benefit can be availed by the consumer keeping in
view the nature of concession granted. Exemption notifications,
therefore, require construction depending upon the tenor of the
B statute/ notification. Whether it should undergo a strict construe-
tion or a liberal construction is one thing but it is another thing
that whether a person is entitled to concession on a plain read-
ing of the notification.
It may be true that the exemption notification should re-
c ceive a strict construction as has been held by this Court in
Novopan India Ltd. Hyderabd v. Collector of Central Excise ~
and CustofT!S, Hyderabad (1994 Supp. (3) S.C.C. 606], but it
is also true that once it is found that the industry is entitled to the
benefit of exemption notification, it would receive a broad con-
D struction. [See Tata Iron & Steel Co. Ltd. v. State of Jharkhand
(2005) 4 SCC 272 and A.P Steel Re-Rolling Mill Ltd. v. State
of Kera/a (2007) 2 SCC 725].
A notification granting exemption can be withdrawn in public
interest. What would be the public interest would, however, de-
E pend upon the facts of each case. ;
29. In State of Jharkhand v. Tata Cummins Ltd. [(2006) 4
SCC 57], this Court held:
"6. Before analysing the above policy read with the ...
F notifications, it is important to bear in mind the connotation
of the word "tax". A tax is a payment for raising general
revenue. It is a burden. It is based on the principle of ability
or capacity to pay. It is a manifestation of the taxing power
of the State. An exemption from payment of tax under an
G enactment is an exemption from the tax liability. Therefore,
every such exemption notification has to be read strictly. :
However, when an assessee is promised with a tax "'
exemption for setting up an industry in the backward area
as a term of the industrial policy, we have to read the
H implementing notifications in the context of the industrial
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 899
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
policy. In such a case, the exemption notifications have to A
be read liberally keeping in mind the objects envisaged
by the industrial policy and not in a strict sense as in the
case of exemptions from tax liability under the taxing
statute."
30. The word "set up", therefore, was also required to be B
construed keeping in view the provisions of the statute opera!-
ing in the field, viz., the 1910 Act, the 1948 Act and the 1956
Rules.
31. Validity of the notifications on the ground they are un- c
reasonable has not been raised before the High Court. We,
therefore, cannot go into the issue. If that be so, it is difficult to
agree with Mr. Parasaran that we should undertake an exercise
to interpret the notifications in a manner which would not lead to
unreasonableness. For the purpose of declaring a statute un-
D
constitutional, foundational facts have to be laid therefor. [See
y Mis. Seema Silk & Sarees & Anr. v. Directorate of Enforce-
ment & Ors. Criminal Appeal@ SLP (Crl.) No. 6812 of 2007
decided on 121h May, 2008]. Grounds are required to be raised
therefor. In absence thereof it would not be possible for us to
enter into the debate of constitutionality of the said provisions. E
The Division Bench of the High Court had rightly or wrongly
opined that the doctrine of promissory estoppel has no appli-
cation. The fact that the said doctrine may apply even in relation
to a statute is beyond any dispute as has been held by this Court
.... in Mahabir Vegetable Oils (P) Ltd. and Another v. State of F
Haryana and Others [(2006) 3 SCC 620], A.P Steel Re-Roll-
ing Mill Ltd (supra), Pawan Alloys and Casting Pvt. Ltd. v. UP
State Electricity Board and others [(1997) 7 SCC 251] and
Southern Petrochemical Industries Co. Ltd. v. Electricity In-
spector & ETIO and Others [(2007). 5 SCC 447] G
32. Strong reliance has been placed by Mr. Parasarn on
)Y Shah v. Shah [2002 Q.B. 35 : (2001) 4 All ER 138] to contend
that the doctrine of promissory estoppel is applicable even in
the field of the statute. Therein, it was held:
H
900 SUPREME COURT REPORTS [2008] 9 S.C.R.
,,
A "In the Godden case [1997] NPC 1 an attempt was made
to defeat by an estoppel the provision in section 2(1) of
the 1989 Act that "a contract for the sale or other disposition
of an interest in land can only be made in writing and only
by incorporating all the terms which the parties have
B expressly agreed in one document or, where contracts
are being exchanged, in each". Simon Brown LJ stated
that the argument that "although Parliament has dictated
that a contract involving the disposition of land made
otherwise than in compliance with section 2 is void, the
c defendants are not allowed to say so" was "an impossible
argument". Simon Brown LJ regarded the principle stated
in Halsbury's Laws as a "cardinal rule" the "absolute nature"
of which cannot be "outflanked by one of the equitable
techniques or types of estoppels sought to be deployed in
the present case". Thorpe LJ and Sir John Balcombe
D
agreed with Simon Brown LJ.
Yaxley v Gotts [2000] Ch 162 was also concerned with ~
section 2 of the 1989 Act. An oral agreement purporting
to grant an interest in land, though void and unenforceable
E under section 2, was held still to be enforceable on the
basis of a constructive trust under section 2(5) which
provides that "nothing in this section affects the creation
or operation of resulting, implied or constructive trusts".
Robert Walker LJ stated, at p 175: "Parliament's
F requirement that any contract for the disposition of an
interest in land must be made in a particular documentary
form, and will otherwise be void, does not have such an
obviously social aim as statutory provisions relating to
contracts by or with moneylenders, infants, or protected
tenants. Nevertheless it can be seen as embodying
G
Parliament's conclusion, in the general public interest, that
the need for certainty as to the formation of contracts of
this type must in general outweigh the disappointment of ...
those who make informal bargains in ignorance of the
statutory requirement. If an estoppel would have the effect
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 901
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
of enforcing a void contract and subverting Parliament's A
purpose it may have to yield to the statutory law which
confronts it, except so far as the statute's saving for a
constructive trust provides a means of reconciliation of
the apparent conflict." Clarke LJ stated, at p 182, that
where a particular estoppel relied upon would offend the B
public policy behind a statute it is necessary to consider
..4. the mischief at which the statute is directed. Where a
statute had been enacted as the result of the
recommendations of the Law Commission it *44 is
appropriate to consider those recommendations. He c
stated that in his opinion: "the contents of that report
[Transfer of Land: Formalities for Contracts of Sale etc of
Land (1987) (Law Com No 164)] will be of the greatest
assistance in deciding whether or not the principles of
particular types of estoppel should be held to be contrary
D
to the public policy underlying the Act. In this regard it
seems to me that the answer is likely to depend upon the
facts of the particular case." Beldam LJ stated, at p 191,
that ''The general principle that a party cannot rely on an
estoppel in the face of a statute depends upon the nature
of the enactment, the purpose of the provision and the E
social policy behind it."
The said decision has also been referred to Actionstrength
Ltd. (trading as Vital Resources) v. International Glass Engi-
neering IN.GLEN SpA and another [2003 (2) All. E.R. 615 at
... F
619], but therein it was held that the doctrine of promissory es-
toppel may not be applicable in case of a statute. As would
appear from the discussions hereinafter, applicability of the said
doctrine would depend upon various factors including the na-
ture and purport of the Statute, the object it seeks to achieve,
G
the purpose for grant of concession/exemption etc. ·
,, 33. It, therefore, depends on the nature of the statute as
also applicability of the doctrine. As noticed hereinbefor.e, -ev~n
such a question had not been raised before the High"Court.
H
902 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 34. The GOMs dated 31.01.1995 granted concession for ...
the new high tension industries to be set up. The eligibility for
grant of concession therefore was for the industries which were
to be set up after H'le said date. The exemption does not stop at
that. It is given a retrospective effect. It is extended to those
B industries which were set up after 3.05.1989. However, excep-
tion therefor is sought to be curved out in respect of those in-
dustries who had been utilizing power from their own generat- ...
ing units or making other arrangements for production for the
purposes and utilizing the power supplied by the Board in aux-
c iliary purposes only. The said notification, therefore is a broad
based one. It not only is to apply to those industries which were
to be set up on or from 31.01.1995 but also to those which were
set up after 3.05.1989.
We may notice that concessional tariffs, however, were to
D be granted only for three years. Those three years of
concessional tariffs, therefore, were available to any industry
~
which had been set up after 3.01.1989 till the concession is
withdrawn. Unlike other notifications, no period is fixed. This
Court, in a number of decisions, has considered the effect of
E the notifications which were applicable for a fixed period, may
be three years or five years. The concession, although was to
apply for a period of three years both in respect of unit as also
maximum demand charges, the same was meant to be applied
to all those industries who intended to set up their industries in
F the areas other than Madras Metropolitan areas. ...
Indisputably, the respondents before us have started set-
ting up their industries after the said date. It is on the aforemen-
tioned backdrop, the impugned notification dated 14.02.1997
requires interpretation. Those who had set up their industries
G have acquired a right, viz. the right to obtain the tariff conces-
sion orice a right is accrued in their favour. What was promised
to them was that they would be granted the tariff concession for
a period of three years@60%, 70% and 80% of the consump-
tion charges.
H
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 903
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
35. Whether by reason of the said notification dated A
14.02.1997, an accrued or vested right has been taken away
or not is the question. The core question, therefore, is as to
whether by reason of the said notification dated 31.01.1995,
the entrepreneurs who had set up new high tension industries
after the said date have acquired any right pursuant thereto. B
The notification dated 31.01.1995 must be interpreted in
a broad based manner, as a promise was made to grant the
concessional tariff not only for the new industries which were to
be set up thereafter but also to the pre-existing industries. The
right accrued to them is sought to be taken away w.e.f. C
15.02.1997. Those who were eligible upto 14.02.1997 to avail
the benefit of the notification dated 31.01.1995 became ineli-
gible. It is in the aforementioned context, the proviso appended
to clause (a) is required to be interpreted. It has used the term
'set up' in any area other than Chennai Metropolitan area be- D
fore 15.02.1997. Should the rule of liberal interpretation be ap-
plied? In our opinion, it should not be. An accrued right ordi-
narily cannot be taken away with retrospective effect. It is not a
case where the notification has a retroactive operation. A per-
son may apply on a particular date for grant of electrical con- E
nection. He may get the electrical connection within a few'days
or a few weeks or a few months. According to the State Elec-
tricity Board, keeping in view the role played by all the three
players, namely, the consumer, the Board and the State, an outer
limit of 18 months is taken for grant of supply. F
36. There are cases before us wherefrom it appears that
electrical connections had not been provided owing to default
on the part of the Electrical Inspector who is an officer of the
State and/or authorities of the Board, although prompt action
had been taken in the matter of depositing of money and/or G
complying with directions by the consumers.
37. A statute, even a subordinate legislation, may have to
be construed reasonably. A subordinate legislation ordinarily
would not be given a retrospective effect. Retrospective effect H
904 SUPREME COURT REPORTS [2008] 9 S.C.R.
A can be granted only if there exists any power in that behalf. There
is nothing to show that such a power has been conferred upon
the State in terms of the Act. While saying so, we are not oblivi-
ous of the situation that the State has a statutory power to fix the
tariff. It may also be true that when a statutory power is con-
8 ferred, the State would have power to amend, alter, modify or
rescind the same. The Court must also bear in mind that it may
not cause undue hardship. What we mean to say that if con-
struction of a statute is possible as a result of hardship is
avoided, vis-a-vis, an undue hardship would be created, the court
c will prefer the former interpretation. The proviso is an exception
to the main clause whereas all industries which were set up on
or after 151' February become wholly ineligible for any tariff con-
cession but those who had set up prior thereto shall continue to
avail themselves of the said tariff concession. Legally, those
who had not become consumer of electrical energy, but were
0
the potential consumers, they had not only applied for it but they
were and, in fact, some of them has also been gone into com-
mercial production. Once they have set up the high tension in-
dustries and who had gone up for commercial production must
be held to have set up the high tension industries. Once they
E. have set up the high tension industries after 31•1 March, 1995,
they became entitled to the benefit of concessional tariff for a
period three years. Such concession was to be availed by them
from the date of grant of service connection. If they had already
been granted service connection, they would continue to avail
F themselves of the said tariff concession. However, the difficulty
arises only in cases where despite applying for grant of electri-
cal communication, actual service connection had not been
granted. If a literal interpretation of the proviso is taken recourse
to, the same may result in an anomaly in the sense that in one
G case, connection may be granted in one day and in another
case, connection may not be granted for a long time. Because
of the acts of discrimination on the part of the officers of the
Board or the State, the entrepreneurs would suffer. It is in the
aforementioned limited sense, the doctrine of promissory es-
H toppel will have application. If doctrine of promissory estoppel
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 905
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
'
applies, the right accrued in terms thereof cannot be withdrawn A
with a retrospective effect. [See Mahabir Vegetable Oils (P)
Ltd. (supra) Southern Petrochemical Industries Co. Ltd. (su-
pra)]
38. In MRF Ltd., Kottayam v. Asstt. Commissioner (As-
sessment) Sales Tax and others [(2006) 8 sec 702], this Court B
held:
"In any event, the appeal preferred by the State of Kerala
was dismissed and the judgment of the High Court has
therefore become final. Accordingly, it was held that Section c
10(3) does not confer the power to withdraw an exemption
with retrospective effect. Effect of this is that the amendment
Notification SRO No. 38/98 has to be read so as not to
take away or disturb any manufacturer's pre-existing
accrued right of exemption for a period of 7 years. If SRO D
No. 38/98 is construed as now contended by the
respondent, then the inevitable consequence would be
that SRO No. 38/98 would itself be rendered ultra vires
Section 10(3) of the Act, and therefore, illegal, bad in law
and null and void."
E
39. Yet again, in Tata Teleservices Ltd. v. Commissioner
of Customs [(2006) 1 SCC 746], this Court held:
"10. We are of the view that the reasoning of the Bombay
Bench of the Tribunal as well as that of the Andhra Pradesh
High Court must be affirmed and the decision of the Delhi F
Tribunal set aside insofar as it relates to the eligibility of
LSP 340 to the benefit of the exemption notification. The
Andhra Pradesh High Court was correct in coming to the
conclusion that the Board had, in the impugned circular,
predetermined the issue of common ,Jarlance that was a G
matter of evidence and should have been left to the
Department to establish before the adjudicating authorities.
The Bombay Bench was also correct in its conclusion that
the circular sought to impose a limitation on the exemption
notification which the exemption notification itself did not H
906 SUPREME COURT REPORTS [2008] 9 S.C.R.
A provide. It was not open to the Board to whittle down the
exemption notification in such a manner. The exemption
notification merely reproduced the language of Entry 8525
20 17 and since the exemption notification merely
reproduced the tariff entry, the limitatiort sought to be
B imposed by the Board would tantamount also to reading
the limitation intoJhe classification itself."
40. In State of Orissa and Others v. Tata Sponge Iron Ltd.
[(2007) 8 SCC 189], this Court held:
c "20. In view of the clear legal provision as also the
aforementioned Notification dated 23-9-1992, there
cannot be any doubt whatsoever that the exemption in
respect of deferment of sales tax having been provided
for under the Orissa Sales Tax Act as also the notification
issued thereunder, the High Court, in our opinion, is correct
D
in taking its view."
41. In State of Kera/a and Others v. Kurian Abraham (P)
Ltd. and Another [(2008) 3 SCC 582], it was opined :
"23. Tax administration is a complex subject. It consists of
E
several aspects. The Government needs to strike a
balance in the imposition of tax between collection of
revenue on one hand and business-friendly approach on
the other hand. Today, Governments have realized that in
matters of tax collection, difficulties faced by the business
F have got to be taken into account. Exemption, undoubtedly,
is a matter of policy. Interpretation of an Entry is
undoubtedly a quasi-judicial function under the tax laws.
Imposition of taxes consists of liability, quantification of
liability and collection of taxes. Policy decisions have to
G be taken by the Government. However, the Government
has to work through its senior officers in the matter of
difficulties which the business may face, particularly in
matters of tax administration. That is where the role of the
Board of Revenue comes into play. The said Board takes
H administrative decisions, which includes the authority to
TAMIL NADU ELECT. BOARD & ANR. v. STATUS 907
SPINNING MILLS LTD. &ANR. [S.B. SINHA, J]
grant Administrative Reliefs. This is the underlying reason A
for empowering the Board to issue orders, instructions
and directions to the officers under it."
42. It is not a case where decisions were altered pursu-
ant to any representation made by the State. Concessions in
tariff had been granted by reason of a statutory provision. Such 8
concessions could also be withdrawn. If the appellants have not
altered their position pursuant to any promise, the doctrine of
pro_missory estoppel wou1d not apply. If that b~ so, the question
of any right being vested in the appellants would also not apply.
In any event, the reasonableness of the statute was not the sub- C
ject matter of the writ petition. The provisions have not been
sought to be declared ultra vires. Even otherwise, the State while
amending statute stated abou1 the public interest necessitated
the same. When a statute is amended keeping in view the pub-
lic interest even the concession can be withdrawn with retro- D
spective effect.
43. In Kasinka Trading & Anr. v. Union of India & Anr.
[(1995) 1 SCC 274], the power of the State to change its policy
decision in public interest was E'.mphasized. It was held that the
power which can be used for grant of concession, namely, Sec- E
tion 25(1) of the Customs Act itself is the source to rescind the
earlier notification, stating :
"Since, the notification had been issued under Section
25(1) of the Act. the very same power was available to the F
authority for rescinding or modifying that notification and
appellant ought to have known that the said notification
~
was capable of or liable to be revoked, modified or
rescinded at any time even before the expiry of 31.3.1981
if the 'public interest' so demanded. To hold that after the G
Government had issued the Notification No.66 of 1979
indicating that it was to remain operative till 31.3.1981, it
could not be rescinded or modified before the expiry of
that date would arn0unt to prohibiting the Government from
discharging its statutory obligation under Section 25(1) of H
908 SUPREME COURT REPORTS (2008] 9 S.C.R.
A the Act, if it was satisfied that it was in the 'public interest'
to withdraw, modify or rescind the earlier notification. The
plain language of Section 25 of the Act is indicative of the
position that it is the public interest and public interest
alone which is the dominant factor. It is not the case of the
B appellants that the withdrawal of Notification No.66of1979
by the impugned notification was not in 'public interest'.
Their case, however, is that relying upon the earlier
notifications they had acted and the Government should
not be permitted to go back on its assurance as otherwise
c they would be put to huge loss. The courts have to balance
the equities between the parties and indeed the courts
would bind the Government by its promise 'to prevent
manifest injustice or fraud'."
It was further held :
D
"23. The appellants appear to be under the impression
that even if, in the altered market conditions the continuance
of the exemption may not have been justified, yet,
Government was bound to continue it to give extra profit
to them. That certainly was not the object with which the
E notification had been issued. The withdrawal of exemption
"in public interest" is a matter of policy and the courts
would not bind the Government to its policy decisions for
all times to come, irrespective of the satisfaction of the
Government that a change in the policy was necessary in
F the "public interest". The courts, do not interfere with the
fiscal policy where the Government acts in "public interest"
and neither any fraud or lack of bona fides is alleged
much less established. The Government has to be left
free to determine the priorities in the matter of utilisation
G of finances and to act in the public interest while issuing
or modifying or withdrawing an exemption notification
under Section 25(1) of the Act."
Kasinka Trading (supra) has been followed in many cases
H including, Shrijee Sales Corporation & Anr. v. Union of India
TAMIL NADU ELECT BOARD & ANR. v. STATUS 909
SPINNING MILLS LTD. & ANR. [S.B. SINHA, J]
[(1997) 3 SCC 398], Bannari Amman Sugars Ltd. v. Commer- A
cial Tax Officer & Ors. [(2005) 1 SCC 625], Ku/deep Singh v.
Govt. of NCT of Delhi [(2006) 5 SCC 702], M.P Mathur & Ors.
v. OTC & Ors. [(2006) 13 SCC 706] and Ramchandra Murarilal
Bhattad & Ors. v. State of Maharashtra & Ors. [(2007) 2 SCC
588]. B
44. A distinction must be made between a policy decision
and a statute. Whereas prima facie a policy decision may not
have any retroactive operation, a statute may have. Only be-
cause it affects a past transaction the same, by itself, would not
come in the way of the legislature in enacting an enactment or C
the executive government to exercise its power of subordinate
legislation.
45. We have noticed hereinbefore that some of the indus-
tries had even installed generators. They had to do it. They in- D
evitably had to do it because the Board would not supply power.
Would it not be too much to contend that even those industries
have not been set up as they have not become consumers?
We think that for the said purpose, the proviso has to be read
down. It must be made applicable to them who not only had
started commercial production before the said date, namely, E
14.02.1997 but also had applied and were otherwise ready to
take electrical connections having deposited the amount asked
for, wherefor their industries were otherwise ready for consum-
ing electrical energy.
F
46. Those hard cases, even according to Mr. Ganguly,
should be brought within the purview of the proviso.
We, therefore, held:
1. As the concession had been granted by the State, it G
had the power to withdraw the same.
2. It is not a case where in view of the doctrine of
promissory estoppel, the State could not have in law
amended the Schedule.
H
910 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 3. In view of existence of public interest the doctrine of
promissory estoppel would have no application.
4. Even otherwise the appellal'lts having not preferred
appeals against the judgment of the Division bench
of the High Court, the said questions cannot be
B permitted to be raised before us.
5. Proviso appended to the main provision should be ;.
read down as stated in paragraphs 44 and 45 supra.
6. In view of our findings aforementioned, we have not
C gone into the merit of the matter involved in each
case separately.
We direct accordingly. The matters would now be exam-
ined by the Appropriate Authority of the Board, as directed by
the High Court in individual cases. The appeals are allowed
with the aforementioned directions. No costs.
S.K.S. Appeals allowed.
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