M/S. KOTHARI INDUSTRIAL CORP. LTD. Vs. TAMILNADU ELECTRICITY BOARD & ANR.
Markandey Katju, J.
1. These appeals have been filed against the common judgment and
order of the Madras High Court dated 06.12.2001 in Writ Appeals Nos. 421
& 488 of 1985 etc. The facts have been stated out in great detail in the
impugned judgment of the High Court in which the points contended by the
parties herein have been dealt with. Hence we are not repeating the same
2. The appellants have set up new industries in which a major raw
material is said to be power (electricity). It is alleged by the appellants that
due to large consumption of power, the economic viability of their project is
very sensitive to power tariffs. It is further alleged that the appellants were
attracted by the tariff concessions given under Tamil Nadu Revision of
Tariff Rates on Supply of Electrical Energy Act, 1978 (Tamil Nadu Act 1 of
1979). In the Schedule to the said Act, new industries were to be given the
benefit of concessional tariffs for the first five years of production. It is
alleged that on the basis of said promise the appellants proceeded in setting
up their projects and established their industrial units which commenced
production. The appellants were sanctioned the power supply by the
respondents and started production.
3. Subsequently, by notification dated 30.4.1982 the respondents by
revising the tariff introduced a new condition to the tariff concession,
namely, that the said concession was not to apply from the year when the
industry starts earning profits. On the basis of the above notification, the
appellants were asked by the respondents to give an undertaking, which they
gave, fearing disconnection of their power supply.
4. It is alleged by M/s. Kothari Industrial Corporation Limited, which is
one of the appellants before us, that in the year 1982-83 they disclosed a net
profit of Rs.7,07,572/- which under Income Tax Act was available for set off
against carry forward losses which amounted to Rs.45,20,611/- . Hence it
was alleged that in fact the said appellant incurred losses. The appellant has
been served notice to pay Rs.2,09,433/- to avoid disconnection of power
5. The appellants have relied on the decisions of this Court in Pawan
Alloys & Casting (P) Ltd. vs. U.P. State Electricity Board & Ors. (1997) 7
SCC 251, Southern Petrochemical Industries Company Limited vs.
Electricity Inspector and E.T.I.O. & Ors. (2007) 5 SCC 447, Shri Bakul Oil
Industries & Anr. vs. State of Gujarat & Anr. (1987) 1 SCC 31 etc. On the
basis of the aforesaid decisions the appellants relied on the doctrine of
promissory estoppel and legitimate expectation.
6. On the other hand, the respondents have alleged that there is no
estoppel against the statute, and the amendment to the Schedule by which
the concession was restricted was a legislative act. They have relied on the
decisions of this Court in Union of India & Ors. vs. Godfrey Philips India
Limited (1985) 4 SCC 369, State of Tamil Nadu vs. K. Sabanayagam &
Anr. (1998) 1 SCC 318 and Jalan Trading Co. (Pvt. Ltd.) vs. Mill Mazdoor
Union 1967(1) SCR 15. The respondents have also alleged that since the
appellants have given a specific undertaking to abide by the G.O. dated
30.4.1982 they are estopped from challenging the same vide Kasinka
Trading & Anr. vs. Union of India & Anr. (1995) 1 SCC 274 and Shrijee
Sales Corporation & Anr. vs. Union of India (1997) 3 SCC 398. The
respondents have also alleged that Section 4 of the 1978 Act empowered the
Government to amend the Schedule to the Act vide Tamil Nadu Electricity
Board vs. Status Spinning Mills Ltd. & Anr. (2008) 7 SCC 353.
7. We are of the opinion that there seems to be some difference of
opinion in the various decisions by different benches of this Court. Hence
the matter needs to be decided by a larger bench of this Court, on the issue
as to whether the principles of promissory estoppel and legitimate
expectation are applicable in this case. The larger bench may also consider
whether the undertaking given by the appellants acts as an estoppel against
8. Let the papers of this case be placed before Hon'ble the Chief Justice
of India for constitution of a larger bench.
.......J. (T. S. Thakur)
October 01, 2010