REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9748 OF 2003

M/s. Kothari Industrial Corporation Ltd. ..        Appellant

 -versus-

Tamil Nadu Electricity Board & Another ..    Respondents

[With Civil Appeal Nos. 9749/2003 & 9750/2003]

J U D G M E N T

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  

here.

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.

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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  

supply.

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  

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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  

them.

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8. Let the papers of this case be placed before Hon’ble the Chief Justice  

of India for constitution of a larger bench.   

………………………..J. (Markandey Katju)

…………………… …….J. (T. S. Thakur)

New Delhi; October 01, 2010

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