17 September 1996
Supreme Court
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ESTER INDS. LTD Vs U.P.S.E.B.

Bench: K. RAMASWAMY,G.B. PATTANAIK
Case number: SLP(C) No.-018156-018156 / 1996
Diary number: 68870 / 1996


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PETITIONER: M/S. ESTER INDUSTRIES LTD.

       Vs.

RESPONDENT: U.P. STATE ELECTRICITY BOARD & ORS.

DATE OF JUDGMENT:       17/09/1996

BENCH: K. RAMASWAMY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      This special  leave petition  arises from  the judgment and order  of the Division Bench of the Allahabad High Court at Lucknow made on May 8, 1996 in writ Petition No.10195/89.      The admitted  position is  that the Government of Uttar Pradesh  had   laid  down   a  sanction  for  grant  of  10% developmental rebate  in supply  of electricity to the newly set up  industries on  July 16,  1986 and  that was to be in Vogue till  1990. It  is the  claim of  the petitioner  that pursuant to  that policy,  the petitioner  had  set  up  his industry in  Nainital District. Consequently, he is entitled to the  rebate. When  the bill was issued, the Board imposed its tariff  rates contrary  to the rebate. Resultantly, they filed the  writ petition.  The High  Court in  the  impugned judgment has held that Section 78A of the Indian Electricity (Supply) Act,  1984 (Act  54 of 1948) (for short, the ’Act’) being a  legislative policy, the Board was not automatically bound by  the directions issued by the State Government. The Board is  entitled to  revise tariff  in accordance with its procedure. Therefore,  writ could  not be  issued compelling the Board  to follow  the directions  issued  by  the  State Government. Thus, this special leave petition.      It is  contended for the petitioner that in view of the law laid  down by  this Court  in Real  Food Products Ltd. & Ors. vs.  A.P. State  Electricity Board  & Ors. [AIR 1995 SC 2234] in  particular paragraph  8, the Board is bound by the directions issued by the State Government. The view taken by the High Court is, therefore, not correct in law. We find no force in  the contention.  It is well settled legal position that the  fixation of the tariff is a legislative policy and the Board is entitled to revise unilaterally the tariff from time to  time. The  consumer is bound by the revision of the tariff  duly  notified  in  accordance  with  the  procedure prescribed under  the Act. The question is: whether contrary to the conditions of the tariff entered into by the parties, the policy direction issued by the State would be interposed and be  revised by  the Electricity Board in consonance with the directions  issued by  the  State  Government?  In  this regard, the  observations of  this Court  in paragraph 8 are worth recapitulation:

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    "The  only  surviving  question  is      with  regard   to  the  nature  and      effect of  the direction  given  by      the State  Government under Section      78 A  of the  Act. The question has      to be  examined in  the context  of      the confined  to thee charging of a      flat rate per H.P. for agricultural      pump  sets.   The  nature   of  the      function if the Board in the fixing      the tariffs  and the  manner of its      exercise  has  been  considered  at      length in  the earlier decisions of      this Court  and it does not require      any  further   elaboration  in  the      present case. Section 78 A uses the      expression  "the   Board  shall  be      guided  by   such   directions   on      question of  policy as may be given      to it  by the State Government". It      does appear that the view expressed      by  the   State  Government   on  a      question of policy is in the nature      of a  direction to  be followed  by      the Board in the area of the Policy      to which it relates. In the context      of the  function of  the  Board  of      fixing the  tariffs  in  accordance      with Section  49 read  with Section      59 and other provisions of the Act,      the Board  is to  be guided  by any      such   direction   of   the   State      Government, as in the present case,      was to  fix a  concessional  tariff      for agricultural  pump  sets  at  a      flat rate  per H.P., it does relate      to a  question of  Policy which the      Board  must   follow.  However,  in      indicating the  specific rate  in a      given case, the action of the State      Government may  be in excess of the      power of  giving a direction on the      question  of   Policy,  which   the      Board,   if   its   conclusion   be      different, may  not bee  obliged to      be bound  by. But  where the  Board      considers even  the rate  suggested      by the  State Government  and finds      it  to   be   acceptable   in   the      discharge  of   its   function   of      decision of  the Board would not be      vitiated  merely   because  it  has      accepted the  opinion of  the State      Government even  about the specific      rate. In  such  a  case  the  Board      accept the  suggested rates because      that appears  to be  appropriate on      its own view. If the view expressed      by  the  State  Government  in  its      direction  exceeds   the  State  of      policy, the  Board may not be bound      by it unless it takes the same view      on merits itself."      Section 78A(1)  of  the  Act  postulates  that  in  the discharge of  its functions,  the Board  shall be  guided by

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such directions on questions of policy as may be given to it by the  State Government.  In other  words, the  Electricity Board has a statutory function to discharge in determination of the  rates of  tariff and terms and conditions subject to which the electrical energy be supplied to the consumers and enforcement thereof.  This being a legislative policy, while exercising the  power under  Section 78A  policy  directions issued  by   the  Government   may  also   be   taken   into consideration by the Electricity Board which has a statutory duty to  perform. But so long as the policy direction issued by the  Government is  consistent with the provisions of the Act and tariff policy laid down by the Board, it may be open to the  Board to  either accept  it or  may not  accept  the directions as  such. It  is  for  the  State  Government  to consider whether  the Board  has laid  down  the  policy  or whether the direction issued by the State Government has not been properly implemented. The Court cannot give a direction to implement  the directions  issued by the State Government exercising the  power under  Article 226 of the Constitution to direction  the Board  to exercise its power under Section 78A(1) of  the Act.  Sub-section (2)  has no application for the reason  that if  the Board feels any doubt as to whether the direction  issued by the Government is in the realm of a policy or  otherwise, then  it  shall  be  referred  to  the authority constituted  under the Act whose decision shall be final, i.e., de hors the question in this case.      The learned  counsel for  the petitioner has brought to our notice  that this  Court has  granted leave  against the judgment of  another  Division  Bench  on  the  question  of applicability of the promissory estoppel. In this case, that question does  not arise  for the reason that the promissory estoppel would  apply only  in a  case where  there  was  no contract executed  between the  parties. In this case, since there exists  a contract  duly executed  by law  between the petitioner and  the Board  which binds  them, unless  it  is revised, the question of promissory estoppel does not arise. Considered from  this perspective,  we are  of the view that the High  Court has  not committed any manifest error of law warranting interference.      The special leave petition is dismissed.