EXECUTIVE ENGINEER, UTTARANCHAL POWER CORPORATION v.

M/S. KASHI VISHWANATH STEEL LTD. & ORS. (Civil Appeal No. 1106 of 2007)

MAY 12, 2010

[Harjit Singh Bedi and T.S. Thakur, JJ.] [2010] 6 SCR 1086

The Judgment of the Court was delivered by

T.S. THAKUR, J. 1. This appeal by special leave arises out of an order  dated 17th January, 2007 passed by the High Court of Uttaranchal at Nainital  

whereby  Writ  Petition  No.936  of  2001  filed  by  respondent  M/s  Kashi  

Vishwanath Steels Ltd.  has been allowed and order dated 7th December,  

2001  passed  by  the  Executive  Engineer  (Electricity)  Distribution  Division,  

District Udham Singh Nagar, quashed.

2. Uttar Pradesh State Electricity Board was established by the State of  

Uttar Pradesh in terms of the provisions of the Electricity (Supply) Act, 1948.  

With  the  enactment  of  Uttar  Pradesh  Electricity  Reforms  Act,  1999  the  

Government constituted Uttar Pradesh Electricity Regulatory Commission. In  

terms of a Notification dated 7th August, 2000 the Commission stipulated the  

tariff  for  the supply of electricity effective from 9th August,  2000. The rate  

schedule for large and heavy power, inter alia, provided that consumers who  

opt for power supply during the restricted/peak hours shall pay an additional  

surcharge of 15% on the amount billed at the “Rate of Charge” under item-4A  

of the Schedule. It further provided that consumers getting power supply from  

independent feeders emanating from 400/220/132 KV sub-stations shall pay  

an additional surcharge of 15% on demand and energy charges subject to the  

condition that these consumers will get assured electricity supply of minimum  

500  hours  in  a  month.  In  case  of  shortfall  in  the  guaranteed  hours  of  

electricity supply, the consumers were entitled to a rebate @ 1% for each 10  

hours shortfall on the bill amount computed under “Rate of Charge”. Relevant

portion of the Tariff Rate Schedule HV-2 forming part of Notification dated 7th  

August, 2000, reads as under:  

“...........

Notes:

(a)  In  respect  of  consumers  who  opt  for  power  supply  during  

restricted/peak hours an additional surcharge of 15% on the amount billed  

at the “Rate of Charge” under item 4-A above, i.e. Demand Charge and  

Energy Charge shall be levied.

However,  in  respect  of  consumers  getting  power  supply  on  

independent  feeders  emanating  from 400/220/132  KV  sub-stations  an  

additional  surcharge of  15% on demand and energy charges shall  be  

charged further subject to the condition that these consumers will get an  

assured supply of minimum 500 hours in a month. In case of short fall in  

above guaranteed hours of supply a rebate @ 1% for each 10 hours short  

fall  will  be  admissible  on  the  bill  amount  computed  under  “Rate  of  

Charge”.

.......................”

3. Respondent- Kashi Vishwanath Steels Ltd. (hereinafter referred to as  

the  ‘KVSL‘  for  short)  is  a  public  limited  company  registered  under  the  

Companies Act. On 9th November, 1995 it had entered into an agreement  

with Uttar Pradesh Power Corporation Ltd., Lucknow (respondent no.4 in this  

appeal) for the supply of electrical energy ipfor the production of Furnace and  

Steel Rolling Manufacturing (Process) unit at Narayan Nagar Kashipur in the  

form of three phase Alternating Current at a declared pressure of 33000 Volts  

and a power of not exceeding 4800 K.V. amperes. The said agreement was  

followed by a fresh agreement executed on 28th March, 2000 between the  

company and the Uttar Pradesh Power Corporation Ltd., inter alia, providing  

that the company shall pay for the supply of energy at the rates stipulated by  

the supplier from time to time and that the rate schedule applicable at the

time of execution of the agreement could be revised at the discretion of the  

supplier.  With  the  tariff  prescribed  by  the  U.P.  Electricity  Regulatory  

Commission becoming effective for  the supply  received by the consumer-

company the latter  became liable to pay in terms of  the said tariff.  Some  

confusion, however, appears to have arisen in regard to the interpretation of  

the tariff prescribed by the Commission particularly in relation to the levy of  

15% surcharge upon consumers who drew power from independent feeders.  

The Corporation purported to clear the mist by issuing a circular dated 8th  

September, 2000 whereunder it  purported to give certain guidelines to the  

concerned subordinate officers and demanded strict compliance thereof. The  

circular,  inter  alia,  provided  that  if  consumers  connected  to  independent  

feeders did not want electricity supply for the guaranteed period of 500 hours,  

no  such  surcharge  of  15% could  be  levied  provided  they  intimate  to  the  

Executive  Engineer  that  they do  not  want  the  guaranteed  supply  for  500  

hours. The relevant portion of the circular reads as under:

“2.(a) In the rate schedule HV-2, as a result of the guarantee of 500 hours  

electricity supply of independent feeder from 400, 220 and 132 KV sub  

stations, 15% surcharge shall be levied. Consumers of this category shall  

be  ensured  500  hours  electricity  supply  per  month.  Due  to  lesser  

electricity supply than 500 hours, they shall be given 1% deduction for  

every ten hours in their electricity bill. If consumers connected with these  

independent  feeders  do  not  want  guarantee  of  500  hours  electricity  

supply then, in that event, they shall not be imposed 15% surcharge in  

their  bills.  Such  consumers  shall  intimate  the  Executive  Engineer  

distribution by registered post  that  they do not  want guarantee of  500  

hours electricity supply. The Executive Engineer shall issue office memo  

in this regard. If any consumer of this category does not give any option  

then he shall be ensured 500 hours electricity supply and 15% surcharge  

shall be taken. S.S.O./Junior Engineer shall be responsible to ensure that  

the consumer in question does not use electricity during the restricted

period. If consumers of this category use electricity in the restricted period  

also then they shall be charged 15+15 = 30% surcharge.”

4. It  was pursuant to the above circular that the KVSL addressed two  

letters one dated 6th October, 2000 and the other dated 16th October, 2000  

to the Executive Engineer of the Corporation to the effect that the former did  

not require the assured supply of electrical energy for 500 hours and that they  

may  not  be  required  to  pay surcharge  at  the  stipulated  rate  of  15%.  On  

receipt  of  the  said  letters  the  Executive  Engineer  issued  an  office  memo  

dated 24th October, 2000 granting exemption to the KVSL from payment of  

15%  surcharge  subject  to  the  unit  complying  with  the  other  conditions  

stipulated in the memo.

5.  In  the  meantime M/s  L.M.L.  Limited  who had  also  entered  into  an  

agreement with U.P. State Electricity Board for supply of electrical energy for  

its factory at Kanpur filed Writ Petition No.40692 of 2000 in the High Court of  

Judicature at Allahabad challenging levy of surcharge on the total energy bill  

payable by it. The petitioner’s case in that petition was that it was not only  

observing the peak hour restrictions but was not consuming power during the  

restricted hours  hence was not  liable  to  pay the surcharge of  15% being  

demanded  from  it.  In  the  reply  filed  on  behalf  of  the  electricity  supply  

company it was on the other hand stated that power was being supplied to  

the petitioner from an independent feeder emanating from 400/220/132 KVS  

and consequently the petitioner was liable to pay 15% surcharge under the  

tariff determined by the U.P. Electricity Regulatory Commission. It was also  

stated that payment of 15% surcharge by consumers drawing energy from an  

independent  feeder  was  not  subject  to  the  observance  of  peak  hours  

restrictions because those who consume power between 6 p.m. to 1 p.m. had  

to pay an additional amount of 1% surcharge on the energy charge.

6. A Division Bench of the High Court of Allahabad dismissed the writ  

petition mentioned above holding that there was absolutely no confusion of

any kind in the tariff approved by the Regulatory Commission to call for any  

clarification in the form of the circular referred to earlier. It was also declared  

that for consumers drawing power from independent feeders emanating from  

400/220/132  KVS  sub-  stations  there  existed  no  provision  in  the  tariff  

prescribed by theCommission requiring them to exercise any option in the  

matter.  The  only  benefit  that  the  consumers  who  drew  power  from such  

independent feeders but who do not get supply for the minimum 500 hours in  

a month were granted a rebate @ 1% for every 10 hours or part thereof if the  

continuous supply had failed. The High Court observed:

“There is absolutely no ambiguity or confusion of any kind in the tariff as  

approved by the Commission. It clearly contemplates two categories of  

consumers.  One  category  is  of  consumers  who  get  power  supply  on  

independent feeders emanating from 400/220/132 KV sub stations. The  

two categories are wholly independent and distinct and they are not inter  

linked with each other. The third condition mentioned at the bottom of the  

box clearly shows that a consumer cannot get power supply in restricted  

hours as a matter  of  right  and he shall  have to  take permission from  

UPPCL with intimation to the Commission. It follows that if a consumer  

does not apply for permission from UPPCL and such a permission is not  

granted he shall not get power supply in restricted hours and he will not  

be required to pay 15 per cent surcharge. However, so far as consumers  

getting  power  supply  on  independent  feeders  emanating  from  

400/220/132 KV sub stations are concerned, they have to pay 15 per cent  

surcharge  on  demand  and  energy  charges.  This  levy  of  15  per  cent  

surcharge is dependent only upon the fact that the consumer is getting  

power supply on an independent feeder emanating from 400/220/132 KV  

sub  stations  and  it  is  not  dependent  upon  getting  power  supply  in  

restricted hours. It is also noteworthy that for such category of consumers  

there is no provision for taking any option to the effect that he does not  

want  an  assured  supply  of  500  hours  in  a  month.  The  only  benefit

provided to him in the tariff is that he is assured of supply of minimum 500  

hours in a month and in case of shortfall in the guaranteed hours of the  

supply, a rebate @ 1 per cent 10 hours or part thereof shall be admissible  

on the total amount computed under “Rate of Charge”.

7.  Relying  upon  the  view taken  by  the  High  Court  in  the  above  writ  

petition the Uttarakhand Power Corporation established upon bifurcation of  

the U.P. Power Corporation in terms of Section 63 of the U.P. Reorganisation  

Act issued an order dated 7th December, 2001 withdrawing the exemption  

granted to  KVSL by the erstwhile  U.P.  State  Power Corporation Ltd.  The  

withdrawal order is in the following terms:

“In the aforesaid context, in the light of judgment of the Hon’ble High  

Court,  Allahabad the Uttar  Pradesh Power Corporation Ltd.  vide order  

No.1423/HC/UPCL/Five-  1974+204  C/2000  dated  8.9.2000  has  been  

cancelled  from  the  date  of  its  issuance  itself.  Accordingly,  Memo  

No.3184/Vi.Vi.kha/dated  24.10.2000  is  cancelled  from  the  date  of  

issuance 24.10.2000. The bills of M/s Kashiviswanath are ordered to be  

amended in accordance with the concerned billing tariff since 8.9.2000.”

8. Aggrieved by the above order KVSL filed writ petition No.936 of 2001  

before the High Court of Uttaranchal challenging Note (a) of Clause IV, Rate-

Schedule in Category HV-2 List II of the tariff to be unconstitutional and for  

quashing the revised bill issued to KVSL. A mandamus directing Uttaranchal  

Corporation not to levy any surcharge on the supply energy to the consumer  

was also prayed for.

9.The above petition was allowed by the High Court of Uttaranchal by its  

order dated 17th January, 2007. The High Court took the view that since the  

petitioner KVSL did not require assured supply of 500 hours electricity in a  

month it was not liable to pay 15% surcharge and that the exemption granted  

by the U.P. Power Corporation Ltd.  was valid and in accordance with  the  

provisions of the Notification dated 8th September, 2000. The demand raised

by the Corporation was accordingly struck down. Aggrieved by the said order  

the Uttaranchal Power Corporation filed Civil Appeal No.1106 of 2007 in this  

Court which was heard alongwith Civil Appeal No.5789 of 2002 filed by LML  

Ltd. against the order passed by the High Court of Allahabad dismissing Writ  

Petition No.40692 of 2000 filed by the said company. Similar other appeals  

filed  by  other  units  against  identical  orders  passed  by  the  High  Court  of  

Allahabad were also heard and disposed of by this Court by a common order  

dated 13th December, 2007. This Court held that in so far as the U.P. Power  

Corporation had made a promise to anyone of the consumers the same was  

enforceable.  In the case of  Uttarakhand Power Corporation,  however,  this  

Court  found no  such promise  to  have  been made to  the  consumer.  Civil  

Appeal No.1106/2007 filed by the Uttarakhand Power Corporation against the  

judgment of the High Court of Uttarakhand was accordingly allowed on that  

basis. In so far as appeals arising out of the judgment of the Allahabad High  

Court and touching the question of surcharge on consumers drawing power  

from independent  feeders  were  concerned  the  same  were  allowed  to  be  

withdrawn in view of the fact that several matters involving the said question  

were  pending  before  the  Regulatory  Commission.  The  appellants  were  

permitted  to  agitate  the  said  point  before  the  Commission.  The  relevant  

portion of the order passed by this Court may at this stage be extracted:

“50.  Similarly  Uttaranchal  Power  Corporation  also  does  not  appear  to  

have made such a promise. The doctrine of promissory estoppel in those  

cases also will have no application.  

51.  In  view  of  the  fact  that  several  matters  are  pending  before  the  

Commission on question of independent feeder we need not express any  

opinion thereupon. If any appeal is pending before the Commission on  

the  said  question  it  would  decide the  same independent  of  the  same  

irrespective  of  the  result  of  this  decision.  We,  therefore,  without  

expressing any opinion  on the  said  question,  permit  the  appellants  to  

agitate the same point before the Commission.

52.  We,  therefore,  allow  these  appeals  only  to  the  extent  mentioned  

hereinbefore in terms of the promise made by U.P. Power Corporation  

and allow the appeals on question of independent feeder to be withdrawn  

subject to the observations made by us hereinabove. 53. Civil Appeal No.  

5789  of  2002  which  relates  to  Kanpur  Electricity  Supply  Company  is  

dismissed.

54. Civil Appeal No. 1106 of 2007 filed on behalf of Uttaranchal Power  

Corporation is allowed.

55. There shall, however, be no order as to costs.

SLP (C) No. 6721 of 2007

The only issue involved in  this petition is  the question of  independent  

feeder and the appeal being pending before the Commission, this special  

leave petition is permitted to be withdrawn.

Sd/-

(S.B. SINHA)

Sd/-

(HARJIT SINGH BEDI)”

10. I.A.No.2 of 2008 in Civil  Appeal No.1106 of 2007 was filed in this  

Court for seeking clarification/modification of the above order primarily on the  

ground  that  the  observations  made  in  para  50  are  erroneous  since  

Uttarakhand Power Corporation was non-existent during the relevant period.  

There  was  according  to  the  applicants  no  question  of  any  such  promise  

having been made to respondent-KSVL by a non-existent entity. The promise  

was according to the applicant made by U.P. Power Corporation which was  

binding  upon  the  Corporation  as  also  its  successor  in-interest,  namely,  

Uttarakhand Power Corporation after the same came into existence w.e.f. 9th  

November, 2001. It is further stated that the dispute in the instant case was  

with regard to the period between September 2000 when the exemption of

surcharge was granted to the consumer and 1st September, 2001 when the  

same was discontinued.  

11.  In  substance  the  case  of  the  applicant  was  that  a  

representation/promise had been made to it by the U.P. Power Corporation  

which promise having been held enforceable qua other units similarly situated  

as  the  applicant,  could  not  be  ignored  in  so  far  as  the  applicant  was  

concerned. The promise was according to the applicant binding even upon  

the successor-Corporation, namely, Uttarakhand Power Corporation and the  

very fact that no promise was made by Uttarakhand Power Corporation did  

not make any difference so long as the liability arising out of the promise  

made by the U.P. State Corporation was clear and legally enforceable.  

12. The above application was heard and finally disposed of by a Bench  

of Hon’ble Harjit Singh Bedi and Hon’ble Aftab Alam, JJ. with the following  

direction:

“Learned  counsel  for  the  parties  agree  that  the  judgment  dated  

13.12.2007 of this Court be recalled in C.A. No.1106 of 2007. We order  

accordingly. C.A. No.1106 of 2007 will be heard on its own merit.”

13. It is in the light of the above order that this appeal has been heard for  

disposal afresh.

14. The order of discontinuing the surcharge w.e.f. 1st September, 2001  

reads:

“The  U.P.E.R.C.  in  terms  has  recorded  that  discontinuation  of  15%  

surcharge  is  due  to  (i)  inability/incapability  on  the  part  of  UPPCL for  

technical and operational reasons to ensure the guaranteed supply of 500  

hours, (ii) it was difficult for UPPCL even to distinguish between the two  

consumers  on independent  feeder  who asked for  assured  supply and  

who  do  not,  (iii)  most  of  the  consumers  having  opted  against  this  

agreement  and  (iv)  the  financial  implication  was  also  negligible  if  the  

scheme was discontinued.”

15.  Appearing  for  the  appellant  Mr.  Shanti  Bhushan,  learned  senior  

counsel  strenuously  argued  that  the  circular  issued  by  the  U.P.  State  

Corporation  modifying  the  tariff  prescribed  by  the  Regulatory  Commission  

was wholly without any jurisdiction and could be recalled by the Uttarakhand  

Power Corporation w.e.f. the date the same was issued. Inasmuch as such a  

withdrawal  was  ordered  by  the  Corporation  it  committed  no  illegality  

especially  when  the  withdrawal  was  supported  by  clear  and  authoritative  

pronouncement  of  the  High  Court  of  Allahabad  stating  that  the  grant  of  

exemption  tantamounted  to  modifying  the  tariff  which  modification  the  

corporation was not legally competent to make. It was further argued by Mr.  

Shanti Bhushan that there was no question of any promise having been made  

either by U.P. State Corporation or the Uttarakhand Power Corporation. In the  

absence of any such promise and in the absence of any material to show that  

the petitioner had acted upon any such promise and changed its position,  

there was no question of interfering with the order withdrawing the exemption  

on the basis of the principles of equitable estopple.

16.  On  behalf  of  the  respondent-KVSL,  it  was  on  the  other  hand,  

submitted that since a promise was found to have been made by the U.P.  

Power Corporation to other consumers and since the said promise has been  

held to be enforceable, there was no justification for taking a different view  

insofar as the respondent-company is concerned. It was also submitted that  

once U.P. Corporation is held to be bound by the promise made by it  the  

Uttarakhand Corporation which came into existence upon reorganization of  

the State had no option but  to  make the said promise good.  It  could not  

retrospectively withdraw the same only with a view to recover money which  

even  the  U.P.  State  Power  Corporation  would  not  have  been  entitled  to  

recover.

17.  In  Writ  Petition  No.942 of  2001 filed by the  respondent-KVSL the  

material  facts  were  not  disputed.  It  was  unequivocally  admitted  that  the  

respondent-company was a consumer getting supply from an independent

feeder emanating from 400/220/132 KV sub station. It was also not in dispute  

that  with  the  coming  into  existence  of  State  of  Uttarakhand  w.e.f.  9th  

November, 2000 a new Power Corporation for the said State was established  

on  1st  April,  2001.  The  respondent-company’s  further  case  is  that  

Uttarakhand Power Corporation did not charge 15% surcharge on monthly  

demand and energy charges for the period April 2001 to October, 2001 and  

that it is only on 7th December, 2001 that the applicant received an intimation  

that circular dated 8th September had been revoked and letter dated 24th  

October  cancelled.  That  the  U.P.  Electricity  Regulatory  Commission  had  

approved a new tariff  by order dated 1st September, 2000 and U.P. State  

Power Corporation had issued a consequential Notification dated 10th July,  

2001 is also not in dispute. The said notification, it is noteworthy, does not  

any  longer  provide  for  15% surcharge  from  consumers  getting  supply  of  

energy from independent feeders. Suffice it to say that while according to the  

applicant-KVSL  circular  issued  by  the  U.P.  Power  Corporation  dated  8th  

September,  2001  giving  an  option  to  the  consumers  was  valid  and  in  

accordance with law, there is not even a murmur in the writ petition filed by  

the respondent-company to the effect that either the U.P. Power Corporation  

or its successor had at any point of time made any promise to the company  

that supply of energy would be without any surcharge notwithstanding the fact  

that the tariff prescribed by the Regulatory Commission envisaged the levy of  

surcharge on electricity supplied directly from an independent feeder. There  

is similarly no averment whatsoever in the writ petition to the effect that the  

respondent-KVSL had altered its position acting upon any such promise. Not  

only that the agreements executed between the parties, namely, KVSL on the  

one  hand  and  Power  Corporation  on  the  other  also  did  not  contain  any  

unequivocal promise for supply of energy, no matter the supply was made  

from an independent feeder. In the absence of even an averment to the effect  

that  there  was  a  promise  made  by  the  U.P.  State  Power  Corporation  

regarding supply of energy without payment of surcharge and in the absence

of any material to show that the respondent-KVSL had indeed acted upon any  

such promise it is difficult to see how the said company can insist upon any  

such non-existent promise being made good. It is trite that before a party can  

rely  upon on the doctrine of  promissory  estoppel  it  must  make a  specific  

averments and place material on record to demonstrate that a promise was  

indeed made to it. There is neither any averment nor any material to support  

the plea of promissory estoppel in the case at hand.

18. It is also noteworthy that the High Court of Uttarakhand did not find a  

case in favour of the respondent-KVSL on the ground which is now sought to  

be  urged  in  the  present  appeal.  It  is  one  thing  to  say  that  the  plea  of  

promissory estoppel is available to a consumer but an entirely different thing  

to say that such a plea has been made good by the material on record.

19. We have, therefore, no hesitation in repelling the contention that any  

promise was made by the U.P. State Power Corporation to the respondent-

KVSL which could justify the grant of any mandamus in its favour for making  

good any such promise.

20. We allow this appeal and set aside the order 17 th January, 2007 passed by the  

High Court of Uttaranchal in Writ Petition No.936 of 2001 filed by respondent-

KVSL with costs of Rs.50,000/-.