http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 25  

PETITIONER: INDIAN ALUMINIUM COMPANY LIMITED AND ANR.

       Vs.

RESPONDENT: KARNATTAKA ELECTRICITY BOARD AND ORS.

DATE OF JUDGMENT13/05/1992

BENCH: RAY, G.N. (J) BENCH: RAY, G.N. (J) KASLIWAL, N.M. (J)

CITATION:  1992 AIR 2169            1992 SCR  (3) 213  1992 SCC  (3) 580        JT 1992 (3)   535  1992 SCALE  (1)1157

ACT:      Electricity  (Supply)  Act,  1948 : Section  49  :  (As amended by Karnataka Act 33 of 1981)-Constitutional validity of.      Company-Establishment   of  Aluminium  Smelter   Plant- Tripartite agreement between Company, Electricity Board  and State-Provision  for supply of electricity  at  concessional rates-Amendment  of  Electricity  (Supply)  Act-Effect   of- Imposition of enhanced revised tariff in supersession of the terms of the Agreement-Inclusion of Aluminium Smelter  Plant in  power  intensive  industries  i.e.  category  HT-IA  and imposition   of  uniform  tariff  rate  on  all   industries catgorised as HT-IA-Validity of.      Held   Amending  Act  was  not  invalid  for  want   of legislative competence-Nor was it violtive of Article 14  or 19(1) (g)-Revised levy held valid-Direction to consider  the levy of tariff sympathetically.      Administrative     Law-Promissory     estoppel-Company- Electricity Board-State-Agreement for supply of electricity- Concessional   rate-Agreement   based   on   negotiations-No unilateral  promise  or assurance by  State  or  Electricity Board-Amendment  of  Act-Imposition of  enhanced  tariff  on uniform  basis on industries classified under one  category- Doctrine of promissory estoppel held inapplicable.      Doctrine of legitimate expectation:      Constitution of India, 1950 : Article 14 :      Equality-Classification-Principles  for  exclusion   or inclusion-Question of hostile discrimination-Examination of- Not mere phraseology but the real effect of  the  provisions should be looked into.      Constitution-Interpretation     of-Ascertainment     of legislative  competence-Provisions  should not  be construed with  narrow  or  pedantic  approach-Should  be  interpreted broadly and liberally.                                                        214

HEADNOTE:      The appellant-Company established its Aluminium Smelter Plant  at Belgaum in the State of Karnataka.  On  March  26, 1966  a  tripartite agreement was entered into  between  the Company,  the Electricity Board and the State of  Karnataka.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 25  

A  second  tripartite  agreement,  in  supersession  of  the earlier  one,  was  entered on August 7,  1976  between  the parties  providing for uninterrupted supply of power to  the company at concessional rates.  According to the  appellant- Company, the  agreement  of 1976 was made  in  view  of  the industrial  policy  of  the  Government  of  India  and  the guidelines  stated  by  the  Government  in  the  matter  of electricity  tariff  to be applied to aluminum  plants.   In July  1980, the Electricity Board increased the  power  rate far   beyond   the  prescribed  rate   in   the   agreement. Subsequently, the State of Karnataka enacted the Electricity (Supply) (Karnataka Amendment) Act, 1981 amending Section 49 of the Electricity (Supply) Act 1948. The amended Section 49 empowered the Electricity Board to increase its tariff rates notwithstanding  any  agreement  with  the  consumers.    On February  2,  1981 the  Board further increased  the  tariff rate.   Aggrieved  by  increase  of  tariff  rates  and  the consequential  demands for payment of bills on the basis  of increased   tariff, the  company  filed  a   writ   petition challenging  the vires of the Amending Act on the  score  of legislative  competence and also on the ground of  arbitrary action of revising the tariff without justification and  the unjust classification of the Aluminium Smelter Plant in  the category  of other power tariff industries included  in  the category  of HT IA Industries ignoring the special  features of  aluminium  smelter plant.  It was  also  contended  that since the State Government invited the company to  establish the  plant  by  assuring uninterrupted supply  of  power  at concessional rates, the principle of promissory estoppel was applicable and consequently the demand of tariff contrary to agreement was illegal and arbitrary.      The  High  Court upheld the validity  of  the  impugned legislation  by  holding  that  :  (1)  under  the   amended provisions  of  Section 49 of the Electricity  (Supply)  Act uniformity  was the basis of tariff and since all the  power tariff  industries were treated alike, the  treatment  meted out to the company was not discriminatory under Article  14; (2)  the enhancement of tariff was not violative of  Article 19(1) (g); (3) no special promise was held out by the  State or  Electricity  Board  to the  Company  that  a  particular formula  will  be  applied in the  case  of  consumption  of electricity by the company; that the doctrine of  promissory estoppel was not attracted in the sphere of statutory  power and since the impugned action was a consequence                                                   215 of  the  amended  provision of Section 49  the  question  of promissory estoppel did not arise; (4) the State Legislature was  not  denuded  of   its  legislative  competence  merely because  the  Parliament declared aluminium  industry  as  a controlled  industry under the Industries  (Development  and Regulation)  Act, 1951; and (5) the notification  issued  by the Central Government fixing the aluminium policy and  also indicating  the tariff affecting the aluminium industry  was not repugnant to the impugned provisions under the  Amending Act of State Legislature.      Against  the  decision of the High  Court, the  company filed an Appleal in this Court challenging the vires of  the Amending  Act  as well as the levy of  enhanced  electricity tariff  contending  that  ;  (1)  since  the  agreement  was tripartite  it  could  not  have  been  annulled  by  taking recourse  to the amended provisions of Section 49  and  that the  Electricity Board unjustly repudiated the agreement  by revising  the tariff exhorbitantly and making it  applicable uniformly to all the power intensive industries; (2) even if the  Amending  Act was intra-vires empowering the  Board  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 25  

charge  uniform  tariff  from  consumers  categorised  in  a particular  industry there was no justification  to  include the company’s plant in other power intensive industries; (3) the  smelter aluminium plant has some special  and  peculiar features  and its inclusion in the category of  other  power intensive industries  included in the HT IA category was  an unjust   classification   violating  Article   14   of   the Constitution; (4) the High Court failed to note that a clear case  of promissory estoppel was made out by the  appellant- company  and that it was still applicable without  violating Section 49 of the Electricity (Supply) Act.      Dismissing the appeal, this Court,      HELD  : 1. The amending Act does not  suffer  from  any infirmity  affecting  its  vires  either  on  the  score  of legislative competence or for offending Articles 19(1)(g) or Article 14 of the Constitution. [236 - D]      2.  In deciding the question of legislative  competence one  must  bear in mind that the Constitution is not  to  be construed  with a narrow or pedantic approach and it is  not to  be construed as a mere law but as a machinery  by  which laws  are made.  Such interpretation should be made  broadly and  liberally.   The  entries  in  the  Constitution   only demarcate   the   legislative  fields  of   the   respective legislature  and  do not confer legislative power  as  such. [236 D - F]                                                        216      3.   In   examining   the   allegations   of    hostile discriminatory  treatment,  what is looked into is  not  its phraseology  but  the real effect of  its  provisions.   The legislature has been permitted to exercise an extremely wide discretion in classifying items for collection of revenue so long  as it refrains from clear and  hostile  discrimination against particular persons or classes.  It however should be borne  in  mind  that  with  all  these  latitudes   certain irreducible  consideration  of  equality  shall  govern  the differential treatment even in fiscal legislation.  The test could  only be of palpable arbitrariness in the  context  of left  needs  of the time and social exigencies  informed  by experience.  There cannot be any precise or set formulae  or doctrinaire   test  or  precise  scientific  principles   of exclusion or inclusion. [236 G H, 237 - A]      4.  It is true that the smelter plant  has  distinctive features  in its manufacturing mechanism and in the  process of  electrolytic operation.  Also the smelter plant  is  not only  power intensive industry but the power assumes a  very significant  role and constitutes one of the  important  raw materials in the productive process.  But the categorisation of  the smelter plant as a high power intensive industry  is not by itself illegal or perverse, or without any basis  and wholly  unjustified.   In the  broader  classification,  the smelter  plant is certainly a high power intensive  industry and  such categorisation was made by the Board not  for  the purpose  of enforcing the amended Section 49 with an  object to  annul  the agreement but such  categorisation  was  made even  earlier. In the circumstances, it cannot be said  that the   broader  categorisation  of  the  smelter   plant   is arbitrary, capricious and unreasonable resulting in treating the  unequal  as equal thereby offending Article 14  of  the Constitution. [ 245 B - E]      5. The agreement of 1966 and 1976 were not the  outcome of any unilateral promise or assurance held out by the State or the Board to the appellant-Company . [244 H]      Such  agreement was the result of negotiations  between the  parties  and  on  such  negotiations,  the  terms   and conditions   were   agreed   upon   between   the   parties.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 25  

Accordingly, the foundation of promissory estoppel is absent and the case of promissory estoppel as sought to be made out by the company cannot be accepted. [244 H, 245 - A]      Excise  Commissioner, U.P. Etc. Etc. f. Ram Kumar  Etc. Etc.,  A.I.R.  1976 S.C. 2237; Union of India  and  Ors.  v. Godfrey Philips India Ltd., A.I.R. 1986 S.C. 806; Council of Civil Service Union and Ors. v. Minister for the                                                        217 Civil  Service,  1985 (3) All. E.R. 935; R v.  Secretary  of State  of  Home  Department,  1985 (1)  All.E.R.  40;  R  v. Secretary  of State for Home Department ex parte  Ruddock  & Ors.,  1987  (2) All.E.R. 518; M/s  Motilal  Padampat  Sugar Mills Company (Pvt.) Ltd., v. State of Uttar Pradesh, [1979] 2 S.C.R. 641; Delhi Cloth and Genaral Mills Ltd. v. Union of India, [1988] 1 S.C.R. 383; Indian Aluminium Company v.  The Orissa  Electricity Board and Anr;. A.I.R. 1975 Orissa  100, referred to.      Halsbury’s  Laws of England, Fourth Edition  (Reissue) Vol. 1 (1) Page 151, referred to.      6.  Since the agreements stood annulled in view  of  the amended  provisions of Section 49 of the Act, the Board  was empowered to ask for uniform tariff rate from the industries classified  under  one category.  However, the  question  of tariff  for the supply of electricity to the  smelter  plant should be considered sympathetically. [245 B, F]      Tika Ramji v Stae of U.P., A.I.R. 1956 S.C. 676;  Uttar Pradesh  &  Ors. v. Synthetics and Chemical Ltd.  and  Ors., A.I.R. 1980 S.C. 614; Hoechest Pharmaceuticals Ltd. and Anr. Etc.  v.  State  of Bihar & Ors.,  A.I.R.  1983  S.C.  1019; Ishwari  Khetan Sugar Mills Pvt. Ltd. Etc. v. The  State  of U.P. and Ors., A.I.R. 1980 S.C. 1955, relied on.      Indian Aluminium Co. v. Kerala State Electricity Board, A.I.R.  1975 S.C. 1967; Delhi Cloth and General   Mills  Co. Ltd.  v. The Rajasthan State Electricity Board, A.I.R.  1986 S.C. 1126, referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1841 of 1988.      From  the  Judgment  and Order dated 19.4.1988  of  the Karnataka High Court in W.P. No. 6257 of 1981.      K.Parasaran,  A.K.  Ganguli,  K.R.D.  Karanath  and  S. Sukumaran for the Appellants.      P.P.  Rao, R.N. Naransihma Murthy, S.K.  Kulkarni, R.P. Wadhwani M.Veerappa and Kh. Nobin Singh for the Respondents.      The Judgment of the Court was delivered by                                                        218      G.N.  RAY, J. This Civil Appeal arising out of  Special Leave Petition (Civil) No. 5890 of 1988, is directed against the judgment  passed by the Division Bench of Karnataka High Court  on April 19, 1988 in Writ Petition No. 6257 of  1981. The appellants prayed for a Writ in the nature of certiorari for  directing the respondents to withdraw the letter  dated July  3,  1980  (Annexure  G  to  the  Writ  Petition)   and Notification  dated June 30, 1980 and for appropriate  writs and directions commanding the respondents to refund a sum of Rs,  60,28,175.08  collected by the  respondent  illegally. There was also a prayer for appropriate writs and directions on the respondents to withdraw the supplementary electricity bills for the months of November and December, 1980 and also the  bills of January, 1981 and February, 1981  respectively (being  Annexures  CC, Y, X and GG) and for a  direction  to refund   a  sum  of  Rs.  18,40,800.58  collected   by   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 25  

respondents on accounts of the electricity bills. There  was also  a  prayer for appropriate directions  restraining  the respondents  from  collecting energy charges in  any  manner other  than  on  the  basis of  supply  agreement  and  also restrain   ing   them  for  disconnecting  the   supply   of electricity  to the factory of the appellant No.  1,  Indian Aluminium  Company Limited at Belgaum.  The appellants  also prayed  for  directing the respondent No. 1,  the  Karnataka Electricity  Board to exercise its powers under  Section  49 (3)  of  the  Electricity (Supply)  Act  by  either  framing regulations  in the tariff or by entering into an  agreement providing for appropriate protective claims.      The  essential  facts  concerning  the  writ   petition involved  in  the  instant Civil Appeal  may  be  stated  as follows:      The  Indian Aluminium Company Limited registered  under the  Companies  Act  and one shareholder,  namely,  Shri  K. Ghosh, were the Writ Petitioners and the respondent No. 1 is the   Karnataka   Electricity  Board,   a   Body   Corporate constituted  under  the Electricity (Supply) Act,  1948  and respondents  Nos. 2, 3 and 4 are respectively the  Executive Engineer  (Electrical),  O and M  Division,  Karnataka,  the Chief Engineer (General) and the Accounts Officers, O and  M Division,  all the Karnataka Electricity Board.   Respondent No.  5  is  the State of Karnataka  through  the  Secretary, Department of Public Works Department and the respondent No. 6  is  Union  of India through the  Secretary,  Ministry  of Energy, Government of India.  The case of the appellants was inter  alia  that in 1966 the Government  of  Karnataka  had undertaken  the Sharvathy Valley Hydro Electric  Project  in the  State of Karnataka.  It had planned for constructing  a hydroelectric                                                        219 generating  system to generate a large quantity of  electric power.   The State was anticipating the generation of  large surplus  power.   The aluminium  industry  particularly  the smelter  plant  requires  a  large  quantity  of  power  for manufacturing  operation.  The Karnataka  State  Electricity Board,  (hereinafter referred to as Board) and the State  of Karnataka (hereinafter referred to as State) had invited the Indian Aluminium Company Limited (hereinafter referred to as the Company) to establish its aluminium smelter plant within the State of Karnataka by assuring that uninterrupted supply of  electricity  would  be  given  to  the  smelter   plant. Accordingly, the  Company  established a  factory  with  its smelter plant at Belgaum.      There  was a tripartite agreement entered into  between the  Company,  the Board and the State on  March  26,  1966. Later  on,  a fresh tripartite agreement  was  entered  into between  the  parties  in  modification  of  the   aforesaid tripartite  agreement and the latter agreement  was  entered into  on August 7, 1976.  In the said  tripartite  agreement several  clauses were incorporated to  ensure  uninterrupted supply of power and there were also provisions for supply of power at concessional rates.      The State promulgated the Electricity Supply  Karnataka (Amendment)  Ordinance, 1980 purporting to amend Section  49 of  the Electricity (Supply) Act, 1948.  Such Ordinance  was replaced  by  the  Karnataka  Act 33  of  1981.  Before  the promulgation of the Ordinance which was replaced by the said Act,  the  Board increased the power rate in July  1980  far beyond   the  rate  prescribed  in the    agreement.   After promulgation  of the Ordinance since replaced by the Act  on February  1,  1981, the Board futher  increased  the  tariff rates.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 25  

    The  Aluminium Control Order was issued by the  Central Government in 1970 to control the price of aluminium ingots, wire  bars,  billets  etc.  On July 15,  1975,  the  Central Government notified the aluminium policy.  It was  indicated in the said policy that the proposed new rate for  aluminium should remain in force for five years and such rates  should be periodically revised and revision, if any, should be made only  after consultation with the Central  Government  which was  controlling the price of aluminium.  In July, 1975  the rate of tariff was 7 paise per unit.  The second  tripartite agreement  in  supersession of the earlier one  was  entered into on August 7, 1976 between the Writ Petitioners and  the respondent No. 4 and such agreement inter alia provided that whenever the Board wants to increase its power                                                        220 rates,  it  must  give at least six months’  notice  to  the Company   to  approach  the  Central  Government   so   that corresponding  increase in retention price of aluminium  was effected to absorb the increased power rate.  It was however provided  that if the Central Government would not  increase the  price  within the period of six months,  the  increased tariff rates would become effective.   On January 22,  1980, the  Board issued a letter to the Company calling  upon  the Company  to contact the Executive Engineer for  executing  a supplementary  agreement relating to certain changes in  the tariff  rate  proposed in the letter.  The  Company  by  its letter  dated February 25, 1980 requested the Government  of Karnataka  for  arranging a meeting for  discussion  of  the situation  arising out of the proposed change in  the tariff rate.   It is contended that no positive result came out  of the  discussion held between the parties. On July  15,  1980 the  Government  of India issued a notification  inter  alia refixing the retention price.  On July 8, 1980, the  Company received letter dated July 3, 1980 from the Board indicating that  additional  surcharge  of 2 paise per  unit  had  been enforced.  On August 5, 1980 the Company, by way of abundant caution,   had  applied  to  the  Central   Government   for increasing  the  retention price.  The request made  by  the Company  not to increase the tariff rate for the  supply  of power  to its smelter plant however, was not acceded  to  by the Board.  The power rate was increased to 19.59 paise  per unit  in  1980. The Board had also imposed surcharge  of  10 paise per unit on June 30, 1980, and such surcharge was made effective from June 1, 1980.  The Company contended that the Board had not given six months’ notice for the surcharge and in the Writ Petition such change of surcharge effective from June  1, 1980 had also been challenged and the legality  and validity  of imposition of surcharge for the period  between July 1, 1980 to November 1, 1980 before the promulgation  of the  said ordinance, were challenged in the  Writ  Petition. On  November  21, 1980, the State of  Karnataka  promulgated Electricity  Supply  (Karnataka  Amendment)  Ordinance   for amending Section 49 of the Electricity (Supply) Act which as afsoresaid  was replaced by Act 33 of 1981.  The  effect  of such amendment of Section 49 of the Electricity (Supply) Act is that it has empowered the Board to increase tariff  rates notwithstanding  any  agreement  with  the  consumers.    On February  2,  1981, the Board increased the tariff  rate  to Rs.  25.93 per unit.  Being aggrieved by increase of  tariff rates and consequential demands for payment of bills on  the basis of increased tariff in complete disregard of the  said agreement of 1976, the Company and one                                                        221 of  its share holders moved the said Writ Petition No.  6257 to 1981 for the reliefs indicated hereinbefore.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 25  

    It  may  be  indicated  here  that  existing  rate   of electricity  was  Rs. 22.5 per unit and Rs. 22  per  KVA  on 27.5.1991.   The  Board had thereafter  increased  the  rate periodically from time to time as follows:      20.08.81       Rs. 30.18      01.11.83       Rs. 38.30      10.11.83       Rs. 41.30      01.01.84       Rs. 41.38      27.09.85       Rs. 58.01      01.09.86       Rs. 68.01 The  Company  contended that the increased  tariff  was  not enforceable  against  the company in view of  the  agreement between  the  parties.  However, without  prejudice  to  the rights and contentions, cheques were sent to cover the bill. The Writ Petitioners contended inter alia that the agreement dated  August 7, 1976 between the Company and the Board  and the  State  Government was binding on the  parties  and  the tariff for supply of electricity has to be fixed only on the basis  of  the terms of the  said  agreement.  Consequently, excess  amount paid by the Company under protest  should  be refunded.   The Writ Petitioners further contended that   in the  first agreement dated March 26, 1966, the  then  Mysore State Electricity Board had agreed to supply electric  power to  the  smelter plant of the Company  located  at  Belgaum. Elaborate  provisions were made to cover several  situations which were likely to arise in the course of supply of  power and  utilisation of the same by the Company.  The supply  of power  under  the  said  agreement  commenced  from  October 22,1969.   The said agreement was replaced by the  agreement dated August 7, 1976 (Annexure B to the Writ Petition). Such agreement of 1976 was made in view of the industrial  policy of the Government  of India and the guidelines stated by the Government  of India in the matter of electricity tariff  to be applied to the aluminium plants.      The  Writ Petitioners contended that the smelter  plant of  the  Company is fully dependent on power and  for  every tonne  of aluminium produced, about 1900 units  of  electric energy  are consumed by the said smelter plant.  It  is  the specific case of the Writ Petitioners-appellants that                                                   222 production in the smelter plant depends mainly on the supply of  uninterrupted  electrical  power  and  unlike  in  other industries  where electricity is used as a motive power,  in the smelter plant of the Company the electricity is not only a   motive  power  but  also  an  important  raw   material. Uninterrupted  supply  of  power at a very  high  degree  is essentially  necessary  for breaking the chemical  bond  for aluminium  oxygen in the compound of aluminium  oxide.   The process  of  manufacture of primary alumina is done  at  two stages-first,  alumina,  i.e., pure oxide  of  aluminium  is extracted from its ore, bauxite by a chemical process.  Such alumina is further processed in the smelter plant.  In  this smelter  plant,  the  alumina is treated with  the  help  of electrolytic cells.  In the smelter plant at Belgaum,  there are  three  lines  with  492  installed  electrolyic  cells. Alumina is charged into the molten cryolite in which it gets dissolved  and direct electric current is passed through  it continuously.   By  the  passage  of  electric  current  the alumina  gets split into aluminum and oxygen.  The  cryolite is kept at a temperature of about 970 degree C.  The melting point  of  aluminium  is less than  this  temperature.   The aluminium  formed  by  the splitting up of  the  alumina  is molten  at this temperature and then it settles down at  the bottom  of the cells from which it is periodically  siphoned out in the molten form for casting into different forms like

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 25  

ingots,  slabs, etc.  It is contended that if  the  electric supply  is curtailed or interrupted, the temperature of  the cryolite bath will come down and if the interruption  period is more than 2 hours, the bath will cool down and  solidify. Once the cryolity bath gets solidified, it will not be  able to  pass electric current through the cell and even  if  the power  supply is restored, after solidification of  cryolite bath, the cell cannot be restarted.  Once the solidification of cryolite bath takes place, the cells can be restored only by  a complicated procedure.  The entire cryolite bath  will have to be dug out, powdered and charged back.  The same has then  to  be melted again using abnormally  high  amount  of electric  power, and such process entails a very high  cost. The cathode carbon which will cost more than Rs. 1 lakh  per cell  will also get severely damaged with the thermal  shock of cooling and heating.  It is contended that apart from the time  factor and the large amount of energy required  to  be consumed,   in  the  process  of  restarting  the  cost   of restarting  each  cell  is over Rs.  60,000.   Besides,  the financial  loss,  there will be production loss and  it  may take  about two months before normalcy of operations can  be resumed after the restart operations.  It is also  contended that any change                                                        223 or  fluctuations  such  as power cuts  or  interruptions  in supply of power has severe adverse costs implication for the production  of aluminium quite apart from production loss of aluminum metal itself.      It  is  also a specific case of  the  Writ  Petitioners appellants  that manufacturing process in the smelter  plant has  special characteristics and such manufacturing  process is distinctively different in metallurgical-cum electrolytic process  and  the same cannot be compared with most  of  the other industries including power intensive industries  where curtailments or interruptions of supply of power only affect the  production during the interrupted period and not  after the  full  power  is resumed.   Moreover,  unlike  in  other industries,  the  power  is  itself  a  very  important  raw material  for production of aluminium in the smelter  plant. Accordingly,  the  smelter plant is not only  a  high  power sensitive  plant  but it is absolutely  dependent  on  power being  its  essential  and  primary  raw  material.   It  is contended that all over the world, aluminium has been  given a  special status with regard to the power and ’firm  power’ concept  is the key note in this industry.  Since  aluminium industry  requires  a large amount of power  not  comparable with any other industry, cost of power is the most important element  in  the cost of production of  aluminium.   At  the relevant time when the Writ Petition was presented the  cost of  power formed about 38% of the total cost  of  production and it is very strongly contended that in no other  industry such  large  amount of power is  required  and  consequently power  cost  element  in the cost  of  production  in  other industries is substantially lower.  In the aluminium  policy notified  by  the  Government  of  India  in  1975,  it  was indicated  that  the  production  of  aluminium  metal   had declined  considerably  since 1971-72 in spite of  the  fact that  installed  capacity had been going up.   It  was  also indicated  that  such  decline  was  primarily  due  to  the restrictions on power supply to the aluminium producers.  It was  further indicated that the rates at  which  electricity Board had contracted in the past for supply of power to  the aluminium  industry,  proving to be unremunerative  for  the Boards has also been responsible for this situation, and the electricity  Boards  were the largest  users  of  aluminium.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 25  

Government  of India., therefore, considered  it  imperative that  power tariffs need to be revised in a way which  would be fair to the Electricity Boards but which would not result in rising of the price of aluminium.      The Writ Petitioners have contended that under clause 5 of  the agreement of 1976, the payment for supply is  to  be made at the rate at                                                        224 which power is being drawn and no payment is to be made with reference to the units of electrical energy consumed in  any particular  period and the method will  operate  reasonably. Provisions were made for a formula to find out average  from the  demands  for all the half hours during  the  months  in which the cut or interruption took place.  By such provision the consumer, namely, the company was given the benefit of a reduced  consumption of the demand during the  period  where there may have been a power cut or interruption in supply.      Clause  10 of the agreement provides for relieving  the Company from the obligation of taking and paying for  supply of  power if the Company was prevented from taking  electric power.   It has been contended that if reference is made  to various  provisions  in  the agreement of 1976  it  will  be evident that the State Government and the Board having fully appreciated  the absolute necessity of uninterrupted  supply of power and the impact of the tariff rate for the supply of power  to  the  smelter  plant  agreed  to  various  clauses ensuring  smooth and uninterrupted supply of electricity  at the rates agreed upon by the parties.  In view of such facts the  Board  could  not revise the tariff  according  to  its fancies and the Board being squarely bound by the  agreement could  not  repudiate  the  same  under  the  cover  of  the amendment of Section 49 of the Electricity (Supply) Act.  It was contended by the Writ Petitioners before the High  Court that  since this smelter plant was installed at  Belgaum  on the  invitation  by the State of Karnataka  and  Electricity Board  by  clearly assuring the Company  that  uninterrupted supply of electricity would be made at a reasonable rate and on  the  basis of the understanding between the  parties  as embodied  in  the  first  and  the  second  agreement,   the principle  of promissory estoppel was squarely attracted  in the facts of the case and any demand of tariff for  electric supply  to  the  smelter plant of  the  Company  at  Belgaum contrary to the existing agreement of 1976 is wholly illegal and  inoperative.   It  was  also  contended  that   in  the aforesaid  circumstances  amendment  of Section  49  of  the Electricity  (Supply) Act, applicable to the Board  and  its consumers, was not applicable to the Company and the Company despite such amendment was entitled to enjoy the  privileges emanating  from the agreement of 1976.  The validity of  the amending  Act was challenged by the Writ Petitioners  before the High Court.      It  was  contended by the Writ Petitioners  before  the High  Court  that  the  amending act  does  not  affect  the existing agreement of 1976 inter alia                                                        225 on the following grounds :          (a)  The  agreement is a tripartite  agreement  not          contemplated by the amending Act but the  agreement          envisaged  under  the amending Act is  a  bipartite          agreement between the consumer and the Board.          (b)  The  tripartite agreement was  the  result  of          aluminium  policy  of the Government of  India  and          such Governmental policy cannot be negatived by the          amending Act.          (c) The Board is estoppel from claiming any  higher

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 25  

        tariff not contemplated by the agreement.          (d) The amending Act is ultra vires inasmuch as :          (i) It treats, all consumers at par irrespective of          the special features of each class of consumers and          therefore  arbitrary  offending Article 14  of  the          Constitution          (ii)  The  increase  of tariff  by  virtue  of  the          amending   Act  directly  hits  at  the  price   of          aluminium  fixed under the Aluminium Control  Order          issued by the Central Government and hence  illegal          and ultra vires.          (iii)  Aluminium  industry is a  scheduled industry          under  the  control of the Government of  India  as          declared  by Industries Development and  Regulation          Act  and  hence falls under Entry 52 of List  I  of          VIIth   Schedule  of the  Constitution.   Therefore          policy of Government of India amounts to  direction          issued  to  the State Governments  which  they  are          bound to obey.  Consequently, the agreement of 1976          is  an  agreement protected by a law  coming  under          Entry 52 of List I, terms of which cannot be varied          by a law enacted by a State by virtue of the  power          conferred by the concurrent list (List III of VIIth          schedule).  The amending Act should be construed in          such a way as not to impinge on or detract from the          law, statutory order or constitutional direction of          the Central Government, otherwise the said amending          Act will lack legislative competence.                                                        226 The   Respondents  opposed  the  contentions  of  the   Writ Petitioners  and  the  contentions  of  the  Respondents  as advanced  before the High Court may broadly be indicated  as follows :          (i)  The  remedy of writ petition  to  enforce  the          contractual  rights  under the  agreement  was  not          available.          (ii)  State  did  not  invite  the  petitioner   to          establish the factory at Belgaum; it only agreed to          make available the necessary facilities.          (iii)  Aluminium factor does not occupy any  unique          position and does not constitute a class of its own          from the point of view of power requirement  and/or          supply.   Even  if it is a class  by  itself,  that          would not confer any legal right on the  petitioner          to  be accorded any pereferential  treatment  among          industries or consumers of electricity.          (iv)  It  is  not  correct  to  contend  that   the          agreement  entered  into  was by  exercise  of  the          statutory  powers  under Section 49(3) of  the  Act          alone.          (v)  The  clauses in the  agreement  were  included          after  mutual  discussion  and  consensus  of   the          concerned parties.          (vi)  The  clause relating to the giving  of  prior          notice  before  revision  of tariff  is  neither  a          condition precedent, nor constituted a  fundamental          term  of  the agreement.  Similarly, such  a clause          does   not   amount  to  a  solemn   assurance   or          representation on the part of the State Government.          However, such a term in the agreement will not bind          the  Board to revise the tariff in exercise of  its          statutory powers.          (vii) Surcharge of 2 paise per unit was levied  and          collected by the Board, as applied to others.          (viii)  In view of the ordinance with  effect  from

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 25  

        22.11.1980  the tariff schedule H.T.1A  (Electrical          Power  Tariff of 1978, with all other charges  like          surcharges   and  additional  surcharge  etc.)   is          applicable  and the petitioner is governed by  that          H.T.1A  Tariff  Schedule, in  supersession  of  the          terms set out in the                                                        227          agreement.   The Ordinance nullifies all the  rates          and  the  mode of billing envisaged in  the  supply          agreement.           (ix)  The plea of promissory estoppel put  forward          by the petitioner is untenable, since the  amending          Act is a legislative measure.          (x)  The  State legislature has plenary  powers  to          legislate on all matters pertaining to  electricity          and  the  powers of the State legislature  in  this          behalf,  cannot  be   curtailed  by  an   agreement          entered  into by the State with the petitioners  or          any other person.      To appreciate the respective contentions of the parties on  the question of legislative competence for the  amending Act, the High Court referred the Entries 52 and 54 of List I of VIIth Schedule of the Constitution, Entries No. 26 and 27 List  II  Entries  33,34 and 38 of List  III  of  the  VIIth Schedule.   The High Court also referred to and  relied   on the  discussion of this Court in the case of Tika  Ramji  v. State  of  U.P.  (AIR 1956 S.C. 676) where  the  concept  of ‘industry’  as  a topic of legislation was  explained.   The legislative competence of the State of U.P. to regulate  the supply and purchase of sugar cane by the impugned State  Act of  1953  was  raised  by  contending  that  ‘sugar’   being controlled  industry  under the Industries  Development  and Regulation Act, the topic of impugned legislation pertaining to  sugarcane  fall within the purview  of  Central  Control under Entry 52 of List I and hence the subject is taken away from  the  field of legislation by the State.  It  was  also contended  that  Sugar  Control Order  1955  promulgated  by Central Government under the Essential Commodities Act  1955 empowered the Central Government to regulate the movement of sugarcane  and  to fix its price.  The observation  of  this Court at page 695 of the report was copiously quoted by  the High Court for holding that there was no question of lack of legislative competence for enacting the amending act by  the Karnataka Legislature.      The  High  Court referred to the  observation  of  this Court to the following effect:-          "It  is clear therefore, that all the Acts and  the          notifications  issued thereunder by the  Centre  in          regard  to  sugar and sugar cane  were  enacted  in          exercise of the concurrent jurisdiction.                                                        228          The exercise of such concurrent jurisdiction  would          not deprive the provincial legislatures of  similar          powers   which  they  had  under   the   Provincial          Legislature List and there would, therefore, be  no          question   of  legislative  incompetence  qua   the          Provincial Legislatures in regard to similar pieces          of legislation enacted by the latter.           The provincial Legislatures as well as the Central          Legislature  would  be  comptetent  to  enact  such          pieces   of   legislation  and   no   question   of          legislative   competence  would  arise.   It   also          follows as a necessary corollary that, even  though          sugar  industry was a controlled industry, none  of          these Acts enacted by the Centre was in exercise of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 25  

        its jurisdiction under Entry 52 of List I.           Industry  in the wide sense of the term  would  be          capable  of comprising three different aspects  (1)          raw  materials  which are an integral part  of  the          industrial  process (2) the process of  manufacture          or  production,  and (3) the  distribution  of  the          products of the industry.  The raw materials  would          be  goods which would be comprised in Entry  27  of          List II.  The process of manufacture or  production          would  be comprised in Entry 24 of List  II  except          where the industry was a controlled industry   when          it  would  fall within Entry 52 of List I  and  the          products of the industry would also be comprised in          Entry  27  of List II except where  they  were  the          products  of  the controlled industries  when  they          would fall within Entry 33 of List III.            This  being the position it cannot be  said  that          the legislation which was enacted by the  Centre in          regard  to  sugar and sugarcane could  fall  within          entry 52 of List I.  Before sugar industry became a          controlled industry, both sugar and sugarcane  fell          within Entry 27 of List II but, after a declaration          was  made by Parliament in 1951 by Act 65  of  1951          sugar industry became a controlled industry and the          product  of that industry viz. sugar was  comprised          in  Entry  27 of List II.  Even so, the  Centre  as          well as the Provincial Legislatures had  concurrent          jurisdiction in regard to the same.           In  no  event could the legislation in  regard  to          sugar  and sugarcane be thus included within  entry          52 of List I.  The pith                                                        229          and substance argument also cannot be imported here          for  the simple reason that, when both  the  Centre          as well as the State Legislatures were operating in          the concurrent field, there was no question of  any          trespass upon the exclusive jurisdiction vested  in          the  Centre  under  Entry 52 of List  I,  the  only          question which survived being whether, putting both          the pieces of legislation enacted by the Centre and          the  State  Legislature  together,  there  was  any          repugnancy,  a contention which will be dealt  with          hereafter." The  High  Court  also noted that amending  Act  was  placed before  the  President and consent was obtained.   Hence  by virtue  of  Article  254(2) of the  Constitution, the  State Legislation  will prevail even if there is  any  repugnancy. The   High  Court  also  held  that  the  Writ   Petitioners specifically  pleaded that in the smelter plant  electricity was  a raw material for aluminum or ‘relatable  article’  to the  industry.   Hence in the absence  of  any  notification under   Section  18G  of  the  Industries  Development   and Regulation  Act there was no question of any  repugnancy  on the  score  of tariff of electricity fixed by  the  amending Act.  The High Court also relied on the observation of  this Court in Tika Ramji’s case at page 701 and 703 of the report to the following effect:-          "Sugar   industry  being  one  of   the   scheduled          industries,  it was contended for  the  petitioners          that  sugarcane  was an article  relatable  to  the          sugar industry and was, therefore, within the scope          of  S.  18G  and the Central  Government  was  thus          authorised   by  notified  order  to  provide   for          regulating the supply and distribution thereof  and          trade and commerce therein."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 25  

         Even  assuming  that sugarcane was an  article  or          class  of articles relatable to the sugar  industry          within the meaning of S. 18-G of Act of 1951, it is          to be noted that no order was issued by the Central          Government  in exercise of the powers vested in  it          under  that section and no question  of  repugnancy          could ever arise because, as had been noted  above,          repugnancy must exist in fact and not depend merely          on  a  possibility.  The possibility  of  an  order          under   S.  18-G  being  issued  by   the   Central          Government  would not be enough.  The existence  of          such  an order would be the essential  prerequisite          before any repugnancy                                                        230           could ever arise." It  may be noted here that for the purpose of  finding  that electricity  was a raw material for the smelter  plant,  the High  Court  referred  to relevant  pleadings  of  the  Writ Petitioners and also referred to the decision of this  Court concerning the petitioner company itself in Indian Aluminium Co.  v.  Kerala State Electricity Board, AIR  1975  SC  1967 wherein  this Court referring to the process of  manufacture of aluminium from alumina has held that electricity is a raw material  for such manufacturing process.  Similar view  was also expressed by this Court in the decision of Delhi  Cloth and   General  Mills  Co.  Ltd.  v.   The  Rajasthan   State Electricity  Board,  AIR  1986  SC  1126  while  considering electro  chemical  and  PVC  and  other  allied   industrial products in a power oriented industry.      The  High  Court also negatived the contention  of  the Writ  Petitioners that when Parliament has evinced  interest in  Aluminium  Industry,  the entire  field  of  legislation touching  all  aspects of the said industries vests  in  the Parliament and State Legislature has lost its competence  as the field of legislation will be only under Entry 52 of List I.      The  High  Court  has held  that  mere  declaration  by Parliament  that  a  particular  industry  is  a  controlled industry under the Industries Development and Regulation Act is  by  itself not sufficient to exclude the  competence  of State  legislature  to  enact a law  over  a  subject  which otherwise  falls within its field of legislation.  The  High Court referred to the decision of this Court in the case  of State  of Uttar Pradesh & others v. Synthetics and  Chemical Limited  and others, AIR 1980 SC 614. It was contended  that the denatured spirit or industrial alcohol comes within  the purview  of the control of the Central Government and  hence Central  Government  alone  was  empowered  to  provide  for regulating    the   distribution,    transport,    disposal, acquisition  etc.   Referring to the order  of  the  Central Government  issued as Ethyl Alcohol (Price  Control)  Order, 1971, this Court held to the following effect:-          "...We are unable to read the Ethyl Alcohol  (Price          Control)  Orders as explicitly or impliedly  taking          away  the  power  of  the  State  to  regulate  the          distribution of intoxicating liquor by collecting a          levy  for parting away with its  exclusive  rights.          If   the  powers  of  Parliament  and   the   State          Legislature were confined to Entry 52 in List 1 and          the Entry 24 in List II, Parliament                                                        231          would  have  had exclusive power  to  legislate  in          respect of industries notified by Parliament.   The          power  of  the  State under Entry 24,  List  II  is          subject  to the provisions of Entry 52 in  List  I.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 25  

        But  we have to take into account Entry 26 in  List          II  and  Entry 33 in List III for  determining  the          scope  of legislative power of the  Parliament  and          the State.  Entry 26 in List II is as follows:           ‘Trade  and commerce within the State  subject  to          the provisions of Entry 33 of List III’."      In the said case, this Court relied on the decision  in Tika  Ramji’s  case.  The High Court also  referred  to  the decision   of   this   Court  in   the   case   of   Hoechst Pharmaceuticals  Ltd. and another etc. v. State of  Bihar  & Ors.,  AIR 1983 SC 1019. It was contended in the  said  case that  levy  of surcharge of sale tax imposed  by  the  State Legislature   was  without  legislative  competence  as   it impinged  or affected the price of drugs fixed  under  Drugs (Price Control) Order, 1979 issued by the Central Government under the Essential Commodities Act.  This Court has held in the said decision:          "In  the  case of a seeming  conflict  between  the          Entries  in  the two lists, the Entries  should  be          read   together   without  giving  a   narrow   and          restricted  sense to either of them.  Secondly,  an          attempt  should  be  made to see  whether  the  two          Entries  cannot  be  reconciled so as  to  avoid  a          conflict of jurisdiction.  It should be  considered          whether  a fair reconciliation can be  achieved  by          giving  to  the language of the  Union  Legislative          List a meaning which, if less wide than it might in          another context bear, is yet one that can  properly          be  given to it and equally giving to the  language          of  the State Legislative List a meaning  which  it          can  properly  bear.  The non  obstante  clause  in          Article   246  (1)  must  operate  only   if   such          reconciliation  should prove impossible.   Thirdly,          no question of conflict between the two lists  will          arise   if   the  impugned  legislation,   by   the          application of the doctrine of ‘pith and substance’          appears to fall exclusively under one list, and the          encroachment upon another list is only  incidental.          Union and State Legislatures have concurrent  power          with  respect to subjects enumerated in  List  III,          subject only to the provision contained in Cl.  (2)          of Article 254 i.e., provided the provisions of the          State Act do not conflict with those of any                                                        232          Central  Act on the subject.  However, in  case  of          repugnancy between a State Act and a Union Law on a          subject enumerated in List III, the State law  must          yield  to  the  Central  law  unless  it  has  been          reserved  for the assent of the President  and  has          received  his  assent under Article 254  (2).   The          question  of repugnancy arises only when  both  the          Legislatures are competent to legislate in the same          field i.e., when both the Union and the State  laws          relate  to  a  subject specified in  List  III  and          occupy the same field."      The  High  Court  also referred to the  decision  of  a Constitution  Bench  of this Court in Ishwari  Khetan  Sugar Mills Pvt. Ltd. etc. etc. v.  The State of U.P. and  others, AIR  1980  SC 1955.  It has been held by this Court  in  the said  decision that the question arose for decision  in  the said  case about the validity of law acquiring  undertakings involved  in manufacturing sugar by the  State  Legislature. The contention was sugar as a topic of legislation was under Entry  52  of List I by virtue of it being  declared  as  an industry control of which vested in the Union as declared by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 25  

Industries  Development  and Regulation Act.   The  majority view  of  this Court in the said case at page  1961  of  the report was quoted by the High Court to the following effect:          "The  legislation enacted pursuant to the power  to          legislate  acquired  by  declaration  must  be  for          assuming   control  over  the  industry   and   the          declaration has to be made by law enacted, of which          declaration would an integral part, Legislation for          assuming  control containing the  declaration  will          spell  out the limit of control so assumed  by  the          declaration.   Therefore, the degree and extent  of          control  that  would  be  acquired  by   Parliament          pursuant  to  the  declaration  would   necessarily          depend  upon the legislation enacted  spelling  out          the degree of control assumed.  A mere  declaration          unaccompanied by law is incompatible with entry  52          List  I.  A  declaration for  assuming  control  of          specified  industries  coupled  with  law  assuming          control  is a pre-requisite for taking  legislative          action under Entry 52, List I. The declaration  and          the  legislation  pursuant to  declaration  to  the          extent  denude  the power of State  Legislature  to          legislate under Entry 24, List II.  Therefore,  the          erosion  of the power of the State  legislature  to          legislate in respect of declared industry would not          occur  merely by declaration but by  the  enactment          consequent                                                        233          on the declaration prescribing the extent and scope          of control."      The  High Court also referred to few more decisions  of this  Court for the purpose of appreciating  the  contention whether  the  supply of electricity and  tariff  rates  were controlled  by  Entry  52 of List  I,  thereby  taking  away legislative competence of the State Legislature and  whether or  not  the Notification issued by the  Central  Government fixing  the aluminium policy and also indicating the  tariff affecting  the  aluminium industry became repugnant  to  the impugned   provisions  under  the  amending  Act  of   State Legislature.  The High Court by giving a long reasoning  has come to the finding that the impugned legislation was  quite valid and did not suffer either from the want of legislative competence or on the score of repugnancy between the Central and the State legislation.      The  High  Court also negatived the contention  of  the Writ Petitioners that aluminium industry is special class of its   own  and  thus  cannot  be  categorised   with   other industries.   It was indicated by the High Court that  if  a microscopic  analysis  is to be done almost  every  industry will  have  its own special features. Such  as  analysis  is outside the scope of Article 14. Classification is based  on broad principles, to be connected reasonably with the object to be achieved.  It has been held by the High Court that the Scheme of Section 49 of the Electricity Supply Act indicates that  uniformity will be the basis of tariff and  since  all power  intensive industries have been treated alike in  view of  the amended provision of Section 49 in  supersession  of agreements  between  the consumers and the Board,  the  High Court held that no discriminatory treatment was meted out to the Writ Petitioners.  The High Court has also held that the contention  that  Kudremukh Iron and Steel  Industries  have been   treated  favorably  resulting  in  a   discriminatory treatment  to the petitioner-Company should not be  accepted by  indicating  the  consideration  relating  to   Kudremukh industry and also noting the submission made by the  learned

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 25  

Advocate  General that enforceability of the agreement  with Kudremukh  Iron  and Steel Industry was  also  under  active consideration  in the light of the impugned amendments.   It has  been held by the High Court that since the Company  was not  comparable with the Kudremukh Iron and  Steel  Industry the  contention  of discrimination was not to  be  accepted. The High Court also rejected the contention that price  hike for the power supply imposes an unreasonable restriction  on the  right  of  the  petitioner-Company  to  carry  on   its industry,                                                        234 thereby  infringing Article 19(1) (g) of  the  Constitution. It has been indicated by the High Court that the price  hike will  have  its impact on the cost of  production  but  such increase   in the cost of production cannot be avoided.   It has  been  held that the price of  aluminium  control  order itself  provides for restructure of aluminium for which  the petitioner-Company has to approach the Central Government.      Coming to the question of promissory estoppel raised by the  petitioners, the High Court referred to  paragraphs  91 and 92 of the Writ Petition where the pleading of promissory estoppel  was made by the Writ Petitioners.  The High  Court has  accepted the contention of the respondents as  advanced by   the   learned  Advocate-General   appearing   for   the respondents that the doctrine of promissory estoppel is  not attracted  in  the sphere of statutory power and  since  the impugned  action was a consequence of the amended  provision of  Section 49, the question of promissory estoppel did  not arise.  The reference was made to the decision of this Court in  Excise  Commissioner, U.P. etc. etc. v. Ram  Kumar  etc. etc., AIR 1976 SC 2237 wherein it was observed by this Court to other following effect:-          "It  is now well settled by a catena  of  decisions          that  there can be no question of estoppel  against          the Government in the exercise of its  legislative,          sovereign or executive powers."      Reference  was  also made to another decision  of  this Court in Union of India and others v. Godfrey Philips  India Ltd.,  AIR  1986  SC 806.  The  observation  of  this  Court appearing  at para 14 was referred to by the High  Court  to the following effect:-          "...It  is  equally true that  promissory  estoppel          cannot be used to compel the Government or a public          authority to carry out a representation or  promise          which  is contrary to law or which was outside  the          authority or power of the officer of the Government          or  of the public authority to make.  We  may  also          point out that the doctrine of promissory  estoppel          being an equitable doctrine, it must yield when the          equity  so  requires,  if it can be  shown  by  the          Government  or public authority that having  regard          to  the facts as they have transpired, it would  be          inequitable  to  hold  the  government  or   public          authority to the promise or representation made  by          it, the Court would not raise an                                                        235          equity in favour of the person to whom the  promise          or  representation is made and enforce the  promise          or representation against the Government or  public          authority.   The  doctrine of  promissory  estoppel          would  be displaced in such a case, because on  the          facts, equity would not require that the Government          or  public  authority should be held bound  by  the          promise or representation made by it."      The  High Court has held that Section 49(5) of the  Act

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 25  

as  introduced  by  the  impugned  amendment  by  the   very language of it overrides any other agreement or law.  It has been  held  that question of  categorisation  under  Section 49(5)  is to compel the consumer to pay for the  electricity consumed  according to the uniform tariff applicable to  the category  to which it belongs.  The High Court has held  the petitioner’s   contention  should not be accepted  that  the Board is bound to treat the petitioner as a special category for  which the tariff applicable was to be regulated by  the agreed formula.  The High Court has also held that factually also it is not possible to conclude on the existing material that  a  special  promise was held out  to  the  petitioner- Company  that  a particular formula will be applied  in  the case   of  the  consumption  of  electricity  by  the   Writ Petitioners.  The High Court has come to the finding that it will not be possible to hold that there was a promise  which was  held  out for the benefit of the  petitioners  but  the invitation to start the industries in the State, if at  all, was the motive force for the petitioner and other industries to  establish  various factories in the State to  avail  the advantages  of the prevailing conditions in the State.   The contentions   of  the  Writ  Petitioners  that   the   bills containing  the revised tariff even before the  promulgation of   ordinance   amending  Section  49   was   illegal   and unjustified,  had  not been gone into by the High  Court  in view  of the specific statement by the learned  counsel  for the  Board before the High Court that the  Writ  Petitioners should  approach  the Board with particulars in  support  of their  contentions and the Board was prepared to revise  the bills if there had been any error or omission on the part of the  Board. Save as aforesaid, all other reliefs claimed  by the petitioners in the Writ Petition were disallowed by  the High Court and the Writ Petition was accordingly dismissed.      Mr. Parasaran,the learned Senior Counsel appearing  for the  appellants  in his usual fairness  had  indicated  that detailed  arguments had been advanced before the High  Court of Karnataka at the hearing of the Writ                                                        236 proceeding on the question of vires of the amending Act,  on the  score of legislative competence and also on the  ground of   arbitrary  action  in  revising  the  tariffs   without justification and unjust classification of the smelter plant in the category of other power intensive industries included in  the category of HT-1A without appreciating the  peculiar features  of the productive  mechanism in  a  smelter  plant thereby  offending Article 14 of the Constitution.   He  has submitted that as he intends to advance the same contentions raised  before the High Court on the question of  vires  for appropriate  consideration by this Court he does not  intend to  elaborate the same once more.  It is precisely  for  the aforesaid reason, we have indicated in detail the reasonings of  the High Court in dispelling the contentions of the  Writ Petitioners that the amending Act is ultra vires.      We   have  given  our  anxious  consideration  to   the contentions raised for challenging the vires of the amending Act but we are unable to accept the contentions that the Act suffers from any infirmity affecting its vires either on the score  of legislative competence or for  offending  Articles 19(1)  (g)  or Article 14 of the Constitution.   It  appears that  the High Court has given cogent reasons for  upholding the  vires  of  the  amending Act  and  for  dispelling  the contentions  raised by the Writ petitioners and  we  endorse the view taken by the High Court.  We may only indicate  her that in deciding the question of legislative competence  one must  bear  in  mind  that the Constitution  is  not  to  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 25  

construed  with a narrow or pedanti  approach and it is  not to  be construed as a mere law but as a machinery  by  which laws  are made.  Such interpretation should be made  broadly and  liberally.   The  entries  in  the  Constitution   only demarcate   the   legislative  fields  of   the   respective legislature and do not confer legislative power as such.      In examining the allegations of hostile  discriminatory treatment, what is looked into is not is phraseology but the real effect of its provisions.  Decisions of this Court have permitted  the  legislature to exercise  an  extremely  wide discretion in classifying items for collection of revenue so long  as it refrains from clear and  hostile  discrimination against particular persons or classes.  It, however,  should be  borne  in  mind that with all  these  latitudes  certain irreducible  consideration  of  equality  shall  govern  the differential treatment even in fiscal legislation.      The test could only be of palpable arbitrariness in the context  of  felt needs of the time  and  social  exigencies informed by experience.  There                                                        237 cannot  be any precise or set formulae or doctrinaire  tests or precise scientific principles of exclusion.      Mr. Parasaran in his fairness has submitted that  under the  Electricity  (Supply) Act, the Board  is  empowered  to revise  tariffs  but  he has contended  that  such  revision cannot  be  made  arbitrarily  and  capriciously.   He   has submitted that since the Board is the licencee for supply of electrical energy to various consumers in a particular area, the  Board,  as  a matter of fact enjoys  the  privilege  of monopoly  to  some  extent.  It is  therefore  necessary  to consider whether in the exercise of revision of tariffs, the Board has acted reasonably and fairly and the action is well informed by reasons.  He has also contended that the smelter plant  has  some  special  and  peculiar  features  in   its manufacturing  mechanism of aluminium from alumina.  He  has drawn  our attention to the pleadings in the  Writ  Petition where  such mechanism and the key role of  electricity  have been elaborately high-lighted.  Mr. Parasaran has also drawn our  attention to the accepted position all over  the  world about the very important and key role of electricity in  the electrolytic  process  in  manufacture  of  aluminium  in  a smelter plant and its impact as a basic raw material with  a very  high implication in the cost of manufacture.   In  the aforesaid  context, Mr. Parasaran has contended that  it  is only  unjust and improper to classify the smelter  plant  in the  general  group  of  power  intensive  industries.    To classify  the  smelter  plant  only  as  a  power  intensive industry like various other power intensive industries, will not  be  proper classification.  The  very  distinctive  and unique features of smelter plant are well known to the State and  the Board.  He has drawn the attention of the Court  to various clauses of the agreement of 1976 for the purpose  of showing that the State and the Board were fully aware of the role  of  electricity in the manufacturing  mechanism  in  a smelter  plant and the extreme need of uninterrupted  supply of energy to the plant of the petitioner-Company at Belgaum. Mr. Parasaran has submitted that as the State and the  Board were fully aware of the implication of tariff of electricity in  the smelter plant, special provisions were made  in  the agreement  for billing and rates to be charged in the  event of interruption of supply. Mr. Parasaran  has contended that as  the  agreement  was tripartite it could  not  have  been annulled  by  taking recourse to the  amended  provision  of Section  49 of the Electricity (Supply) Act, the Boards  has unjustly  repudiated the agreement by treating  the  smelter

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 25  

plant  as only a power intensive industry and  revising  the tariff   exorbitantly  and  making  it  applicable  to   the petitioner-company on the                                                        238 plea  that all the power intensive industries including  the plant of the petitioner-Company have been placed at par  and have  been  subjected  to  same tariff  for  the  supply  of electricity.      Mr.  Parasaran has contended that even if the  amending Act  is intra vires thereby empowering the Board  to  annual all existing agreements with the consumers and requiring the Board to charge uniform tariff to the consumers  categorised in  a particular group or class, there was no  justification to  treat the smelter plant in the same category as  in  the case of other power intensive industries.      Mr. Parasaran has referred to specific pleadings in the Writ Petition wherein a case of promissory estoppel  binding the  State and Board in the matter of adhering to the  terms of  agreement of 1976 have been made out by the  petitioner- Company.  He has submitted that the foundation of promissory estoppel  lies  in the legitimate expectation a  person  may have  of  being treated in a certain way  by  administrative authority.   In this connection, Mr. Parasaran has  referred to  paragraph  81 at page 151 of Volume 1(1)  of  Halsbury’s Laws  of  England,  Fourth Edition  (Reissue)  dealing  with "Legitimate  Expectation".   It has been  indicated  in  the treatise that a person may have a legitimate expectation  of being  treated  in  a  certain  way  by  an   administrative authority even though he has not legal right in private  law to receive such treatment.  The expectation may arise either from  a  representation  or promise made  by  the  authority including an implied representation or from consistent  past practice.   The  existence of a legitimate  expectation  may have  a  number of different consequences and  one  of  such consequences is that the authority ought not to act so as to defeat  the  expectation without some overriding  reason  of public  policy  to justify its doing so.  It may  also  mean that  if  the  authority  proposes  to  defeat  a   person’s legitimate expectation it must afford him an opportunity  to make representations in the matter.  In this connection, Mr. Parasaran has referred to the decision of House of Lords  in Council  of Civil Service Union and others v.  Minister  for the  Civil Service, (1985) 3 All England Reporter page  935. It  has  been held in the said decision  that  an  aggrieved person  was entitled to invoke judicial review if  he  could show  that  a decision of public authority affected  him  of some  benefit  or advantage which in the past  he  had  been permitted to enjoy and which he legitimately expected to  be permitted  to continue  to enjoy either until he  was  given reasons  for  withdrawal and the opportunity to  comment  on these                      reasons.                      Mr.                                                        239 Parasaran has also referred to a decision of Court of Appeal in R v. Secretary of State for Home Department, (1985) 1 All England Reporter page 40 wherein the right of being heard by a  person  having a reasonable expectation if likely  to  be affected by a decision to be taken by an authority has  been indicated.  Mr.  Parasaran  also relied  on  a  decision  of Queen’s  Bench Division in R v. Secretary of State for  Home Department  ex parte Ruddock & others (1987) 2  All  England Law  Reports  page 518.  It has been indicated in  the  said decision that the doctrine of legitimate expectation imposed in  essence a duty  to act fairly and was not restricted  to cases  that party having expectation was to be consulted  or to be given the opportunity to make representations before a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 25  

decision  was made.  Where ex hypothesis there was no  right to be heard, it could be more important to fair dealing that a  promise or undertaking given by a Minister as to  how  he would  proceed  should  be  kept.  Mr.  Parasaran  has  also submitted that the Courts in India including this Court have also  taken  note  of the case of  promissory  estoppel  and obligation  on  the  part  of the  promisor  to  honour  the commitment  or the representation on the basis of which  the other  party  has  altered  its  position  financially,  Mr. Parasaran has referred to some of the decision of this Court including  the decision in M/s Motilal Padampat Sugar  Mills Company (Private) Limited v. State of Uttar Pradesh,  [1979] 2 SCR 641 and the decision in Delhi Cloth and General  Mills Ltd.  v.  Union of India, [1988] 1 SCR 383.  In  the  latter decision, it has been indicated by the Supreme Court that if one  of  the representations induced a party  to  alter  his position,  a case of promissory estoppel is  attracted.   He has contended that before annulling the agreement and making unjust demand of high tariff, the Board ought to have  given reasonable   opportunity   to  the   petitioner-Company   to establish  that  there was no occasion to  resile  from  the obligation  under the agreement.  Mr. Parasaran has  further submitted  that if the Court comes to the finding  that  the action  of the Board and the State are unjust and the  Board has an obligation to abide by the agreement of 1976 in  view of  the promissory estoppel, there will be no difficulty  in issuing appropriate writs for giving the reliefs claimed  in the Writ Petition.      Mr. Prasaran  has submitted that even if it is accepted that  in view of amendment of Section 49 of the  Electricity (Supply)  Act,  the Board was required to charge  tariff  at uniform  rate  to all the consumers placed in  a  particular category, such amendment does not stand in the way of giving special privilege to the petitioner-Company in the matter of tariff  for  the supply of electricity in view of  the  fact that the smelter plant cannot be                                                        240 equated with other power intensive industries placed in  the category HT IA and Section 49(3) of the Electricity (Supply) Act  still  empowers the Board to fulfil its  obligation  in terms  of  the  agreement of 1976.  Mr.  Parasaran,  in  his fairness,   has  stated  that  promissory  estoppel   cannot operate in violation of the statutory provisions but Section 49(3)  of  the  Act  empowers the Board  to  fix  tariff  in conformity  with  the promise held out  to  the  petitioner- Company  because the petitioner-Company was entitled  to  be treated  altogether  differently for the  reasons  indicated hereinbefore.   In  view of such  enabling  provision  under Section  49(3),  Mr.  Parasaran  has  submitted,  that   the obligation  to  abide by the agreement consistent  with  the case  of  promissory estoppel still survives.  He  has  also submitted that there has been clear non-application of  mind by the Board in not considering the manufacturing process in the  smelter plant in its proper perspective and because  of such  non-application  of mind an attempt has been  made  to treat  an  unequal  with  equals,  Mr.  Parasaran  has  also contended  that before purporting to annul the agreement  by taking recourse to the amended provisions of Section 49, the Board   should   have  given  proper  opportunity   to   the petitioner-Company  to  substantiate that there had  been  a clear  case   of  promissory estoppel  and  such  promissory estoppel   survived  even  on  the  face  of   the   amended provisions.   He  has, therefore, submitted that  the  Board should  be directed to give a fresh look to the question  of abiding   by   the  agreement  of  1976   by   taking   into

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 25  

consideration  of the relevant aspects of the  manufacturing mechanism in the smelter plant of the petitioner-company  in a  proper  perspective.  Mr. Parasaran  has  submitted  that unfortunately,  the  High  Court concentrated  more  on  the question  of  vires and attack of the amending  Act  or  the score  of legitimate competence.  The High Court has  failed to  note that a clear case of promissory estoppel  was  made out  by the petitioner-Company and such promissory  estoppel was   still  applicable  without  offending  the   statutory provisions, namely, the amended provisions of Section 49  of the Electricity (Supply) Act.      Mr. Narasimhamurthy, learned counsel appearing for  the respondent-Board  has submitted that the amending  Act  does not suffer from any vice either on the score of  legislative competence or on the score of arbitrary or capricious action and/or  on account of offending Article 14 and  19(1)(g)  of the Constitution.  He has also submitted that the High Court has  discussed the contentions raised by the parties at  the hearing of the Writ Petition at length and has not  accepted the contentions that the amending Act was ultra vires on any account.  He has submitted that the                                                        241 reasonings  of  the High Court should be  accepted  and  the contentions  on the question of the vires of the Act  sought to be reiterated in this Appeal should be discarded by  this Court.      We  have  already indicated that decision of  the  High Court  in upholding the vires of the amending Act should  be accepted  and we have endorsed the reasonings given  by  the High Court in that regard which we have referred to in  some details.      Mr.  Narasimhamurthy  has submitted that  there  is  no conflict  with  the  proposition that if a  strong  case  of promissory  estoppel  is  made  out  by  a  party  and  such promissory  estoppel  does  not come in  conflict  with  any statutory provision, the party having reasonable expectation flowing  from  a  promise  or  representation  may  ask  for enforcement  of  such  legitimate  expectation  founded   on representations   or   assurances  on  the   part   of   the administrative  body  in  appropriate  cases.   But  in  the instant case, the very foundation of promissory estoppel  is absent  and  as  such  consideration  of  the  question   of promissory estoppel does not arise.  In this connection,  he has drawn the attention of this Court to the preamble of the first  agreement  of  1966.   He has  submitted  that  if  a reference is made to the preamble of the agreement and other clauses  it is quite apparent and evident that the  same  do not indicate that on the invitation by the electricity Board or   the  State  Government,  the  smelter  plant   of   the petitioner-Company  had been established at Belgaum.  It  is quite evident that on coming to know that the State and  the Board  were in a position to supply electric energy  without any interruption according to the need of the smelter  plant the petitioner-Company became interested in establishing its smelter  plant at Belgaum and thereafter  negotiations  were made  between  the parties and an  agreement  under  Section 49(3)  of the Electricity (Supply) Act was entered into.  He has   contended   that  later  on,  in   view   of   changed circumstances  a new agreement was entered into between  the parties  in  1976 for the purpose of  getting  uninterrupted supply  of  electricity on agreed rate and in  a  particular manner.   Both the said agreement of 1966 and 1976 were  the outcome of usual bargaining between the parties on terms and counter  terms  and  it is not a case that  the  terms  were offered  unilaterally by the  State or the Board  to  induce

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 25  

the  Company  to set up its smelter plant in  the  State  of Karnataka and the Company being induced by a  representation by the State or the board that if the Company would set up a smelter plant in the State of Karnataka then in the  smelter plant of the Company,                                                        242 concessional   rates   would  be  offered  for   supply   of electricity  for  all times to come and  the  smelter  plant would  be treated altogether in a different manner.  He  has also submitted that in the first agreement of 1966 there was no  provision relating to the revision of rates but  in  the agreement  of  1976,  there  is  a  specific  provision  for revision  of  the  rates  of tariff  of  electricity  to  be supplied  to  the smelter plant.   Mr.  Narasimhamurthy  has drawn  the  attention  of the court  to  the  correspondence between  the parties starting from 1964 for the  purpose  of showing  that  such correspondence unmistakably point out  a normal  case of bargaining between the parties  for  getting uninterrupted supply of electricity in the proposed  factory of the Company.  In this connection, Mr. Narasimhamurthy has also  referred to a decision of the High Court of Orissa  in the  case  of  Indian  Aluminium  Company  v.   The   Orissa Electricity  Board and Anr., AIR 1975 Orissa page 100  where the  Division Bench of the Orissa High Court has  considered when the principle of promisory estoppel can be invoked.  It has   been  held  in  the  said  decision  that  the   State Electricity  Board  may revise the tariff  fixed  under  the binding  contract  by relying on Section 49 and  59  of  the Electricity (Supply) Act.  It has been held by the  Division Bench that simply because the State Government had held  out the assurances to the Company to supply hydro power fixed at low rate, a case of promissory estoppel is not made out.  It has  been  held  that if the agreement  was  the  result  of negotiations between the parties indicating that the Company was  as much desirous of being supplied with electric  power as the supplier was anxious and willing to supply the  same, there is no case of promissory estoppel. Mr. Narasimhamurthy has  submitted that facts and circumstances in  the  instant case  clearly reveal that the State government was eager  to have  industries  established  in the   State  and  for  the purpose  took steps to supply sufficient electric energy  to various  industries including the  petitioner-Company.   The petitioner-Company was also equally anxious to establish its smelter  plant  in  the State of Karnataka in  view  of  the facilities made available in the State, and both the parties thereafter   entered   into   negotiations   and   on   such negotiations  terms  and conditions were  arrived  at.   The agreement  was made in accordance with the Section 49(3)  of the Electricity (Supply) Act.  It is not the case that there was  no occasion to enter into any negotiation for  settling the  terms but clearly unilateral assurances were  given  by the  State  and the Board to give  uninterrupted  supply  of electricity  on  specific  conditions  and  on  agreed  rate promised  to  the  Company and only on  the  basis  of  such promises held out                                                        243 to  the  petitioner-Company,  the  said  smelter  plant  was established  and  the agreement is only  embodiment  of  the terms and conditions unilaterally held out by the State  and the  Board.   Mr. Narasimhamurthy has,  therefore  contended that the very foundation of promissory estoppel is absent in the  case and the High Court was justified in not  accepting the case of promissory estoppel.      Mr.  Narasimhamurthy has submitted that  sub-section  1 and  2 Section 49 of the Electricity (Supply)  Act  envisage

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 25  

supply of electric energy to different consumers at  uniform tariffs.   It,  however,  empowers the  Board  to  charge  a different tariff in appropriate case under Section 49(3)  of the Act.  By the amending Act, Section 49 of the Electricity (Supply)  Act  has been amended in its  application  in  the State  of Karnataka. Sub-Section 5, sub-section 6  and  sub- section 7 to section 49 have been inserted after sub-section 4  of  Section  49 of the Electricity  (Supply)  Act.   Sub- section  5 and 6 of Section 49 of the  Electricity  (Supply) Act  as  applicable to Karnataka in view  of  the  aforesaid amendment are to the following effect:-          "(5)  The  party  to  an  agreement  or  any  other          arrangement entered into prior to the  commencement          of  the Electricity (Supply) (Karnataka  Amendment)          Act,  1981 and providing for supply of  electricity          by   the  Board  shall,  notwithstanding   anything          contained  in the instrument of agreement or  other          arrangement  or in any law including this  Act,  in          force  at  such commencement, pay,  in  respect  of          electricity  so supplied after  such  commencement,          price  (by  whatever  name  called)  calculated  in          accordance  with  the  uniform  tariff  framed   or          modified  from time to time, under sub-section  (1)          and applicable to the category to which such  party          belongs.          (6) The party to any such agreement or  arrangement          entered   into  after  the  commencement   of   the          Electricity  (Supply)  (Karnataka  Amendment)  Act,          1981,  shall,  notwithstanding  anything  contained          inthis   Act,  or  in  such  agreement   or   other          arrangement,   pay,  in  respect   of   electricity          supplied  by  the Board, price  (by  whatever  name          called)  calculated in accordance with the  uniform          tariff  framed or modified from time to time  under          sub-section  (1) and applicable to the category  to          which such party belongs."                                                        244      Mr.  Narasimhamurthy  has contended  that  the  smelter plant of the petitioner-Company has always been  categorised by the Board as industries included in HT-IA.  He has  drawn attention of the Court to tariff rates of 1974 and 1978.  It appears  that  for  1978  tariff rates,  the  plant  of  the petitioner-Company  was  included in HT  IA  category.   Mr. Narasimhamuarthy  has contended that such categorisation  by the  electricity  Board made as far back as in 1978  is  not under  challenge,  and  no  protest had  been  made  by  the petitioner-Company   for  categorising  the  plant  of   the petitioner-Company  in HT-IA.  Mr. Narasimhamurthy has  also contended that industries may have some distinctive features but  still then a broader classification is possible  taking into  consideration, the power intensive nature  of  various industries.   The  Board has taken into  consideration  such power intensivity in the manufacturing process and has  made a  broad based categorisation.  The smelter plant  has  been included in HT-IA not only for the first purpose of applying the  amended  provisions of Section 49 of the Act  but  such categorisation  was  made  long back.   Even  in  1978  such categorisation  was  made  without  any  protest  from   the petitioner-Company.   If such categorisation has a  rational basis   and  not  arbitrary,  capricious  or  illusory,   no exception need be made to such categorisation.  Accordingly, sub-sections  5 and 6 of Section 49 are squarely  applicable to  the  petitioner-Company and the Board  is  justified  in treating  the  agreement  as  annulled  and  subjecting  the petitioner-Company to the uniform tariff rate applicable  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 25  

all  the industries categorised as ST-IA.  He has  submitted that if in terms of the statutory provision, a uniform  rate of  tariff  is applicable to the petitioner-Company  on  the basis  of category of the industry to which it belongs,  and the agreement of 1976 stands annulled in view of the amended provision,  there  cannot  be  any  question  of  promissory estoppel  against statute even if it is assumed that in  the facts  of  the  case,  a case  of  promissory  estoppel  has otherwise been made out.  He has, therefore, submitted  that there  is no occasion to interfere with the  judgment  under appeal and the appeal should be dismissed with costs.      After   giving   our  anxious  consideration   to   the respective  contentions  of  the  learned  counsel  for  the parties,  it  appears to us that the agreement of  1966  and 1976  were  not  the outcome of any  unilateral  promise  or assurance  held  out  by  the  State or  the  Board  to  the petitioner-Company.   Such  agreement  was  the  result   of negotiations between the parties and on                                                        245 such negotiations, the terms and conditions were agreed upon between   the  parties.   Accordingly, the   foundation   of promissory  estoppel  is absent and the case  of  promissory estoppel as sought to be made out by the  petitioner-Company cannot  be  accepted.  In our view, Mr.  Narasimhamurthy  is justified in his contention that since the agreements  stood annulled in view of the amended provisions of Section 49  of the  Act, the Board was empowered to ask for uniform  tariff rate from the industries classified under one category.   It is  true that the smelter plant has distinctive features  in its   manufacturing   mechanism  and  in  the   process   of electrolytic  operation.   It also appears to  us  that  the smelter  plant is not only power intensive industry but  the power assumes a very significant role and constitutes one of the important raw materials in the  productive process.  But it does not appear to us that categorisation of the  smelter plant  a high power intensive industry by itself is  illegal or  perverse, or without any basis and  wholly  unjustified. In the broader classification, smelter plant is certainly  a high  power intensive industry and such  categorisation  was made  by  the  Board not for the  purpose  of  enforcing  of the amended Section 49 with an object to annul the agreement but  such  categorisation  was made even in  1978.   In  the circumstances,  we are unable to accept the contention  that the   broader  categorisation  of  the  smelter   plant   is arbitrary, capricious and unreasonable resulting in treating the  unequal  as equal thereby offending Article 14  of  the Constitution.   We,  therefore,  find  no  justification  to interfere  with the impugned decision of the High Court  and the  appeal, therefore, fails but in the facts of the  case, there will be no order as to costs.      Before we part with this matter, it appears to us  that the question of tariff for the supply of electricity to  the matter plant requires a sympathetic consideration.  In 1975, policy  of  the Central Government regarding  the  aluminium industry,  it was highlighted that despite the  increase  in the  productive capacity of the aluminium plants  in  India, the  production  as a whole decreased  for  various  factors particularly  in view of irregular supply of electricity  to the  plants.  It was also noted in the said policy that  the costs for generating the power and transmission of power  to the  plants  had  increased over the years and  it  was  not possible  for the Boards to stick to rates   agreed  earlier for  supply  of electricity to the  aluminium  plants.   The Central Government felt the necessity to strike a balance so that the Boards do not suffer and the plants  for  aluminium

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 25  

get proper supply of electricity                                                        246 at reasonable rates.  It was noted that high rate of  tariff and consequential increase in the price of aluminium  caused prejudice to the Boards because the Boards were consumers of aluminium  to a considerable extent.  It appears to us  that it  is only desirable that  interest of both the Boards  and the aluminium industry are to be reconciled with a pragmatic approach  and the Central Government, the   concerned  State Governments  and  the  Boards should try to  evolve  a  more realistic  policy by which the interest of both  the  Boards and  aluminium  industry  are  safeguarded  to  the   extent practicable.   We have no manner of doubt  that if  a  joint venture  is  made an effective policy may be  evolved  which will  ensure  to the benefit of both the  supplier  and  the consumers  in the field of production of aluminium,  in  the national interest as a whole. T.N.A.                                     Appeal dismissed.                                                        247