http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 20  

CASE NO.: Appeal (civil)  1215-1216 of 2001

PETITIONER: U.P.Power Corporation Ltd. & Anr

RESPONDENT: Sant Steels & Alloys (P) Ltd & Ors

DATE OF JUDGMENT: 10/12/2007

BENCH: A.K.MATHUR & MARKANDEY KATJU

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOs.1215-1216 OF 2001

A.K.MATHUR,J.

1.        These appeals are directed against the order dated  25.5.2000 passed by the Division Bench of the Allahabad High  Court whereby the Division Bench has allowed the writ petitions  and Clause 9(a) of the notification dated 25.1.1999 (Annexure-8  to the writ petition) and clause 8(a) of the notification dated  18.6.1998 (Annexure -7 to the writ petition ) were struck down.  It was further directed that the writ petitioners were entitled  to get hill development rebate of 33.33% on the total amount of  the bill till  the period of 5 years from the date of  commencement  of supply of the electricity to them and the  appellant- Corporation was directed to issue electricity bills  to the writ petitioners after allowing 33.33% hill development  rebate on the total amount of bill for the remaining unexpired  period of five years. Aggrieved against this order, the present  appeals were filed by U.P. Power Corporation Ltd.(hereinafter  referred to as Corporation.)  

2.       In order to dispose of these appeals brief facts may be  detailed below.  Pursuant to industrial policy of the State of  Uttar Pradesh, U.P.State Electricity Board (now U.P. Power  Corporation Limited)[hereinafter to be referred to as the  "Corporation"]- the appellant herein framed its tariffs vide  notifications dated 18.1.1992 & 15.7.1994. By these  notifications 33.33% hill development rebate was allowed to the  new industrial units  for a period of five years from  the date  of commencement of the supply of the electricity.  The above  concession was initially valid till 31.3.1995. It was later on  extended up to 31.3.1997. It was alleged that all the writ  petitioners established industrial units in the hill areas after  huge investments and after executing  agreement with the  appellant-Corporation. But subsequently, by notifications dated  18.6.1998 and 25.1.1999 the concession which was earlier given  was reduced by the appellant-Corporation from 33.33% to 17%  which is arbitrary and not permissible according to principle of  promissory estoppel and in that connection reliance was placed  on a decision of this Court in Pawan Alloys & Casting Pvt. Ltd.,  Meerut v. U.P.State Electricity Board & Ors. [ (1997) 7 SCC 251.  Written statement was filed by the appellant-Corporation and the  appellant took the stand that  the impugned tariffs were new

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 20  

structured tariff  in respect of HV-1 category of consumers and  it was empowered to frame tariff under the provisions of Section  49 of the Electricity (Supply) Act, 1948 (hereinafter to be  referred to as the Act of 1948). It was also contended that this  restructuring was necessitated in order to avoid loss to the  Corporation due to theft of electricity and it was done in the  public interest.  3.              In order to appreciate the controversy involved in the  matter, it will be appropriate to refer to the relevant tariff  notification issued from time to time by the appellant-  Corporation. The first in point of time is the tariff vide  notification dated 18.1.1992. Relevant provisions of clauses  read as under :

       "4.     Rate of Charge ( Energy Charges) :         All KWH consumed in the month           200 paise per KWH. 5.      Extra Charge or Rebate: (i)     In case of supply given at 400 volts, the  consumer shall be required to pay an extra  charge of 10 per cent on the amount calculated  at the rate of charge under item (4). (ii)    If supply is given at voltage more than 11KV,  rebate mentioned below will be admissible on  the amount calculated at the rate of charge  under item (4). (a)             Above 11 KV upto 66 KV          5% (b)             Above 66 KV upto 132 KV         7.5% )               Above 132 KV                            10%.                 Xx              xx              xx 8.      Concessions: In respect of connections as may be located in  any of the eight hill districts in U.P. whose  names are given below but excluding those  existing at a height of less than 610 mts  (2,000feet) above M.S.L. in Dehradun and National  districts a development rebate of 33 1/3% on the  amount of the bill as computed under item 4 & 5  above will be given to new connections for a  period of five years from the date of  commencement of supply. This rebate will also be  admissible for the unexpired period of five years  to those existing connections which have not  completed five years from the date of  commencement of supply. This development rebate  shall not be admissible to the Departments/  Corporations/ Undertaking of State/ Central  Government and Local Bodies." Name of eight Hill Districts: 1.      Almora district 2.      Chamoli district 3.      Pauri Garhwal district 4.      Pithoragarh district 5.      Uttar Pradesh district 6.      Tehri Garhwal district 7.      Uttarkashi district 8.      Dehradun district. In respect of connections as may be located in  Bundelkhand region, comprising Jhansi, Lalitpur,  Hamipur, Jalaun and Banda districts a development  rebate of 50% on the amount of the bill as  computed under item 4 & 5 above will be given to  new Industrial units for a period of five years  from the date of commencement of supply. This  rebate will also be admissible for the unexpired  period of five years to those existing Industrial

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 20  

units of the above district of Bundelkhand region  who have not completed five years from the date  of commencement of supply. This development  rebate shall however not be allowed to the  Department/ Corporations/ Undertakings of the  State/ Central Government  and Local Bodies. " Therefore, this concession was extended to the entrepreneurs in  the hill districts including Dehradun  who established their  industries at the height of 610 metres (2000 feet) above  M.S.L.for a period of five years. Then on 15.7.1994 another  notification was issued. Relevant provisions of Clauses 4,5 & 8  read as under :

       "4.     Rate of Charge ( Energy Charges) :         All KWH consumed in  3 month            280 paise per KWH. 5.Extra Charge or Rebate: (iii)   In case of supply given at 400 volts, the  consumer shall be required to pay an extra  charge of 10 per cent on the amount calculated  at the rate of charge under item (4). (iv)    If supply is given at voltage more than 11KV,  rebates mentioned below will be admissible on  the amount calculated at the rate of charge  under item (4). (a)             Above 11 KV upto 66 KV          5% (b)             Above 66 KV upto 132 KV         7.5% )               Above 132 KV                            10%.                 Xx              xx              xx 8.Concessions: (a) In respect of connections as may be located  in under mentioned areas of the hill districts in  U.P., a development rebate of 33 1/3 percent on  the amount of the bill as computed under item 4 &  5 above will be given to new connections for a  period of five years from the date of  commencement of supply. This rebate will also be  admissible for the unexpired period of five years  to those existing connections which have not  completed five years from the date of  commencement of supply.          Provided that the above development rebate  shall not be admissible to the Departments/  Corporations/ Undertakings of State/ Central  Government and local bodies.          Description of Area of Hill Districts: 1.      Almora district 2.      Pithoragah district 3.      Chamoli district 4.      Uttarkashi district 5.      Pauri Garhwal district excluding Nagarpalika  area of Kotdwara. 6.      Tehri Garhwal district excluding Muni Ki Reti  and Dhalwala Blocks. 7.      Nainital  district excluding Haldwani,  Rudrapur, Gadarpur, Kashipur, Bajpur, Ram  Nagar, Jaspur, Khatima and Sitarganj Block. 8.      Dehradun district excluding Doiwala, Rampur,  Sahaspur and Vikas Nagar Blocks. (b) In respect of connections as may be located  in Bundelkhand region, comprising Jhansi,  Lalitpur, Hamipur, Jalaun and Banda districts a  development rebate of 50% on the amount of the  bill as computed under items 4 & 5 above will be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 20  

given to new Industrial units for a period of  five years from the date of commencement of  supply. This rebate will also be admissible for  the unexpired period of five years to those  existing Industrial units of the above district  of Bundelkhand region who have not completed five  years from the date of commencement of supply.  This development rebate of 50% in Bundelkhand  region shall, however, not be allowed to the  Railways and Departments/ Corporations/  Undertakings of the State/ Central Government   and Local Bodies.  The development rebates under this clause  shall be allowed subject to the condition that  the net amount payable after allowing these  rebates would not be less than the amount of  minimum consumption guarantee under item 6  above." Meaning thereby that the energy charges were increased from 200  paise to 280 paise and the concession granted to the hill areas  continued. Thereafter, in supercession of earlier notifications  another notification was issued in which energy charges were  increased from 280 paise to 308 paise per KW. But the concession  granted earlier continued. Relevant provision reads as under :

       "4.     Rate of Charge ( Energy Charges) :         All KWH consumed in  one month  308 paise per KWh. 5.Extra Charge or Rebate: (i)     In case of supply given at 400 volts, the consumer  shall be required to pay an extra charge of 10 per  cent on the amount calculated at the rate of charge  under item (4). (ii)    If supply is given at voltage more than 11KV, rebate  mentioned below will be admissible on the amount  calculated at the rate of charge under item (4). (iii)   Above 11 KV upto 66 KV          5%       (iv)   Above 66 KV upto 132 KV            7.5%        (v)   Above 132 KV                               10%.                 Xx              xx              xx 8.Concessions: The concessions mentioned hereunder shall be  applicable to consumers connected upto 31.3.97. (a) In respect of connections as may be located  in under mentioned areas of the hill districts in  U.P., a development rebate of 33 1/3 % on the  amount of the bill as computed under item 4 & 5  above will be given to new connections for a  period of five years from the date of  commencement of supply. This rebate will also be  admissible for the unexpired period of five years  to those existing connections which have not  completed five years from the date of  commencement of supply.          Provided that the above development rebate  shall not be admissible to the Departments/  Corporations/ Undertakings of State/ Central  Government and local bodies.          Description of Area of Hill Districts: 1.Almora district 2.Pithoragah district 3.Chamoli district 4.Uttarkashi district 5.Pauri Garhwal district excluding Nagarpalika  area of Kotdwara.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 20  

6.Tehri Garhwal district excluding Muni Ki      Reti town area and  Dhalwala villae under  Narendra Nagar Block. 7.Nainital  district excluding Haldwani,  Rudrapur, Gadarpur, Kashipur, Bajpur, Ram Nagar,  Jaspur, Khatima and Sitarganj Blocks. 8.Dehradun district excluding Doiwala, Rampur,  Sahaspur and Vikas Nagar Blocks. (b) In respect of connections as may be located  in Bundelkhand region, comprising Jhansi,  Lalitpur, Hamipur, Jalaun and Banda districts a  development rebate of 50% on the amount of the  bill as computed under items 4 & 5 above will be  given to new Industrial units for a period of  five years from the date of commencement of  supply. This rebate will also be admissible for  the unexpired period of five years to those  existing Industrial units of the above districts  of Bundelkhand region who have not completed five  years from the date of commencement of supply.  This development rebate of 50% in Bundelkhand  region shall, however, not be allowed to the  Departments/ Corporations/ Undertakings of the  State/ Central Government  and Local Bodies.  The development rebates under this clause  shall be allowed subject to the condition that  the net amount payable after allowing these  rebates would not be less than the amount of  minimum consumption guarantee under item 6  above." Thereafter, on 18.6.1998 a new notification came to be issued,  which is relevant for our purpose. By this notification the  bills were divided into two parts, i.e. demand charge plus  energy charge. Relevant provisions of Clauses 4,5 & 8 read as  under:

       " 4.    RATE OF CHARGE : (A)     Demand Charge 1. Induction Furnaces   Rs.700/- per KVA/ month 2. ARC Furnaces         Rs.615/- per KVA/ month

3. Rolling/    Re-rolling Mills             Rs.440/- per KVA/month

(B)     Plus Energy Charge All KWH consumed in  the month                               100 Paise per month.

               Notes: (i)     Any consumer availing the supply for more than one  process of Induction Furnace, ARC furnace or  Rolling/ Re-rolling Mill, will be charged at the  applicable rate of demand charge whichever is  higher. (ii)    The recording of demand and energy shall be done  through static Trivector Meters. 5.      EXTRA CHARGE OR REBATE: (i)     In case of supply given at 400 volts, the  consumer shall be required to pay an extra  charge of 10 per cent on the amount calculated  at the rate of charge under item (4). (ii)    If supply is given at voltage more than 11 KV,  rebate mentioned below will be admissible on  the amount calculated at the rate of charge  under item (4).

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 20  

(a)     Above 11 KV upto 66 KV          5% (b)     Above 66 KV upto 132 KV         7.5% )       Above 132 KV                            10%   xx            xx              xx 8.CONCESSION:

       The concessions mentioned hereunder shall be  applicable to consumers connected upto  31.03.1997. (a)     In respect of connections as may be located in  under mentioned area of hill districts in U.P. a  development rebate of 17% on the demand charges  only as computed under item (4) above will be  given during the unexpired period of five years  to those existing connections which have not  completed five years from the date of  commencement of supply. Provided that the above development rebate  shall not be available to the Department/  Corporations/ Undertaking of State/ Central  Government and Local Bodies.                         DESCRIPTION OF AREA OF HILL DISTRICTS:                          1.Almora district 2.Pithoragah district 3.Chamoli district 4.Pauri Garhwal district excluding Nagarpalika  area of Kotdwara. 5.Uttarkashi district 6.Tehri Garhwal district excluding Muni Ki      Reti town area and  Dhalwala villae under  Narendra Nagar Block. 7.Nainital  district excluding Haldwani,  Rudrapur, Gadarpur, Kashipur, Bajpur, Ram Nagar,  Jaspur, Khatima and Sitarganj Blocks. 8.Dehradun district excluding Doiwala, Rampur,  Sahaspur and Vikas Nagar Blocks. (b) In respect of connections as may be located  in Bundelkhand region, comprising Jhansi,  Lalitpur, Hamipur, Jalaun and Banda districts a  development rebate of 25% on the demand charges  only as computed under item 4 above will be given  during the unexpired period of five years to  those existing industrial units of the above  districts of Bundelkhand region who have not  completed five years from the date of  commencement of supply. This development rebate  shall however not be allowed to the Departments/  Corporations/ Undertakings of the State/ Central  Government and Local Bodies.." Similar is the notification dated 25.1.1999which is identical to  the notification dated 18.6.1998. But in this notification dated  25.1.1999 the concession was not in clause 8 but the concession  has been re-numbered from clause 8 to clause 9 which is  identical and as such need not be reproduced again. As a result  of these two notifications i.e. notifications dated 18.6.1998 &  25.1.1999 two significant things happened,  that the tariff was  divided into two parts i.e. demand charge plus energy charge.  The energy charge was charged earlier at 308 paise per KV was  reduced to 100 paise KVA per month but the demand charge i.e.  induction furnace, ARC furnace, rolling/re-rolling mills etc.  which were fixed charges, concession was given at the rate of 17  % computed under item No.4(A) i.e. induction furnace @ Rs.700/-  per KVA/ month, ARC furnace @ Rs.615/- per KVA/month and  Rolling/ Re-rolling Mills @ Rs.440/- per KVA/ month. Therefore,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 20  

as a result of restructuring of tariff,  the demand charges  under item  4(A) were made fixed but the energy charges were  reduced from 308 paise to 100 paise per month.  It is not the  case that the appellant has completely revoked the concession.  It is the case that appellant- Corporation has reduced the  energy charges from 308 paise per KVA to 100 paise but the  demand charges have been fixed per KVA/ month and the concession  has been re-scheduled instead of giving them 33.33%  the energy  charges have been reduced which is applicable to all but in the  case of demand charges for hill areas it has been reduced to 17  % in respect of demand A charges and that was allowed to be  continued for the unexpired period of five years to its existing  connections which have not completed five years from the date of  commencement of supply.  At the same time the appellant-  Corporation has denied this benefit to the State Departments/  Corporations, Undertakings of the State/ Central Government and  local Bodies. Therefore, so far as the private consumers are  concerned, this has been kept in tact.

4.              Now, in this factual controversy, we have to examine   whether the concession in the consumption of energy which has  been given to the writ petitioners for establishing the  industries in the hill areas can be revoked or modified by the  appellant- Corporation or not. The High Court has taken the view  that the appellant is bound on the principle of promissory  estoppel  and it cannot revoke the benefit.  

5.              Dr.A.M.Singhvi, learned senior counsel for the  appellant has given nine reasons that this modification of the  rebate is fully justified for the following reasons:

(i)     That the notifications have been issued in exercise  of the statutory provisions under section 49 of the  Act of 1948, therefore, it has statutory flavour. (ii)    That there is complete change of tariff i.e. it has  two parts, (a) demand charge and (b) energy charge. (iii)   That there has been reduction in the energy  consumption charges i.e. from 308 paise to 100 paise  per unit. (iv)    That there was large scale theft of energy in the  State of U.P. (v)     That units were closing on account of these  concessions. (vi)    That there is no total withdrawal of the rebate but  by restructuring concession at the rate of 17%  continues in the demand charges. (vii)   That the High Court has failed to consider the  public interest which was specifically pleaded by  filing a detailed affidavit. (viii)  That no malafide is attributed. (ix)    That actual cost of energy production has shoot up  to Rs.2.50. Therefore, learned senior counsel for the appellant  submitted  that the appellant- Corporation is fully within its right to  modify the rebate and the principle of promissory estoppel  cannot estop. Dr.Singhvi also submitted that the Division Bench  of the High Court  has relied on a decision in Pawan Alloys &  Casting Pvt. Ltd. (supra) in which no affidavit was filed. This  was not appreciated by the High Court and therefore, the whole  situation has turned on that count.  Dr.Singhvi has also raised  the question of laches, estoppel, waiver and acquiesance and  submitted that the earlier writ petition was filed challenging  the notification dated 18.6.1998 and it was withdrawn with  liberty and thereafter on 4.11.1999 application to recall the  order was filed which was rejected. Again, another writ petition

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 20  

has been filed without permission of the High Court. Dr.Singhvi  submitted that  by virtue of the U.P. Electricity Reforms Act,  1999,(hereinafter to be referred to as the Act of 1999) now the  new tariff has been fixed from  August, 2000-2001 by the  Commission because now the power to determine the tariff has  been given to the Commission and no estoppel against the Statute  can be pleaded after the Act of 1999 having come into force.  Dr.Singhvi, learned senior counsel submitted that in view of the  affidavit filed by Shri C.R.Goswami, Executive Engineer,  Electricity Distribution Division, Kotdwar, Uttarakhand on  behalfof the appellant and a  comparative chart has been annexed  to indicate that in fact after introduction of two part tariff,  energy consumption of these units has considerably increased.  The chart has been filed along with the affidavit in respect of  all the writ petitioners except Shree Sidhbali Steels Ltd.

6.              As against this, Mr.Shanti Bhusan, learned senior  counsel for the respondent- writ petitioners  submitted that  these concessions were given to the hill areas in pursuance to  the direction by the State Government in exercise of power under  Section 78A of the Act of 1948 and submitted that  the State  Government was fully competent to do so.  The State/ Corporation  . has made a representation on which the private entrepreneurs  have made huge investments  and therefore, the State Government/  Corporation cannot wriggle out from it and the State  Government/Corp. is estopped from withdrawing these concessions.  Mr.S.Ganesh, learned senior counsel appearing for some of the  writ petitioners has also submitted that the concession which  has been given has a vested right and it can only be revoked by  the same Statute.  

7. Both the learned senior counsel appearing for the parties  relied on number of decisions of this Court on the subject.   Since the High Court has relied primarily on the decision of  this Court in Pawan Alloys & Casting Pvt. Ltd. (supra),  therefore, it would be profitable to first examine the said  decision. In this case,  the U.P.State Electricity Board  by  notifications issued in exercise of powers under Section 49 of  the Act of 1948 held out promises to the industrial units  established  in different parts of the State of U.P. and they  were given concession in the electricity charges to the extent  of 10 per cent of rebate for a period  of three years for the  first time and the same was prematurely withdrawn by subsequent  notification which gave rise to number of writ petitions being  filed in the High Court and the principle of promissory estoppel  was invoked. In the writ petitions it was contended that when  rebate was given to the new industrial units for a period of  three years, the Board could not have arbitrarily withdrawn the  same prior to the expiry of a period of three years. It was  contended that such withdrawal of concession is applicable  prospectively and cannot have retrospective effect to the  earlier existing industrial units.  The Board contested the  matter. The Allahabad High Court framed the following  three  questions. (i)  Whether the Board is estopped  from withdrawing   the said rebate before the completion of the 3/5 year period, by  virtue of the doctrine of promissory estoppel ? (ii) Whether the  agreement executed by the petitioners bars them from questioning  the impugned notification ? (iii) Whether the impugned  notification has no application to existing consumers and does  it apply to only those consumers who receive the supply on or  after 1-8-1986 ? The High Court after hearing the contesting  parties came to the conclusion that the respondent-Board was  estopped  by virtue of the doctrine of promissory estoppel from  withdrawing  the development rebate before the completion of the  period of three years. On second point,  the High Court came to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 20  

the conclusion that the writ petitioners were barred from  questioning the impugned notification on the express terminology  found in the agreements entered into by them with the Board for  supply of electricity and under those agreements the Board was  given full play to revise the tariff rates which included  development rebate also from time to time and consequently the  impugned notification was not illegal. On the third issue, it  was held that the notification dated 31-7-1986 could not be said  to be retrospective and consequently, the High Court dismissed  all the writ petitions.  Aggrieved against this, the matter came  up before this Court by Pawan Alloys & Casting Pvt. Ltd.  This  Court after review of all the earlier decisions observed as  follows :

               " 34.   Consequently it must be held that  relying upon the representations held out by the Board  in these earlier notifications assuring grant of  incentive rebate of 10% on the total bill of  electricity consumption charges these new industries  being assured that for three years this concession will  be available had burnt their boats and spent large  amounts and had established their industries in the  area falling in the operative jurisdiction of the Board  in the State of U.P.

35.     Under these circumstances when no public interest  was sought to be pressed into service by the Board for  withdrawal of this incentive rebate, as seen earlier,  the equity which had arisen in favour of the appellants  remained untouched and undisturbed by any overwhelming  and superior equity in favour of the Board entitling it  to withdraw this development rebate in a premature  manner leaving these promises high and dry before the  requisite period of three years earlier guaranteed to  them by way of development rebate had got exhausted.  This takes us to the consideration of the second aspect  of the matter."

8.              Dr.Singhvi, learned senior counsel for the appellant- Corporation emphasized that in fact the whole case turned on the  question that no public interest was sought to be pressed into  service by the Board on the incentive rebate.  But, in the  present case, specific affidavit was filed and all the detailed  facts were disclosed pertaining to the public interest  but that  was not dealt with by the High Court. Therefore, Pawan Alloys &  Casting Pvt. Ltd. (supra) case stands distinguished. Learned  senior counsel submitted that if proper public interest had been  pleaded in Pawan Alloys & Casting Pvt. Ltd.(supra) then perhaps   the situation would have been different. In this connection,  learned senior counsel for the appellant- Corporation invited  our attention to the question of public interest which was  pleaded before the High Court and which was not considered by  the High Court. Learned senior counsel for the appellant-  Corporation submitted that all the nine points which have been  mentioned above were mentioned in the counter affidavit filed by  the appellant- Corporation before the High Court and in that  connection, he invited our attention to paragraphs  5,6,7,10,40,42,44,48 of the counter affidavit and specifically  invited our attention to paragraph 53 that the Corporation is  incurring a loss of Rs.15  to 20 crores. Learned senior counsel  also invited our attention to paragraphs 56,58 & 60 of the  counter affidavit filed before the High Court and submitted that  it was not in public interest to continue this benefit to these  industries located in hill areas and further submitted that the  entire benefit was not withdrawn. This benefit has been

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 20  

rationalized and as a result of this rationalization an  affidavit was filed to show that  the energy consumption of  these units has increased to manifold. Therefore, this  restructuring of the rebate has not proved disadvantageous to  these industries but  for the larger public interest this was  done and it not a case that the appellant has totally revoked  the concession but the concession still exists in modified form.  Therefore, the whole exercise was done in the public interest  only. Learned senior counsel stressed that in fact all this  public interest was not disclosed in Pawan Alloys & Casting Pvt.  Ltd. (supra). Therefore, this turned against the Board on that  count. In the present case all the nine points raised by him  were raised before the High Court of Allahabad but the High  Court has totally ignored the same.

9.              Learned senior counsel for the appellant- Corporation  also invited our attention to another decision of this Court in  Kasinka Trading & Anr. V. Union of India & Anr. [ (1995) 1 SCC  274]. In this case, a notification was issued under Section 25  (1) of the Customs Act in public interest exempting from basic  duty and specific date to which it will remain in force. Prior  to expiry of that date another notification was issued in  exercise of same power in public interest withdrawing  the  exemption on excise duty on the materials imported. Public  interest was explained by the Government and in that context, it  was held that Government being satisfied about the public  interest in withdrawing the exemption no unequivocal  representation or promise extended by merely specifying the  period of operation of the exemption notification so as to  attract the doctrine of promissory estoppel.  It was pointed out  that exemption under Section 25 was not in the nature of any  incentive and has the effect of only suspending levy and  collection of customs duty and can be revoked or withdrawn in  public interest. It was further  observed that when exemption is  granted in exercise of statutory powers, it is implicit that it  can also be rescinded or modified at any time  in exercise of  the same power and it was observed that withdrawal of exemption  is a matter of Government policy with which the Court would not  in the absence of any manifest injustice, mala fides or fraud  interfere. It was observed as follows :

               " The doctrine of promissory estoppel is  applicable against the Government also particularly  where it is necessary to prevent fraud or manifest  injustice. The doctrine, however, cannot be pressed  into aid to compel the Government or the 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". To invoke  the  doctrine of promissory estoppel clear, sound and  positive foundation must be laid in the petition itself  by the party invoking the doctrine. Bald expressions,  without any supporting material, to the effect that the  doctrine is attracted because the party invoking the  doctrine has altered its position relying on the  assurance of the Government would not be sufficient to  press into aid the doctrine. The doctrine of promissory  estoppel cannot be invoked in the abstract and the  courts are bound to consider all aspects including the  results sought to be achieved and the public good at  large, because while considering the applicability of  the doctrine, the courts have to do equity and the  fundamental principles of equity must for ever be  present in the mind of the court, while considering  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 20  

the applicability of the doctrine. The doctrine must  yield when the equity so demands if it can be shown  having regard to the facts and circumstances of the  case that it would be inequitable to hold the  Government or the public authority to its promise,  assurance or representation."

However, it was also observed as follows: " The reasons given by the Union of India justifying  withdrawal of the exemption notification are not  irrelevant to the exercise of the power in "public  interest", nor are the same shown to be insufficient to  support the exercise of that power. The exemption  notification was not issued as a potential source of  extra profit for the importer. Again, at the same time  when the notification was withdrawn by the Government  there was no scope for any loss to be suffered by the  importers. The exemption notification did not hold out  to the appellants any enforceable promise. Neither the  notification was of an executive character nor did it  represent a scheme designed to achieve a particular  purpose. It was a notification issued in public  interest and again withdrawn in public interest."

10.             Our attention was  also invited to a decision of this  Court in Shrijee Sales Corporation & Anr. V. Union of India  [(1997) 3 SCC 398]. In this case it was observed as follows :

               " Moreover, the Government is competent to resile  from a promise even if there is no manifest public  interest involved, provided, of course, no one is put  in any adverse situation which cannot be rectified.  Even where there is no such overriding public interest,  it may still be within the competence of the Government  to resile from the promise on giving reasonable notice  which need not be a formal notice, giving the promise a  reasonable opportunity of resuming his position,  provided, of course, it is possible for the promise to  restore the status quo ante. If, however, the promise  cannot resume his position, the promise would become  final and irrevocable. "

This case in turn followed Kasinka Trading (supra).

11.             Our attention was invited to a decision of this Court  in Sales Tax Officer & Anr. V. Shree Durga Oil Mills & Anr. [  (1998) 1 SCC 572]. In this case it was held that the Government  was competent to change its policy in public interest on the  basis of resource crunch and that would be sufficient for non- applicability of the rule of promissory estoppel. Their  Lordships held that public interest can override consideration  of private loss or gain. Any Industrial Policy Resolution (IPR)  can be changed by  the State looking to its severe economic  crunch and in this case the respondent sought to invoke this IPR   which was issued on 18.7.1979 and was effective for the period  1979-83. The respondent established its industry on 28.11.1979.  Therefore, on factual aspect also this Court found that within  four months of establishment of industry, the respondent was not  likely to suffer any loss. But at the same time, their Lordships  observed as follows :

               " Any IPR can be changed if there is an  overriding public interest involved. In the instant  case, it has been stated on behalf of the State that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 20  

various notifications granting sales tax exemptions to  the dealers resulted in severe resource crunch. On  reconsideration of the financial position, it was  decided to limit the scope of the earlier exemption  notifications issued under Section 6 of the Orissa  Sales Tax Act. Because of this new perception of the  economic scenario of the State, the scope of the  earlier notifications had to be restricted. Withdrawal  of notification was done in public interest. The Court  will not interfere with any action taken by the  Government in public interest. Public interest must  override any consideration of private loss or gain.  Thus the plea of change of policy trade on the basis of  resource crunch should have been sufficient for  dismissing the respondent’s case based on the doctrine  of promissory estoppel."

12.     Our attention was invited to another decision of this  Court in State of Rajasthan & Anr. V. Mahaveer Oil Industries &  Ors. [ (1999) 4 SCC 357]. In this case also Government of  Rajasthan gave sales tax incentive scheme for industries in 1987  exempting  new industrial units from the tax on sale of goods  manufactured by them for sale within the State for a specified  period i.e. from 5.3.1987 to 31.3.1997. Oil extraction and  manufacturing was one of the industries eligible to the benefit  of the scheme but the same was revoked.  On facts it was found  that the Scheme had failed to achieve its object and had rather  adversely affected the oil industry. In this situation, it was  held that the Government can in public interest revoke the  policy and the doctrine of promissory estoppel cannot preclude  the Government from issuing such notification and on facts it  was found that the respondent had not taken any effective steps  for starting a new unit prior to the issuance of the  notification. It was observed as follows:          "Public interest requires that the State be  held bound by the promise held out by it in such a  situation. But this does not preclude the State from  withdrawing  the benefit prospectively even during the  period of the Scheme, if public interest so requires.  Even in a case where a party has acted on the promise,  if there is any supervening public interest which  requires that the benefit be withdrawn or the Scheme be  modified, that supervening pubic interest would   prevail over any promissory estoppel." 13.             As against this, Mr.Shanti Bhushan, learned senior  counsel appearing for the respondents has submitted that in view  of Section 78-A of the Act of 1948 a direction was issued by the  State Government for giving this development concession and the  State was competent to give such direction and in pursuance of  that the hill development rebate was given. Mr.Shanti Bhushan  submitted that it will be arbitrary and unfair if those  entrepreneurs who have established their industries on the  representation made by the State that they will be given certain  concessions and in pursuance of that they have made huge  investments and now that the concession has been withdrawn it  will ruin those entrepreneurs  and therefore, the appellant-  Corporation is estopped from going back from their  representation. In this connection, he principally relied  on a  decision of this Court in  M/s. Motilal Padampat Sugar Mills  Co.Ltd. v. State of Uttar Pradesh & Ors. [(1979) 2 SCC 409] and  specially invited our attention to paragraph 24 of the judgment.  In paragraph 24, their Lordships have summed up the ratio of the  earlier decisions given by this Court as follows :

               "  Under our jurisprudence the Government is not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 20  

exempt from liability to carry out the representation  made by it as to its future conduct and it cannot on  some undefined and undisclosed ground of necessity or  expediency fail to carry6 out the promise solemnly made  by it, nor claim to be the judge of its own obligation  to the citizen on an ex parte appraisement of the  circumstances in which the obligation has arisen. The law may, therefore, now be taken to be settled as a  result of this decision, that where  the Government  makes a promise knowing or intending that it would be  acted on by the promise and, in fact, the promise,  acting in reliance on it, alters his position, the  Government would be held bound by the promise and the  promise would be enforceable against the Government at  the instance of the promise, notwithstanding that there  is no consideration for the promise and the promise is  not recorded in the form of a formal contract as  required by Article 299 of the Constitution. It is  elementary that in a republic governed by the rule of  law, no one howsoever high or low, is above the law.  Everyone is subject to the law as fully and completely  as any other and the Government is no exception. It is  indeed the prides of constitutional democracy and rule  of law that the Government stands on the same footing  as a private individual so far as the obligation of the  law is concerned; the former is equally bound as the  latter. It is indeed difficult to see on what principle  can a Government, committed to the rule of law, claim  immunity from the doctrine of promissory estoppel. Can  the Government say that it is under no obligation to  act in a manner that is fair and just or that it is not  bound by considerations of "honesty and good faith"?  Why should the Government  not be held to a high"  standard of rectangular rectitude while dealing with  its citizens"? There was a time when the doctrine of  executive necessity was regarded as sufficient  justification for the Government to repudiate even its  contractual obligations; but, let it be said to the  eternal glory of this Court, this doctrine was  emphatically negatived in the Indo-Afghan Agencies case  and the supremacy  of the rule of law was established.  It was laid down by this Court that the  Government  cannot claim t be immune from the applicability of the  rule of promissory estoppel and repudiate a promise  made by it on the ground that such promise may fetter  its future executive action. If the Government does not  want its freedom of executive action to be hampered or  restricted, the Government need not make a promise  knowing or intending that it would be acted on by the  promise and the promise would after his position  relying upon it. But if the Government makes such a  promise and the promise acts in reliance upon it and  alters his position, there is no reason why the  Government should not be compelled to make good such  promise like any other private individual. The law  cannot acquire legitimacy and gain social acceptance  unless it accords with the moral values of the society  and the constant endeavour of the Courts and the  legislature most, therefore, be to close the gap  between law and morality and bring about as near an  approximation  between the two as possible. The  doctrine of promissory estoppel is a significant  judicial contribution in that direction. But it is  necessary to point out that since the doctrine of  promissory estoppel is an equitable doctrine, it must

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 20  

yield when the equity so requires\005.."

Mr.Shanti Bhushan  emphasized on the basis of this observation  made in this case that benevolent Government has to act with  equity and  the Court should yield in favour of the equity  whenever case arises of a citizen who has acted bona fidely  on  the basis of the representation made by the Government or by the  instrumentality of the State. Mr.Shanti Bhushan submitted that  since representation was made by the appellant- Corporation,  therefore, industries were established in the hill areas and now  the appellant- Corporation wanted to change the tariff that will  be unconstitutional, unfair and arbitrary to the citizens who  have acted on the promise made by the appellant- Corporation. In  this connection, Mr.Shanti Bhushan also submitted that this is   violative of Article 14 of the Constitution  as held in MRF  Ltd., Kottayam v. Asstt. Commissioner (Assessment) Sales Tax &  Ors. [ (2006) 8 SCC 702]. In that case, the Court held that  revocation of such notification is arbitrary and one of  us(Hon’ble Katju.J) was a party to the judgment. In this case  the concept of doctrine of legitimate expectation was invoked.  In this case, the State of Kerala issued notification granting  exemption for expansion in the manufacture of certain products  including rubber-based goods. The assessee manufacturer relying  on that introduction of exemption commenced commercial  production after investing huge amount. This concession was  granted for a fixed period of seven years.  But during the  currency of the period of exemption the State Government issued  another notification excluding the formation of a compound  rubber from the definition of "manufacture" for the purpose of  the original exemption notification. Therefore, this premature  deprivement  of the exemption to the assessee manufacturer  was  held by the Court arbitrary, unjust and unreasonable.  Their  Lordships invoked the doctrine of legitimate expectation.  It  was contended before the Court that the notification was a  statutory one and no plea of estoppel would lie against  the  statute.  But their Lordships held that the principle of  underlying legitimate expectation was based on Article 14 of the  Constitution and any action taken by the State which went  against the rule  of fairness was liable to be struck down.  Finally  this Court after review of the cases on the subject,  invoked the principle of promissory estoppel  and also the  legitimate expectation and found that the  revocation of the  exemption granted for a period of seven years by the State  Government was arbitrary, unjust and unreasonable and was liable  to be quashed. It was observed as follows :

               " This Court in E.P.Royappa v. State of  T.N.[(1974) 4 SCC 3] observed that where an act is  arbitrary,  it is implicit in it that it is unequal  both according to political logic and constitutional  law and is therefore violative of Article 14. Equity  that arises in favour of a party as a result of a  representation  made by the State is founded on the  basic concept of " justice and fair play". The  attempt to take away the said benefit of exemption  with effect from 15-1-1998 and thereby deprive MRF  of the benefit of exemption for more than 5 years  out of a total period of 7 years, in our opinion, is  highly arbitrary, unjust and unreasonable and  deserves to be quashed.   ..  .."

14.             Mr.Shanti Bhushan, learned senior counsel invited our  attention to paragraph 33 of the judgment in Pawan Alloys &  Casting Pvt. Ltd.(supra) and submitted that in fact an argument

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 20  

was made at the Bar that the high-powered Tariff Realisation  Committee advised the Board for withdrawing this rebate and the  Board acted in the light of the said report submitted to it in  the year 1986. It was submitted that the genesis of the  notification was the recommendation of the Tariff Realisation  Committee.  Therefore, the Court concluded that the rebate was  revoked not on the ground of general public interest but solely  on the ground of commercial interest of the Board. Therefore, it  was observed as follows :

               " Consequently it must be held on the facts of  these cases that the impugned withdrawal notification  was not backed up by any demands of public interest  which would outweigh the individual interests of the  appellant-promisees who had acted upon the same. "  

Mr.Shanti Bhushan, learned senior counsel submitted that in the  present case also, the revocation is not on the basis of general  public interest but it is only on account of losses the  Corporation   trying  to make up the losses revoked this  concession. Therefore, learned senior counsel submitted that it  is not the consideration of general public interest but based on  the commercial angle.  Learned senior counsel invited our  attention to the decision in Kasinka Trading & Anr. (supra),  specially to paragraph 21 of the judgment and submitted that,  that case is distinguishable on the ground that it only  suspended the levy and collection of customs duty wholly or  partially and there was no promise for benefit to public at  large.  Thus, the exemption notification issued under Section  25(1) of the Customs Act is an exercise of the statutory power  of the State under the law itself and the State can revoke the  same as per General Clauses Act. Therefore, Mr.Shanti Bhushan  distinguished the case of Kasinka Trading (supra) that the said  case was not the case in which any promise was made and on which  the assessee has acted & invoked certain benefits. It was a  general notification giving certain benefits and it was revoked  back in public interest. Learned senior counsel invited our  attention to a decision of this Court in ShriJee Sales  Corporation & Anr. (supra) and submitted that it was not an  inducement but  a case of  promissory estoppel  when a promise  is made and citizen is induced to act on those representation,  then in that case, once the party has suffered on account of so  called inducement, then in that case it cannot be revoked to the  disadvantage of the other party. Learned senior counsel  submitted that in Shrijee Sales Corporation & Anr. (supra) and  Shree Durga Oil Mills & Anr.(supr) certain tax exemption was  given and subsequently it was revoked and learned senior counsel  submitted that those cases are distinguishable, that there were  not the cases in which inducement was made, and the party acted  on that inducement. Those were the cases where exemption was  given on customs and sales tax but it was not in the nature of   inducement or any representation or promise on the part of the  other party to encourage the entrepreneurs to come and make  their investments.  

15.             Learned senior counsel invited our attention to a  decision of this Court in State of Punjab V. Nestle India Ltd. &  Anr. [ (2004) 6 SCC 465] in which a representation was made by  the Government in the manner de hors  the Rules but a statement  was made by the Finance Minister in  his Budget speech for 1996- 97 making representation to the effect that the State Government  had abolished purchase tax on milk. The manufacturers of milk  products, therefore, were not paying  the purchase tax on milk  for the assessment year 1996-97 and mentioned this fact in their  returns.  The taxing authority entertained such returns. The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 20  

manufacturers passed on the benefit of exemption to the dairy  farmers and milk producers. However, after expiry of the said  assessment year, the Government took a decision not to abolish  purchase tax on milk and the taxing authority therefore raised a  demand for the assessment year 1996-97. On these facts, the  Court held that in absence of proof of any overriding public  interest rendering the enforcement of estoppel against the  Government was inequitable, notwithstanding  that no exemption  notification as required by the statute was issued. It was held  that the State Government cannot resile from its decision to  exempt milk and raise a demand for the aforesaid assessment  year. However, the same principle of estoppel was not invoked  after assessment year 1996-97. The Court enforced the principle  of estoppel. All the earlier cases on the subject were reviewed  by the Court and ultimately it was concluded as follows :

               " 47.   The appellant has been unable to  establish any overriding public interest which would  make it inequitable to enforce the estoppel against the  State Government. The representation was made by the  highest authorities including the Finance Minister in  his Budget speech after considering the financial  implications of the grant of the exemption to milk. It  was found that the overall benefit to the State’s  economy and the public would be greater if  the  exemption were allowed. The respondents have passed on  the benefit of that exemption by providing various  facilities and concessions for the upliftment of the  milk producers. This has not been denied. It would, in  the circumstances, be inequitable to allow the State  Government now to resile from its decision to exempt  milk and demand the purchase tax with retrospective  effect from 1-4-1996 so that the respondents cannot in  any event readjust the expenditure already made. The  High Court was also right when it held that the  operation of the estoppel would come to an end with the  1997 decision of the Cabinet."

Similarly, our attention was invited to paragraph 16 of the  judgment in Shree Durga Oil Mills & Anr.(supra). Mr.Shanti  Bhushan submitted that in the aforesaid case Section 6 of the   Orissa Sales Tax Act clearly contemplated that the State  Government can grant exemption from sales tax and likewise  withdraw any such exemption. Learned senior counsel submitted  that so far as Section 49 of the Act of 1948 is concerned, there  is no such contemplation that it can also revoke the same.  It   is only because of the provisions of the General Clauses Act it  can be revoked but not once granted under Section 49(3) of the  Act of 1948, there is no provision for any revocation of the  exemption granted to certain class of persons having regard to  the geographical condition of the area, the nature of supply and  the purpose  for which supply is required and other relevant  factors. Mr.Shanti Bhushan also submitted that there is no  allegation of theft in the hill area by the persons to whom  the  power had been granted at a concessional rate. and all the  circumstances which have been taken into consideration for  revocation of the exemption notification show that there was no  overwhelming consideration for revoking such exemption in public  interest.  

16.             Mr.S.Ganesh, learned senior counsel appearing for some  of the respondents invited our attention to a decision of this  Court in Mahabir Vegetable Oils (P) Ltd. & Anr. V. State of  Haryana & Ors. [ (2006) 3 SCC 620]. In this case, the appellants

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 20  

were the owner of solvent extraction plants. Industrial policy  for the period 1.4.1988 to 31.3.1997 granted incentive by way of  sales tax exemption to the industries set up in backward areas  in the State. Solvent at that time was not included in the  negative list in the Rules. In August, 1995 the appellants  purchased land to set up a net unit and they made huge amount in  construct work, erection of plant and that investment  constituted 45% of the total investment. They started trial  production on 26.3.1997  and commercial production on  29.3.1997  and then they applied for grant of exemption for payment of  sales tax.  Meanwhile, the State Government notified its  intention to amend the Haryana  General Sales Tax Rules and  invited objections  and thereafter they issued notification on  16.12.1996 which included solvent extraction plants in the  negative list  but Note 2 appended to that list provided that  the industrial units which had made investment upto 25% of the  anticipated cost of the project and which had been included in  the negative list for the first time would be entitled to the  sales tax benefits related to the extent of investment made upto  3.1.1996.  On 28.5.1997 Note 2 was omitted. As a result of this,  the appellants were deprived of the benefit and consequently,  the Department rejected the application for exemption.  This was  challenged unsuccessfully before the High Court and ultimately  the matter reached this Court and this Court held that the  incumbents had made huge investment pursuant to and in  furtherance of the representation made by the State Government   and the State Government without assigning any reason withdrew  the exemption with retrospective effect at the end of the  operative period. The retrospective withdrawal of the exemption  was found to be bad in law. In this context, their Lordships  observed as follows:

               " Undisputedly, when the appellants started  making investments, Rule 28-A was operative.  Representation indisputably was made in terms of the  said Rules, The relevant provisions of the Act and the  Rules framed thereunder indisputably were made keeping  in view the industrial policy of the State."

Their Lordships held that the doctrine of promissory estoppel  will operate even in the legislative field.  Learned senior  counsel submitted that such concession which has been granted  cannot be revoked as the beneficiary acquired a vested right and  the same can only be revoked by the Statute.

17.             in this background, in view of various decisions  noticed above, it will appear that the Court’s approach in the  matter of invoking the principle of promissory estoppel depends  on the facts of each case. But the general principle that  emerges is that once a representation has been made by one party  and the other party acts on that representation and makes  investment and thereafter the other party resiles,  such act  cannot stated to be fair and reasonable.  When the State  Government makes a representation and invites  the entrepreneurs  by showing various benefits for encouraging to make investment  by way of industrial development of the backward areas or the  hill areas, and thereafter the entrepreneurs on the  representations so made bona fidely make investment and  thereafter  if the State Government resile from such benefits,  then it certainly is an act of unfairness and arbitrariness.  Consideration of public interest and the fact that there cannot  any estoppel against a Statute are exceptions.  18.            Learned senior counsel for the appellant has cited  nine instances which can be loosely categorised into two  i.e.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 20  

(i)  that there cannot be any estoppel against the statute and  (ii) overriding public interest. So far as the first part is  concerned i.e. the revocation has the statute flavour  i.e. the  benefit which was extended under Section 49 of the Act of 1948  and the notification had been issued revoking the same benefit  under Section 49 of the Act of 1948 by invoking the provisions  of the General Clauses Act that an authority granting exemption  has a right to revoke the same also. It is true that  it has a  right to revoke the same but if the other party has suffered on  that account then such representation will be against the public  policy and the morality.  Notification issued under Section 49  of the Act of 1948 for giving the benefit of exemption for the  hill areas was in the nature of delegated  legislation and not  an Act framed by the State Legislature. Therefore, a distinction  has to be made between the delegated  legislation and the  primary legislation framed by the Legislature. In Section 49  there is no specific stipulation that the notification issued  under Section 49 of the Act of 1948 can be revoked at any time  as was in the case of Shree Durga Oil Mills & Anr. (supra) where  Section 6 of the Orissa Sales Tax Act itself provided that the  notification is capable of being revoked at any time. Therefore,  a distinction has to be made between the delegated  legislation  and the primary legislation. So far as the primary legislation  is concerned, if the Act is passed by State Legislature and  denies the  benefit by the  primary legislation then no estoppel  can be applied against that Act but  so far as the case of  delegated legislation is concerned,  where delegated authorities  passes certain notification in exercise of his delegated  authority there is no contemplation mentioned in the act itself  that it is capable of being revoked at any time. Then such acts  cannot be treated at par with the primary Act passed by the  State Legislature.  The State is fully competent to pass an Act  prospectively as well as retrospectively but retrospectivity  to  the extent of aforesaid nature cannot stand. Therefore, this  distinction has to be borne in mind.  In the present case, the  U.P. Electricity Reforms Act, 1999 came into force with effect  from 2000. Therefore, if such benefit has not been extended then  a different stand will follow but so far as the delegated  legislation is concerned, this kind of revocation cannot be  sustained.  It is highly against the public morality that the  incumbent who have felt persuaded on account of the  representation made by the State Government that they will be  given certain benefits and they acted on that representation,   it does not behove on the part of the appellant- Corporation to  withdraw the said benefit  before expiry of the stipulated  period by issuing the notification revoking the same which the  respondents were legitimately entitled to avail. We fail to  understand why  the appellant- Corporation which made a  representation  and allowed the other party to act  upon such  representation could resile and leave the citizens in a lurch.  In such a situation the principle of promissory estoppel which  has been evolved by the Courts which is based on public morality  cannot permit the State to act in such an arbitrary fashion.   Other grounds  for the purpose of public interest which have  been pleaded;  namely that there are two methods of tariff   provided by the amendment and the actual consumption has been  reduced based on the calculation of energy charges  per KV  from   308 paise  to 100 paise and there was large scale theft or that  units were closing down and there was no mala fide intention in  the matter of revocation of the notification and the cost of  production of power has gone up to Rs.2.50 per unit, are  considerations which hardly involve any public interest.  They  were more of a nature of losses which has been suffered by the  Corporation and in order to make these losses, these methods  were evolved to reduce  and to make good of the losses.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 20  

Restructuring benefit to 17%  of the Tariff 4(A) (demand chages  )are the factors which are aimed at to make the losses good for  the Corporation.  This is not case in which serious public  repercussion was involved.  These are not the factors which put  together can constitute a public interest.  Theftof the energy  if it was proved by cogent datas that as a result of giving this  benefit to the entrepreneurs in the hill areas, they were  misusing it or there was theft of the energy at a large scale by  these persons to whom the concession had been given then of  course such factors, if all the datas were brought on record of   course  could have persuaded the Court to take a different view  of the matter. But simply because there was theft of energy  allow the State cannot persuade us to hold that the revocation  of such concession can be said to be in public interest. Since  the benefit was given to these units in the hill areas, there  should have been overwhelming evidence to show  some mala fide  on the part of these consumers which have persuaded the  Corporation to revoke it. If there was no misuse of the energy  by these units in the hill areas to whom the concession had been  granted then in that case it cannot be taken that there was  really public interest involved  which persuaded the Corporation  to revoke the same. No person can be permitted to misuse the  concession or benefit and invoke promissory estoppel. Promissory  estoppel is not one sided affair, it is rather two sided affair.  If one party abuses the concession then it is always open to the  other party to revoke  such concession but if one party avails  the benefit and is acting on the same representation made by the  other party then the other party who has granted the said  benefit cannot revoke the same under the garb of public  interest. Therefore the grounds that the revocation notification  was issued in public interest and that same has the flavour of  the statute, cannot persuade us to uphold it. sustained.  It is  true that a detailed statement was given in various paragraphs  of the written statement  filed by the appellant- Corporation  before the Allahabad High Court and unfortunately, the High  Court did not advert to these details but we have examined all  these details and found that all the nine points raised by  Dr.Singhvi does not persuade us to take a contrary view from the  view taken by the High Court. There is no gain saying that the  public interest is paramount and the private interest has to be  sacrificed for the larger interest. But, after survey of all  these cases on the subject, the judicial consensus  that emerges  is that  whenever the State has made a representation to the  public and the public has acted on that representation and  suffered economically   or otherwise, then in that case the  State should be estopped from withdrawing such benefit to the  detriment of the such people except in public interest or  against the Statute. So far as the public interest as involved  in the present case is concerned, we have found that there was  no overwhelming evidence to revoke  the benefit granted to the  industrial units in the hill areas. So far as the Statute is  concerned, the notification was issued under Section 49 of the  Act of 1948 and the same was revoked under Section 49 of the Act  of 1948 though there was no such provision contained in Section  49 that  it will be open to the Corporation to revoke the same  but could be possible by invoking the principle of General  Clauses Act. But in such delegated legislation such withdrawal  could only be permitted if larger public interest is involved or   if the Act is passed by legislature.

19.             Dr.Singhvi, learned senior counsel for the appellant- Corporation submitted that now the Act of 1999 has come into  force and that Act does not recognize the concessions given to  the hill areas and that this is a primary legislation i.e. Act  passed by the State Legislature. Therefore, to this extent we

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

can accept the submission of Dr. Singhvi that since the Act of  1999 does not recognize such   hill developmental benefits,  therefore, from the date of passing of the Act of 1999 the said  benefit cannot be accepted. We have stated above that there  cannot be estoppel against a statute. Since such benefits have  not been recognised by the Act of 1999, therefore, upto the date  of coming into force of the Act of 1999, all the benefits which  were being given to the respondent- entrepreneurs  shall be  protected by invoking the principle of promissory estoppel but  after coming into force of the Act of 1999, which is a primary  legislation enacted by the State Legislature the benefits from  the date the Act  has come into force, cannot be made available  to the respondents.

20.             In this 21st century, when there is global economy, the  question of faith is very important. Government offers certain  benefits to attract the entrepreneurs and the entrepreneurs act  on those beneficial offers. Thereafter, the Government withdraws  those benefits. This will seriously affect the credibility of  the Government and would show the shortsightedness of the  governance. Therefore, in order to keep the faith of the people,  the Government or its instrumentality should abide by their  commitments. In this context,  the action taken by the  appellant-Corporation in revoking the benefits given to the  entrepreneurs in the hill areas  will sadly reflect their  credibility and people will not take the word of the Government.  That will shake the faith of the people in the governance.  Therefore, in order to keep the faith and maintain good  governance it is necessary that whatever representation is made  by the Government or its instrumentality which induces the other  party to act, the Government should not be permitted to withdraw  from that. This is a matter of faith.

21.             Therefore, as  a result of our above discussion, we  hold that the view taken by the Allahabad High Court on revoking  the principle of promissory estoppel is correct and the  respondent- units will be entitled to such benefits till the  U.P. Electricity Reforms Act, 1999 came in to force. Since   after coming into force  the Act of 1999 no such concession  has  been granted, therefore, the concession shall survive till the  Act of 1999 came into force.  The appeals are accordingly  disposed of with no order as to costs.