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2008(4) Supreme 214
SUPREME COURT OF INDIA
S.B. Sinha, J.
Kusumam Hotels (P) Ltd. — Appellant
versus
Kerala State Electricity Board & Ors. — Respondents
Civil Appeal No. 101 of 2007
WITH
Civil Appeal Nos. 102, 103, 104, 105, 106 And 3309 of 2007
Decided on : 16-05-2008
(1985) 2 SCR 686; (1987) 3 SCC 189; (2007) 5 SCC 447; 2007 (14) SCALE 469; (2004) 1 SCC 139: 2003(8) Supreme 65 – Relied upon.
(1995) 1 SCC 274 – Distinguished.
(b) Promissory Estoppel – If the doctrine of promissory estoppel applies for the purpose of enforcing the concession granted in favour of entrepreneurs, it can be withdrawn in public interest – A different policy decision can be taken in its place after giving adequate notice. (Para 24)
(1979) 2 SCR 641; (1985) 4 SCC 369; (1997) 3 SCC 398: 1997(1) Supreme 352; (2005) 1 SCC 625: 2004(8) Supreme 479; (2006) 5 SCC 702: 2006(5) Supreme 742; (2006) 13 SCC 706 – Relied upon.
(c) Promissory Estoppel – For invoking the doctrine of Promissory Estoppel proper foundation has to be laid – A policy decision giving retrospective effect may not always be unreasonable although it should be and is normally presumed to be prospective. (Para 26)
(d) Electricity (Supply) Act, 1948 – Section 78A – The Act does not authorize the State to issue a direction with retrospective effect – Board, therefore, could only give prospective effect to such directions – By such action the accrued right of the appellants had been affected. (Para 27)
(2006) 5 SCC 702: 2006(5) Supreme 742; (2007)2 SCC 588: 2007(1) Supreme 622 – Relied upon.
(e) Constitution of India – Article 226 – Grant of Interest – The principle laid down in KSEB v. MRF Ltd. would apply to the bills raised prior to 2003. (Para 32)
(1996) 1 SCC 597 – Relied upon.
Facts of the case :
1. Appellants herein are owners of hotels situated at different parts of the State of Kerala.
2. Falling in line with the Government of India decision, the State of Kerala accepted tourism as an industry and various incentives including differential electricity tariff were announced.
3. A new policy for grant of investment subsidy was also floated.
4. By an order dated 11.10.1999, the industrial tariffs granted to the hotels in the State stood cancelled w.e.f 15.10.1999. It was ordered that industrial tariff already granted by various officers of the Board from 15.5.1999 would be suspended by an order dated 8.11.1999.
5. The hotels of the appellants were reclassified in the year 1999. Despite that appellants, however, were served with demand-cum-disconnection notices on the basis of bills raised on commercial tariffs on or about 9.4.2000.
6. A writ petition was filed thereagainst which was disposed of by an order dated 4.8.2004 directing that commercial tariff may be charged w.e.f. 15.5.1999 onwards.
7. They preferred an intra court appeal which was dismissed.
Findings of the Court :
The concessions could be withdrawn with retrospective effect.
Result : Appeal allowed with cost.
JUDGMENT
S.B. Sinha, J. —
1. These appeals involving similar questions of facts and law were taken up for hearing together and are being disposed of by this common judgment.
2. Appellants herein are owners of hotels situated at different parts of the State of Kerala. By reason of a policy decision adopted by the Central Government, ‘tourism’ was declared to be an ‘industry’. The State of Kerala adopted the said policy of the Central Government. Pursuant to the said policy decision, various incentives were to be granted. It was declared that “Tourism” will be treated as an `Industry’ and the concessions available to the’ tourism industry’ were:
“(i) Subsidy for prepration of feasibility/project report.
(ii) Investment subsidy limited to 10% thereof.
(iii) Incentive for training local manpower.
(iv) Augmenting availability of funds from State Financial Corporations.
(v) Concession in electricity and water charges.
(vi) Allocation of land at concessional rate.
(vii) Exemption from building tax levied by the Revenue Department. (Action to amend the Kerala Buildings Tax Act 1975 will be taken separately).”
3. Apart from the concession in electricity and water charges and payment of building tax to be levied by the Revenue Department which was open ended in nature, other concessions were to be granted on a one time measure.
4. A new policy for grant of investment subsidy was also floated. Classified hotels (One to Five Stars) came within the purview thereof. In terms of the said policy decision, the Kerala State Electricity Board (the Board) was directed to grant tariff concessions to the classified hotels and motels consequent on the said declaration of Government of Kerala and Government of India. The concessions to be granted thereby were :
“(1) The electricity tariff applicable to the categories listed above will be ht i- industrial tariff/l.t. Iv industrial tariff depending on the type of supply from 1.4.1987.
(2) The tariff as indicated above will be applied to the institutions either on production of proper certificate from the Director of Tourism or based on list of institutions eligible for the concessional tariff furnished by the director of tourism to the Secretary, Kerala Electricity Board. The certificates/ communications should be given by the Director of Tourism himself.
(3) In the case of institutions in the above categories applying for power connection hereafter tariff as above will be applied by the Kerala State Electricity Board on receipt of necessary certificate from the Director of Tourism.
(4) Regarding the admissibility of the concession to any particular unit the matter will be referred to the Director of Tourism and the report on the matter will be accepted by the Kerala State Electricity Board.”
5. Indisputably, the appellants had set up or upgraded their hotels and motels. The Government of Kerala classified the hotels in question in several categories for which they became entitled to from the year 1990. The Board, allegedly, had been suffering losses. The Government of Kerala, however, issued a Government Order on or about 25.8.1997 adopting the mode of grant of subsidy, inter alia, to the industrial sector, the relevant portions whereof read as under :
“1. In the Government order read as first paper above it was ordered that the actual cost of electricity concessions allowed to Industries in the State, as part of Industrial policy will be reimbursed to Kerala State Electricity Board to the extent necessary to reach 3% Rate of Return (ROR) starting with the accounting year 1986-87, by adjusting the amount of concession against the dues payable to Government by Kerala State Electricity Board.
2. The Chairman, Kerala State Electricity Board in his letters read above has reported that the loss sustained by the Kerala State Electricity Board due to concessional electricity tariff allowed to Industries during the last ten years comes to Rs.60.3 crores and that the loss for the year 1995-96 alone is Rs.24 cr
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