IMPORTANT POINTS
There can be no estoppel against statute.
Court cannot determine what should be the policy of the State.

JUDGMENT

RANJAN GOGOI, J.

1. These cases have been referred by a two-Judges Bench of this Court on the question as to whether, in the facts of the case, the principles of promissory estoppel can be invoked in favour of the appellants so as to entitle them to the benefit of concessional tariff of electricity.

2. Civil Appeal No.9748 of 2003 and Civil Appeal No. 9750 of 2003 have identical facts. In fact the appellant in Civil Appeal No. 9750 of 2003 is the successor-in-interest of the appellant in Civil Appeal No. 9748 of 2003. The facts in the third appeal i.e. Civil Appeal No. 9749 of 2003 are also largely similar.

3. The appellant in C.A.No.9748 of 2003 M/s. Kothari Industrial Corporation Ltd. had proposed to set up a caustic soda manufacturing unit at Manali in the State of Tamil Nadu. As the manufacturing process involved high consumption of electrical power, the appellant applied for concessional tariff which was promised to it by a Government Letter dated 29.6.1976 for first five years after commencement of production. In the said letter it was specifically mentioned that the rate at which the appellants were required to pay tariff would be below the rate applicable to the other two established caustic soda units in the State for the first three years and thereafter the rates will be at par with that of the other two units in the State.

4. Admittedly the unit of the appellant had started commercial production with effect from January, 1979. On 23.2.1979 the Tamil Nadu Revision of Tariff Rates on supply of Electrical Energy Act, 1978 (hereinafter referred to as the “Act”) came into force.

5. Section 2(b) of the Act defines tariff in the following terms:

“Tariff” means the rate of tariff leviable upon the consumption of any electrical energy in this State supplied by the Tamil Nadu Electricity Board and as specified in the Schedule to this Act.”

Section 3 of the Act provides that the tariff rates for consumption of electrical energy shall be as specified in the Schedule to the Act.

Under Section 4 the State Government is empowered to amend the provisions of the Schedule to the Act after taking into account the cost of production of energy and such other matter as may be prescribed.

The schedule to the Act, inter alia, provides that in the case of new industries, concessional tariff would be charged after commencement of the production in the following manner–

“For the first Three years ..... 66-2/3 Per cent of the High Tension rates under 1(A) (B) as the case may be.

For the fourth year ...... 80 Per cent of the High Tension rates under 1(A), 1(B) as the case may be.

For the fifth year ...... 90 Per cent of the High Tension rates under 1(A)(B) as the case may be.

For the sixth year ...... Full Tariff.”

6. In exercise of the power conferred by Section 4 of the Act, the Schedule thereto was amended by G.O. No.861 dated 30.4.1982. While maintaining the concessional tariff as noticed above, the Amendment provided that the same will not be available from the year when the industry starts earning profits. It is also an admitted fact that the appellants had furnished undertakings that it will be bound by amendment to the Schedule as affected by G.O. No.861 dated 30.4.1982.

7. On the above basis, a demand was raised on the appellants for consumption of electricity at the normal rate of tariff applicable on the ground that the industries had started earning profits. The said demand insofar as the appellant, M/s. Kothari Industrial Corporation Ltd. and Southern Petro Chemical Industries Corporation Ltd. is concerned is for the period from May 1982 to November, 1983, while for the appellant National Oxygen Ltd. the period is May 1982 to April, 1984.

8. The appellants protested against the said demand and eventually moved the High Court contending that under the Act the respondent State had promised concessional tariff for a period of five years starting from the date of commencement of commercial production. The said position could no