1. Dispute regarding the withdrawal of concessional power supply rates by an electricity board after the industry's status as a new industry was initially approved and contracted. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 )
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2025 Supreme(SC) 1228
SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, ATUL S. CHANDURKAR, JJ.
EDCONS(MKS) Castings Pvt. Ltd. – Appellant
Versus
West Bengal State Electricity Board & Ors. – Respondents
Civil Appeal No. 2592 of 2013
Decided On : 07-08-2025
Advocates appeared:
For the Appellant(s) : Mr. Gaurav Jain, Adv. (Arguing Counsel) Ms. Abha Jain, AOR
For the Respondent(s): Mr. Saurabh Mishra, AOR (Arguing Counsel) Mr. Shrimay Mishra, Adv. Ms. Bhumi Agrawal, Adv. Mr. Kapil Kaushik, Adv.
For the Appellant(s) : Mr. Gaurav Jain, Adv. (Arguing Counsel) Ms. Abha Jain, AOR
For the Respondent(s): Mr. Saurabh Mishra, AOR (Arguing Counsel) Mr. Shrimay Mishra, Adv. Ms. Bhumi Agrawal, Adv. Mr. Kapil Kaushik, Adv.
Important Points
The Court held that it is illegal and arbitrary for a Board to withdraw a concessional power supply rate after having approved the eligibility, executed a formal agreement, and implemented the concession, as changing its stand after such actions is unsustainable.
Subject
Administrative Law - Public Utility Regulation
Act Referred
WEST BENGAL INCENTIVE SCHEME: .
Headnote
(A) Tariff regulations - Concessional rate of power supply - Agreement dated 18.01.1999 - Board's arbitrary withdrawal of concession questioned - No justifiable basis for classification as ‘New Industry’ after initial verification - Just and reasonable expectations must be upheld. (Paras 2, 18, 20, 22)
(B) Authority - Doctrine of legitimate expectation - The principles of reliance on approved concessions must be respected, and the arbitrary change in status by the Board was found to be illegal and unsubstantiated, affirming the appellant's entitlement. (Paras 18, 21)
Facts of the case:
The appellant sought a Higher Tension (HT) power supply to expand operations under a previously granted concession. Initially granted benefits were retracted by the Board due to demands for additional certifications and a subsequent change in classification.
Findings of Court:
The court determined the Board's denial unjustified as it deviated from prior agreements and there was no proper evidence to substantiate claims against the appellant's status as a ‘New Industry’.
Issues: The court addressed whether the Board's classification of the appellant as a ‘New Industry’ was validly questioned after prior approvals.
Ratio Decidendi: The court held that once concessions were granted, subsequent attempts to revoke them without adequate justification violated principles of administrative law.
Result: Appeal allowed.
(B) Authority - Doctrine of legitimate expectation - The principles of reliance on approved concessions must be respected, and the arbitrary change in status by the Board was found to be illegal and unsubstantiated, affirming the appellant's entitlement. (Paras 18, 21)
Facts of the case:
The appellant sought a Higher Tension (HT) power supply to expand operations under a previously granted concession. Initially granted benefits were retracted by the Board due to demands for additional certifications and a subsequent change in classification.
Findings of Court:
The court determined the Board's denial unjustified as it deviated from prior agreements and there was no proper evidence to substantiate claims against the appellant's status as a ‘New Industry’.
Issues: The court addressed whether the Board's classification of the appellant as a ‘New Industry’ was validly questioned after prior approvals.
Ratio Decidendi: The court held that once concessions were granted, subsequent attempts to revoke them without adequate justification violated principles of administrative law.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether the board was justified in reclassifying the appellant as a converted consumer to deny concessional rates after previously granting approval and executing an agreement. (Para 13 , 16 , 18 )
3. The board's reversal of its position on the appellant's eligibility after conducting inspections and implementing a formal agreement was found to be arbitrary and unsustainable. (Para 19 , 20 , 21 )
4. An authority cannot arbitrarily change its stand on a party's eligibility for a benefit after granting approval and executing a binding agreement. (Para 20 , 21 )
5. Appeal allowed; High Court judgment set aside; appellant entitled to the 25% concessional rate of power supply as per the agreement. (Para 22 , 23 , 24 )
6. Can an authority withdraw a benefit after granting approval and executing a binding agreement?
An authority is not justified in changing its stand on a party's eligibility for a benefit after it has conducted due verification, sanctioned the benefit, and executed a formal agreement, as such action is considered arbitrary and unsustainable. (Para 19 , 20 , 21 )
7. What is the legal consequence of an arbitrary administrative decision to withdraw a contracted concession?
Such decisions are deemed illegal and unsustainable, and the court may set aside the administrative order to restore the benefits promised under the original agreement. (Para 21 , 22 )
JUDGMENT :
1. This Civil Appeal is against the judgment and order of the Division Bench of the High Court of Calcutta1[A.P.O.T. No. 519 of 2010 dated 19.05.2011], confirming the order of the Single Judge2[W.P. No. 1131 of 2002 dated 10.08.2010] dismissing the writ petition filed by the appellant challenging the arbitrary action of the West Bengal State Electricity Board3[Hereinafter referred to as the ‘Board’] withdrawing the concessional rate of power supply under Agreement dated 18.01.1999.
2. Facts, to the extent they are relevant for our purpose are that the respondent Board issued a notification dated 18.10.1996 revising the tariff applicable. The notification also provided concessional tariff to new and expanding industries as well as sick and closed industries being re-opened. The relevant provisions of the concession notification are as follows:
"Concessions to New Industries, Expanding Industries and Sick and closed Industries being reopened.
(a) Concession for New Industries:-
All new HT and EHT industries will be eligible for a concession in the Tariff (energy charge) based on consumption on the following pattern with effect from the date permanent connection is effected for a period of 3 (three) years.
All new industrial consumers drawing power at 66/132 KV will be given a concession of 40% on the total energy charges for three years.
All new HT industrial consumer drawing power at 33 KV will be given a concession of 30% on the total energy charges for three years.
All new HT industrial consumers drawing power at 6/6, 6/11 KV will be given a concession of 25% on the total energy charges for three years."
3. The appellant, an industry involved in manufacture of cast iron, had a Low Tension (LT) power supply connection for its factory at Dankuni, Hooghly, West Bengal. In order to expand its business and to cope with clean and technologically advanced industrial growth, the appellant installed 500 Kgs. capacity Induction Furnace (300 KVA) having production capacity of 1500 Mt. p/a in grey iron casting and additional capacity of 1200 Mt. p/a in ductile iron casting for its industry. By such upgradation, the appellant transitioned into a ‘New Industry’.
4. With the aforesaid installation and upgradation, appellant needed a HT/Bulk Power Supply from the Board. Accordingly, appellant filed an application for HT power supply in place of its existing LT Power Supply by furnishing all details in the prescribed proforma on 31.08.1998.
5. Pursuant to the above application, the Superintending Engineer vide his letter dated 03.09.1998 asked the appellant to deposit a sum of Rs.5,000/- for processing the application and for inspection of the factory premises. The appellant deposited the said amount and by its letter dated 05.09.1998 requested for an inspection. A joint inspection was held on 15.09.1998 and the appellant was informed that the authorities were fully satisfied and an estimation/quotation for service connection charges for effecting HT/Bulk Power Supply will be processed immediately.
6. By a Memo dated 10.10.1998, the Board sanctioned and proposed a HT/Bulk Power Supply to the appellant’s factory, subject to certain conditions. The relevant portion of the Memo is as follows:
“This has reference to your application No. Nil Dtd. 7.9.98 and subsequent joint inspection of site on 15.9.98 based on your load forecast conveyed to us through year above letter we have framed an estimate for the proposed Bulk Power Supply to your factory/at Jagannathpur, P.S. Serampore, District-Hooghly supply may be available to you under the following terms and conditions.
a) You will have to pay us in advance a Service Connection charges of Rs.3,99,381-00………
b) You will have to make an advance of Rs. 30,000-00 only to the Board towards cost of T.O.D. meter……
2) You will have to execute an agreement with us for five years. Based on your load forecast, you will have to Guarantee Annual Minimum Guaranteed Revenue for each year of operation……
3) A security amo
