M/S KOTHARI INDUSTRIAL CORPORATION LTD.versusTAMIL NADU ELECTRICITY BOARD & ANR.

                  [2010] 11 S.C.R. 1139


    M/S KOTHARI INDUSTRIAL CORPORATION LTD.                     A
                             v.
       TAMIL NADU ELECTRICITY BOARD & ANR.
          (Civil Appeal No. 9748 of 2003 etc.)
                   OCTOBER 01, 2010
                                                                B
    [MARKANDEY KATJU AND T. S. THAKUR, JJ.]

      F?eference to Larger Bench - Tariff-concession provided
to new industries under Electrical Energy Act - Establishment
of industrial units - Subsequently by Notification new C
condition for tariff-concession provided ~ Industrial units also
giving undertaking to that effect - Held: In view of difference
of opinion in various judgments passed by Supreme Court,
the matter referred to Larger Bench to decide the issues
whether principles of 'legitimate expectation' and 'promissory D
estoppe/' are applicable to the case and whether undertaking
given by the industrial units acted as estoppel against them
- Tamil Nadu Revision of Tariff Rates on Supply of Electrical
Energy Act, 1978 - Administrative Law - Principles of
'legitimate expectation' and 'promissory estoppel' - Estoppel E
- Electricity.

     Tariff concessions were given for a period of first five
years to new industries under Tamil Nadu Revision of
Tariff Rates on Supply of Electrical Energy Act, 1978. The
appellants, attracted by the concessions, established           F
their industrial units. Subsequently, by a Notification
dated 30.04.1982, the respondents revised the tariff
concession, whereby the concession was not to apply
from the year when the industry started earning profit.
                                                                G
    Appellants were asked to give an undertaking to that
effect which they gave fearing disconnection of their
power supply. Appellant in C. A. No. 9748 of 2003 was
served notice to pay a particular amount towards tariff.
                         1139                                   H
    1140     SUPREME COURT REPORTS             [2010] 11 S.C.R.


A       The questions for consideration in the instant
    appeals were whether the principles of 'promissory
    estoppel' and 'legitimate expectation' were applicable and
    whether the undertaking given by the appellants acted as
    an estoppel against them.
B       Referring the matters to the Larger Bench, the Court

      HELD: There are some differences of opinion in the
  various decisions by different benches of the Supreme
  Court. Hence the matter needs to be decided by a Larger
C Bench of this Court, on the issue as to whether the
  principles of 'promissory estoppel' and 'legitimate
  expectation' are applicable in this case. The Larger
  Bench may also consider whether the undertaking given
  by the appellants acts as an estoppel against them.
D (1143-E-F]

       Pawan Alloys and Casting (P) Ltd. vs. UP. State
  Electricity Board and Ors. (1997) 7 SCC 251; Southern
  Petrochemical Industries Company Limited vs. Electricity
  Inspector and E. T.1.0. and Ors. (2007) 5 SCC 447; Shri Baku/
E Oil Industries and Anr. vs. State of Gujarat and Anr. (1987) 1
  SCC 31 etc.; Union of India and Ors. vs. Godfrey Philips India
  Limited (1985) 4 SCC 369, State of Tamil Nadu vs. K.
  Sabanayagam and Anr. (1998) 1 SCC 318; Jalan Trading Co.
  (Pvt. Ltd.) vs. Mill Mazdoor Union 1967(1) SCR 15; Kasinka
F Trading and Anr. vs. Union of India and Anr. (1995) 1 SCC
  274; .(1997) 3 SCC 398; Tamil Nadu Electricity Board vs.
  Status Spinning Mills Ltd. and Anr. (2008) 7 SCC 353 -
  referred to.

G                       Case Law Reference:
        (1997) 1 sec 251           Referred to.       Para 5
        (2007) 5 sec 447           Referred to.        Para 5
        (1987) 1 sec 31            Referred to.        Para 5
H
 KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL1141
       NADU ELECTRICITY BOARD & ANR.

     (1985) 4 sec 369              Referred to.          Para 6        A

     (1998) 1 sec 318              Referred to.          Para 6

     1967(1) SCR 15                Referred to.          Para 6

     (1995) 1 sec 214              Referred to.          Para 6        B
     (1997) 3 sec 398              Referred to.          Para 6

     (2008) 1 sec 353              Referred to.           Para 6

     CIVIL APPELLATE JURISDICTION : Civil Appeal No.
 9748 of 2003.                                                         c
     From the Judgment & Order dated 06.12.2001 of the
 High Court of Madras in WA No. 421 of 1995.

                                  With
                                                                       D
 Civil Appeal No. 9749 and 9750 of 2003.

     P.H. Parekh, Nalini Chidambaram, E.R. Kumar, Debojyoti
 Battacharya, Vishal Prasad, Anand Jha (for Parekh & Co.)
 Nikhil Swani, Prabha Swami, A.M.P. Latha, Krishnamurthi               E
 Swani, D. Durga Devi (for Vikas Mehta), R. Nedumaran and
 Vimal Dubey for the appearing parties.

      The Judgment of the Court was delivered by

        MARKANDEY KAT JU, J. 1. These appeals have been                F
  filed against the common judgment and order of the Madras
  High Court dated 06.12.2001 in Writ Appeals Nos. 421 & 488
\ of 1985 etc. The facts have been stated out in great detail in
· the impugned judgment of the High Court in which the points
  contended by the parties herein have been dealt with. Hence          G
  we are not repeating the same here.

      2. The appellants have set up new industries in which a
 major raw material is said to be power (electricity). It is alleged
 by the appellants that due to large consumption of power, the         H
    1142      SUPREME COURT REPORTS                [2010] 11 S.C.R.


A economic viability of their project is very sensitive to power
  tariffs. It is further alleged that the appellants were attracted by
  the tariff concessions given under Tamil Nadu Revision of Tariff
  Rates on Supply of Electrical Energy Act, 1978 (Tamil Nadu
  Act 1 of 1979). In the Schedule to the said Act, new industries
B were to be given the benefit of concessional tariffs for the first
  five years of production. It is alleged that on the basis of said
  promise the appellants proceeded in setting up their projects
  and established their industrial units which commenced
  production. The appellants were sanctioned the power supply
c by the respondents and started production.
         3. Subsequently, by notification dated 30.4.1982 the
    respondents by revising the tariff introduced a new condition
    to the tariff concession, namely, that the said concession was
    not to apply from the year when the industry starts earning
P   profits. On the basis of the above notification, the appellants
    were asked by the respondents to give an undertaking, which
    they gave, fearing disconnection of their power supply.

       4. It is alleged by M/s. Kothari Industrial Corporation
E Limited, which is one of the appellants before us, that in the
  year 1982-83 they disclosed a net profit of Rs.7,07,572/- which
  under Income Tax Act was available for set off against carry
  forward losses which amounted to Rs.45,20,611/- . Hence it
  was alleged that in fact the said appellant incurred losses. The
F appellant has been served notice to pay Rs.2,09,433/- to avoid
  disconnection of power supply.

        5. The appellants have relied on the decisions of this
  Court in Pawan Alloys & Casting (P) Ltd. vs. U.P. State
  Electricity Board & Ors. (1997) 7 SCC 251, Southern
G Petrochemical Industries Company Limited vs. Electricity
  Inspector and E. T.1.0. & Ors. (2007) 5 SCC 447, Shri Baku/
  Oil Industries & Anr. vs. State of Gujarat & Anr. (1987) 1
  SCC 31 etc. On the basis of the aforesaid decisions the
  appellants relied on the doctrine of promissory estoppal and
H legitimate expectation.
KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL1143
NADU ELECTRICITY BOARD [MARKANDEY KAT JU, J.]
     6. On the other hand, the respondents have alleged that       A
there is no estoppel against the statute, and the amendment
to the Schedule by which the concession was restricted was
a legislative act. They have relied on the decisions of this
Court in Union of India & Ors. vs. Godfrey Philips India Limited
(1985) 4 SCC 369, State of Tamil Nadu vs. K. Sabanayagam           B
& Anr. (1998) 1 SCC 318 and Jalan Trading Co. (Pvt. Ltd.)
vs. Mill Mazdoor Union 1967(1) SCR 15. The respondents
have also alleged that since the appellants have given a
specific undertaking to abide by the G.O. dated 30.4.1982
they are estopped from challenging the same vide Kasinka           c
 Trading & Anr. vs. Union of India & Anr. (1995) 1 SCC 274
and Shrijee Sales Corporation & Anr. vs. Union of India
(1997) 3 SCC 398. The respondents have also alleged that
Section 4 of the 1978 Act empowered the Government to
amend the Schedule to the Act vide Tamil Nadu Electricity          D
Board vs. Status Spinning Mills Ltd. & Anr. (2008) 7 SCC
353.

     7. We are of the opinion that there seems to be some
difference of opinion in the various decisions by different
benches of this Court. Hence the matter needs to be decided        E
by a larger bench of this Court, on the issue as to whether the
principles of promissory estoppel and legitimate expectation
are applicable in this case. The larger bench may also consider
whether the undertaking given by the appellants acts as an
estoppel against them.                                             F

    8. Let the papers of this case be placed before Hon'ble
the Chief Justice of India for constitution of a larger bench.
K.K.T                   Matters referred to the Larger Bench.