Holding

Promissory estoppel does not apply to statutory concessions, and the State may lawfully modify or withdraw the concessional tariff under the powers granted by the Tamil Nadu Revision of Tariff Rates Act.

Summary

M/s Kothari Industrial Corporation Ltd and other industrial units set up caustic soda plants in Tamil Nadu and were promised a concessional electricity tariff for the first five years by a government letter dated 29‑06‑1976. After the Tamil Nadu Revision of Tariff Rates on Supply of Electrical Energy Act, 1978 came into force, the Schedule provided a sliding concessional tariff for new industries. The State later amended the Schedule by GO No. 861 (30‑04‑1982) withdrawing the concession once an industry became profit‑making. The respondents demanded normal tariff from May 1982, alleging the appellants were profit‑making, while the appellants contended that they were still loss‑making and that the principle of promissory estoppel should prevent the State from withdrawing the concession. The Supreme Court held that a statutory concession is a privilege that can be altered or withdrawn by the State under the powers conferred by the Act, and that promissory estoppel does not apply to such statutory benefits. Consequently, the appeals were dismissed.

Issues considered

Whether the principle of promissory estoppel can be invoked to estop the State from withdrawing the concessional electricity tariff granted to the appellants.
Whether the amendment of the Schedule to the Tamil Nadu Revision of Tariff Rates Act by GO No. 861, 30‑04‑1982, is permissible under the statutory framework.
Whether the assessment of profit or loss of the industrial units is a valid basis for invoking the withdrawal clause in the amended Schedule.

Legislation cited

Electricity (Supply) Act, 1948s. 48, s. 49
Tamil Nadu Revision of Tariff Rates on Supply of Electrical Energy Act, 1978s. 2(b), s. 3, s. 4

Subjects

promissory estoppelconcessional tariffelectricity tariffstatutory concessionadministrative lawprofit‑loss assessmentTamil Nadu Electricity Board

Judgment

[2016] I S.C.R. 564

A M/S. KOTHARI INDUSTRIAL CORPORATION LTD.
v.
TAMIL NADU ELECTRICITY BOARD & ANR.
(Civil Appeal No. 9748 of2003 etc.)
B JANUARY 29, 2016
(RANJAN GOGOi, ARUN MISHRA AND
PRAI<ULLA C. PANT, JJ.J
Electricily- Concessional lariffto new Industries -Alleralion/
modificalion qf: by S/a/e - l'ursuanl to e1~force111enl of Tamil Nadu
c Rel'ision of Tariff Rates on Supp~v of Electrical Eneri;y Act, 1978 -
Permissibility al- On the principle of promissory estoppel - Held:
There ca11 be no es/oppel against a sta/u/e - The pri11ciple of
promissory estoppel would have no application lo !he case of !he
beneficiaries of co11cessional lar{ff; so as lo enlilie them any righl
D lo continue !he concessional 1arif1 which was earlier gra/1/ed - The
assessment of profit/loss of !he induslry for determining the
applicalion of !he (JO.No. 861 doled 30. 04.1982 (whereby the /arijf
rales were revised), was no/ arbitrwy or unjustified - Subsequent
wilhdrawal of the G 0. would no/ invalidate the some - Decision to
grant/refi1.ml qfconcessimwl power at different points of lime, should
E
he lefl lo !he Slate and 1101 lo !he Cour/S - Tamil Nadu Revision of
Tariff.Ra/es m1 Supply of Eleclrical Energy Act, 1971! · ss. 3 and 4
Administrative Law ·· Principle of Promissorr £.vtoppel.
Shree Sidhbali Steels Limited vs. State ()f VIiar Pradesh
& Ors. 2011 (3) SC I 93: 2011 (3) SCR 134; Stale of
r Rajasthan vs. .J.K. Udaipur V<(vog Ltd. 2004 (7) SCC
673: 2004 (4) Suppl. SCR 812 - referred to.
Case Law Reference
2011 (3) SCR 134 referred to. Para 11
G 2004 (4) Suppl. SCR 812 referred to. Para 12
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9748
of2003
From the Judgment and Order dated 06.12.200 I of the High Court
of Judicature at Madras in Writ Appeal No. 421 of 1995.
H
564
MIS_ KOTHARI INDUSTRIAL CORPORATION LTD_ v. TAMii. 565
NADU ELECTRICITY BOARD & ANR.

WITH
C. A_ NOS. 9749 and 9750 OF 2003
Pravin 1-L Parekh. Nalini (~hida1nbaran1. E. R.. Ku1nar. Anurag
Tripathi. (lor M/s. Parekh & Co .. ). Krislman1urthi Swami. Nikhil Swami,
Divya Swami. Prabha Swami. Anushree Menon. Yikas Mehta. Rakhi
Mohanty. Prashant Singh for the Appellant. B

Subramonium Prasad. 13. Bala_ji. Sudhanshu. Utkarsh Srivastava
for the Respondents_
The Judgment of the Court was delivered by
RANJAN GOGOi, .I. I. These cases have been referred by a C
two-Judges Bench of this Court on the question as to whether. iu the
facts of the case. the principles or promissory cstoppel can be invoked in
favour of the appellants so as to entitle them to the benefit of concessional
tariff of e lcctric ity_
2. Civil Appeal No.9748 of 2003 and Civil Appeal No. 9750 of D
2003 have identical facts. In fact the appellant in Civil Appeal No. 9750
of2003 is the successor-in-interest of the appellant in Civil Appeal No.
9748 of2003.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 of2003 Mis. Kothari Industrial E
Corporation Ltd. had proposed to set up a caustic soda manufacturing
unit at Mana Ii in the State o fTam iI Nadu_ As the nrnnll l:1ct uring process
involved high consumption of electrical power, the appcl Iant applied for
concessional tariff which was promised to it by a Government Letter
dated 29 .6. 1976 for first fi vc years after commencement of production.
In the said letter it was specifically mentioned that the rate at which the F
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 therealicr 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 G
production with effect from Janumy, 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:
H
566 SUPREME COURT REPORTS [2016] I S.C.R.

A "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
B Act.
Under Section I the State Government is empowered to amend
the provisions <.fthe Schedule to the Act after taking into account
the cost of production of energy and such other matter as may be
prescribed.
C The schedule to the Act, inter alia, provides that in the case of
new industri !S, concessional tariff would be charged after
commencem• nt of the production in the following manner-
" For the f rst
Three yeus ..... 66-2/3 Per cent of the High Tension
rates under I (A) (B) as the
D case may be.
For the fourth year ...... 80 Per cent of the High
Tension rate's under I (A), I (B) as the case may be.
For the firti'I year ...... 90 Per cent of the High
Tension rates Lmder I (A)
E (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 GO. No.861 dated 30.4.1982.
While maintaining the concessional tariff as noticed above, the
F 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. I 982.
7. On the above basis, a demand was raised on the appellants
G 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, Mis. 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
H National Oxygen Ltd. the period is May 1982 to April, 1984.
KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL. 567
NADU ELECTRICITY BOARD [RANJAN GOGOi, J.]

8. The appellants protested against the said demand and A
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 not have been revisited by any contrary action as
has been done. Alternatively, it was contended that the appellants had
B
not rr.ade any profits as claimed by the State. Therefore, even if the
amendment in the Schedule to the Act is to be construed to be legally
permissible, the same would have no application to the appellants which
were loss making concerns. The said claim was negatived by the High
Court leading to the appeals before us.
9. We have heard Shri Pravin H. Parekh and Ms. Nalini
c
Chidambaram, learned senior counsels for the appellants in C.A. No
9748 of2003 and C.A. No 9750 of2003 and Shri Krishnamurthi Swami,
learned counsel forthe appellant in C.A.No.9749 of2003. We have also
heard Shri Subramonium Prasad, learned counsel for the respondents.
I 0. The question referred to this bench, as noticed, is whether D
the State would be estopped from altering/modifying the benefit of
concessional tariff by means of the impugned G.O No. 861 dated
30.4.1982 on the principle of promissory estoppel. In fact, insofar as the
caustic soda unitofM/s. Kothari Industrial Corporation Ltd., subsequently
taken over by Southern Petro Chemical Industrial Corporation Ltd., is E
concerned, strictly speaking, the above question. would not even arise
inasmuch as at the time when the unit was set up and had started
commercial production, the Act had not yet come into force. The promise,
if ariy, was made by the letter dated 29.6.1976 on the terms noticed
abovr; namely, the tariff payable by the industry was to be at a rate less
than what was applicable to the other two units of the State for the first F
three years and thereafter at the rate equivalent to what was being paid
by the said two units.
11. Be that as it may, the question referred has been squarely
answered by this Court in Shree Sidhbali Steels Limited vs. State of
Uttar Pradeslr & Ors.I wherein this Court has considered a similar G
question with regard to the withdrawal of concessional tariff/rebate to
an industrial unit carrying on business in the hill areas of the State of
U.P. (now the State of Uttarakhand). After an indepth consideration of

1
2011 (3) sec 193 H
568 SUPREME COURT REPORTS [201(>J 1 S.C.R.

A the provisions orSection 48/49 or the Electricity Supply AcL 1948 under
which the concessional tariff/rebate \Vas granted and the provisions or
Section 21 of the (Jenera! ('lauscs Act as \vcll as the provisions ol'thc
U.P. Electricity Reforms AcL 1999 undcr which the concessional tariff/
rebate \Vas later \Vilhdra\vn this C.'ourt in para 5 I ca1nc to the follo\ving
c0nclusiu11 -
B
"'Fron1 the above discussion. it is clear that lhc petitioners cannot
raise pica of cstoppcl against the Notitication dated 7.8.2000
reducing, hil I development rebate to 0% as there can be no estoppcl
against the statute.''
c 12. In Para 47 oft/Jc report this Court has considered and liad
thought it appropriate to extract. the vic,vs c.\pn.:sscd in an earl icr dl:'cision
i.e. Stal<,: o{ R11j_a.'jl_ha11_~·s . .{.K~UdaiJ!l11.· (/d)<JgJtd.' :
'"25. An cxe111ption is by definition a rrccdo111 fro1n an obligation
\Vhich the cxc111plcc is othcr\visi.: liable to disthargc. It is a privilege

D granli ng an a<lvanlagi.: not ava ilablc lo otht.:rs. ;\n t.:xcnipt ion granted
under a statutory provision in a fiscal statute has been held to be
a concession granted by the Stale (Jovcrn111ent so that the
beneficiaries of such conccssio11 arc not required to pay the tax
or duty they arc otherwise liable to pay under such statute. The
recipient ofa concession has no legally cnfiJrccablc right against
E the Government to grant of a concession except to enjoy the
benefits of the concession during the period of its grant. This right
to enjoy is a detcasiblc one in the sense that it may be taken away
in exercise of the very power under which the exemption was
granted. (Sec S/Jri Hukul Oil Industries v. Siule ol Gujunll,
Kasinku liwli11)'.. v. U11io11 ol India and Shriiee Sain ( '011n1.
v. U11i,)f) ol ludia. )"

I}. On the aforesaid basis in Para 48 of the report in S'/1rce
Sidhhali Steels Ud. (supra) it was concluded as ll>tlows :
"'48. From the principle enunciated in the abovcmcnlioned decision
G in Udaipur U<(VO)'.. rnse there is no manner of doubt that the
rebate which \Vas granlcd to lhc petitioners. was, by definition, a
freedom from an obligation which the appellants otherwise were
liable to discharge. ·r1ic rebate \Vas a privilege granting an

11
2 2004 (7) sec 673
KOTHARI INDUSTRIAL CORPORATION LTD. v. TAMIL 569
NADU ELECTRICITY BOARD [RANJAN GOGOL J.]

advantage which was not 111ade available to others. The rebate A
granted under Section 49 of the Electricity (Supply) Act of 1948
was, therefore, a concession granted by the State Government so
that the beneficiaries of such concessions were not re~uired to
pay the electricity tariff they were otherwise liable to pay under
the said Act during the pe1·iod of its grant. The petitioners. as
13
recipients of a concession, accepted to enjoy the benefits of the
concession during the period of" its grant. This right to enjoy was a
defeasible one in the sense that it was liable to be taken away or
withdrawn in exercise of the very power under which the
exe1nption was granted.')

14. In the light of the above discussion and the earlier views of c
this Court, as set out above, it has to be held that the principle of
promissory estoppel would have no application to the case of the
appellants so as to entitle the applellants any right to the continuation of
the concessional tariff earlier granted.
15. The appellants have urged certain other issues to persuade D
the court to strike down the impugned action of the respondents in
withc!rawing the concessional tariff, the foremost being that the industries
in question had earned no profits so as to attract the withdrawal/disabling
condition introduced in the Amended Schedule. In this regard it is pointed
out that Kothari Industrial Corporation Ltd. had incurred losses as a E
\vhole though its caustic soda unit, to \vhoni concessional tariff \Vas
promised and granted, may have ei1rned a profit. The concessional tariff
having been granted to the industry by the Act in question, though in
respe~t of its caustic soda unit, the assessment or profit/loss made by
the industry as a whole and not by the unit alone, cannot be said to be an
arbitrary or irrational basis for determining the application ofthc impugned
GO. to the appellants in C.A.Nos.9748 and 9750 of2003. Similarly in
the case of the appellant National Oxygen Ltd. the rel"usal of the
respondent to compute the issue of profit/loss by distributing the
depreciation of cylinders for a period of five years instead of the first
year in which the depreciation was allowed, as claimed, cannot be termed G
as an unjustified basis for holding the industry to be a profit making
enterprise. The contention on the above score made on behalf of the
appellant National Oxygen, therefore, is of no consequence. Similarly
the withdrawal of the GO. 861 dated 30.4.1982 in the year 1988 and a
reversal to the situation prevailing earlier cannot invalidate the GO. (No.
II
570 SUPREME COURT REPORTS [2016) 1 S.C.R.

A 861 dated 30.4.1982) inasmuch as it is for the State and not for the
court to determine what should be the policy for grant/refusal of
concessional power at different points of time. These are questions that

.. must be left to the State and not to the Courts to decide .
16. In the light of the above, even the contentions on the merits
B of the decision as advanced by the appellants are not tenable so as to
invalidate the action(s) impugned in the present cases.
17. For the aforesaid reasons all the appeals are without any
merit and are accordingly dismissed.
Kalpana K. Tripathy Appeals dismissed.
c