THE STATE OF HIMACHAL PRADESH & ORS.versusMIS. GUJARAT AMBUJA CEMENTS LTD. & ORS.

                         [2017] 10 S.C.R. I


        THE STATE OF HIMACHAL PRADESH & ORS.                          A
                                 v.
       MIS. GUJARAT AMBUJA CEMENTS LTD. & ORS.
                  (Civil Appeal No. 2652 of2006)
                       OCTOBER 04, 2017                               B
         [RANJAN GOGOi AND NAVIN SINHA, JJ.]
        Electricity: Power Tariff Freeze - Benefit of - Cement
manufacturing unit's entitlement to the benefit of power tariff freeze,
whether includes right to reimbursement of all the amounts paid by C
the industrial unit on account of Peak Load Exemption Charge
(PLEC) - Held: Company-industrial unit was clearly informed that
the State is going through a phase of acute shortage of power
affecting peak load hour supply - Board accorded sanction for
supply of electricity during peak load hours to the unit subject to
certain terms and conditions - Furthermore, by notification dated D
30. I 0. I 995, power during peak hours was to be provided as a
special dispensation for industries which could not afford to remain
without continuous power/electricity - Normal supply of electricity
for which there was a normal tariff was infact discontinued during
the peak hours ,,.. Thus, incentive provided under the Incentive Rules E
would not include PLEC - Company not entitled to reimbursement
towards PLEC paid by it during the period offour years commencing
from the date of commercial production, for availing power supply
by way of special dispensation - Any reimbursement made to the
 company to be returned to the State/Board with interest @ 6% p.a.
- Revised Rules regarding Grant of Incentive to Industrial Units in F
 Himachal Pradesh, I 99 I
      Allowing the appeal, the Court
      HELD: 1.1 It is abundantly clear from the sequence of facts
that what was provided for by way of an incentive under the
Incentive Rules framed under the Industrial Policy of the State is · G
'power tariff freeze' for a period of four years from the date of
commercial production by reimbursement of the amount of
increase in tariff during the said period of four years. Even before'
the cement manufacturing unit had gone into the commercial
production, by letter dated 28.01.1994 the respondents-writ H
                                  1
2            SUPREME COURT REPORTS                       [2017] IO S.C.R.


A   petitioners were clearly informed that the State is going through
    a phase of acute shortage of power affecting peak load hour supply.
    The schedule of tariff published by the Board by Notification dated
    31.05.1994 made an unequivocal reiteration on the part of the
    Board that power supply during peak load hours, as may be
    notified by the Board from time to time, shall not be available
B   and in case of continuous process and like industries electricity
    supply during peak load hours would be provided only for special
    reasons and by means of a separate agreement to be entered
    into with the Board. In fact, an Office order dated 23.08.1995
    was passed by the Chief Engineer (Commercial) of the Board
C   according sanction for supply of electricity during peak load hours
    to the respondents-writ petitioners' unit subject to the terms and
    conditions mentioned therein. Finally by notification dated
    30.10.1995 another schedule of tariff was published levying peak
    load exemption charge (PLEC) at the rate of Rs.11- per unit over
D   and above the normal tariff. Power during peak hours was to be
    provided as a special dispensation for industries which could not
    afford to remain without continuous power/electricity. The mode
    of making available the power was also different inasmuch as the
    Notification dated 30.10.1995 contemplated installation of
    separate meters for the said purpose. In the counter affidavit
E   filed by the Board before this Court it has been stated that power,
    to make electricity supply available during the peak load hours,
    was obtained from other sources. The normal supply of electricity
    for which there was a normal tariff was in fact discontinued during
    the peak hours. Normal supply of electricity therefore, has to be
F   distinguished from the supply of electricity during peak load hours
    which was an act of special dispensation and upon payment of
    PLEC which change, in the facts noted, would assume the
    character of a surcharge. The question is not one whether PLEC
    is a part of the tariff having regard to the dictionary and the natural
    meaning of the word 'tariff'. The question is how the word/
G   expression 'tariff' is to be understood in the context in which
    such meaning is required to be determined. The meaning that
    has to be assigned must, naturally, be contextual having regard
    to what was promised i.e. tariff freeze. The nature of the charge
    imposed i.e. PLEC has to be understood keeping in mind that
    supply of power during the peak load hours was an exception; a
H
    THE STATE OF HIMACHAL PRADESH & ORS. v. MIS.                           3
           GUJARAT AMBUJA CEMENTS LTD.

special dispensation involving a special arrangement i.e.                  A
procurement from other sources. [Para 10] (9-E-H; 10-A-F]
       1.2 Viewing the matter from the aforesaid perspective, it is
concluded that the incentive provided under the Incentive Rules
would not include PLEC and the respondents-writ petitioners
would not be entitled to reimbursement towards the PLEC paid               B
for availing power supply by way of special dispensation in force.
The fact that in the revised Incentive Rules of 1996 PLEC has
been specil1cally excluded from the scope of reimbursement made
on account of power tariff will not fundamentally alter the situation.
The said declaration can be reasonably understood to be
clarificatory and intended to clear all doubts, queries and issues         c
raised on the aforesaid score. [Para 11] (10-F-G]
       1.3 The respondents-writ petitioners are not entitled to
reimbursement towards PLEC paid by it during the period of
four years commencing from the date of commercial production
i.e. 26.09.1995. It is directed that in the event any reimbursement D
had been made the same be returned forthwith by the respondents
to the appellants with interest thereon at the rate of 6% per
annum. In the light thereof, the order of the High Court is set
aside.[Para 12, 13] (10-11; 11-A-B]
     . CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2652                E
of2006.
      From the Judgment and Order dated 05.09.2003 of the High Court
of Himachal Pradesh at Shimla in Civil Writ Petition No. 603 of200l.
      D. K. Thakur, AAG, Anoop George Chaudhari, Ms. June                  F
Chaudhari, A. P. Datar, Sr. Ad vs., Shariq Ahmed, Ms. B. Gupta, Varinder
Kumar Sharma, U. A. Rana, Himanshu Mehta (For Mis. Gagrat and
Co.), Ms. Parul, Advs. for the appearing parties.
      The Judgment of the Court was delivered
       RANJAN GOGOi, J. 1. The State of Himachal Pradesh is in G
appeal before this court challenging an order of the High Court of
Himachal Pradesh dated 5u, September, 2003 allowing the writ petition
filed by the respondents - Mis Gujarat Ambuja Cements Ltd. and holding
that the respondents - writ petitioners' entitlement to the benefit of
power tariff freeze, would include the right to reimbursement of all the
                                                                           H
4             SUPREME COURT REPORTS                         (2017] JO S.C.R.


A amounts paid by it on account of Peak Load Exemption Charge
  (hereinafter referred to as "PLEC").
           2. The core facts that will be necessary to be noticed are as
    follows:
         The respondent - writ petitioner no.I - Mis Gujarat Ambuja
B Cements Ltd. set up an industrial unit for manufacture of portland cement
  in Darlaghat, District Solan, Himachal Pradesh. The approval of the
  State Government for establishment of the said unit was accorded on
  23'd January, 1990. The cement manufacturing unit of the
  respondents - writ petitioners was accorded the "prestigious status" to
c avail of incentives in accordance with the Revised Rules Regarding Grant
  oflncentive to Industrial Units in Himachal Pradesh, 1991 (hereinafter
  referred to as "Incentive Rules"), as amended from time to time. To be
  entitled to the incentives under the aforesaid Incentive Rules the
  respondents -writ petitioners had to and in fact had satisfied the stipulated
  requirement of capital investment at least of Rs. 50 crores and guaranteed
D employment of minimum of 200 persons on permanent/regular basis who
  are bona fide residents ofHimachal Pradesh. The cement manufacturing
  unit of the respondents - writ petitioners commenced commercial
  production on 261h September, 1995. At that point of time, under the
  Incentive Rules, the respondents - writ petitioners were entitled, inter
E alia, to a 'power tariff freeze' for a period of four years from the date
  of commencement of commercial production. Specifically, the tariff freeze
  was to be worked out by granting to the respondents - writ petitioners
  reimbursement of any increase in industrial power tariff after the date
  of commencement of commercial production for a period of four years.
  The formula for calculating the increase in power tariff to be reimbursed
F was the rate of electricity per unit billed minus the rate of electricity as
  on date of commercial production.
         3. On 28'h January, 1994 (before commencement of commercial
  production) the respondent- writ petitioner was informed by the Chief
  Engineer (Commercial) of the Himachal Pradesh State Electricity Board
G (hereinafter referred to as "the Board") that the power required by its
  cement unit (i.e. 21000 KW) can be made available subject to certain
  tenns and conditions mentioned in the aforesaid letter (dated 28'h January,
  1994). By the said letter the respondent- writ petitioner was informed
  that Peak Load hours restrictions will be imposed between 6 p.m. to 9
H p.m. for the summer months (April to October) and 5 p.m. to 9 p.m. for
   THE STATE OF HIMACHAL PRADESH & ORS. v. M/S.                               5
  GUJARAT AMBUJA CEMENTS LTD. [RANJAN GOGOI, J.]

the winter months (November to March). Thereafter, it appears that in A
exercise of powers under Sections 49 and 59 of the Electricity (Supply)
Act, 1948, the Board brought into force a schedule of electricity tariff
known as "Himachal Pradesh State Electricity Board Schedule of
Electricity Tariff, 1994 w.e.f. 31" May, 1994. Clause (m) of the said
Schedule which deals with "Peak Load Hour Supply" is as follows:
                                                                         B
        "m) PEAK LOAD HOUR SUPLY
        Supplies under Schedule Agriculture pumping (A.P.), Small
        Industrial Power (S.P), Medium Industrial Power Supply
        (Schedule M.S.), Large Industrial Power Supply for Mini Steel
        Mills etc. and for others (Schedule L.S.-1 and L.S.-2) and Water c
        and Irrigation pumping (Schedule W.l.P.) shall not be available
        during the peak load hours as may be notified by the Board from
        time to time. However. in the case of continuous grocess
        industries. or where a particular industrial consumer wants to
        run his industry during the peak load hours for any special reasons.
        a separate agreement shall have to be entered into with the D
        Board."
       4. On 23"1 August,1995, the Chief Engineer (Commercial) of the
Board issued an Office Order according sanction in favour of the
respondent- writ petitioner for running of its cement manufacturing unit
during the evening peak load hours subject to the conditions enumerated       E
in the said Office Order (dated 23'd August, 1995)
       5. After the respondent- writ petitioner's unit went into commercial
production, on 3Q1h October, 1995 the Board issued another Notification
in exercise of power under Sectio.ns 49 and 59 of the Electricity (Supply)
Act, 1948 publishing another schedule of tariff and general conditions        F
for supply of electricity to various categories of consumers in Himachal
Pradesh with effect from 1" November, 1995. The aforesaid Notification
(dated 3Q'h October, 1995) dealing with the "Peak Load Hour Supply"
which is relevant to the present case is as follows:                     ·
        "1) PEAK LOAD HOUR SUPLY                                              G
         Supplies under Schedule Agriculture pumping (A.P.), Small
        Industrial Power (S.P), Medium Industrial Power Supply
        (Schedule M.S.), Large Industrial Power Supply for Mini Steel
        Mills etc. and for others (Schedule L.S.-1 and L.S.-2) and Water
        and Irrigation pumping (Schedule W.l.P.) shall not be available H
6             SUPREME COURT REPORTS                        [2017] lOS.C.R.


A           during the peak load hours. The duration of peak load hours in
            summer and winter shall be as under:
            i)Summer
             CApril to Oct) 6 PM to 9 PM
            ii) Winter
B
            (Nov. to March) 5.30PM TO 8.30PM
            However. in the case of continuous process industries. or where
            a particular industrial consumer wants to run his industry during
            the peak load hours for any special reasons. a separate agreement
            shall have to be entered into with the Board. Such consumers
c           shall be billed for additional charge as specified in the relevant
            schedules of tariff'
          In part II of the aforesaid Notification (dated 30'h October, 1995)
    under the "Schedule of Tariffs" the provision with ,·egard to "Peak Load
    Exemption Charge (PLEC)" were stated in the following terms:
D
            "5. Peak Load Exemption Charge CPLEC)
            The consumers availing special dispensation or exemption during
            evening peak load hours stipulated under Part-I General of this
            notification shall be billed at extra charges of Rs. I/- per unit
            over and above the normal tariff. For this purpose, time of the
E
            day (T.0.D.) meters shall be provided. Till such time, these
            meters are provided, the monthly peak load exemption charges
            shall be Rs.70/- per KVA of exemption/relaxation sought."
          6. After the commencement of the commercial production by the
  cement manufacturing unit of the respondent - writ petitioner, in the
F
  year 1996, the Incentive Rules were revised and the incentive of power
  tariff freeze, though continued, underwent certain modifications. While
  the said notification may not be strictly relevant for the present what
  was clearly provided in the revised Incentive Rules is that the power
  tariff to be reimbursed will not include any other charge/surcharge/peak
G load charge/fuel adjustment charge etc. as may be levied by the
  competent authority. It may be noticed, at this stage, that the aforesaid
  revised Incentive Rules were made applicable to new industrial units
  which fact is borne out from clause 1.2(a) of the Revised Incentive
  Rules (which came into force with effect from I'' October, 1996) dealing
  with eligibility which is in the following terms.
H
   THE STATE OF HIMACHAL PRADESH & ORS. v. MIS.                               7
  GUJARAT AMBUJA CEMENTS LTD. [RANJAN GOGOi, J.]

       "1.2 Eligibility                                                      A
       (a) New Industrial units as defined in these rules, shall be eligible
       for grant of incentives as provided for under these rules. Units
       which have commenced commercial production before the
       appointed day will continue to be governed for grant of all
       incentives under the Revised Rules regarding Grant oflncentives B
       to Industrial Units in HP-1991 as amended from time to time,
       unless otherwise provided in these rules. Such industrial units
       will be eligible for incentives, concessions and facilities only if
       they meet the minimum employment criteria as laid down under
       these rules."
                                                                             c
       The definition of 'New Industrial Unit" contained in clause 2(s)
of the aforesaid Revised Incentive Rules (of 1996) m11y also be extracted
below for convenience.
        "2(s) "New industrial unit" means a registered SSS BE, tiny, small,
        ancillary, medium or large scale industrial unit as defined in clauses D
        2(x) and 2(za) of these rules, located within the State of Himachal
        Pradesh which commences commercial production on or after
        the appointed day and includes any existing unit which is eligible
        to gel fresh registration as per the guidelines provided by the
        Development Commissioner, Small Scale Industries, Govt. of
        India, from time to time."                                             E
      The "appointed day" was notified as 1" day of _October, 1996.
       7. It is in the above backdrop of the core facts that the issue
arising in the case, namely, the entitlement of the respondent - writ
petitioner to reimbursement of the PLEC will have to be decided.              F
       8. The argument advanced by Shri Anoop George Chaudhari,
learned Senior Counsel appearing for the appellant State of Himachal
Pradesh centres around two principal issues. The first is that on the
date when the cement unit was set up and had commenced its commercial
production i.e. 26'h September, 1995 the PLEC had not come into force.
                                                                              G
The promise of reimbursement of increased power tariff did not and, in
fact, could not have, therefore, cover/covered reimbursement of PLEC.
Additionally, it has been contended that even before the cement
manufacturing unit had commenced commercial production the
respondent - writ petitioner was informed by letter dated 28'h January,
 1994 that there will be restrictions on availability of power during the     H
8              SUPREME COURT REPORTS                        [2017) IO S.C.R.


A peak load hours which hours also were specifically mentioned in the
   said letter (dated 28'h January, 1994). It has been contended on behalf
  of the State that in the Notification dated 30'h October, 1995 it is clearly
  and categorically reiterated that electricity supply during the peak load
  hours would not be available except as a matter of special dispensation
  to a industry that needed a continuous supply of power. In the said
B
  Notification (dated 301hOctober, 1995) it was also mentioned that supply
  of power during the peak load hours would entail an additional charge of
  Rs. I/- per unit over and above the normal tariff and further that a separate
  meter for reading of electricity consumed during the peak load hours
  would be installed. All these facts, according to the learned Senior
c counsel, would go to show that PLEC is a special/additional charge over
  and above the normal tariff in cases where the power is made available
  during the peak load hours as a special dispensation. In this regard, Shri
  Chaudhari has also drawn the attention of the Court to the affidavit filed
  before this Court by the Board wherein it has bet-11, inter alia, stated
  that the power for supply during peak load hours had to be procured by
0
  the Board from other sources. Therefore, it is contended that PLEC is
  not a part of the normal/regular tariff in respect of which alone there is
  a promise of reimbursement by way of an incentive in the event of
  increase of such tariff during the eligibility period i.e. four years from
  the date of commencement of commercial production. According to the
E learned Senior Counsel, in the present case there is no dispute with
  regard to the issue of reimbursement of charges on account of hike/
  increase of normal tariff.
          9. In reply, Shri Arvind P. Datar, learned Senior Counsel appearing
  for the respondents - writ petitioners has submitted that tariff is not a
F defined expression either under the Electricity (Supply) Act, 1948 which
  would govern the parties or even in the succeeding statute i.e. the
  Electricity Act, 2003. The dictionary meaning of tariff is not very helpful
  either; tariff has been conveyed to mean a charge or list of charges
  either for services or on goods entering a country. Shri Datar has pointed
  out that the object and effect test must. therefore be applied to hold that
G PLEC is included within the meaning of electricity tariff. Exclusion of
  such charges from an understanding of the expression "tariff' would be
  counter-productive in a situation where incentive has been offered under
  the industrial policy of the State to attract investments. Shri Datar has
  submitted that any exclusion of PLEC from the meaning of the expression
H 'tariff' in the present context would be to permit the appel_lant to destroy
   THE STATE OF HIMACHAL PRADESH & ORS. v. MIS.                                9
  GUJARAT AMBUJA CEMENTS LTD. [RANJAN GOGOI, J.]

the very purpose of the incentive scheme. Such an interpretation would         A
enable the appellant to load the normal tariff with various other additional
charges and surcharges by giving such additions different nomenclatures
with a view lo distinguish the same from the expression 'tariff'. Shri
Datar has also pointed out to the very language of the Notification dated
30'11 October, 1995 and the provisions of Sections 49 and 59 of the            B
Electricity (Supply) Act, 1948 to contend that PLEC is nothing but tariff
inasmuch as it is by revision of the schedttle of tariff made by the said
Notification that PLEC had been introduced. Shri Datar has further
submitted that even under the Notification of 1992 granting the incentive
of "tariff freeze'" the method of calculation prescribed is a simple one,
namely, difference between the amount actually billed and the amount           C
that would have been billed as per the tariff in force on the date of
 commercial production. The said formula, if applied, would definitely
 include reimbursement of PLEC within the ambit of the incentive granted.
 Lastly. Shri Datar has submitted that the Revised Rules of 1996 which
 specifically ex dudes PLEC from the power tariff to be reimbursed makes
                                                                               D
 the position amply clear that PLEC had always been and is a part of the
 tariff.
        10. We have considered the submissions advanced on behalf of
the rival parties. The sequence of facts recited in the preceding paragraphs
makes it abundantly clear that what was provided for by way of an
incentive under the Incentive Rules framed under the Industrial Policy E
of the State is 'power tariff freeze' for a period of four years from the
date of commercial production by reimbursement of the amount of
increase in tariff during the aforesaid period of four years. It cannot be
lost sight of that even before the cement manufacturing unit had gone
into the commercial production, by letter dated 281h January. 1994 the F
respondents - writ petitioners were clearly informed that the State is
going through a phase of acute shortage of power affecting peak load
hour supply. The schedule of tariff published by the Board by Notification
dated 3 I'' May, 1994 made an· uPequi vocal reiteration on the part of the
Board that power supply during peak load hours, as may be notified by
the Board from time to time, shall not be available and in case of continuous G
process and like industries electricity supply during peak load hours would
be provided only for special reasons and by means of a separate
agreement to be entered into with the Board. In fact, an Office order
dated 23'.i August, 1995 was passed by the Chief Engineer (Commercial)
of the Board according sanction for supply of electricity during peak H
10             SUPREME COURT REPORTS                        [2017) 10 S.C.R.


A  load hours to the respondents - writ petitioners' unit subject to the terms
   and conditions mentioned therein. Finally by notification dated 30"'
   October, 1995 another schedule of tariff was published levying peak
   load exemption charge (PLEC) at the rate of Rs. I/- per unit over and
   above the normal tariff. Power during peak hours was to be provided as
   a special dispensation for industries which could not afford to remain
B
   without continuous power/electricity. The mode of making available the
   power was also different inasmuch as the Notification dated 3Q1h October,
   1995 contemplated installation of sep<irate meters for the said purpose.
  As already noticed, in the counter affidavit filed by the Board before this
  Court it has been stated that power, to make electricity supply available
c during the peak load hours, was obtained from other sources. The normal
  supply of electricity for which there was a normal tariff was infact
  discontinued during the peak hours. Nomial supply of electricity therefore
  has to be distinguished from the supply of electricity during peak load
  hours which was an act of special dispensation and upon payment of
  PLEC which change. in the facts noted, would assume the character of
D
  a surcharge. The question is not one whether PLEC is a part of the
  tariff having regard to the dictionary and the natural meaning of the
  word 'tariff'. The question is how the word/expression 'tariff' is to be
  understood in the context in which such meaning is required to be
  determined. The meaning that has to be assigned must, naturally, be
E contextual having regard to what was promised i.e. tariff freeze. The
  miture of the charge imposed i.e. PLEC has to be understood keeping in
  mind that supply of power during the pe<tk load hours was an exception;
  a special dispensation involving a special arrangement i.e. procurement
  from other sources.

F        11. If the matter is to be viewed from the aforesaid perspective
  we have to arrive at the conclusion that the incentive provided under the
  Incentive Rules would not include PLEC and the respondents - writ
  petitioners would not be entitled to reimbursement towards the PLEC
  paid for availing power supply by way of special dispensation in force.
  The fact that in the revised Incentive Rules of 1996 PLEC has been
G specifically excluded from the scope ofreimbursement made on account
  of power tariff will not fundamentally alter the situation. The said
  declaration can be reasonably understood to be clarificatory and intended
  to clear all doubts. queries and issues raised on the aforesaid score.
            12. For the atoresaid reasons, we hold that the respondents - writ
H    petitioners are not entitled to reimbursement towards ~LEC paid by it
    THE STATE OF HIMACHAL PRADESH & ORS. v. MIS.                           11
   GUJARAT AMBUJA CEMENTS LTD. [RANJAN GOGOi, J.]

during the period of four years commencing from the date of commercial     A
production i.e. 26'b September. 1995. We order accordingly and direct
that in the event any reimbursement had been made the same be returned
forthwith by the respondents - writ petitioners to the appellants with
interest thereon at the rate of 6% per annum.
      13. Consequently and in the light of the above, the order of the     B
High Court is set aside and the appeal is allowed in the above terms.


Nidhi Jain                                               Appeal allowed.