Dismissed

M/S. Premium Ferro Alloys Limited v. Kerala State Electricity Board

Kerala HC20 Sept 2017WP(C)/26738/2014

Case brief

AI extract

What is this about?

New industries holding five-year exemption from power cuts and tariff enhancement under 1990 and 1992 government orders claimed compensation for the EREB period, when power beyond 70% of base average was charged at higher rates, and for peak hour load restriction, treating these as power cuts. The court held neither amounted to interruption of supply and dismissed the writ petitions.

What did the court decide?

Board permitted to demand normal tariff for the 708 compensated days without interest or penalty; any interest applied to be recomputed; three months' time granted to deposit the amounts if no adjustm

M/S. Premium Ferro Alloys Limited Vs Kerala State Electricity Board — Kerala HC (2017) — LawSathi Research

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT:

¶3

THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

¶4

WEDNESDAY, THE 20TH DAY OF SEPTEMBER 2017/29TH BHADRA, 1939

¶5

WP(C).No. 26738 of 2014 (N)

¶6

PETITIONER(S):

¶7

M/S. PREMIUM FERRO ALLOYS LIMITED, 39/3490A, 1ST FLOOR, RAVIPURAM ROAD, KOCHI - 682 016, REPRESENTED BY ITS MANAGING DIRECTOR, S.S.AGARWAL.

¶8

BY ADVS.SRI.K.SRIKUMAR (SR.) SRI.P.R.AJITHKUMAR

¶9

RESPONDENT(S):

¶10

1. KERALA STATE ELECTRICITY BOARD, VYDHYUTHI BHAVAN, PATTOM P.O.,

¶11

THIRUVANANTHAPURAM - 695 004, REPRESENTED BY ITS SECRETARY.

¶12

2. THE SPECIAL OFFICER (REVENUE), VYDHYUTHI BHAVAN, PATTOM P.O.,

¶13

THIRUVANANTHAPURAM - 695 004.

¶14

3. THE CHIEF ENGINEER, (COMMERCIAL & THERMAL), KERALA STATE ELECTRICITY BOARD, THIRUVANANTHAPURAM - 695 004.

¶15

*ADDL.R4 & R5 IMPLEADED

¶16

*** Addl. 4. THE STATE OF KERALA**

¶17

REPRESENTED BY SECRETARY TO THE GOVERNMENT, POWER DEPARTMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM - 695 001.

¶18

Addl. 5. THE SECRETARY DEPARTMENT OF INDUSTRIES, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

¶19

*ADDL.R4 & R5 ARE IMPLEADED AS PER ORDER DATED 24/11/14 IN I.A.NO.15097/2014.

¶20

R1 TO R3 BY ADVS.SRI.RAJU JOSEPH (SR.), SRI.K.T.PAULOSE, SC

¶21

SRI.JAICE JACOB,SC R4 & R5 GOVERNMENT PLEADER SMT.RAJI.T.BHASKER

¶22

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-08-2017, ALONG WITH WPC. 26791/2014,AND CONNECTED CASES, THE COURT ON 20-09-2017 DELIVERED THE FOLLOWING:

¶23

¶24

WP(C).No. 26738 of 2014 (N)

¶25

APPENDIX

¶26

PETITIONER(S)' EXHIBITS

¶27

EXHIBIT P1 - TRUE COPY OF THE JUDGMENT IN OP NO. 9816/2001 DT. 24.2.05.

¶28

EXHIBIT P2 - TRUE COPY OF THE JUDGMENT IN CIVIL APPEAL NO. 101013-10106/2010 OF THE HON'BLE SUPREME COURT DT. 06.02.14.

¶29

EXHIBIT P3 - TRUE COPY OF THE LETTER DT. 09.4.14.

¶30

EXHIBIT P4 - TRUE COPY OF THE REPLY DT. 08.5.14.

¶31

EXHIBIT P5 - TRUE COPY OF THE LETTER DT. 05.05.14.

¶32

EXHIBIT P6 - TRUE COPY OF THE REPLY DT. 28.5.14.

¶33

EXHIBIT P7 - TRUE COPY OF THE LETTER DT. 04.9.14.

¶34

EXHIBIT P8:- TRUE COPY OF THE LETTER DATED 10.3.2015.

¶35

EXHIBIT P9:- TRUE COPY OF THE LETTER DATED 20.3.2015.

¶36

EXHIBIT P10:- TRUE COPY OF THE LETTER DATED 23.3.2014 WITH WORK SHEET.

¶37

EXHIBIT P11:- TRUE COPY OF THE JUDGMENT DATED 27.7.2006 IN OP NO.8985/1998.

¶38

EXHIBIT P11A:- TRUE COY OF THE CALCULATION TABLE. EXHIBIT P12:- TRUE COPY OF THE MINUTES OF THE HEARING HELD ON 14.7.2015.

¶39

EXHIBIT P13:- TRUE COPY OF STATEMENT SHOWING THE CONSUMPTION PATTERN FROM AUGUST 1998 TO DECEMBER 2003.

¶40

RESPONDENT(S)' EXHIBITS

¶41

----------------------------------------EXHIBIT R2(A):-TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 10.3.2014.

¶42

EXHIBIT R2(B):- TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 24.11.2015.

¶43

EXHIBIT R2(C):_ A CHART SHOWING THE CONSUMPTION OF THE PETITIONER DURING THE NON-POWER CUT PERIOD FROM AUGUST 1998 TO DECEMBER 2003 WITH AVERAGE CONSUMPTION AND ESTIMATED CONSUMPTION AS ER THE CALCULATION OF THE PETITIONER.

/TRUE COPY/

PS TO JUDGE

K. Vinod Chandran, J

------------------------------------------------------------------------W.P.(C).Nos.26738 of 2014-N, 26791 of 2014-Y, 34909 of 2014-K, 245 of 2015-E, 586 of 2015-W, 3658 of 2015-F, 10049 of 2015-E & 27995 of 2016-Y

¶49

------------------------------------------------------------------------Dated this the 20th day of September, 2017

¶50

JUDGMENT

¶51

This batch of writ petitions is an off-shoot of the earlier litigation which culminated with a decision of the Hon’ble Supreme Court. Whether the subsequent action taken by the Kerala State Electricity Board [for brevity “Board”] was in accordance with the judgment of the Hon’ble Supreme Court is the short question; with many ramifications as to the manner in which an exemption made available to new industries is alleged to have been frustrated.

¶52

I have heard learned Senior Counsel Sri.K.Srikumar,

¶53

and Sri.C.K.Karunakaran for the petititioners and learned Senior Counsel Sri.Raju Joseph for the respondent-Board.

¶54

The State Government in a bid to encourage industrialisation, brought out Government Order dated 19/06/1990 providing certain incentives to new industries in the matter of provision and supply of power. This was by reason of the poor industrial climate available in the State inter alia by reason of grossly

¶55

WP(C).No.26738 of 2014 & - 2 - connected cases.

¶56

deficient power supply; for which the State depended, then, mainly on hydro-electric power; subject to the vagaries of monsoon. The State hence in the years charecterized by lean rain-fall, resorted to 'powercuts', as it is popularly termed; cutting of the supply in specified areas by rotation during specified time slots or as in the case of the petitioners industries by written orders restricting the use of power to specified percentage, on threats of penalty and propotionate reduction in the subsequent month, if exceeded. Normal life was slightly disrupted and industries suffered losses for reason of the abrupt disruptions and the higher tarriffs as also penalties for use beyond their allotted share.

¶57

Industrialization came to a grinding halt and hence, the new units commencing industrial production were exempted from 'power-cuts' for a period of 5 years from the date of commercial production. They were also granted total exemption from payment of electricity duty in the aforesaid period; which was the Governments share of the charges for supply. The petitioners are few among a number of industries, which set up their manufacturing units within the State of Kerala, lured by the exemption offered. Subsequently, on

¶58

WP(C).No.26738 of 2014 & - 3 - connected cases.

¶59

06/02/1992 a concession for 5 years, from enhancement of power tariff, was granted on certain conditions, which also the petitioners were entitled to. Despite the guarantee of uninterrupted power supply, as the circumstances existed the Board was unable to comply,due to the disparity in production, supply and demand. The petitioners among others were faced with power cuts, in various forms, which resulted in the promise extended not having been fulfilled. 'Powercuts' continued in the period between 07/01/1996 and 14/12/1997 and the petitioner industries, despite the promises were affected severly.

¶60

From 15/12/1997, the Board is said to have availed additional power from Eastern Regional Electricity Board [for brevity “EREB”]. The Board demanded higher rates for power made available from EREB and stipulated that 30% of the contract demand for every consumer would be so charged at the higher rates. It was also mandated that out of the total power consumed the first 30% availed by any industry would be charged at the higher rate and the balance at the normal rates. This applied to the petitioners also, who were entitled to the benefit of new industries, at the pre-1992 rates as per the exemption made applicable by Government Order of 1992. One

¶61

WP(C).No.26738 of 2014 & - 4 - connected cases.

¶62

industry challenged the said order by a writ petition which was finalised by a judgment dated 28/04/1998 in W.A.No.808 of 1998. The Division Bench found that extra charge would be payable only for consumption over the 70% of the base average. Hence, 70% of the total contract demand had to be supplied at the normal rates and in the case of new industries at pre-1992 rates. Herein, it is to be noticed that the normal rate was Rs.1.22 per unit, while the pre-1992 rates was 0.35 paise and the rates available under the EREB Scheme was Rs.3.20.

¶63

Even prior to the issue of EREB rates arose, representations were filed by various new industries to compensate them for the days in which power-cut was imposed. The Government, by an order dated 06/09/2000 agreed for such compensation; subject, however, to the restriction that extension beyond the promised 5 year period would be for those days on which 50% or more power cut was imposed. With respect to the Extra-High Tension [for brevity “EHT”] consumers, the days computed for compensation came to 325 and in the case of High Tension [for brevity “HT”], it came to 214. The petitioners herein were all HT consumers. The industries not being

¶64

WP(C).No.26738 of 2014 & - 5 - connected cases.

¶65

satisfied with the compensation granted, approached this Court. This Court, in a batch of writ petitions, by judgment dated 24/02/2005, produced as Exhibit P1 in W.P.(C) No.26738 of 2014, rejected the challenge. The industries were before the Hon’ble Supreme Court, in which appeals, Exhibit P2 decision was taken, reversing that of this Court.

¶66

The Hon’ble Supreme Court noticed the Government Orders of 1990 and 1992, respectively granting uninterrupted power supply and exemption from payment of enhanced power tariff. The compensation offered by way of adding the days on which more than 50% power cut was imposed was found to be inadequate. The Court found that even when the power cut was less than 50%, the industries had faced several problems especially when they were involved in a continuing manufacturing process; which were also power intensive. The manufacturing activities being a continuous process, the interruption of power supply results in stopping and re-starting of the process, which was found to occasion loss to the manufacturers. The State having given the assurance of uninterrupted power supply, it was presumed that the State would have taken necessary

¶67

WP(C).No.26738 of 2014 & - 6 - connected cases.

¶68

arrangement to provide such power to the new industries established on such a promise. Especially considering the teething problems of a new industry, it was held that the interruption of power supply and the resultant stoppage of the manufacturing process would result not only in the failure of business but also a complete ruin of the establishment and the entrepreneur. Taking all these factors into consideration, the decision of the State to compensate only for the period in which power was disrupted for more than 50% was found to be lacking in complete fairness. The following directions were issued:

¶69

“39. We, therefore, allow the appeals by quashing and setting aside the impugned order passed by the High Court and direct the respondents to calculate the period during which 100% electricity supply was not given to the appellants and extend the period of incentive accordingly. The calculation shall be made and consequential orders shall be passed within two months from today. The appeals are allowed with no order as to costs”.

¶70

In compliance of the judgment of the Hon’ble Supreme

¶71

Court, the Government directed the Board to compensate for the days in which the power cut was employed even less than 50%. The

¶72

WP(C).No.26738 of 2014 & - 7 - connected cases.

¶73

commencement of the industries being the starting point for exemption, the Board computed various periods applicable to each of the industries as directed by the Hon’ble Supreme Court. The Board thus granted the additional days, which, for a HT industry who suffered the entire period of power cut, enabled extension by a further period of 494 days. The total exemption available to such an industry was 708 days [214 + 494].

¶74

The petitioners contend that they are entitled to much more. Arguments have been specifically addressed on the tariff revision applicable on implementation of EREB rates. The petitioners contend that when a higher tariff under EREB rate was specified, the petitioners had desisted from availing power at the higher rate for fear of penalties and propotionate reduction, which would have sounded the death knell of the new industry; as has been emphatically noticed by the Hon’ble Supreme Court. The petitioners who were entitled to uninterrupted power supply, had to break off at 70% of their contract demand, for fear of payment at the higher rates as applicable under EREB. The disparity in rates is specifically emphasised, pointing out that the new industries were entitled to the pre-1992 tariff of 0.35

¶75

WP(C).No.26738 of 2014 & - 8 - connected cases.

¶76

paise while the EREB rate was Rs.3.20 per unit. The higher tariff so implemented resulted in interruption of power and was a measure akin to a power cut.

¶77

Further, there was employed a peak hour load restriction, which was another mode of interrupted power supply. Peak hour load restriction is employed by the Board when there is deficiency in supply, since when there is a larger demand, if fully satisfied, would lead to complete disruption of power supply. During peak hours as notified by the Board, power-cuts are made for shorter periods; distributed in areas within a locality itself. Any use of power in excess of the limit prescribed would result, again in penalty, proptionate reduction and even disconnection of supply. The dates on which EREB rates and peak hour load restriction were imposed also had to be added on to fairly compensate the petitioners, as has been directed by the Hon’ble Supreme Court. The Board, however, refused so to do and this goes against the spirit and tenor of the decision of the Hon’ble Supreme Court. The petitioners are entitled to either adjustment in the future bills or reimbursment of the cash equivalent of such units of electricity which the industries were per-force

¶78

WP(C).No.26738 of 2014 & - 9 - connected cases.

¶79

restricted from use; hence, the above writ petitions.

¶80

The petitioners had also been paying the tariff at the regular rate during the EREB period, which had to be computed on the pre-1992 tariff and the balance adjusted to the future periods. This Court, by interim order dated 09/12/2014, granted a stay, which restrained the Board from even collecting the future invoices. While the writ petitions were pending, by order dated 04/06/2015 the petitioners were directed to move a detailed representation before the Special Officer (Revenue), Vydhyuthi Bhavan, Thiruvananthapuram. The Special Officer (Revenue) was directed to pass orders clearly reflecting the manner in which the judgment of the Hon’ble Supreme Court is given effect to. A further interim order was passed on 11/04/2017, directing the Board to calculate the amounts due to each of the petitioners on the basis of the judgment of the Hon’ble Supreme Court and the observations made in that order. In the said order, a learned Single Judge of this Court found the denial of the benefit of pre-1992 tariff for days of supply of less than 50% power to those who did not avail the EREB power to be unsustainable. In the teeth of the said order passed, the Board again passed a revised

¶81

WP(C).No.26738 of 2014 & connected cases.

¶82

- 10 -

¶83

order. The Board also revised the tariff payable for the units of power

¶84

used on the days of power-cuts, which stood compensated; at the higher tariff applicable post-1992.

¶85

What is essentially claimed by the petitioners, all HT

¶86

consumers, in these writ petitions, who were new industries, are the following:

¶87

(i) The petitioners should be given additional days in addition to that already provided, to compensate the days on which they were allowed the pre-1992 rates only to the extent of 70% for reason of the EREB rates being employed for power consumed in excess of the 70% base rate.

¶88

(ii) The new industries ought to be compensated for the days in which there was peak hour load restriction.

¶89

(iii) As of now, the Board has revised the tariff applied to the earlier period when power cuts were imposed, and subsequently compensated; calculating the tariff for the energy consumed at the normal rates, which is not permissible.

¶90

The respondent-Board argues that EREB rates is

¶91

settled by the decision of the Division Bench of this Court long before

¶92

the Supreme Court decision relied on by the petitioners. The new

¶93

WP(C).No.26738 of 2014 & - 11 - connected cases.

¶94

industries found to be liable to pay the enhanced rate for the energy consumed beyond the base average of 70%, cannot now contend that the said days also be compensated deeming it to be a power cut. Even then the Board has revised the demands for the EREB period and for all the new industries covered by the notifications, pre-1992 rates were applied for the power consumed in the EREB period. During the EREB period those who availed below and over 70% were subsequently granted the pre-1992 rates. The tariff demanded and collected at the normal rates for consumption of power below the base average of 70% and at the EREB rates for that consumed above the base average were recomputed and the excess amounts collected have been adjusted to the future demand. Those who did not avail of the higher rates, cannot now turn around and contend that it is a deemed power cut. The peak hour load restriction also does not amount to a power cut, since an industry could very well use the entire contract demand at times other than the peak hours and could arrange their affairs suitably, since peak hours are notified earlier. More relevant it is asserted, these issues could have been raised before the Hon’ble Supreme Court and that having not been done, the

¶95

WP(C).No.26738 of 2014 & - 12 - connected cases.

¶96

petitioners cannot seek for embellishment of the Supreme Court directions.

¶97

As to the normal tariff rate being employed and the rates for the days in which power cut was imposed being revised, the learned Senior Counsel would contend that it is only a logical computation going by the clear terms of the exemption notification. The exemption notification permitted pre-1992 rates for 5 years from the date of commencement of commercial production. The Government was also obliged to provide uninterrupted power supply in that period. As of now, it has been accepted by the Board that for 708 days there was interruption of power supply; for 214 days more than 50% and for the balance, less than 50%. The promise having been made for uninterrupted power supply for 5 years, the deficient 708 days was added on to the 5 year period. The petitioners having availed pre-1992 rates for the 708 additional days in which there was uninterrupted power supply, the petitioners have to pay the normal rates for the power consumed in the 708 days when there was a power cut employed. It is, hence, the revision was made of the tariff employed in the 708 days when power cut was imposed; which days

¶98

WP(C).No.26738 of 2014 & - 13 - connected cases.

¶99

were compensated subsequently. There can be no fault found against such computation, is the argument especially going by the terms of the notification, which is an exemption notification possible only of very strict interpretation.

¶100

The learned Senior Counsel would also point out that as of now there is a huge liability on all the petitioners, since they have not paid even the regular tariff after the exemption period. Based on the interim orders in the present litigation, the Board has been advised not to proceed for recovery even of the present invoices raised against them. Huge amounts are due to the Board, is the compelling argument put forward. The learned Senior Counsel would contend that the petitioners even during the normal period, were not using power upto 70% and their average consumption was far lesser than 70%. There was never any possibility of the petitioners availing power beyond the 70% base average, is the contention put forth, grounded on the statistics produced. In allowing the claim now raised this Court would have to assume that, if there was un-interrupted power-supply, then the petitioners would have used it 24x7 and used up their entire contract demand; which would be a very unrealistic

¶101

WP(C).No.26738 of 2014 & connected cases.

¶102

14 -

¶103

assumption. The demand now made by the petitioners is based on the calculation of the contract demand having been used every day for five years and compensation for whatever restriction in use occassioned or reimbursement of the tariff of the unused contract demand, which, the Board submits, is totally unrealistic and unacceptable.

¶104

THE DECISION:

¶105

At the outset, it has to be noticed that the contention raised of calculation of the power, possible of consumption if there was uninterrupted power supply for the entire five year period and computation of compensation on that basis would be a totally unrealistic approach. One has to necessarily take into account the other vagaries to which an industry would be subject to, in its functioning including of course the holidays statutorily prescribed. There is also the essential cooling down of every manufacturing process, which, at any rate, cannot be continued uninterruptedly throughout the year and for five years at one stretch. The petitioners also, at the time of arguments, did not press for such an unrealistic approach to be taken by this Court. The issues as raised in paragraph

¶106

WP(C).No.26738 of 2014 & - 15 - connected cases.

¶107

12 are those arising here. Before proceeding to decide that, it has to be noticed that, in the EREB period, though the Board had levied normal rates (post-1992), for the power consumed below 70% and higher EREB rates, for that consumed above the base average; the same has been re-computed. At present adjustments have been made, and the entire power consumed during the EREB period is levied only the pre-1992 tariff and not the normal tariff or the EREB tariff.

¶108

The first issue is as to the compensation for the period in which EREB power was made available by the Board and restrictions imposed based on the higher tariff for the power consumed above the base average. It is argued that though as of now the pre-1992 tariff has been applied, many of the petitioners, who were fledgling industries, coupled with their financial constraints, had availed power only up to the base average, for reason of the threat of application of higher tariff. The petitioners could not have forseen a revision, subsequently effected and this led to the maximum utilization being not achieved, during the said periods, is the argument. This should also be compensated, is the prayer, which it is asserted , the

¶109

WP(C).No.26738 of 2014 & - 16 - connected cases.

¶110

petitioners have a right to claim, based on the findings of the Hon'ble Supreme Court.

¶111

The petitioner in W.P.(C) No.10049 of 2016 has filed I.A.No.13869 of 2017, showing the computation of the compensation according to the petitioners. According to them, a total of 921 days have to be compensated between 07/01/1996 and 16/07/1998. The break-up is shown in the tabular form in the affidavit supporting the I.A. Above 50% power-cut was imposed on 214 days, which stood compensated by the Government itself. The balance demanded is 707 days out of which, 494 days was the period in which less than 50% power-cut was imposed, between 07/01/1996 to 16/12/1997 {Exhibit P9}; which also stands compensated after the Supreme Court decision. The balance demanded is 213 days. Between 15/12/1997 to 31/01/1998, 48 days, when; though EREB power was not available, the Board had brought in restriction by providing a base average of 70% and normal tariff was applied. Between 01/02/1998 to 16/07/1998, 165 days, in which EREB power was made available, subject to the base average of 70% and EREB rates for power consumed beyond the base average.

¶112

WP(C).No.26738 of 2014 & connected cases.

¶113

17 -

¶114

Admittedly during the EREB period power was

¶115

available and there was no restriction in using the power. Restriction is pleaded on the basis of the stipulation of higher rates being applied for power used beyond the base average of 70%. The option, hence, was of the industry to avail the additional power or not. There are instances of industries, who availed the additional power and was imposed with the higher rates. The rates were revised to the pre-1992 rates subsequently. If the petitioners too had availed such power in excess of the base average, the petitioners could have derived such benefit; which they were entitled to; based on the promise of the Government. True, the petitioners could not have been clairvoyant insofar as contemplating a subsequent revision to the pre-1992 rates. But the supply was uninterrupted and having not availed it, they cannot turn around and contend that it effectively was a power-cut. Even if the revision had not been affected their claim, legally sustainable, was to demand the pre-1992 rates, as per the notification of the Government, which was aimed at inviting industries into the State. Having not availed of the uninterrupted power supply, no right flows from the notification to demand compensation on the ground of

¶116

WP(C).No.26738 of 2014 & - 18 - connected cases.

¶117

the industries having not fully utilized their contract load; especially when the Government had not breached its promise of uninterrupted power supply.

¶118

Peak hour load restriction is also a reasonable measure imposed by the Board to balance the supply with the higher demand, arising during such peak hours. As was argued by the Board, the peak hours were notified well in advance. The time between 6.00 p.m. to 10.00 p.m. was specified as peak hours, that between 10.00 pm. to 6.00 a.m. was off-peak hours and 6.00 a.m. to 6.00 p.m. was normal hours. There was no restriction in the using of the contract demand during the off-peak and normal hours. The contention of the Board that the industries should have arranged their affairs in such a manner to provide for the cooling period of any manufacturing process between the peak hours is a reasonable and acceptable argument.

¶119

The sustainable claim of the petitioners, based on the promise made by the Goverment, can only be for uninterrupted power supply and the pre-1992 tariff. The fixed tarriff (pre-1992) promised by a subsequent notification, has been applied across the board for the

¶120

WP(C).No.26738 of 2014 & - 19 - connected cases.

¶121

entire period for whatever power consumed by the industries and there could be no dispute raised on that count. As to the claim for uninterrupted supply, it has to be noticed that during the EREB period there was uninterrupted supply, but only a restriction made of enhanced tariff for use beyond a specified quantum of consumption. This does not really create a right to claim compensation on the ground of interruption in power supply. The petitioners could have, based on the subsequent promise of pre-1992 rates, raised a valid contention for the pre-1992 rates to be applied even for the excess consumed, if any. However, by opting not to consume at the higher rates, of the uninterrupted power supply, they cannot turn around and contend that these days should be compensated by the State deeming it to be an interruption of power supply. The peak hour load restriction is also for a very short period not amounting to an interruption in power supply.

¶122

We are concerned with two notifications promising certain incentives to new industries. The specific exemption granted in the notification dated 21/05/1990; which we are concerned with reads as follows:

¶123

20 -

¶124

WP(C).No.26738 of 2014 & connected cases.

¶125

(a) Power connection will be given on completion of any project irrespective of whether a general power cut is in force or not.

¶126

(b) New units commmencing industrial production will be exempted from power cut for a period of 5 years from the date of commercial production.

¶127

Subsequently by order dated 06/05/1992 the new units were exempted from payment of enhanced tariff for the above period of 5 years. Exemption notifications, as is trite, has to be strictly construed and when there was uninterrupted power supply, there could be no compensation on the ground of the petitioners having not availed of the same for reason of the higher rates applied; which was not possible on the basis of yet another promise of pre-1992 tariff being retained for 5 years.

¶128

23.The petitioners having been given uninterrupted power supply, if had availed of the same, then they would have been entitled to the subsequent exemption for application of pre-1992 tariffs to its full extent. The breach in not applying the post-1992 tariff and the higher EREB tariff, being levied is of the second notification. Having

¶129

WP(C).No.26738 of 2014 & - 21 - connected cases.

¶130

not consumed the power to the available capacity, for reason of higher rates being employed, they cannot allege breach of promise of uninterrupted power supply. On the allegation of breach of promise of pre-1992 rates; they cannot seek a compensation of additional days of uninterrupted power supply. The two notifications are separate and are on distinct aspects, which though interlinked, the breach of one cannot lead to a compensation for the other. If there was interruption in power supply, then compensation for such days is a legitimate claim. That cannot however lead to a claim that they are not liable to pay the tariff for whatever power consumed. Similarly if higher tariff is applied in breach of the promise of pre-1992 tariff; the legal remedy is to claim ths promised tariff for the power consumed; not to seek compensation deeming the breach to be a power cut.

¶131

The Board has filed statements in all the writ petitions showing the consumption of various petitioners between the months of 12/1997 and 07/1998 when there was supply from EREB. The attempt of the Board is to show the Court that though the petitioners were permitted consumption of power upto 70% under the pre-1992 rates, they had not achieved the said limit in many of the aforesaid

¶132

WP(C).No.26738 of 2014 & - 22 - connected cases.

¶133

months. The petitioners have not consumed power to the limit they were permitted and hence there can be no plea raised that they would have used it to the full capacity if the rates were pre-1992. When the petitioners/consumers have not consumed power upto 70% at the available pre-1992 rates, they cannot now take up a contention that there was effectively a power cut by stipulation of higher rates with power consumed above 70% of the base average. The petitioners/consumers have filed a reply to the statement filed by the Board, wherein it is contended that the statistics belie the factual aspects especially since the consumption is taken on the base average which is actually very lower than that would have been actually consumed by the units if there was uninterrupted power supply. This Court is of the opinion that there need not be any reliance placed on the statistics produced, since this Court has already found that the petitioners cannot claim a deemed power cut based on the higher stipulation of rates during the EREB period. It has also come out that there were many units who consumed in excess of the base average and who subsequently have been levied only at the pre-1992 rates for the entire power consumed. This Court

¶134

WP(C).No.26738 of 2014 & - 23 - connected cases.

¶135

does not see any reason to allow the prayer of the petitioners for compensation for the EREB period or for the peak hour load restriction period.

¶136

One other contention is with respect to the order of a learned Single Judge on 11/04/2017. The petitioners would stress on the finding “the fact that the petitioners did not avail the EREB power offered to them at much higher rates also cannot be relied on to deny them the benefit of pre-1992 tariff for days of the supply of less than 100% power.” This finding is only with respect to the rates applicable to the power consumed during the EREB period. It does not in any manner deal with the issue of compensation as raised in the writ petitions. At the risk of repetition, it has to be noticed that in the EREB period the Board had applied the post-1992 normal rates for consumption below the base average of 70% and the higher EREB rate for power consumed in excess of the base average. This has been revised and pre-1992 rates have been applied across the board during the entire period; whether the consumption was above or below the base average. There can, hence, be no valid claim for compensation made on the findings so recorded, which cannot be

¶137

WP(C).No.26738 of 2014 & - 24 - connected cases.

¶138

read out of context.

¶139

Special emphasis is placed on the decision of the Hon'ble Supreme Court in the Civil Appeals referred to earlier, specifically paragraph 28, which took into account the problems faced by a new entrepreneur especially engaged in a power intensive manufacturing process and the promise of uninterrupted power supply, which promise raises a presumption of the State having taken appropriate measures to meet its obligation. The Hon'ble Supreme Court had considered the decision of the Government which only took into account the days on which there was power cut for more than 50% and found it to be unfair in the circumstances. It was hence that those days on which power supply was interrupted and reduced to even less than 50% was directed to be compensated. The issue of EREB tariff and peak hour load restriction were never raised before the Hon'ble Supreme Court. The contention even now is only that the above peak hour load restriction and the application of higher tariff during the EREB period; be deemed to be a power cut. There can be no such exercise to presume a power cut when there was none; based on which a compensation can be granted. Further the

¶140

WP(C).No.26738 of 2014 & - 25 - connected cases.

¶141

petitioners have not raised the specific issue, which was alive even at the time of disposal of the earlier writ petitions before this Court and the Civil Appeals before the Hon'ble Supreme Court. They cannot be allowed to re-agitate the issue of compensation.

¶142

The present writ petitions are only in the context of the allegation that the directions in the judgment of the Hon'ble Supreme Court are not fully complied with. Admittedly the power cut of various percentage was employed between 07/01/1996 and 14/12/1997. The days so denied to the HT consumers, as all the petitioners; were 708 days which is now fully compensated. There can be no compensation offered for the periods later to that when there was uninterrupted power supply as promised. The issues (i) and (ii) raised in paragraph 12 are answered against the petitioners.

¶143

The further issue is one which arose during the pendency of the writ petitions on the revision of tariffs being applied by the Board based on the interim orders issued. The issue is as to the rate to be applied for the 708 days when there was admittedly power cuts employed between 07/01/1996 and 14/12/1997. All the petitioners had availed of power and carried on the industry within the

¶144

WP(C).No.26738 of 2014 & - 26 - connected cases.

¶145

consumption limits prescribed on the said dates. The tariff applied was also the pre-1992 rates as promised. The petitioners had sought for compensation for the above periods, on the ground of interruption in supply and the same was granted to a limited extent by the Government itself and to the full extent by the Hon'ble Supreme Court. The petitioners were given an additional 708 days of uninterrupted power supply applying the pre-1992 tariff. The said days have now been used up and there is no complaint of any interruption in the course of that period; by reason of power cuts. Hence, beyond the 5 year period from commencement of commercial production, 708 additional days were granted to the petitioners. The promise was only for uninterrupted power supply for the first five years and application of pre-1992 tariff; by two notifications. When additional days have been granted, for compensating the days on which there was power cuts; the question arise as to what should be the tariff applied to the power consumed on those days when power cuts were employed. Necessarily for the power consumed in the 708 days, when there were power cuts employed has to be at the normal tariff. Otherwise, the benefit of pre-1992 tariff, enjoyed by the petitioners would go

¶146

WP(C).No.26738 of 2014 & - 27 - connected cases.

¶147

beyond the 5 year period, in excess of the notification. This would result in an unjust enrichment having been accrued to them for reason of a compensatory measure employed by the State. Equity is not a one way street and the equitable relief insofar as granting compensation having been availed of by the petitioners, they cannot seek for an unjust enrichment by way of the pre-1992 rates being applied beyond the 5 year period. The power consumed in the 708 days when there were power cuts employed would reasonably have to be at the regular rates. This Court does not find any reason to interfere with the decision of the Board on that count.

¶148

Be that as it may, it has to be realized that the power cuts employed and the compensation subsequently offered were all not in the contemplation either of the State or the parties. The State; dependent mainly on Hydro-Electric power, is at the mercy of nature and the vagaries of monsoon, which have an adverse impact on the generation of power. The petitioners too had adjusted to the adverse conditions and had pulled on with much difficulty. When the normal rates are applied for the earlier periods, it is only fair that the Board does not demand any interest or penalty for the revision now made.

¶149

WP(C).No.26738 of 2014 & - 28 - connected cases.

¶150

Hence, if interest has been applied, the Board shall re-compute the same and demand only the additional charges as applicable on employment of the normal tariff for the 708 days within the 5 year period; now compensated. The petitioners shall also be given three months time to deposit such amounts if no adjustment is possible from the amounts due to them. Only if the amounts are not paid within the three months period granted by this Court would the claim for interest and penalty arise, that too from the date of expiry of the three month period. However, if any dues are defaulted after the period of power cut, that would be subject to the normal levy of interest and penalty as provided statutorily.

¶151

With the above reservation alone, the writ petitions would stand dismissed. Parties are left to suffer their respective costs.

¶152

Sd/- K.Vinod Chandran Judge.

¶153

vku/-

¶154

[ true copy ]

M/S. Premium Ferro Alloys Limited v. Kerala State Electricity Board

Case brief

What is this about?

What did the court decide?

M/S. Premium Ferro Alloys Limited v. Kerala State Electricity Board

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

K.A. Thomas Vs Dr. Hasmukh Adhia

Nagath Rajeevan Vs District Registrar(G), Kozhikode & Ors.

Vvutty Haji Vs State of Kerala

Job Vs Principal Secreary, Local Self Government

K.Abdul Rahiman Vs the Secretary to Government, Forest & Wilf Life Department

Poultry Farmers & Traders Association of Kerala Vs State of Kerala