Orissa High Court
Laxmi Udyog Rock Cement Pvt. Ltd. And ... vs State Of Orissa And Ors. on 3 November, 2000
Equivalent citations: AIR 2001 ORISSA 51
Author: Pradipta Ray
Bench: Pradipta Ray
JUDGMENT R.K. Patra, Ag. C.J. 1. In this batch of writ petitions the controversy centres round the sweep and extent of benefits available under the Industrial Policy Resolution, 1989 of the State Government with regard to levy of minimum charge on electricity consumption by the industrial units. As the basic facts in all the cases are identical and questions of law Involved are common, they were heard together and are disposed of by this judgment. For the sake of convenience, pleadings averred and documents referred to in O.J.C. No. 11189 of 1996 are referred to. 2. The case of the petitioner is that the Government of Orissa in the Industries Department declared in the Industrial Policy Resolution, 1989 (hereinafter referred to as 'IPR 1989') inter alia that in respect of all existing and new industrial units with a contract demand up to 500 KVA, so minimum charges would be levied and the energy bill would be on the basis of actual monthly consumption of energy. It was also indicated that the new industrial units with contract demand up to 500 KVA would be exempted from payment of electricity duty for a period of five years from the date of power supply. In view of the promises and assurances given in the said resolution, the petitioner set up a small scale industrial unit at Teliposh in the district of Sundargarh for manufacturing and sale of mosaic chips, mosaic powder and dolomite powder. It accordingly availed loan facilities from various financial institutions. The unit started its commercial production from 25-6-1992. The petitioner-unit is a "new industrial unit". The Project Manager, District Industries Centre, Rourkela (opposite party No. 2) in letter No. 4802 dated 11-8-1993 and 4798 dated 11-8-1993 certified that the petitioner-unit being a "new small scale industrial unit" is eligible for exemption from payment of sales tax on sale of its finished products, purchase of raw materials, spare parts of machinery and packing materials for a period of seven years from the date of commercial production as per the IPR 1989. The Executive Engineer, Grid Corporation of Orissa Limited (opposite party No. 3) similarly extended exemption to the petitioner with the present contract demand of 61 KW from payment of minimum charges in terms of IPR 1989 till June, 1996. While the matter stood thus, all of a sudden he (the Executive Engineer opposite party No. 3) issued bills dated 18-9-1996 and 23-9-1996 for the period from July, 1996 to August, 1996 levying minimum charges with a note that the exemption of minimum charges under IPR 1989 was discontinued with effect from 1 -3-1996. Thereafter, the Chairman-cum-Managing Director. Grid Corporation of Orissa, Bhubaneswar (opposite party No. 4) in letter dated 26-11-1996 (Annexure 6) clarified to all the Executive Engineers Incharge of Distribution Division that in all cases coming under pre-1992 IP Rs. the benefit of exemption from payment of minimum charge would end on 31-7-1997. The contention of the petitioner is that the withdrawal of such benefit enjoyed by it is arbitrary and contrary to the promises and assurances held out in the IPR 1989. It has made fixed capital investment during the operative period of IPR 1989 and it was granted exemption from payment of minimum charges and while continuing to avail such benefits, the same cannot be withdrawn. The petitioner claims that it is also entitled to exemption of electricity duty for a period of five years from 2-6-1992, i.e., the date of power supply for commercial production and the clarification issued by the Chairman-cum-Managing Director, Grid Corporation of Orissa in his letter dated 26-11-1996 (Annexure 6) is misconceived and without jurisdiction. 3. The State Government in the Department of Industries is the opposite party No. 1. An affidavit opposing the claim of the petitioner has been filed on its behalf sworn to by the Deputy Secretary of the Department. Briefly stated its case is that the benefits under the IPR 1989 were never intended to be made available till eternity. The State Government is required to compensate the erstwhile O.S.E.B. (now designated as GRIDCO) for the loss sustained by it on account of waiver of minimum charges. This question of compensating loss had been engaging the attention of the Government. Therefore after due consideration, the Government decided to do away all open-ended concessions and to limit the maximum period for availing the exemption from payment of minimum charges to five years in respect of industrial units covered under the IPRs 1986 and 1989 commencing from the date of coming into force of IPR 1992, i.e. 1992. The withdrawal of concession was duly made by the Minister concerned in public interest. 4. The Manager (Project), District Industries Centre, Rourkela (opposite party No. 2) has filed counter-affidavit. He has stated that the petitioner is a small scale industrial unit for manufacturing of mosaic chips, mosaic powder and dolomite powder which started commercial production from 25-6-1992. The petitioner is a new small scale industrial unit covered under the IPR 1989. The unit made its first investments and fixed assets after 1-12-1989 and before 1-8-1992 when the IPR 1992 came into force. As per the notification of the Government contained inletter No. 47696 dated 1-12-1989 (Annexure A/2) exemption from payment of electricity duty O.S.E.B. power supply was to be extended on application for exemption cer- tificate in the prescribed form and on certification by the General Manager, District Industries Centre (D.I.C.), a new S.S.I, unit with a contract demand up to 500 KVA was eligible for full exemption on electricity duty for a period of five years from the date of power supply for commercial production. The petitioner has not filed any application in the prescribed form before the D.I.C. for availing such exemption within the time stipulated, i.e. within one year after power supply as indicated in the Government letter at Annexure A/2. The petitioner having not made any such application, no recommendation to the concerned Executive Engineer for grant of exemption was made. 5. The Executive Engineer, Grid Corporation and its Chairman (opposite party Nos. 3 and 4) have filed a preliminary counter-affidavit. They have pleaded that the petitioner has been given benefit of exemption of minimum charges under IPR 1989 up to 31-7-1997 as per the policy decision of the State Government in the Industry Department dated 21-11-1996 (Annexure A/3) and accepted by the Grid Corporation in its letter dated 26-11-1996 (Annexure 8). The petitioner's bill made on minimum charge for the period from July, 1996 to September, 1996 was subsequently revised on the basis of actual consumption and the revised bill was duly served on it on 24-10-1996. Since the petitioner has not yet submitted necessary recommendation certificate from the concerned D.I.C.. for exemption of electricity duty, the same has not been granted in his favour. The opposite parties 3 and 4 have further pleaded that the petitioner has enjoyed the benefit of waiver of minimum charge for more than five years. Since Its unit started commercial production from 25-6-1992, it is, therefore, not entitled to get any exemption from payment of minimum charge from 1-8-1997. 6. It is contended by the learned counsel for petitioner that the IPR 1989 was published in Orissa Gazette which was expressed in the name of the Governor duly authenticated by the Chief Secretary but the impugned withdrawal order was neither published in the Gazette nor was it expressed in the name of the Governor nor was it authenticated by any officer and, as such, the withdrawal of benefit relating to waiver of minimum charges is illegal. The aforesaid contention is based on the provisions contained in Article 166 of the Constitution of India. The said provision contains three clauses. Clause 1 prescribes the mode in which executive action of the Government is to be expressed. Clause 2 lays down the ways in which the order is to be authenticated. Clause 3 deals with the power of the Governor to make rules for convenient transaction of the business of the Government. The IPR 1989 was admittedly published by order of the Governor. It was also authenticated by the Chief Secretary. Is the order vitiated in absence of the expression "by order or in the name of the Governor" in it ? Does the order also become bad because it was not authenticated? A Constitution Bench of the Supreme Court consisting of seven Hon'ble Judges in P. Joseph John v. State of Travancore-Cochin, AIR 1955 SC 160 observed as follows ; "It was held by this Court in 'Dattatraya Moreshwarv. State of Bombay', AIR 1952 SC 181(B) that Clauses (1) and (2) of Article 166 are directory only and non-compliance with them does not result in the order being invalid, and that in order to determine whether there is compliance with these provisions all that is necessary to be seen is whether there has been substantial compliance with those requirements. . . . .." The aforesaid being the legal position, absence of the expression 'by order or in the name of the Governor' in the order or non-authentication by an officer is not decisive one way or the other. In absence of such mention, the fact that the order was made under the authority of the Governor can be proved by other evidence. Under sub-clause (3) of Article 166 of the Constitution, the Governor is empowered to make rules for the more convenient transaction of business of the Government of the State. In exercise of said power, the Governor of Orissa has made the Orissa Government Rules of Business, as observed by the Supreme Court in A. Sanjeevi Naidu, v. State of Madras, AIR 1970 SC 1102. under our Constitution the Governor is essentially a constitutional head, the administration of the State is run by the Council of Ministers, but in the very nature of things it is impossible for the Council of Ministers to deal with each and every matter that comes before the Government. In order to obviate that difficulty, the Constitution has authorised Governor under Sub-clause (2) of Article 166 to make rules for the more convenient transaction of the business of the Government of the State and for the allocation amongst its Ministers the business of the Government. The Minister is not expected to burden himself with the day-to-day administration. His primary function is to lay down the policies and programmes of his Ministry. When a civil servant takes a decision, he does it on behalf of the Government. The officers designated by the Rules or the Standing Orders can take decisions on behalf of the Government. With regard to the status of rules of business, the Calcutta High Court in Arun Kumar Bhattacharjee v. State of West Bengal. AIR 1968 Cal 35 has observed as follows : "The rules of business have been made for convenience of public business. The opening words of Clause (3) of Article 166 make it clear that the rules of business are framed by the Governor for more convenient transaction of business of the Government of the State. These rules have not been framed and indeed were not intended to create or confer a right upon a citizen to come and apply for a writ under Article 226 of the Constitution for violation of these rules." It is evident from all the aforesaid decisions that the provisions of Article 166 of the Constitution are directory in nature. Any non-compliance thereof would be a mere procedural defect and it would not confer any right upon any citizen to move the writ Court under Article 226 of the Constitution. 7. It has been the stand of the State Government that it is obliged to compensate the erstwhile O.S.E.B. (now GRIDCO) for the loss sustained by it due to the waiver of minimum charges. In this connection, it would be appropriate to refer to certain provisions of the Orissa Electricity Reforms Act, 1995. The Grid Corporation of Orissa has come to be incorporated with effect from 20-4-1996 with the main object of engaging in the business of procurement, transmission and bulk supply of electric energy subject to the powers of the State Government under Section 12 of the Electricity Reforms Act, 1995. Section 12 of the said Act provides that the State Government shall have all the powers to issue policy directives on matters concerning electricity in the State. Sub-section (3) thereof lays down that the State Government shall be entitled to issue policy directives concerning the subsidies to be allowed for supply of electricity to any class or classes of persons or in respect of any area in addition to the subsidies permitted by the Orissa Electricity Regulatory Commission while regulating and approving the tariff, provided that the State Government shall pay the amount to compensate pay concerned body or unit affected by the grant of subsidies by the State Government to the extent the subsidies granted. Law now obligates the State Government to compensate the Orissa State Electricity Board (now GRIDCO) so far as the loss sustained by it on account of waiver of minimum charges is concerned. 8. It is on record that the question of compensating the loss sustained by the erstwhile O.S.E.B. (Now GRIDCO) due to the waiver of minimum charges had engaged the constant attention of the Government. A High-Level Meeting was held on 21-9-1993 presided over by the Chief Secretary of the Government with regard to waiver of minimum charges under the provisions of the (sic) I.P.C. The following were the relevant decisions taken in the said meeting (Annexure A/3): (i) The approximate amount to be allowed towards waiver of minimum charges between 1-4-1986 to 31-7-1992 should be worked out by O.S.E.B. and intimated to Government. Thereafter a decision would be taken as to the manner in which OSEB could be compensated/subsidized in the matter. (ii) All open-ended concessions should be done away with as a matter of principle. So far as concessions in the power sector were concerned, the maximum period for availing of the waiver of minimum charges should be five years in respect of all Industrial Units including those covered under IPRs. 1986 and 1989. The decision in this respect should be expedited. (iii) The OSEB should start allowing the concessions on waiver of minimum charges for a period of 5 years prospectively with effect from 1-8-1992. Under Clause 28. 2.3 of IPR 1989 the State Level Nodal Committee was the authority to resolve all problems relating to the erstwhile OSEB (now GRIDCO). Accordingly, the State Level Nodal Committee meeting was held on 1-10-1996 with the Chief Secretary in the Chair. One of the proposals taken up for consideration was with regard to determination of time limit for availing of benefits of waiver or minimum charges up to a contract demand of 500 KVA under IP.Rs. prior to IP 1992. The said Nodal Committee recommended Inter alia the following (An-nexure-B/1) for approval of the Government : "So far as the question of providing the time limit to avail of the benefits of exemption from the levy of minimum charge up to a contract demand of 500 KVA was concerned, the consensus was that the period of limitation of 3 year, shall commence from the date of coming into force of I.P.R. 1992 i.e, 1st August, 1992 so as to avoid any retrospective application of a policy decision of the State Government." The proceeding of the Nodal Committee was placed before the Minister of Industries. It was duly approved by him on 27-10-1994 (Annexure-C/1). After the orders of the Minister, the Government in the Energy Department in its letter No. 24641 dated 11-11-1994 (Annexure-D/1) communicated the decision stating inter alia that the benefit of exemption from levy of minimum charge under the IPRs 1986 and 1989 would end on 31-7-1997 so as to avoid any retrospective application. The copy of the said decision was circulated to all Including the Industries Department. Therefore, the Government in the Industries Department letter No. 33197 dated 21-11-1996 (Annexure-F/1) with reference to the Energy Department's letter dated 11-11-1994 (Annexure-D/1) issued clarification in regard to waiver of minimum charge reiterating that in all cases coming under the pre-1992 IPRs the benefit of exemption from payment of minimum charge would end on 31-7-1997. The aforesaid clarification issued by the Industries Department had also the approval of the Minister of Industries (Annexure-C/1). 9. From the discussion made above, it is evident that the package of incentives announced in the IPR 1989 was made by the Industries Department. Therefore, that department is competent to make any amendment on any matter mentioned in the resolution. We have noticed above that the decision to withdraw the benefit of waiver of minimum charge was taken by none other than the Minister of Industries Department who is the competent appropriate authority to do so on due consideration of the resolution of the High Level meeting and the rec- ommendation of the State Level Nodal Committee. The said decision was communicated under the signature of the Principal Secretary to the Government in the Department of Energy in letter No. 24641/E, dated 11-11-1994 (Annexure-D/1) to all concerned including the Joint Secretary to Government in the Industries Department. The Industries Department by referring to the Energy Department letter dated 11-11-1994 issued letter No. 33197/1, dated 21-11-1996 (Annexure-F/1) under the signature of the Commissioner-cum-Secretary of Industries Department by way of clarification. As the impugned decision was taken by the competent authority, merely because it was not expressed in the name of the Governor, the decision communicated thereunder is not at all affected in any manner. In our considered opinion, there has been substantial compliance with Sub-clauses (1) and (2) of Article 166 of the Constitution. The decision having been taken by the Minister, Industries, who was competent to do so, merely because it was first communicated under the signature of the Principal Secretary to the Government in the Department of Energy. it does not lose its efficaciousness. In any case, later in letter dated 21-11-1996 (Annexure-F/1). the decision was duly communicated by way of clarification under the signature of the Secretary, Industries Department. 10. There is also no merit in the contention of the learned counsel for the petitioner that the withdrawal having been not published in the official Gazette, it has no legal effect. It is true that the IPR 1989 was published in the Official Gazette, Learned counsel has not been able to bring to our notice any statutory provision requiring the Government to publish an industrial policy like IPR 1989 in the Orissa Gazette. Publication of a policy decision in the Official Gazette is one of the modes of publication. It does not necessarily follow that any subsequent decision of the Government curtailing liberalisation of the package of incentives granted under IPR has also to be published in the Official Gazette. At this, we may clarify that this is not a case of withdrawal of IPR 1988 as contended by the learned counsel. The IPR 1989 (vide para-1) thereof declared that it would be operative from its date of issue and would remain In force for five years. This is a case where a particular benefit admissible thereunder has only been withdrawn. 11. Shri Udgate also contended that the cut-off date has no nexus with the withdrawal of benefit of exemption from payment ofminimum charges. No also submitted that in absence of an element of public interest, the withdrawal of the benefit is arbitrary. It is the conscious decision of the Government that the benefit of exemption from levy of minimum charges would be available for a period of five years commencing from 1 -8-1992 (the date of coming into force of IPR 1992) so as to avoid any retrospective application of a policy decision. IPR 1989 was followed by IPR 1992 which was to be operative from its date of issue, i.e. 1-8-1992. So, the cut-off date 1-8-1992 has a nexus with the object sought to be achieved. Basically the fixing of a out-off date for determining the outer limit of enjoyment of benefit is In the discretion of the Government. It cannot be disputed that such a cut-off date cannot be fixed with any mathematical precision. When a cut-off date is prescribed or fixed, there may be some persons falling on the right side of the cut-off date and some may fall on its wrong side. That cannot make the cut-off date per se arbitrary unless it is so wide of the mark as to make it wholly unreasonable (see Union of India v. Parameswaran Katch Works, AIR 1974 SC 2349 and Ami Lal Bhat v. State of Rajasthan, AIR 1997 SC 2964). For the reasons aforesaid, the date 1-8-1992 does not suffer from arbitrariness. 12. It has now been authoritatively laid down by the Supreme court that the plea of promissory estoppel is not available against the Government if it withdraws any exemption granted for a particular period before its expiry in public interest, because public interest must override any consideration of private loss or gain (see Sales Tax Officer v. Shree Durga Oil Mills, AIR 1998 SC 591). As discussed earlier, the question as to how to compensate the erstwhile OSEB (now GRIDCO) for the loss sustained by it following the Government decision to waive payment of minimum charges had been under active consideration of the Government. Accordingly, it took the policy decision that all open-ended concessions should be done away with as a matter of principle and so far as concessions in the power sector were concerned, the maximum period for availing of the waiver of minimum charges should be five years in respect of all Industrial units covered under the IPR 1986 and IPR 1989 and the period of limitation of five years was to commence from 1-8-1992. The aforesaid decision has been taken in public interest because the Government cannot go on compensating the erstwhile O.S.E.B. (now GRIDCO) for the loss sustained by it at the cost of private gain of some industrial entrepreneurs. As the decision of withdrawal of the benefit was taken in public interest, no exception can be taken to it. 13. In the result, there is no merit in the writ petitions which are accordingly dismissed. Pradipta Ray, J.
14. I agree.