A.P. STATE ELECTRICITY BOARD AND ORS. versus SARADA FERRO ALLOYS LTD.

Citation: [1993] 2 S.C.R. 114 · Decided: 25-02-1993 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Leave granted
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Judgment (excerpt)

A 
A.P. STATE ELECTRICITY BOARD AND ORS. 
v. 
SARADA FERRO ALLOYS LTD. 
FEBRUARY 25, 1993 
B 
(KULDIP SINGH AND N.M. KASLIWAL, JJ.] 
. 
. 
Promissory estoppel-Eiectricity Board-Gralll of rebate in demand 
-~ 
and energy charges-Subsequent withdrawal of rebate-Industry established 
during the period when concession was not operative-Held not entitled to 
c rebate-Doctrine of promissory estoppel held inapplicable. 
The Andhra Pradesh State Electricity Board granted rebate of25 per 
cent in demand and energy charges for High Tension industries and asked 
the Director of Industries to identify the industries which would be eligible 
~. 
for the rebate. By its order dated July 13, 1976 the State extended the 
D rebate to certain industries. The Board also issued order extending the 
concession to the notified industri.es for a period of three years from the 
date of their going into regular produetion. By an order dated August 23, 
1985, the conc.ession already granted was extended for two more years, i.e. 
a total of live year. However, by its order dated December 8, 1987 the Board 
E withdrew the concession. The State Government also issued similar order 
dated July 27, 1989 withdrawing the rebate. The respondent-company 
which established a Ferro Chrome industry and commenced production 
on regular basis on August 11, 1990 claimed concession but the same was 
refused by the Board on the ground that the said concession had already 
been withdrawn. The company tiled a writ petition before the Andhra 
F 
Pradesh High Court seeking a declaration that it was entitled to rebate as 
declared by the State Government in its letter dated August 23, 1985. A 
~
Single Judge of the High Court allowed the petition on the ground that the 
respondent-company having acted upon the representation made by the 
> 
Board and the State Government the doctrine of promissory estoppel was 
G attracted and as such the Board and the State Government were bound to 
grant rebate for a period of live years. The writ appeal preferred by the 
Board was dismissed by a Division Bench of the High Court. The 
Electricity Board tiled an appeal in this Court. 
~. 
Allowing the appeal and setting aside the judgment of the High 
H Court, this Court, 
114 
-· 
AP.S.E.B. v. SARADA FERRO ALLOYS [KULDIP SINGH, J.] 
115 
'"( 
HELD: 1. The High Court was not justified in applying the doctrine A 
-
or promissory estoppel to the racts aod circumstances or this case. 
[ll 7H,118A) 
2. Only those industries were entitled to the beoelit or the incentive 
who rullilled the requirements during the period the incentive was opera· 
live. The promise or representation made by the Board in its letter dated B 
July 13, 1976, ir any, was directly linked with the date or commencement or 
production by the company. It is not disputed that the rupondent~om· 
pany commenced production on commercial scale on August 11, 1990. The 
incentive was withdrawn by the Board on December 8, 1987 and by the 
Government on July 27, 1989. Whichever date is taken ioto accou11t the C 
compan)· was not entitled to the incentive as it bad not commenced 
production on or before either or these two dates. [119A:-B, DJ 
2.1. E•·en if it is assumed that a promise or representation was made 
by the Board the doctrine of promissory estoppel is not attracted in this 
case as the company failed to act upon the said representation. Therefore, D 
the assumption entertained by the High Court that once the company 
started the process of setting up an industry and had incurred expendi· 
lure, the Board was bound to keep its ince.1tive open for the company till 
it started production is not correct. (1198-C] 
E 
Union of India v. Godfrey Phillips India Ltd., (1985] 4 S.C.C. 369, 
relied on. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 766 of 
1993. 
From the Judgment and Order dated 7.2.92 of the Andhra Pradesh 
High Court in W.A. No. 1271 of 1991. 
Shanti Bhushan, K. Rajendra Chowdhary and R.K. Sharma for the 
Appellants. 
F 
G 
G.L. Sanghi, Duba Mohan Rao, Y.P. Rao, Dhruv Mehta, T.V.S.N. 
~· . Chari, Ms. Suruchi Aggarwal and Ms. Bharati Reddy for the Respon-
dent. 
The Judgment of the Court was delivered by 
H 
116 
SUPREME COURT REPORTS 
[1993] 2 S.C.R. 
A 
KULDIP SINGH, J. Special leave granted. 
B 
c 
The Andhra Pradesh State Electricity Board (the Board), in exercise 
of its powers under Section 49 of the Electricity Supply Act, 1948 (the Act) 
issued order dated September 17, 1975 granting rebate of
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