LexKUSUMAM HOTELS (P) LTD. versus KERALA STATE ELECTRICITY BOARD & ORS.
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[2008] 9 S.C.R. 752 · A KUSUMAM HOTELS (P) LTD. v. KERALA STATE ELECTRICITY BOARD & ORS. (Civil Appeal No.101 of 2007) B MAY 16, 2008 [S.B. SINHA AND LOKESHWAR SINGH PANTA] _., Administrative law: Policy decision taken by Central Government and fol- c lowed by State Government - Grant of concessional electric- ity tariff to hotels - Withdrawal of concession with retrospec- live effect, by Government Order- Validity of-Held: Not valid, as accrued right of hotel owners affected - Impugned GO must be held to have a prospective operation and not a retrospec- D live operation - That view would save it from being hit by Art. 14 of the Constitution - Doctrines - Doctrine of promissory estoppel - Constitution of India, 1 ~50 - Art. 14. By reason of a p91icy deci:;ion adopted by the Cen- E tral Government, 'tourism' was declared to be an 'indus- try'. The State of Kerala adopt~d the said policy of the Central Government. Pursuant t<) the said policy decision, various incentives were to be gr,mted. It was declared that "tourism" will be treated as an 'industry' and concessions F such as concession in electricit)• and water charges would -4-. be made available to the 'tourism industry'. In terms of the said policy decision, the Kerala State Electricity Board (the Board) was directed to grant elec- tricity tariff concessions to cla~;sified hotels and motels. G Subsequently, however, w.e.f. 15-5-1999, the Kerala State Electricity Board withdrew th~! concessional industrial tariff offered to hotels and App1~llants, who owned hotels -;- situated at different parts of the State of Kerala, were served with demand-cum-disconnection notices on the H 752 KUSUMAM HOTELS (P) LTD. v. KERALA STATE 753 ELECTRICITY BOARD & ORS. basis of bills raised on commercial tariffs. A writ petition A was filed thereagainst. In the meantime, the State of Kerala issued a Government Order dated 26-9-2000 stating that the concession on electricity tariff shall be limited only to five years by the Department of Tourism, Government of Kerala and the concession was not to be extended for B any further period. The writ petition filed by the Appellants ~ was disposed of with a direction that commercial tariff be + charged w.e.f. 15-5-1999 onwards. By reason of the said Government Order dated 26-9- 2000, the benefit of concession made available to the Ap- c pellants had been taken away. The said Government Or- der was given retrospective effect and retroactive opera- ti on. The contention of the Appellants before this Court is D that i) the concessions granted to Appellants should not have been withdrawn from an anterior date; ii) that the Board could not have directed application of commercial tariff despite the fact that the hotels are still considered to be an industry and iii) that in view of the provisions in E sub-section (2) of s.56 of the Electricity Act, 2003, no bill could have been raised after a period of two years. Disposing of the appeals, the Court \. ~ HELD:1.1. Tourism was declared to be an industry. F The wide range of concessions, inter alia, covered elec- tricity and water charges. It is not a case where some ex- emptions or concessions were to be given for a specific period or as a one time measure. No time limit was fixed for applicability in respect of the policy decisions. Pursu- ant thereto long term investments might have been made. G It is not based on a principle of giving benefit with a view ... to facilitate the initial growth of the industry. It was not based on any formula or criteria to evaluate the realiza- tion of the object of grant of such concession over a pe- riod. It was an open ended offer. It must, therefore, be held H 754 SUPREME COURT REPORTS [2008] 9 S.C.R. A that the Government was satisfied that the need was to ..-.. grant concession if not permanently, at least for a long time. [Para 15) [764-C,D,E] 1.2. However, the State is also entitled to change or alter the economic policies. Appellants do not have any 8 vested right to enjoy the concessions granted to them forever, particularly when the Board is constituted and incorporated under the provisions of Electricity (Supply) Act, 1948. Any policy decision adopted by the State would not be binding on the Board, save and except provided C for in the Act. The Board being an independent entity, the duties and functions of the Board vis-a-vis the State are enumerated in the Act. The Boar
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