M/S. ESTER INDUSTRIES LTD. versus U.P. STATE ELECTRICITY BOARD AND ORS.

Citation: [1996] SUPP. 6 S.C.R. 444 · Decided: 17-09-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Dismissed
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Judgment (excerpt)

A 
M/S. ESTER INDUSTRIES LTD. 
v. 
U.P. STATE ELECTRICITY BOARD AND ORS. 
SEPTEMBER 17, 1996 
B 
[K. RAMASWAMY AND G.B. PATTANAIK, JJ.) 
Indian Electlicity (Supply) Act, 1948 : 
S. 78-A-Grant of 10% develop~nent rebate in supply of electlicity to 
C newly set-up industlies-:Policy of State Govemment-High Cowt holding that 
the Electlicity Board not automatically bound by the directions of State 
Govemment-On appeal held : So long as the policy direction issued by the 
Govemment is consistent with the provisions of the Act and the taliff policy 
laid down by the board, it may be open to the Board to either accept it or not 
to accept the directions as such-It is for the State Govemment to consider 
D whether the Board has laid down the policy or whether the direction issued 
by the State Govemment has not been properly implemented-Court cannot 
give a direction to implement the directions issued by the State Govemment 
exercising the power under Article 226 of the Constitution to direct the Board • 
to exercise its power under Section 78A(l) of the Act-Sub-section (2) has 
E no application for the reason that if the Board feels any doubt as to whether 
the direction issued by the Govemment is in the realm of a policy or othe1wise, 
then it shall be refeJTed to the authority constituted under the Act whose 
decisions shall be final, i.e., de hors the question in this case-Doctrine of 
promiss01y estoppef-Held not applicable in the //Jets and circumstances of 
the case. 
F 
Real Food products Ltd. & Ors. v. A.P. State Electricity Board & Ors., 
AIR (1995) SC 2234, referred to. 
CIVIL APPELLATE JURISDICTION: Special Leaves Petition (C) 
G No. 18156 of 1996. 
From the Judgment and Order dated 8.5.96 of the Allahabad High 
Court in W.P. 10195 of 1989. 
R. Santhanam, Ashok Kumar Singh and Rajinder Singhvi for the 
H Appellants. 
444 
I 
ES1ER INDS. LID. v. U.P. STAIB ELECTRICITYBD. 
445 
The following Order of the Court was delivered : 
This special leave petition arises from the judgment and order of the 
Division Bench of the Allahabad High Court at Lucknow made on May 8, 
"1996 in Writ Petition No. 10195/89. 
A 
The admitted position is that the Government of Uttar Pradesh had B 
laid down in sanction for grant of 10% developmental rebate in supply of 
electricity to the newly set up industries on July 16, 1986 and that was to 
be in vogue till 1990. It is the claim of the petitioner that pursuant to that 
policy, the petitioner had set up his industry in Nainital District. Conse-
quently, he is entitled to the rebate. When the bill was issued, the Board C 
imposed its tariff rates contrary to the rebate. Resultantly, they filed the 
writ petition. The High Court in the impugned judgment had held that 
Section 78A of the Indian Electricity (Supply) Act, 1948 (Act 54 of 1948) 
(for short, the 'Act') being a legislative policy, the Board was not automat-
ically bound by the directions issued by the State Government. The Board 
is entitled to revise tariff in accordance with its procedure. Therefore, writ D 
could not be issued compelling the Board to follow the directions issued 
by the State Government. Thus, this special leave petition. 
It is contended for the petitioner that in view of the law laid down 
by this Court in Real Food Products Ltd. & Ors. v. A.P. State Electricity E 
Board & Ors., AIR (1995) SC 2234 in particular paragraph 8, the Board is 
bound by the directions issued by the State Government. The view taken 
by the High Court is, therefore, not correct in law. We find no force in the 
contention. It is well settled legal position that the fixation of the tariff is 
a legislative policy and the Board is entitled to revise unilaterally the tariff 
from time to time. The consumer is bound by the revision of the tariff duly F 
notified in accordance with the procedure prescribed under the Act. The 
question is : whether contrary to the conditions of the tariff entered into 
by the parties, the policy direction issued by the State would be interposed 
and be revised by the Electricity Board in consonance with the directions 
issued by the State Government? In this regard, the observations of this G 
Court in paragraph 8 are worth recapitulation : 
"The only surviving question is with regard to the nature and effect 
of the direction given by the State Government under Section 78A 
of the Act. The question has to be examined in the context of the 
facts of the present case which is confined to the charging of
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