Supreme Court restores 25% power tariff concession under executed agreement

A bench of Justice Pamidighantam Sri Narasimha and Justice Atul S. Chandurkar heard an appeal challenging the Division Bench of the Calcutta High Court, which had affirmed the Single Judge's dismissal of a writ petition by an industrial consumer contesting the West Bengal State Electricity Board’s withdrawal of a concessional tariff granted under an agreement dated 18.01.1999.

The Court allowed the civil appeal, set aside the High Court order and quashed the Board’s memo dated 16.11.2000 that denied the 25% concession. The Supreme Court held that the Board’s reversal of its earlier sanction and agreement was “unsustainable, illegal and arbitrary” and recorded that the appellant was entitled to the 25% concession on total energy charges for three years in terms of the agreement. The Court, in its reasoning, observed: The Court added that "the Board is not justified in changing its stand after more than 2 years."

Background The dispute arose from a 1996 tariff notification by the West Bengal State Electricity Board that offered concessional energy tariffs to new and expanding industries. The appellant, a cast-iron manufacturer with an existing low-tension connection, upgraded its plant by installing a 500 kg induction furnace and applied for high-tension (HT) bulk supply on 31.08.1998. After inspection, the Board issued Memo dated 10.10.1998 proposing HT/Bulk supply and expressly stating that the consumer "will be eligible for a concession of 25% on total energy Charges ... for 3 (three) years" subject to conditions including that the consumer had not availed state subsidies under the West Bengal Incentive Scheme, 1993. An agreement embodying these terms was executed on 18.01.1999 and permanent HT supply was effected on 29.07.1999; the Board issued bills for August, September and November 1999 applying the concession.

A billing dispute arose when the Board denied the concession for October 1999 and demanded certificates proving the appellant had not availed subsidy. The appellant submitted two certificates from competent state agencies (dated 18.11.1999 and 12.07.2000). Despite compliance, the Board issued Memo dated 16.11.2000 taking a new ground that the unit was not a "new industry" and therefore not eligible for the concession. The appellant filed a writ petition seeking grant of the 25% concession or refund/adjustment of excess charges. The Single Judge and thereafter the Division Bench dismissed the petition, the Single Judge relying on this Court’s decision in BSES Ltd. v. Tata Power Co. (AIR 2004 SC 760) to construe eligibility requirements for the concession. The Supreme Court found that the High Court failed to examine the Board’s letter in light of the admitted facts, noted that the Board had initially sanctioned and implemented the concession and that it was unjustified in changing its position after implementation, and therefore set aside the Board’s impugned memo and allowed the writ. The Court recorded that during litigation the concessional rate had, in fact, been granted and adjusted, rendering the issue of refund academic. The appeal was allowed and parties were directed to bear their own costs; pending applications stood disposed of.

Case No.: CIVIL APPEAL NO. 2592 OF 2013 Case Title: EDCONS(MKS) CASTINGS PVT. LTD. v. WEST BENGAL STATE ELECTRICITY BOARD & ORS. Appearances: (List advocates if available, for both sides using the format) For the Petitioner(s): Mr. Gaurav Jain, learned counsel, assisted by Ms. Abha Jain For the Respondent(s): Mr. Saurabh Mishra, learned senior counsel, assisted by Ms. Bhumi Agrawal and Mr. Shrimay Mishra