Supreme Court settles electricity rebate dispute in Goa industrial units: Puja Ferro Alloys vs. State of Goa (2025) INSC 217 (14 February 2025)

Date of the Judgment: 14th February 2025
Citation: (2025) INSC 217
Judges: Dipankar Datta, J., Sandeep Mehta, J.

Did industrial units in Goa receive the electricity rebate they were promised? The Supreme Court of India addressed this question in a recent case involving several companies and the State of Goa. The core issue revolved around a 25% rebate on electricity tariffs that was promised to industrial units in 1991 but later rescinded. This judgment clarifies whether these companies are entitled to the rebate based on the initial notification.

Case Background

The case originates from a series of notifications issued by the State of Goa (SoG) regarding electricity tariffs and rebates for industrial units. Here’s a chronological breakdown:

• 27.06.1988: SoG issued a notification determining the tariff applicable to electricity bills from 01.07.1988.
• 30.09.1991: Under Section 23 read with Section 51-A of the Indian Electricity Act, 1910, SoG introduced a 25% rebate on electricity tariffs for industrial units using High-Tension or Low-Tension power for industrial activities. This rebate was applicable for five years from the date electricity supply was made available.
• 15.09.1992 – 01.02.1994: Appellant companies applied for power connections.
• 05.08.1993 – 10.02.1995: Power Supply Agreements were entered into between the appellant companies and SoG.
• 31.03.1995: SoG issued a notification rescinding the 30.09.1991 notification, effective 01.04.1995. This meant new industrial units applying for power after 31.03.1995 would not receive the 25% rebate.
• 16.05.1995 – 28.07.1995: Power connections were established for the appellant companies
• 15.05.1996: The 30.09.1991 notification was amended to include “Extra High-Tension” consumers.
• 01.08.1996: The notification was amended again to extend the 25% rebate to all industrial units using extra high-tension power supply.
• 01.01.1997: The 25% rebate began to be given to the appellant companies. Arrears were to be disbursed in 60 monthly installments.
• 31.03.1998: SoG issued a circular suspending the rebate entitlement, without specifying which notification it applied to.
• 24.07.1998: The 01.08.1996 amending notification was rescinded.
• 2002: The Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 was enacted, requiring those who benefited from the 15.05.1996 and 01.08.1996 notifications to refund the rebate amount.
• 21.02.2011: Demand notices were issued to the appellant companies, seeking recovery of the rebate amounts.

The appellant companies, including Puja Ferro Alloys P Ltd., M/s Karthik Alloys Ltd., Karthik Inductions Ltd., Global Ispat Ltd., and Sunrise Electromelt Ltd., sought relief from these demand notices, arguing they were entitled to the 25% rebate based on the initial promise by the SoG.

Timeline

Course of Proceedings

The appellant companies initially filed writ petitions before the High Court of Bombay at Goa, challenging the demand notices issued by the respondents. The High Court, in its judgment and order dated 21.01.1999 in W.P. No. 239 of 1998 [GR Ispat Ltd. v. Chief Electrical Engineer], held that the rescission of the notification dated 30.09.1991 by the notification dated 31.03.1995 meant that the rebate scheme was discontinued from 01.04.1995 for new industrial units. However, it also held that the amendment of the notification after its rescission indicated that the notification dated 30.09.1991 was still in effect for industrial units already entitled to the rebate. The High Court concluded that the notification dated 24.07.1998 was legal and valid, and the petitioning companies were entitled to a 25% rebate in power tariff until 24.07.1998.

This decision was challenged in the Supreme Court in CA Nos. 3206-3217/1999, but the Court declined interference, noting that the High Court had taken a balanced view.

Another writ petition was filed challenging the notifications dated 15.05.1996 and 01.08.1996, which was allowed by the High Court [Manohar Parrikar v. State of Goa] due to non-compliance with the Rules of Business under Article 166(3) of the Constitution. The impugned notifications were declared non-est and void ab initio.

The judgment in Manohar Parrikar was challenged in the Supreme Court, which dismissed the appeals in MRF Limited v. Manohar Parrikar & Ors.

Subsequently, the High Court dismissed the writ petitions filed by the appellant companies, leading to the current appeals before the Supreme Court.

Legal Framework

The legal framework relevant to this case includes:

• Section 23 of the Indian Electricity Act, 1910: This section empowers the State Government to regulate the supply, distribution, and use of electricity.
• Section 51-A of the Indian Electricity Act, 1910: This section allows the State Government to issue notifications regarding electricity tariffs and rebates.
• Section 21 of the General Clauses Act, 1897: This section deals with the power to issue, amend, vary or rescind notifications.
• Article 166(3) of the Constitution of India: This article relates to the conduct of business of the Government of the State.
• Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002: This act provides for the recovery of rebate amounts granted under specific notifications. Section 3 of the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 specifies that any person or industrial consumer in the SoG who has already availed of the benefits of 25% rebate in pursuance of the Government notifications dated 15.05.1996 and 01.08.1996 would be liable to refund the amount to the third respondent herein – the Chief Electrical Engineer, Electricity Department, Government of Goa.

Arguments

Arguments by the Appellant Companies:

• The appellant companies argued that they are covered by the notification dated 30.09.1991, not by the notification dated 01.08.1996.
• They contended that their rights crystallized when they applied for power while the notification dated 30.09.1991 was in force. Therefore, regardless of when the power was actually supplied, they are entitled to the rebate.
• Relying on Pawan Alloys & Casting (P) Ltd. v. UP SEB, they argued that new industries were attracted to the region based on the promise of the SoG to grant a rebate. Without this incentive, they would not have set up industries in Goa.
• They asserted that a notification cannot be rescinded with retrospective effect, only prospectively. The decision in GR Ispat Ltd. supports their claim that they cannot be denied the rebate.
• The appellant companies claimed that the impugned demand notices are illegal, arbitrary, and ultra vires the provisions of the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002.
• They argued that they became aware of a letter from the Electricity Department of the SoG that has a direct bearing on the matter. The discovery of this new material is sufficient to exercise the power of review, as decided in Inderchand Jain v. Motilal.
• The appellant companies felt they have been treated unfairly and requested that the impugned demand notices be quashed and the deposits made by them be refunded.

Arguments by the Respondents:

• The respondents argued that the impugned demand notices were issued in accordance with the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002, and its constitutionality has been upheld by the Supreme Court.
• They contended that the High Court rightly concluded that the notification dated 30.09.1991 does not cover the case of the appellant companies, and therefore, they are not entitled to any rebate.
• The respondents stated that the appellant companies received benefits from the notifications dated 15.05.1996 and 01.08.1996, but they are now claiming benefits from the notification dated 30.09.1991.

Issues Framed by the Supreme Court

The central issue before the Supreme Court was:

1. Whether the appellant companies are covered by the notification dated 30.09.1991 for the purpose of availing a 25% rebate on the tariff chargeable for availing power supply.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The court considered the following authorities:

• GR Ispat Ltd. v. Chief Electrical Engineer, 1999 (1) Goa L.T. 218 (High Court of Bombay at Goa): The High Court clarified that the rescission of the notification dated 30.09.1991 was limited to new industrial units and remained operative for existing units entitled to the rebate.
• Manohar Parrikar v. State of Goa, 2001 SCC OnLine Bom 350 (High Court of Bombay at Goa): The High Court declared the notifications dated 15.05.1996 and 01.08.1996 as non-est and void ab initio due to non-compliance with the Rules of Business under Article 166(3) of the Constitution.
• MRF Limited v. Manohar Parrikar & Ors., (2010) 11 SCC 374 (Supreme Court of India): The Supreme Court dismissed the appeals challenging the judgment in Manohar Parrikar.
• Goa Glass Fibre Limited v. State of Goa & Anr., (2010) 6 SCC 499 (Supreme Court of India): The Supreme Court held that the object of the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002, was to recover liabilities arising from the notifications dated 15.05.1996 and 01.08.1996.
• Pawan Alloys & Casting (P) Ltd. v. UP SEB, (1997) 7 SCC 251 (Supreme Court of India): This case discussed the doctrine of promissory estoppel and the withdrawal of incentives based on public interest.
• Satyadhyan Ghosal v. Deorajin Debi, [1960] 3 SCR 590 (Supreme Court of India): This case explained the principle of res judicata and its application in giving finality to judicial decisions.
• Hope Plantations Ltd. v. Taluk Land Board, (1999) 5 SCC 590 (Supreme Court of India): This case elucidated the applicability of the principles of res judicata and estoppel in the Indian context.
• T.P. Moideen Koya v. State of Kerala, (2004) 8 SCC 106 (Supreme Court of India): This case affirmed that the principle of res judicata applies to petitions arising under Article 226 of the Constitution.
• Inderchand Jain v. Motilal, (2009) 14 SCC 663 (Supreme Court of India): This case was cited regarding the discovery of new material as a ground for review.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• GR Ispat Ltd. v. Chief Electrical Engineer, 1999 (1) Goa L.T. 218: The High Court’s clarification regarding the rescission of the notification dated 30.09.1991 was considered, but ultimately, the appellant companies did not fall within its purview.
• Manohar Parrikar v. State of Goa, 2001 SCC OnLine Bom 350: The High Court’s declaration of the notifications dated 15.05.1996 and 01.08.1996 as non-est and void ab initio was a key factor in rejecting the appellant companies’ claims.
• MRF Limited v. Manohar Parrikar & Ors., (2010) 11 SCC 374: The Supreme Court’s dismissal of the appeals challenging the judgment in Manohar Parrikar reinforced the invalidity of the notifications dated 15.05.1996 and 01.08.1996.
• Goa Glass Fibre Limited v. State of Goa & Anr., (2010) 6 SCC 499: The Supreme Court’s holding on the object of the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002, supported the recovery of rebate amounts.
• Pawan Alloys & Casting (P) Ltd. v. UP SEB, (1997) 7 SCC 251: This case was distinguished because, in the present case, the SoG had specifically taken the stand that the policy of rebate was unviable resulting from financial crunch and was overriding public interest.
• Satyadhyan Ghosal v. Deorajin Debi, [1960] 3 SCR 590: This case was cited to support the application of the principle of res judicata.
• Hope Plantations Ltd. v. Taluk Land Board, (1999) 5 SCC 590: This case was cited to elucidate the applicability of the principles of res judicata and estoppel.
• T.P. Moideen Koya v. State of Kerala, (2004) 8 SCC 106: This case was cited to affirm that the principle of res judicata applies to petitions arising under Article 226 of the Constitution.
• Inderchand Jain v. Motilal, (2009) 14 SCC 663: This case was cited regarding the discovery of new material as a ground for review, but the court found that the document did not aid the review applicants.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The fact that the notification dated 30.09.1991 was rescinded with effect from 01.04.1995, and most appellant companies received power connections after this date.
• The declaration in Manohar Parrikar v. State of Goa that the notifications dated 15.05.1996 and 01.08.1996 were non-est and void ab initio.
• The principle of res judicata, as the issues were covered by the previous decision of the High Court in GR Ispat Ltd. v. Chief Electrical Engineer.
• The overriding public interest due to financial constraints, which justified the withdrawal of the rebate.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law

Logical Reasoning

Issue: Whether the appellant companies are covered by the notification dated 30.09.1991 for the purpose of availing a 25% rebate?

The Supreme Court reasoned that since the notification providing the rebate was rescinded before most of the appellant companies received their power connections, and the subsequent notifications they relied upon were declared void, they were not entitled to the rebate. The principle of res judicata also applied, as the issues had been previously decided.

The majority opinion was delivered by Justices Dipankar Datta and Sandeep Mehta. There were no dissenting opinions.

“The impugned demand notice s were issued under the 2002 Act and seeks to recover the rebate granted to the appellant -companies by the SoG.”

“The High Court has rightly concluded that the said notification dated 30.09.1991 does not cover the case of the appellant -companies and hence, they are not entitled to any rebate.”

“For the principle of res judicata to be applied in the subsequent proceeding, it must be between the same parties and the cause of action of the subsequent proceeding must be the same as in the previous proceeding.”

Key Takeaways

• Industrial units must ensure they meet all eligibility criteria for incentives and rebates at the time of application and commencement of operations.
• Government notifications and policy changes can significantly impact the financial viability of industrial projects.
• The principle of res judicata can prevent parties from re-litigating issues that have already been decided by a competent court.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of the case is that industrial units are not entitled to claim rebates under a notification that has been rescinded before they received power supply, especially when subsequent notifications relied upon have been declared void. The judgment reinforces the application of the principle of res judicata in cases where the same issues have been previously decided. There is no change in the previous position of law.

Conclusion

The Supreme Court dismissed the appeals, upholding the demand notices issued to the appellant companies. The Court found that the companies were not entitled to the 25% rebate as the relevant notification had been rescinded before they received power supply, and subsequent notifications they relied upon were declared void. The principle of res judicata also played a significant role in the decision.