Sakthi Hotel, Baker Junction, Kottayam v. Kerala State Electricity Board & Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 3RD NOVEMBER 2008 / 12TH KARTHIKA 1930 ## W.A.No.1803 of 2008 ------------------------------------ AGAINST THE JUDGEMENT IN O.P.5689/2000, DATED 18/03/2008 .................... ## APPELLANT/PETITIONER:- ---------------------------------------- SAKTHI HOTEL, BAKER JUNCTION, KOTTAYAM, REPRESENTED BY ITS PARTNER, SAJI PHILIP, S/O.M.C.PHILIP, MOOZHAYIL HOUSE, MARIGATHURUTHIL P.O. BY ADV. SRI.BECHU KURIAN THOMAS ## RESPONDENTS/RESPONDENTS:- --------------------------------------------------- 1. KERALA STATE ELECTRICITY BOARD, VAIDYUTHI BHAVAN, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY. 2. THE DEPUTY CHIEF ENGINEER, ELECTRICAL CIRCLE, PAKKIN P.O., KOTTAYAM. 3. THE ASSISTANT EXECUTIVE ENGINEER, ELECTRICAL MAJOR SECTION, KOTTAYAM CENTRAL, KOTTAYAM. - R1 TO R3 BY STANDING COUNSEL SRI.C.K.KARUNAKARAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- ## **H.L.Dattu, C.J. & A.K.Basheer, J.** ---------------------------------------------- W.A.No.1803 of 2008 ---------------------------------------------Dated, this the 3[rd] November, 2008 ## **JUDGMENT** ## H.L.Dattu, C.J. Though this Writ Appeal is posted for admission, by consent of all the contesting parties, the matter is taken up for final hearing, since a very simple issue involves in this Writ Appeal. (2) The appellant before us is a hotel, having a Star status. The hotel calls in question the decision of the learned Single Judge passed in O.P.No.5689 of 2000, dated 18[th] March, 2008. It is relevant, at this stage itself, to notice, that, when the learned Single Judge has disposed of the Original Petition, he did not have the benefit of the judgment of the apex Court in _M/s.Kusumam Hotels (P) Ltd._ v. _Kerala State Electricity Board & Others_ (AIR 2008 S.C.2796). In fact, the learned Single Judge, for his decision, has relied upon the Division Bench decision of this Court in W.A.No.624 of 2005, dated 18[th] May, 2005. (3) Petitioner is a hotel and the Government of India, by passing appropriate orders, has given “Star status” to the petitioner. It is also a consumer of electrical energy, supplied by the Kerala State Electricity Board (“Board” for short). (4) To trace the history of the case, we can begin with the orders passed by the State Government dated 11[th] July, 1986. The said order W.A.No.1803/2008. - 2 - was made by the State Government pursuant to the policy decision taken by the Government of India to develop the Tourism Industry in the country. The State Government, keeping that policy in view, has declared Tourism as an “Industry” and and those industries which are engaged in tourism promotional activities in the State would be automatically eligible for the concessions/incentives as applicable to the industrial sector from time to time. Under this Government Order, certain concessions were made available to the Tourism Industry. One such concession was, with regard to electricity and water charges. One of the requirements to get the benefit of the Government Order was, for a hotel, it should be either classified as a Star Hotel (1 to 5) by the Government of India. The said order also provided a Committee of Members who would decide the eligibility, quantum of concession, etc. payable to Tourism Industry under the new scheme. (5) Pursuant to the Government Order dated 11.07.1986, Power (A) Department has issued yet another order, dated 1.6.1987. In the said order, it was once again made clear, that, it would apply to the classified hotels (1 to 5 Star) and, secondly, the electricity tariff that would be applicable to classified hotels will be HT I Industrial Tariff/ LT IV Industrial Tariff depending on the type of supply, with effect from 1.4.1987. The other condition was, that, the tariff as indicated above will be applied to the institutions, either on production of proper certificate from W.A.No.1803/2008. - 3 - the Director of Tourism or based on lists of institutions eligible for the concessional tariff furnished by the Director of Tourism to the Secretary of the Board. Clause (4) of the said order would make it clear, that, in the matter of admissibility of the concession to any particular unit, the matter shall be referred to the Director of Tourism and his report will be accepted by the Board. (6) Pursuant to the orders passed by the State Government dated 11.07.1986 and the orders passed by the Power (A) Department dated 1.6.1987, the Board has issued orders dated 6.6.1987, literally incorporating the orders passed by the Power (A) Department. In the said order, the concessions which are available to Tourism Industries are clearly stipulated. There again, there is a statement to the effect, that, if in the case of institutions applying for power connection as mentioned in Clauses (1) and (2), the tariff as above will be applied by the Board on receipt of necessary certificate from the Director of Tourism. In view of the orders passed by the Board, we are informed by Sri.Bechu Kurian Thomas, learned counsel appearing for the appellant, that, the appellant Tourism Unit was enjoying the concessional rate of tariff from the year 1991 till March, 1997. (7) The appellant Tourism Unit had filed an application before the Assistant Executive Engineer, Kottayam for grant of concessional rate of tariff. The said application came to be replied by the W.A.No.1803/2008. - 4 - Assistant Executive Engineer, _inter alia_ directing the appellant Unit to produce the certificate issued from the Director of Tourism Department for the purpose of considering its application for grant of concessional power tariff. (8) After receipt of the said clarification from the Assistant Executive Engineer, the appellant Unit had approached the Government of India for approval and classification of its hotel and to award the Star classification. The Government of India, by its letter dated 5.8.1999, has granted “1 Star” status to the appellant Tourism Unit with effect from 05.01.1999. (9) After issuance of the Certificate of Star classification by Government of India, the Director of Tourism, Thiruvananthapuram, by his order dated 18.8.1999, has certified that the appellant Unit is entitled for concessional power tariff with effect from 5.1.1999 in accordance with the order of the Government of India dated 5.8.1999. (10) Since the appellant Unit was not granted the concessional power tariff, it had to come before this Court in O.P.No.1435 of 2000. This Court, while disposing of the Original Petition, had directed the Deputy Chief Engineer, Electrical Circle, Kottayam to consider the petitioner's application/representation and pass appropriate orders in accordance with law. W.A.No.1803/2008. - 5 - (11) After the disposal of the Original Petition, the Deputy Chief Engineer has passed the order dated 1.2.2000, rejecting the claim of the appellant Unit for concessional power tariff. The reasons assigned by him for rejecting the application was that the applications filed by the petitioner are dated 19.8.1999 and 9.12.1999, i.e., much beyond the period prescribed by the Government as well as by the Board to enjoy the benefit of concessional power tariff. The second reason that was assigned by him was, that, the appellant Tourism Unit was not enjoying the concessional power tariff for the periods from April, 1997 to 18.8.1999. It is the correctness or otherwise of the said order that was called in question by the petitioner before this Court in O.P.No.5689 of 2000. (12) As we have already stated, the learned Single Judge, by his order dated 18.03.2008, following the observations made by this Court in W.A.No.624 of 2005, disposed of on 18.05.2005, has rejected the writ petition. (13) In W.A.No.624 of 2005, disposed of by this Court on 18.05.2005, what was called in question was the orders passed by the State Government dated 26.9.2000. By the said order, Government, after referring to the various orders passed by the Board dated 11.10.1999, 8.11.999 and 20.12.1999, had restricted the benefit of the concessional power tariff to such of those industries which have enjoyed concessional power tariff for a period of five years and that order had been given W.A.No.1803/2008. - 6 - retrospective effect. This Court, while disposing of the Writ Appeal, had stated that the Government can pass an order giving retrospective effect and, thereby, the concession which was granted earlier can be withdrawn, modified, canceled etc.. (14) The orders passed by this Court in W.A.No.624 of 2005 was the subject matter of the Civil Appeal before the apex Court. The apex Court, while reversing the decision of this Court in W.A.No.624 of 2005, has observed, that, the Government has the power to issue a notification/order taking away the benefit granted under the earlier Government Orders; but that Government order can only be prospective, in view of the statutory provisions, as provided under the Electricity (Supply) Act, 1948. In the said decision (AIR 2008 S.C. 2796), the apex Court has stated as under: _“27. The State of Kerala in this case did not grant any concession by itself. The Central Government took a larger policy of treating the tourism as an industry. A wide range of concessions were to be granted by way of one time measure; some of them, however, had a recurring effect. So far as grant of benefits which were to be recurring in nature, the State exercises its statutory power in the case of grant of exemption from payment of building tax wherefor it amended the statute. It issued directions which were binding upon the board having regard to the provisions contained in Section 78A of the 1948 Act. The Board was bound thereby. The board, having regard to its financial constraints, could have brought its_ W.A.No.1803/2008. - 7 - _financial stringency to the notice of the State. It did so. But the State could not have taken a unilateral decision to take away the accrued or vested right. The Board's order dated 11.10.1999 in law could not have been given effect to. The Board itself kept the said notification in abeyance by reason of order dated 8.11.1999._ _Appellants, indisputably, continued to derive the benefits in terms of the original order. They obtained certificates of classification. It is on the aforementioned context, the question as regards construction of the impugned notification dated 26.9.2000 arises. Ex facie, the said policy decision could not be given a retrospective effect or retroactive operation. The State was not exercising the power under any statute to grant or withdraw the concession. It was exercising its statutory power of issuing direction. It is, therefore, a statutory authority. The 1948 Act does not authorize the State to issue a direction with retrospective effect. The Board, therefore, could only give prospective effect to such directions in absence of any clear indication contained therein. By reason of withdrawal of concession with retrospective effect, the accrued right of the appellants had been affected. In Kuldeep Singh v. Govt. of NCT of Delhi [(2006) 5 SCC 702] this Court held:_ _“In a case of this nature, where the State has the exclusive privilege and the citizen has no fundamental right to carry on business in liquor, in our opinion, the policy which would be applicable is the one which is prevalent on the date of grant and not the one, on which the application had been filed._ W.A.No.1803/2008. - 8 - _If a policy decision had been taken on 16.9.2005 not to grant L-52 licence, no licence could have been granted after the said date.”_ _We, however, are not concerned with a similar situation”._ ## (15) Further, the Court has observed as under: _“29. We, therefore, are of the opinion that the impugned GO dated 26.9.2000 must be held to have a prospective operation and not a retrospective operation. That view would save it from being vulnerable to the challenge of being hit by Article 14 of the Constitution of India.”_ (16) In the instant case, pursuant to the directions issued by this Court in O.P.No.1435 of 2000, disposed of on 13.1.2000, the Deputy Chief Engineer has considered the appellant's application dated 19.8.1999 for grant of concessional power tariff and has rejected the same. When he passed the impugned order, the Deputy Chief Engineer did not have the benefit of the orders passed by this Court in _M/s.Kusumam Hotels (P) Ltd. case_ (supra). In our opinion, in view of the law declared by the apex Court, the reasons assigned by the Deputy Chief Engineer cannot be sustained and, therefore, the orders passed by the Deputy Chief Engineer requires to be set aside and the matter requires to be remanded back to the Deputy Chief Engineer to reconsider the application filed by the appellant/petitioner dated 19.8.1999 in the light of the observations made W.A.No.1803/2008. - 9 - by the apex Court in _M/s.Kusumam Hotels (P) Ltd._ Case. (17) In view of the above, we pass the following: ## Order (i) The Writ Appeal is allowed in part. (ii) The order passed by the Deputy Chief Engineer of the Board in No.BG2/Con-Tariff/99-2000/1058 dated 1.2.2000 is set aside. (iii) The order passed by this Court in O.P.No.5689 of 2000 dated 18[th] March, 2008 is set aside, in view of the declaration of law made by the apex Court in _M/s.Kusumam Hotels (P) Ltd. case_ (supra). (iv) The matter is now remanded back to the Deputy Chief Engineer to reconsider the appellant's application dated 19.8.1999 for concessional power tariff in the light of the observations made by the apex Court in _M/s.Kusumam Hotels (P) Ltd. c_ ase. (v) The aforesaid exercise the Deputy Chief Engineer shall do within two months from the date of receipt of a copy of this Court's order. Ordered accordingly. H.L.Dattu Chief Justice vku/dk A.K.Basheer Judge