M S INDIAN METALS AND FERRO ALLOYS LIMITED STATE OF ORISSA ORISSA STATE ELECTRICITY BOARD INDIAN METALS AND FERRO ALLOYS LIMITED Vs. STATE OF ORISSA: INDIAN METALS AND FERRO ALLOYS LTD: INDIAN METALS AND FERRO ALLOYS LTD:STATE OF ORISSA

JUDGEMENT

(1.) M/s. Indian Metals and Ferro Alloys Ltd. - the petitioner in Writ Petiton No. 1753 of 1986 and in S.L.P. (C) Nos. 14923-14924 of 1986 is a public limited company incorporated under the Indian Companies Act which is engaged, inter alia, in the manufacture of ferro silicon and silicon metal which are said to be a valuable raw-material used by the Defence establishments in India and also exported out of the country the second petitioner in the aforesaid writ petition and the special leave petitions is the Managing Director of the company. The company has installed three units namely, 11 KV, 33 KV and 132 KV furnaces in which it is manufacturing ferro alloys and silicon metal in a composite industrial complex in a place called Therubali in the State of Orissa. The company has also a subsidiary by name M/s. Indian Metal and Carbide Ltd. engaged in the manufacture of silicon carbide and its factory is also situated in the same industrial complex. All the four units utilise electricity as raw material and they are, therefore, classified as 'power intensive industrial units'- the four units shall hereinafter referred to as "l l KV IMFAL, "33 KV IMFAL" 11 KV IMCL" and "132 KV IMFAL". - The company has entered into separate agreements with the Orissa State Electricity Board (hereinafter called the 'Board') for supply of electric energy to these four different units and the rates of tariff to be charged for such supply. The agreement in respect of 11 KV IMFAL was entered into initially on 3-4-1967 and subsequently renewed on 1-8-1983, that in respect of 33 KV IMFAL on January 2,1974 and the agreement for supply of 11 KV IMCL was entered into on January 28, 1975. The agreement in respect of supply of energy to 132 KV IMFAL was entered into on 4-12-1982. These agreements show that the Board had agreed to supply 78.8 MU for 11 KV IMFAL unit for the manufacture of silicon metal/charge chrome by the company, 1971 MU for the 33 KV IMFAL unit for the manufacture of ferro silicon/silicon metal, 15.8 MU for the 11 KV IMCL for the manufacture of silicon carbide and 262.8 MU for the 132 KV IMFAL unit for the manufacture of charge chrome/ferro silicon/silicon metal. As already indicated, all the above furnaces of the company are located in the same complex and are adjacent to one another. The tariff fixed for supply of the energy to the first three units is the same and that for the 132 KV IMFAL is 0.5 paise less per unit.

(2.) Supply of energy was made to the company regularly as per the agreements in respect of the first three units till the year 1979-80. The unit of time for supply of electricity adopted by the Board is the 'water year' which commences on the lst of July of a year and ends with 30th June of the succeeding year. In the year 1979-80, the State of Orissa resorted to power cuts on account of non-availability of sufficient power in the State to meet in full the requirements of the various categories of consumers. It accordingly. passed orders allocating restricted quotas of power to the four units of the company for the water year 1979-80. This order however. permitted the clubbing of the electricity supplied to the 11 KV IMFAL, 33 KV IMFAL and IMCL furnaces of the company. The 132 KV IMFAL furnace of the company had not been commissioned at that time. The aforesaid position continued for the water years 1981-82 and 1982-83.

(3.) The company's 132 KV IMFAL furnace was commissioned on 20th February, 1983 but the agreement of supply of energy to this unit had been executed on December 4,1982 itself. On July 16,1983, the company addressed a letter to the Board requesting the facility of clubbing of the power allocated to its four furnaces for the water year 1983-84. By a teleprinter message dated August 4, 1983 sent by the Chief Engineer of the Board to the Superintending Engineer, Talcher, it was intimated that IMFAL and IMCL may be permitted to draw the power allotted to the four units taken together as requested by the company in its letter dated July 17, 1983, subject to the condition that the company's drawal of power at its 132 KV IMFAL furnace in excess of the allotment of the said unit shall be made at the tariff applicable of the supply at 132 KV IMFAL. It was also made clear that the said order will be effective from July 16, 1983, that being the date of the company's letter of request. Pursuant to the above permission the company clubbed the supply of power to all its units for the water year 1983-84. On July 23, 1984, the Chief Engineer addressed a letter to the company informing the latter that with effect from July 1, 1984 the drawal of power by the company against the different units will be regulated separately and as such the company was requested to limit its drawal for the different units as per the allotment indicated in that letter with effect from July 1, 1984; in other words, the facility of clubbing was withdrawn by the said letter with effect from July 1, 1984. On July 2, 1984, the company wrote to the Board pointing out the hardship involved in the denial of the facility of clubbing and requesting for permission to club the energy for all the four units for the water year 1984-85. In reply thereto the Chief Engineer of the Board sent a communication dated July 12, 1984 informing the company as follows:-