STATE OF KERALA Vs. INDIAN ALUMINIUM COMPANY LIMITED

JUDGEMENT

(1.) These appeals are directed against the judgment and order dated 17-2-89 of the Kerala High Court in O.P. No. 10002 of 1983, whereby the High Court has held, that the concessional rates for supply of electricity incorporated in special agreement under Section 49(3) of the Electricity Supply Act, 1948 (hereinafter referred to as the 'Act') entered into between the Indian Aluminium Company Ltd. (hereinafter referred to as the 'company') and the Kerala State Electricity Board (hereinafter referred to as the 'Board') was validly rescinded by the statutory amendment incorporating sub-section (5) in Section 49 of the act by the Act No. 7 of 1983. The High Court has further found that the demand of duty at the rate specified under the Kerala Electricity Duty Act which was in excess of concessional duty was invalid. Consequently, the said demand of duty was quashed. It is in this way the State of Kerala is in appeal against the quashing of demand of duty, whereas the company has come up to this Court against that part of the judgment whereby the High Court has upheld the validity of sub-section (5) of Section 49 of the Act. The State of Kerala after the judgment under appeal was delivered filed a review petition but the same was also rejected. The said order is also under challenge in Civil Appeal No. 2008 of 1990.

(2.) The appellant-company is engaged in the business of manufacturing aluminium, having its head office at Calcutta. The company after having been assured of supply of electricity which is raw material for manufacture of aluminium at concessional rates decided to set up its factory at Alupuram in the then State of Travancore. It was in this context that on 30-7-1941 an agreement was entered into between the company and the then State of Travancore for supply of electricity at fixed rate for a period of 35 years w.e.f. 1-7-1941. It was alleged that on the basis of assurance and undertaking given by the erstwhile State of Travancore for supply of regular electricity at cheaper rate, the company had set up its aluminium factory at Alupuram, although alumina required for manufacture of aluminium was brought from far off places, like Bihar incurring heavy freight and other expenses. In the year 1948, the State of Travancore was integrated with the Cochin State and the agreement entered into in the year 1941 was treated as binding. The agreement of 1941 was subsequently modified by another agreement dated 15-8-1955 and continued to be in force when the State of Kerala was formed under the State Reorganization Act, 1956. On 1-4-1957 the Board was constituted and the earlier agreement entered into was treated as agreement under sub-section (3) of Section 49 of the Act. Again, in the year 1963, a fresh agreement was entered into which was to be in force for a period of 25 years from 1-1-1965. Subsequently, again on 18-9-1965, another agreement was entered into for supply of 12,500 KWs for another period of 25 years from 1-1-1996 with an option for renewal in favour of the company for a further period of 25 years. In these agreements, it was stipulated that the Board would supply electricity at concessional rates to the company. In the year 1969 the Board in exercise of its power under Section 79 read with Sections 49 and 59 of Electricity (Supply) Act issued an order dated 28-11-1969 known as "The Kerala State Electricity Board Extra High Tension Tariff Order 1969" fixing the rate of tariff for supply of electricity to Extra High Tension consumers. On the basis of the said Order the Board demanded from the Company High Tension Consumption charges at higher rates fixed by the Tariff Order ignoring the terms of agreement entered into under sub-section (3) of Section 49 of the Act. The said demand was challenged by the Company and ultimately this Court struck down the said demand holding that the Board was not entitled to claim more than the charges specified in the special tariff agreement entered into between the parties. Thereafter, the Government of Kerala issued an ordinance which was subsequently replaced by an Act known as Electricity (Supply) Amendment Act, 1983, whereby a new sub-section (5) was inserted in Section 49 of the Electricity (Supply) Act. Based on this new provision, the Board issued demands claiming electricity charges at rates notified for Extra High Tension consumers prescribed by the Kerala Electricity Board Extra High Tension Tariff Revision Order 1982. The Board also demanded duty at higher rates other than the concessional rates - a rate of which the duty was being paid by the company. It is in this way the company challenged the validity of sub-section (5) of Section 49 of the Electricity (Supply) Act, whereby the electricity supply to the company at concessional rates was rescinded and the company was brought under the uniform tariff.

(3.) As stated above, the High Court by its judgment and order under appeal upheld the validity of sub-section (5) of the Act, however, it set aside the notice of demand (sic) higher rates. It is in this way the State of Kerala being aggrieved, is in appeal before us.