RENUSAGAR POWER COMPANY LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India seeks the quashing of the two orders dated September II, 1969 of the Government of India in the Ministry of Finance; one of the orders directs the retrospective cancellation of the approval of the long- term loans bearing interest at the rate of 6 per cent per annum for the purpose of purchase of plant and machinery raised/debt incurred abroad by Renusagar Power Co. Ltd., Renukoot, accorded earlier in the exemption orders under Section 10(15)(iv)(c) of the Income Tax Act, 1961 issued on September 3, 1965 and June 7, 1967 and the other order refuses to accord approval of the rate of interest on the long- term loans for the purchase of structural steel and additional spares and accessories raised/debt incurred abroad by Renusagar Power Co. Ltd. under Section 10(15))(iv)(c) of the Income Tax Act, 1961.

(2.) The Company promoted, in accordance with the agdeement, is Renusagar Power Company Ltd., the petitioner in this case. Pursuant to the agreement the petitioner by ifs letter dated November 27, 1963 applied to the Government of India in the Ministry of Industry for the approval of the proposals for the import of capital goods and heavy electrical plant for establishing a thermal power plant. As the capital goods proposed to be imported were for the establishment of a new undertaking for which a licence had to be obtained under the Industries (Development and Regulation) Act, 1951, the application for import licence was routed through the Ministry of Industry. The application was made in duplicate in the prescribed application Form 'E' for the import of machinery and equipment valued approximately at Rs. 7 crores. A copy of the agreement was forwarded by the petitioner along with the said: application. A request was also made for advising the C-C.I.&E. for the issue of the import licence at an early date. The Government of India in the Ministry of Industry (Metal Section) considered the application of the petitioner for the establishment of a thermal power plant at Rahind (District Mirzapur U. P.) and for the import of plant and machinery for the proposed thermal power plant at an approximate value of Rs. 7 crores (C.I.F.). The approval of the Government of India of the proposals of the petitioner was conveyed in the letter dated January 2, 1964 on the terms mentioned in the letter. The term relating to interest reads as follows :

(3.) The final contract between the petitioner and General Electric Company acting through I.G.E. Was entered into on August 24, 1964 (hereinafter called the Contract). Article IIIA(3)(a) of the contract makes a provision for payment of interest on the unpaid purchase price. Sub-clause (a) reads as follows: