SUPER SPINNING MILLS Vs. SUPT ENGINEER

JUDGEMENT

(1.) The petitioner-a registered Company under the Companies Act, 1956, established its spinning unit at Kirigera Anantapur Dist. It required high tension supply of electrical energy. The petitioner had applied in 1975 for industrial licence under Rule 7 of the Registration and Licensing of Industrial Undertaking Rules, 1952 for substantial expansion to manufacture cotton yarn. Registered licence was granted in August 1975 to expand the manufacturing capacity of the cotton yarn from 29,892 spindles to 50,000 spindles per year, a period of two years from the date of issue of the industrial licence. The petitioner had expended Rs.504.01 lakhs from time to time from the initial capital outlay of Rs.198.05 lakhs and increased the expanded productive capacity to 50,116 spindles with a productive capacity value of Rs.986.20 lakhs per annum as against the existing productive capacity value of Rs.403.98 lakhs.

(2.) The petitioner had been initially supplied with 1550 KVS electrical energy and later with the additional electrical energy on five occasions, Viz., January'22, 1979 200 KVA; October 9, 1979 : 400 KVA; April 18, 1980: 350 KVA; and December 26, 1980 : 100 KVA i.e., a total of 2950 KVA. The petitioner made an application on April 12, 1983 requesting the respondents to accord 25% of the power tariff rebate to the petitioner unit in terms of the Government Order. The respondents have denied the benefit on ths ground that the petitioner has not expanded a substantial increase in the productive capacity or the capital outlay immediately but it was done in a phased mannerfor about four years within the five periods referred to herein before, as a result, the petitioner is not entitled to the benefit of 25% rebate. Mr. Ravi, an young advocate with an analytical thorough preparation and clarity, has forcifully presented the case of the petitioner contending that it is quite unlikely to have an expansion programme of its productive magnitude overnight; the unit could not invest the capital outlay overnight and make the expanded productive capacity. Several factors have to be taken into account in expanding the productive capacity and investment of the capacity outlay; viz, feasibility of finance, availability of plant and machinery and other infrastructure facilities for manufacture; and the petitioner on securing the capital of more than Rs.3 crores, placed orders for the supply of machinery; as and when the machinery was supplied they installed the machinery and started production. As soon as the machinery was ready for manufacture of cotton yarn, application has been made to supply the required KVA and it was accordingly supplied ana the petitioner thus had complied with all the guidelines under the relevant G.Os and it is entitled to the benefit of 25% of the rebate. I find force in the contention.

(3.) Sri V. R. Roddy, learned standing counsel for the respondent-Board while resisting the contentions, has reiterated the contention of the Board. The bone of the contention of the Board is that the substantial expansion should be either within the time prescribed in the licence issued by the licensing authority or within a reasonable period of one or two years. The object of giving benefit is only to tide over and diffuse the financial burden on the industry. If considerable expansion is made for over years, then every enterprenuer would be intitled to claim the benefit and the Board is bound to give the benefit of rebate of tariff of 25%. That is not the intendment of the Government Orders. The question, therefore, is whether the petitioner can be denied of 25% rebate on account of the fact that the expension of the manufacturing of cotton yarn was substantially increased in a phased period offour years. In G.O.Ms.No.654, Industries & Commerce, dated July 13, 1976, the Government passed the order that 25% of the concession in power tariff should be extended to any new industrial unit going in to regular production on or after January 1, 1976 and the concession should not be applicable to 65 industries notified in G.O.Ms.No.224, Inds. & Com. dated March 9, 1976. It is an admitted fact that the petitioner industry is not one of the 65 industries. It is also an admitted fact that the petitioner-industry has gone into production on or after January 1, 1976 Then the next question is what is the meaning of the phrase 'substantial expansion' which the petitioner has to comply with. In G.O.Ms.No 1049, Ind. & Com. dated December 15, 1976 the Government have stated that the substantial expansion of the existing capacity involving increase in the existing value of capital investment by not less than 25%. This was further adumbrated by G.O Ms.646 Ind. & Com. Dated October 5, 1979 reiterating that 25% substantial increase of the capital outlay would be the creteria linking 25% expansion in the productive capacity the rebate being limited to the expanded portion of the productive capacily and not to the total production of the whole plant. It is already seen that the initial capital outlay is Rs.19805. lakhs and the petitioner, after expansion, has invested Rs.504.01 lakhs. Thereby, there is more than three times of the initial capital outlay. As regards the productive capacity is concerned, 14.01 lakh K..Gs per annum was the initial productive capacity and after expansion, it was 26.01 lakh K. Gs. In terms of value thereof, it was Rs. 403.98 lakhs initially and Rs.986. 20 lakhs after expansion, per annum. Thereby, the expansion in the productive capacity also has been doubled the initial productive capacity. Thus, the petitioner has fulfilled both the conditions prescribed in the G.Os which G.Os the Board has admittedly accepted as well as these facts. Under those circumstances, the petitioner has become eligible to accord concession af 25% of the power rebate on the expanded productive capacity. It is not in dispute that either the Board or the Government had not prescribed any time limit within which the expended productive capacity and capital outlay are to be done. If it were a case the Board could have laid down any policy and if the industry has not fulfilled the conditions within the stipulated period, perhaps the Board would he justified in denying the benefit. But no such guidelines have been laid down. The mere fact that some of the industries may lay claim after expanding the productive capacity and capital outlay over jears is not a ground to deny the benefit to the petitioner provided the petitioner complied with the Prescribed guidelines in the G Os referred to above. As seen already, the guidelines have been fulfilled by the petitioner. Therefore, denying the petitioner of the benefit of 25% rebate in tariff is clearly unwarranted and unjustified. The writ petition is accordingly allowed and the respondents are is directed to give the benefit in terms of G.O. Ms.Nos. 654, 1049 and 646. In the circumstances, there will be no order as to costs.