M-S. SOUTHERN ISPAT LTD. v. STATE OF KERALA AND ORS

Citation: [2004] 3 S.C.R. 570

Court: Supreme Court of India

Bench: K.G. BALAKRISHNAN, B.N. SRIKRISHNA

Case summary

M-S. SOUTHERN ISPAT LTD. v. STATE OF KERALA AND ORS.pdf

Judgment text

MIS. SOUTHERN ISPAT LTD. v. STATE OF KERALA AND ORS. MARCH 25, 2004 (K. G. BALAKRISHNAN AND B. N. SRIKRISHNA, JJ. ] Constitution ofIndia, 1950 : Article 136-Concurrent findings offact-Inte1ference with-Held: As a rule, Supreme Court does not inteifere with concurrentfindings of/act recorded by two courts below-But in the special case, the factual findings were examined and the view taken by the Division Bench was found not so perverse as to require interference-Practice and Procedure. Electricity (Supply) Act, I948 : Concessional power tariff-State Govemment introduced a policy of exempting industrial units from enhanced power tariffifit started "commercial production" between 1. 1. 1992 and 3I. 12. I996-Entit/ementto--Held: Whether the industrial unit commenced "commercial production" within this period was a question offact-Since the concurrent findings on this question offact arrived at by the courts below was not perverse, no interference was called for under Art.

136 of the Constitution. Electricity Rule, 1956: p Rule 65-lnstaflation of diesel generating set-Permission of Chief Electrical Inspector-Applicability of-Held : Such a diesel generating set could not be installed without the permission ofthe Chief Electrical inspector. The respondent-State issued a policy exempting industrial units, which commenced "commercial production" between 1. 1. 1992 and 31. 12. 1996 from payment of enhanced power tariff. The appellantcompany intended to manufacture 24,000 tons of iron and steel ingots and 24,000 tons of iron and steel bars, coil etc. The appellant made an application to the State Electricity Board for allocation of certain quantity of power. However, the appellant's factory was yet to be constructed and SOlJTllERN ! SPAT LTD. 1· SlATF 571 machinery was to be transported and installed thereafter. Subsequently, the State Electricity Board sanctioned the power allocation but actual power supply did not cori1mence due to various reasons.

Apprehending that the State Electricity Board was deliberately delaying the matter, so that the appellant would not be able to carry out commercial production before the cut off date of 31. 12. 1996, the appellant submitted a scheme to the State Government for generation of 125 KVA electrical energy by installation of a diesel power generating set in its factory. The said scheme was sanctioned by the State Government subject to certain conditions. The electric wiring was completed in the factory of the appellant and the Electrical Inspector accorded his sanction only in the year 1998. The appellant filed a writ petition before the High Court challenging the bill for charges for electrical energy supplied to the appellant's industrial unit at rates in excess of the pre-1992 tariff rates. A single Judge dismissed the writ petition holding that the appellant had not complied with the conditions subject to which power supply at concessional tariff rates was to be made.

The Division Bench upheld this judgment. Hence, the appeal. On behalf of the appellant, it was contended that despite the delay in sanction and supply and of electricity, the appellant had installed its own diesel generating set and commenced "commercial production" on 14. 12. 1996. To substantiate its claim the appellant relied on certain invoices for sales made to customers in the month of December 1996, a certificate issued by the State Finance Corporation, the copies of the 'nil' return made to the Commercial Taxes Department, the declaration made to the Excise Department and certain other documents. Dismissing the appeal, the Court HELD : I. The question to be decided in this case is essentially a question of fact, namely, whether the appellant had started "commercial production" between 1. 1. 1992 and 31. 12. 1996 so as to be entitled to power supply at concessional tariff rates.

As a rule, it is not the practice of this Court to interfere with factual finding, which have been concurrently recorded by two courts below. Both the single Judge and the Division Bench have concurrently answered all factual findings against the appellant. On that ground, itself the appellant must fail. Nonetheless, as the appeal was argued with some seriousness, the factual findings have been examined only from the point of view of interference under the special jurisdiction under Article 136. 1580-C-EI 2. The contention of the appellant that "commercial production" had commenced in December, 1996 can hardly be accepted. The appellant was setting up the factory for manufacturing of alloy steel M. S. Sections, C. T. D. bars, Steel ingots and so on with a planned production of 24,000 tons of iron and steel ingots and 24,000 tons of iron and steel bars, coils etc.

It hardly stands to reason that "commercial production" of such a factory could have commenced by using a 125 KVA diesel generator set. There is A also no material on recorded to show that the appellant had run the factory by using the 125 KVA generator set during the period December 1996 to February 1999. Even the diesel unit could also not be used until permission was obtained under Rule 65 of the Electricity Rules, 1956, from the Chief Electrical Inspector. Such permission was obtained from the Chief Electrical Inspector only in 1998. (581-D-FI 3. The High Court rightly held that it was not sufficient for showing "commercial production" that some small items were sold by the appellant in December 1996 and 'nil' assessment of sales tax was made and a small excise duty payment was also made. The High Court also rightly held that the documents relied on by the appellant were all self-serving documents created as evidence for "commercial production" prior to the cut off date of 31. 12.

1996. 1582-F-GI 4. Upon an overall assessment of the facts on record, the view taken by the Division Bench of the High Court on facts is not so perverse that it requires interference by this Court under Article 136 of the Constitution. 1582-H; 583-A[ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5343 of2002. From the Judgment and Order dated 27. 2. 2002 of the Kerala High Court in W. A. No. 2614 of 2001. R. Venkataramani, Ms. Lansinglo Rongmei, Ashok Panigrahi and Mrs. B. Sunita Rao for the Appellant. T. L. Viswanatha Iyer, M. T. George ang Ramesh Babu M. R. for the Respondents. SOUTHERN ISPAT LTD. v. STATE [SRIKRISHNA. J) 573 The Judgment of the Court was delivered by SRIKRISHNA, J. The judgment of the Division Bench of the Kerala High Court dismissing writ appeal no. 2614/2001 of the appel Iant is challenged before us in this appeal. The writ appeal itself was to impugn the judgment of the single Judge dismissing O. P. No. 9007/1999 by the appellant.

With view to encouraging the industrial process in the State of Kerala, and as measure of incentive, the State Government decided as a matter of policy that new industrial units established in the State would be exempted for a period ,, -. of 5 years from payment ofenhanced power tariff which had come into effect on 1. 1. 1992. This policy was reflected in the G. O. (MS) No. 4/92/ID dated 6. 2. 1992 which indicated that the concession would be available: "i. to the units from the date of commercial production which start such production between 1. 1. 1992 and 31. 12. 1996. ii. To manufacturing units only and not to service and entertainments units; iii. To existing units for substantial expansion/ modernisation. I diversification.

The concession in such cases will be available only for the consumption of the new machinery and equipment which add to the capital asset, by not less than 25 % of the existing fixed capital investment excluding land and building the installation of which is to be certified by the competent authority. iv. For modernisation, to industrial units having a contract demand not exceeding 500 KVA. In such cases, new equipments alone will be eligible for the concession. " The Government order also indicated that the eligibility for the concessions would have to be certified by the Kerala State Industrial Development Corporation (KSIDC)/Kerala Financial Corporation (KFC) in respect of units funded by them, or by the- Director of Industries and Commerce in other cases, and by the concerned General Manager, District Industries Centres in respect of Small Scale Industrial units.

It was also declared in Government order that the industrial units which set up their captive power generating units for their own consumption would be exempted from payment of electricity duty to the extent to which they generate power for their own consumption. The said concession was made available to the units which may have started commei:_cial pro~uction or set up captive power generating units between 23. 9. 1991 and 31. 12. 1991. ) .. 574 SLIJ'l made. We agree with the High Court's view that these were all self-serving· documents created as evidence for commercial production prior to the cut off SOUTHERN ! SPAT LTD. v. STATE [SRIKRISHNA, J. ] 583 date of 31. 12. 1996. A Upon an overall assessment of the facts on record, we are not satisfied that the view taken by the Division Bench of the High Court on facts is so perverse that it requires interference by this Court under Article 136 of the Constitution. B In the result, the appeal is dismissed.

However, there shall be no order as to costs. v. s. s. Appeal dismissed.