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2010 DIGILAW 262 (GUJ)

Arvind Limited v. State of Gujarat

2010-05-13

K.A.PUJ

body2010
JUDGMENT : K.A. Puj, J. Since common issue is involved in both these petitions and since they are heard together the same are being disposed of by this common judgment ad order. 2. The Special Civil Application No.725 is filed by M/s.Arvind Limited under Article-226 of the Constitution of India praying for quashing and setting aside the order dated 3.1.2010 passed by the Dy. Secretary, Industries & Mines Department, Government of Gujarat, Gandhinagar and restraining the respondents from making coercive recovery of any amount pursuant to the said order from the petitioner and further restraining the respondents from disconnecting the electric supply of the petitioner being Service Nos. HT 28, 15 and 29. 3. The Special Civil Application No.726 of 2010 is filed by Arvind Products Limited. Another group company of Arvind Group praying for quashing and setting aside the order dated 3.1.2010 passed by the Dy. Secretary, Industries & Mines Department, Government of Gujarat, Gandhinagar and restraining the respondents from making coercive recovery of any amount pursuant to the said order from the petitioner and further restraining the respondents from disconnecting the electric supply of the petitioner being Service Nos. HT 36 and 37. 4. Since facts of both the petitions are more or less similar, for the sake of convenience, facts are taken from Special Civil Application No.725 of 2010. 5. It is the case of the petitioner that the petitioner faced a number of problems during the period from 1998-99 to 2000 to 2001 which had an adverse impact on its profitability. The petitioner took corrective measures to come out of the financial difficulties faced by the petitioner by way of presenting debt restructuring scheme to its shareholders, bankers and financial institutions which was approved by this Court vide order dated 8.4.2002 in Company Petition No.140 of 2001. The petitioner also approached the State Government for certain benefits/exemptions including the benefit of deferment of payment of electricity duty. By Government Resolution No.TEX-102000-300-Part-1-T dated 23.10.2003, the State Government granted the petitioner and its sister concern M/s.Arvind Products Ltd., the benefit of the deferred payment of electricity duty for a period of five years from 1.2.2003 for a maximum limit of Rs. 33.35 crores for the petitioner and Rs. 21.25 crores for M/s. Arvind Products Ltd. The petitioner's limit of Rs. 33.35 crores got over in July, 2007. 33.35 crores for the petitioner and Rs. 21.25 crores for M/s. Arvind Products Ltd. The petitioner's limit of Rs. 33.35 crores got over in July, 2007. The petitioner vide its letter dated 21.7.2007 informed the Collector of Electricity Duty that its maximum financial limit pursuant to the GR was exhausted in July, 2007. Therefore, according to the said GR the first installment of payment would become due on or before 30.6.2008. The respondent No.3. i.e. Torrent Power Ltd., wrote a letter dated 14.5.2008 to the petitioner informing that the petitioner was required to make payment of the electricity duty as mentioned in the said letter and that the installment mentioned in the said letter would be reflected in the month of May which would be payable during June of respective subsequent year. The petitioner wrote a letter giving the schedule of repayment calculating the amount as per the conditions of the said GR and forwarding therewith three cheques dated 30.5.2008 for an amount of Rs. 68,96,063/-, Rs. 1,13,47,024/- and Rs. 1,63,99,073/-. The respondent No.3 vide its letter dated 30.5.2008 informed the petitioner that the amount as per petitioner's letter dated 30.5.2008 did not appear to be in line with the said GR and that the petitioner should send the cheques as per the schedule mentioned in the said letter dated 30.5.2008. The Collector of Electricity Duty wrote a letter dated 2.6.2008 to the respondent No.3 pointing out that the amount of electricity duty should be recovered as per terms of GR. The petitioner, therefore, made a detailed representation on 9.6.2008 to the Collector of Electricity Duty pointing out that the respondent No.3 had wrongly calculated the amount of first installment, that the said GR was not properly interpreted and that the respondent No.2 should permit the petitioner to make the payment of first installment of electricity duty directly in the Government Treasury which will be more beneficial to the respondent No.1. The respondent No.2 gave its reply to the petitioner informing that the installment amount and the interest calculated by the respondent No.3 vide its letter dated 14.5.2008 is in order and that the petitioner should make payment of deferred electricity duty and interest thereon immediately. 6. The respondent No.2 gave its reply to the petitioner informing that the installment amount and the interest calculated by the respondent No.3 vide its letter dated 14.5.2008 is in order and that the petitioner should make payment of deferred electricity duty and interest thereon immediately. 6. Despite this communication, the petitioner did not make the payment ad hence the respondent No.3 issued notice dated 12.6.2008 purported to be under Section-56 of the Electricity Act, 2003 threatening disconnection unless the payment as demanded in the said notice was made. The petitioner, therefore, sent a detailed representation to the respondent No.1 on 18.6.2008 pointing out therein that the interpretation of the said GR made by the respondents was not correct for the reasons stated in the said representation. The petitioner, thereafter filed Special Civil Application No.8662 of 2008 before this Court in connection with Electricity Services No.HT-28 and HT-15. Initially ad-interim relief was granted, inter alia, directing the respondent No.3 not to disconnect the electric supply. Thereafter, another notice was issued in respect of Electricity Service No.HT-29 threatening to disconnect the electric supply. The said notice was also challenged before this Court in Special Civil Application No.9057 of 2008. and ad-interim relief was granted against disconnection on condition that the petitioner should make the payment as stated in the said order without prejudice to its rights and contentions. This Court disposed of both the petitions on 23.1.2009 with a direction to the respondent No.2 to decide the representation of the petitioner with regard to calculation of the amount that may be submitted by the petitioner regarding the GR dated 23.10.2003 after affording an opportunity of hearing to the petitioner. The Misc. Civil Applications were filed by the petitioner which were also disposed on 13.2.2009 giving direction to the respondent to decide the issue within three months from the date of the said order. 7. The petitioner made a written representations to the State Government on 20.3.2009 and 2.4.2009. After hearing the petitioner, the decision was take on 3.1.2010 which was forwarded on 16.1.2010 and received by the petitioner on 18.1.2010. 8. It is this letter/communication dated 3.1.2010 which is under challenge in the present petition. 9. Mr. 7. The petitioner made a written representations to the State Government on 20.3.2009 and 2.4.2009. After hearing the petitioner, the decision was take on 3.1.2010 which was forwarded on 16.1.2010 and received by the petitioner on 18.1.2010. 8. It is this letter/communication dated 3.1.2010 which is under challenge in the present petition. 9. Mr. S.N. Soparkar, learned Senior Counsel appearing for the petitioner has submitted that the order passed by the respondent No.4 is violative of the principle of natural justice inasmuch as in passing the said order the respondent No.4 has relied upon the letter of the respondent No.2 dated 24.6.2009 which is a letter issued after the hearing held on 23.6.2009. Without even serving a copy to the petitioner thereof and without even affording a opportunity to the petitioner to offer its comments thereon, the impugned order is passed and, therefore, the same is violative of principle of natural justice. He has further submitted that the real purpose of the said GR was to offer relief/concession to the ailing industries like the petitioner. The interpretation made by the respondent of the said GR is not correct. The amount of electricity duty becomes payable every month. However, as per the said GR, with effect from 1.2.2003 onwards, the payment of electricity duty would be deferred for a duration of five years, meaning thereby that under the said GR, the electricity duty would be repayable after five years from the respective due dates and that too, in the five equal yearly installments. The Condition no.1 of the said GR clearly provides that the benefit of deferment would be interest free during the period of deferment i.e. for five years. Therefore, it is obvious that this interest free period of five years has to be calculated separately for each month. If this is not so, then the dues accruing on the last month of the benefit amount will not get any benefit of deferment which would be as per the latter and spirit of the GR. As per the calculation made by the respondent No.3 and wrongly approved by the respondent No.2 every preceding month will get lesser period of interest free deferment instead of actual five years of interest free eligible period as provided in the said GR which is not correct. As per the calculation made by the respondent No.3 and wrongly approved by the respondent No.2 every preceding month will get lesser period of interest free deferment instead of actual five years of interest free eligible period as provided in the said GR which is not correct. It is thus, very clear that the total principal amount from 1.2.2003 to 30.6.2007 in case of the petitioner has to be equally divided in five equal yearly installments, the first of which would become due for payment on 30.6.2008. Since the interest free period of availing deferent for five years is allowed by the said GR, 12% interest has to be calculated after five years of a particular month for which the amount has become due. The repayment schedule of the principal amount alongwith interest has been accordingly prepared by the petitioner in the graphic form and submitted alongwith the petitioner's letter dated 9.6.2008. The repayment calculated by the petitioner in five equal installments would thus take care of five years of interest free deferment period for every individual month. If what is calculated by the respondent No.3 and wrongly approved by the respondent No.2 reflected the real intention of the said GR, then, it would have provided that the benefit of deferment would be available for electricity duty dues arising during the five years from 1.2.2003. This is not the intention of the respondent No.1 as the GR was issued with a clear view to offer relief/concessions to the ailing industries like the petitioner. According to the calculations made by the respondent No.3 and wrongly approved by the respondent No.2, the purpose of grating relief/concessions to the petitioner under the said GR would get frustrated/defeated. Thus, the interpretation as made by the respondents of the said GR is against the latter and spirit of the said GR. 10. Mr. Soparkar has further submitted that the respondent No.4 has failed to appreciate the representations of the petitioner in their proper perspective and has passed the impugned order without application of mind and has erred in relying on the calculation made by the respondent Nos.2 and 3. The true interpretation of the GR would be to grant deferment payment from the date of accrual of the amount of electricity duty. The true interpretation of the GR would be to grant deferment payment from the date of accrual of the amount of electricity duty. He has further submitted that Clause-2 of the GR does not indicate that the petitioner was required to make payment of entire principal amount immediately after the expiry of the period of deferred payment. The order passed by the respondent No.3 is cryptic order without any reasons and, therefore, also the same is liable to be quashed and set aside. He has, therefore, submitted that the impugned order deserves to be quashed and set aside. 11. An affidavit-in-reply is filed on behalf of the respondent No.1. Mr. Kamal Trivedi, learned Advocate General appearing with Ms. Sangita Vishan, learned Assistant Government Pleader, submitted that the State Government in its Industries & Mines Department, vide Resolution dated 23.10.2003 extended the benefit in favour of the petitioner Company deferring the payment of electricity duty on certain terms and conditions as indicated therein. The petitioner was given the benefit of deferment to the tune of Rs. 33.35 crores from the payment of electricity duty with effect from 1.2.2003. Similarly, M/s.Arvind Products Ltd., a sister concern of the petitioner Company was also extended the said benefit of deferment to the tune of Rs. 21.25 crores. The Condition No.1 of the said Government Resolution specifically provides that the said benefit will be interest free during the period of deferment and, thereafter, the repayment will bear simple interest at the rate of 12% per annum. The Condition No.2 envisages the period of deferment to the effect that repayment of the electricity duty is to be made till the ceiling limit of Rs. 33.35 crores is exhausted or five years, whichever is earlier. It further provides that thereafter the repayment is to be made in five equal annual instalment in five years with simple interest at 12% p.a. He has further submitted that the aforesaid limit of deferment of electricity duty came to be exhausted by the petitioner Company in the month of June, 2007 and thus, admittedly the petitioner company was obliged to start making the payment from the month of July, 2007. As per Condition No.2, the petitioner Company was to make the payment in five years in five equal annual installments and the breakup of the said consolidated payment was set out in the tabular form which is as under:- Sr. As per Condition No.2, the petitioner Company was to make the payment in five years in five equal annual installments and the breakup of the said consolidated payment was set out in the tabular form which is as under:- Sr. No. Year Principal amount (i.e. 5 equal installments of Rs. 33.35 crores) Simple interest (@ 12% per annum) Total 1 June, 2008 6,67,00,000 4,35,31,031 11,02,31,031 2 June, 2009 6,67,00,000 3,20,16,001 9,87,16,001 3 June, 2010 6,67,00,000 2,40,12,001 9,07,12,001 4 June, 2011 6,66,99,999 1,60,08,001 8,27,08,000 5 June, 2012 6,66,99,999 80,04,000 7,47,03,999 Total 33,34,99,998 12,35,71,034 45,70,71,032 From the above table it is clear that as per Condition No.2 the petitioner company was to first obliged to divide the deferment amount of 33.35 crores in five equal installments and to pay simple interest at the rate of 12% on the outstanding deferred amount of electricity duty. If the petitioner company had deposited the amount of deferment at one go in July, 2007, then in that case, the petitioner would not have been liable to pay any interest on the said amount. In the present case, however, since the petitioner company chose to make the payment of first installment in June, 2008, it is obvious that the said amount will carry interest, as agreed between the parties, as per Condition No.2 from July, 2007 till the final payment of the installments is made. 12. Mr. Trivedi further submitted that the petitioner Company has worked out the payment schedule, interpreting the Condition No.2 in such a fashion that the benefit of deferment, so far as the principal amount is concerned, will be repayable after a period of five years. While illustrating this submission Mr.Trivedi pointed out that the principal amount towards electricity duty of the year 2003 will be payable in the year 2008 and the principal amount for the year 2004 will be payable in the year 2009 and so on, till the year 2007 and principal amount of which will be due and payable in the year 2012. In other words, the payment of deferred amount towards principal amount is to be made after a block of five years for each particular year viz. 2003, 2004, 2005, 2006 and 2007. The petitioner Company exhausted the ceiling limit on 30.6.2007 and thus, the petitioner Company taking the total months from February, 2003 to June, 2007 i.e. 53 months deducted from 65 months. 2003, 2004, 2005, 2006 and 2007. The petitioner Company exhausted the ceiling limit on 30.6.2007 and thus, the petitioner Company taking the total months from February, 2003 to June, 2007 i.e. 53 months deducted from 65 months. The petitioner paid interest on 12 months i.e. 65-53=12 at the rate of 12%. The petitioner Company wants to make the following payment, interpreting Condition No.2 as per its convenience. Sr. No. Year Principal amount (i.e. 5 equal installments of Rs. 33.35 crores) Simple interest (@ 12% per annum) Total 1 June, 2008 6,89,45,042 43,07,329 7,32,52,371 2 June, 2009 7,00,02,779 32,15,666 7,32,18,445 3 June, 2010 6,68,48,763 40,68,593 7,09,17,356 4 June, 2011 6,46,97,030 51,67,374 6,98,64,404 5 June, 2012 6,39,93,167 73,35,058 7,13,28,225 Total 33,44,86,781 2,40,94,020 35,85,80,801 He has submitted that as per the Government Resolution dated 23.10.2003, the petitioner Company was extended the benefit of deferment for a period of five years or till the ceiling limit gets exhausted, whichever is earlier. The petitioner appears to have interpreted the provision in such a manner so as to extend the deferment not only for five years or till the ceiling limit exhausted, whichever is earlier, but stretched it for a period of 10 years i.e. upto 2012. In other words, the benefit starting from February 2003 to June, 2012. Accordingly, as demonstrated in the aforesaid two tabular forms, difference in the calculation of interest comes to a whopping sum of Rs. 9,94,77,014/-. The petitioner was to effect the division of the principal amount in five equal installments and calculated the interest at its own whims, without any valid basis whatsoever and in total contradiction of the conditions Nos.1 ad 2 of the Government Resolution dated 23.10.2003. He has, therefore, submitted that the petitioner having once availed of the deferment benefit for five years, it is expected of the petitioner Company to act reasonably by not interpreting the conditions of the Government Resolution in a distorted fashion so as to avoid payment of interest on the delayed payment of the principal amount. He has, therefore, submitted that the petitioner having once availed of the deferment benefit for five years, it is expected of the petitioner Company to act reasonably by not interpreting the conditions of the Government Resolution in a distorted fashion so as to avoid payment of interest on the delayed payment of the principal amount. The petitioner was accorded the benefit of deferment of payment of electricity duty as a special case and the petitioner availed of the said benefit at the cost of public exchequer which this Court should not like to countenance and the present petition deserves to be dismissed with a direction to the petitioner to make the payment of outstanding amount with applicable interest as per the Government Resolution and for default made the petitioner to make the payment with interest applicable as per provisions of the Bombay Electricity Duty Act, 1958. He has, therefore, submitted that both the petitions are lacking in merits or substance and, therefore, deserve to be dismissed with costs. 13. Having heard the learned Senior Counsel Mr.Soparkar for the petitioners and the learned Advocate General Mr. Trivedi for the respondents and having considered their rival submissions in light of the Government Resolution dated 23.10.2003 and having minutely gone through the impugned order dated 3.1.2010, the Court is of the view that the interpretation put forward by the petitioners of Clause 1 and 2 of the said Resolution is not tenable either in law or on facts and that there is no infirmity or illegality in the impugned order passed by the respondent No.1. Under the scheme, the petitioners were entitled to the benefit of deferment payment for a period of five years or the exhaustion of financial limit, whichever accrued earlier. Admittedly, the petitioner's limit got exhausted in July, 2007. As per Clause-1 of the Resolution, the interest benefit for the deferred payment would be available to the petitioner only during the period of five years or till the financial limit got exhausted, whichever is earlier. Admittedly, the petitioner's limit got exhausted in July, 2007. As per Clause-1 of the Resolution, the interest benefit for the deferred payment would be available to the petitioner only during the period of five years or till the financial limit got exhausted, whichever is earlier. Once the repayment of electricity duty is started after this period, the petitioner is bound to pay simple interest @ 12% p.a. Clause-2 grants installments for repayment of the amount of electricity duty in five equal yearly installments with 12% simple interest p.a. If the petitioner had made the payment of deferred amount at a time immediately after the period is over, there was no question of payment of any interest on such deferred amount. Thus, the interest calculation made by the respondents is in consonance with the true intent and purport of the Resolution and there is no scope for any other interpretation, much less the interpretation canvassed by the petitioners. By twisting and/or stretching the language of the Resolution, the petitioners wanted to derive an undue advantage of a very large sum to the tune of Rs. 9,94,77,014/-, which would be a direct loss to the public exchequer, if the petitioners' interpretation were accepted. The Court while exercising its equitable writ jurisdiction under Articles 226 and 227 of the Constitution of India would never approve such a stand which not only defeats the real purpose or object of the beneficial scheme or legislation, but it encourages dishonesty and breach of commitment or obligation. The Court, therefore, does not find any substance or merit in any of these two petitions and the same are dismissed accordingly, subject to the following directions and observations; (i) The third installment is now due in June, 2010. The petitioners shall make the payment of third installment of deferred amount of electricity duty alongwith interest as per their calculation on or before 10.6.2010. (ii) The difference in calculation of interest made by the petitioners as well as by the respondents in respect of the first three installments shall be paid by the petitioners on or before 30.6.2010. (iii) The remaining two installments shall be paid by the petitioners alongwith interest as per the respondent's calculation on their respective due date. (iv) If the above repayment schedule is adhered to and no default is committed by the petitioners, there shall not be any disconnection of electricity supply. (iii) The remaining two installments shall be paid by the petitioners alongwith interest as per the respondent's calculation on their respective due date. (iv) If the above repayment schedule is adhered to and no default is committed by the petitioners, there shall not be any disconnection of electricity supply. (v) Looking to the facts and circumstances of the case, the direction to pay 12% interest on the differential amount of installment within 7 days from the date of receipt of the impugned order is hereby set aside. 14. Subject to the above, both these petitions are disposed off. Notice is discharged without any order as to costs. Petitions dismissed.