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Judgment
Honorable Chief Justice M.Y. Eqbal and T.S. Sivagnanam, J.—Heard the learned counsel for the parties. The writ appeal is directed
against the order dated 21.8.2009 passed by a learned single Judge of this Court in Writ Petition No. 1496 of 2009, whereby the learned single
Judge dismissed the writ petition filed by the appellant herein.
The appellant is an industry involved in the manufacturing of ceramic tiles for use in domestic, commercial and industrial purposes. The
Government of Pondicherry offers energy tariff subsidy for electricity consumption charges in the Union Territory of Pondicherry, in order to
promote industrial development in the Union Territory. Under the Memorandum dated 11.2.1991, the Government of Pondicherry (Development
Department (Industry)), for Karaikal Mahe Regions, all the new low tension and high tension industries which are energized on or after 1.3.1991,
are eligible for power subsidy. In view of the said concession, the appellant decided to set up an industry for manufacture of ceramic tiles in the
backward area of Thennangudi, Sellur Post, Karaikal Taluk and started production on 2.3.1996. The appellant made an application for the
concession pursuant to the said notification and a sum of Rs. 12,00,000/- was given by the second respondent towards subsidy on 31.3.1998 for
the period from 1.4.1996 to 31.3.1997. Since the appellant was eligible for tariff concession for the remaining period of four years, thus being
entitled for tariff concession to a tune of Rs. 48,00,000/-. While so, the second respondent, by proceedings dated 28.5.1997, all of a sudden
withdrew the power supply to the appellant''s industry with effect from 1.4.1997. The appellant''s claim for the concession was rejected. Similarly,
the claim of five other industries was also rejected by the respondents. Hence, the aggrieved industries filed W.P. No. 14722 of 2001 etc. for a
declaration to grant subsidy for the remaining period. The Full Bench of this Court, by judgment dated 19.6.2006, allowed all those writ petitions.
The respondents filed a SLP before the Supreme Court in SLP No. 17438 of 2006 and the same was dismissed by the Supreme Court by an
order dated 6.11.2006. On 07.02.2008, the subsidy amount was sanctioned by the second respondent and a cheque was issued towards the
subsidy. However, the claim of interest made by the appellant was not considered by the respondents. Claiming that the respondents are bound to
pay the interest for the belated payment, the appellant approached this Court by filing W.P. No. 1496 of 2009 for a direction to the second
respondent to pay interest on the tariff subsidy amount paid to it from the year 1998 till the date of actual disbursement of the principal amount i.e.,
on 4.3.2008.
The respondents opposed the prayer made in the writ petition by filing their counter affidavit. According to them, in view of G.O. Ms. No.
1680/72 # IND dated 16.10.1975 issued by the Development Department, Government of Pondicherry, the consumers have to pay full charges
to the Electricity Department and submit an application in the prescribed form once in six months for grant of subsidy. Based upon the availability
of funds in the Budget allocation of the Industries Department, the Department of Industry disburses eligible subsidy and there is no time limit
prescribed in any of the Government Orders issued by the Industries Department for payment of the subsidy. According to the respondents, the
question of settlement of the claim for subsidy itself arose only consequent to the judgment of the Full Bench of this Court, followed by the orders
made in the said SLP Therefore, the claim of interest in respect of the earlier period is absolutely baseless, incorrect and false. The claim of the
appellant that it is entitled to interest on subsidy cannot be sustained for the reason that the subsidy will be calculated as per the Government Order
from the date of payment made by the industry to the Electricity Department and such payment will be made upon the completion of the
consumption of the industries. The Government Order does not contemplate payment of interest on the subsidy. According to the respondents, the
appellant and the other companies which have approached the High Court as well as the Hon''ble Apex Court were paid subsidy following the
order of the Lieutenant Governor dated 7.02.2008 sanctioning a sum of Rs. 1,73,79,446/- to the six industries covered by the orders referred to
above. Accordingly, payments were also made in March, 2008. All the other units except the appellant accepted the payment and have not raised
any claim for interest. The appellant industry alone has raised its demand of interest after nine months.
The learned single Judge, after hearing the counsel for both sides, held that G.O.Rt. No. 9/91 IND dated 11.02.1991 issued by the Government
of Pondicherry contemplates issuance of subsidy for all new low tension and high tension industries, which is only a concession shown to the
industries. Tracing the dictionary meaning of the term ''subsidy'', which is defined as ""a sum of money granted from public funds to help an industry
or business keeping the price of data or service low # a sum of money granted to support an undertaking held to be in the public interest # a sum
of contribution of money"", the learned Judge held that when such a concession has been shown by way of payment of subsidy, the appellant cannot
expect or claim interest over the subsidy and it will be too much for the appellant to claim interest on a concession shown to it. Even when the
appellant filed the writ petitions challenging the withdrawal of the subsidy and for a direction to the respondents to extend the benefit of subsidy to
it, no claim was made for payment of interest at that point of time. The Full Bench, while disposing of those writ petitions, held that in the absence
of any materials relating to the supervening equity or public interest and in the absence of giving reasonable notice, giving the promise a reasonable
opportunity of resuming his position to restore status quo ante and also in the light of the fact that the promisees in these cases admittedly invested
substantial amounts in setting up their units, acting on the assurance, both express and implied, by the Government and altered their positions by
commencing the production, by which status quo ante cannot be restored, there is no difficulty in holding that Pawan Alloy''s case would squarely
apply to the facts of the present case and consequently, the appellant was entitled to the benefits of the earlier G.O. based on the principle of
promissory estoppel, which is not affected by the so called public interest, which has not been established by the Government. However, the Full
Bench nowhere directed payment of interest. Even the Hon''ble Apex Court while dismissing the SLP filed by the respondents had not stated
anything about the payment of interest to the petitioner and other industries. Subsequent to the orders of the Hon''ble Apex Court dismissing the
SLP filed by the respondents, the Lieutenant Governor of Pondicherry, by an order dated 07.02.2008 sanctioned for payment of the subsidy
amount, not only to the appellant-industry, but also to other industries. The said order speaks about only payment of subsidy to the appellant and
other industries and it does not speak about the payment of interest and the appellant had not challenged the said order. Pointing out that the
appellant received the payment in March, 2008, filed the writ petition claiming interest only on 23.01.2009. Therefore, the learned single Judge
dismissed the writ petition holding that the appellant-industry is not entitled for interest on the subsidy payable by the respondent, which in fact has
been already paid on 4.3.2008.
Mr. C. Selvaraju, learned counsel for the appellant mainly contended that in terms of the provisions contained in the Interest Act, 1978 (Act 14
of 1978), the appellant is entitled to interest payable on the subsidy amount inasmuch as the non-payment of subsidy amount after it was
sanctioned will amount to retaining the money which was payable to the appellant. Learned counsel submitted that the learned single Judge has not
considered the decision of the Supreme Court in Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, and failed to
appreciate the correct legal position as laid down by the Supreme Court in Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State
Electricity Board and Others, .
Section 3 of the Interest Act, 1978 empowers the court to allow the interest in any proceeding for the recovery of any debt or damages. The
proviso to Section 3 clarifies it that where the amount of debt or damages has been repaid before the institution of the proceeding, then interest
shall not be allowed under this Section for the period after such repayment. The term ""debt"" as defined in Section 2(c) of the Act means any
liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment debt.
In the instant case, in terms of the policy decision taken by the Government of Pondicherry, it was decided to pay subsidy to new industries
established to encourage growth of industries in the Union Territory of Pondicherry. The said subsidy is paid from out of the Government funds in
order to help an industry for business or other undertaking to grow and develop. For some reason or the other, if the decision to grant subsidy is
withdrawn or the subsidy is not paid in time, then such industry or undertaking cannot claim interest for non-payment of subsidy. Be that as it may,
in the earlier batch of writ petitions, which was decided by the Full Bench, the petitioners neither claimed any interest on the subsidy amount nor
any interest was awarded by the Court. It was only after the appellant received the subsidy amount from the respondents, a fresh claim for
payment of interest was raised.
In Secretary, Irrigation Department, Government of Orissa and others Vs. G.C. Roy, the question that fell for consideration before the Supreme
Court was as to whether in a case where the agreement between the parties does not prohibit grant of interest, and the dispute is referred to the
arbitrator, and in such case, the arbitrator shall have the power to award interest pendent lite. In our view, this decision is not at all applicable to
the facts of the present case.
In Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State Electricity Board and Others, , the facts were that the Electricity Board
issued notification under-levying late payment surcharge, compelling the consumers to pay additional charge. The consumers withheld payment of
surcharge on bona fide reasons. Their lordships in such a case held that the charge of interest at the rate of 18% is to be reduced. In our view, this
decision is also not at all applicable to the facts of the present case.
After giving our anxious consideration to the matter, we are of the view that the learned single Judge rightly dismissed the writ petition holding
that the appellant is not entitled to interest for late payment of the subsidy amount. The writ appeal is, therefore, liable to be dismissed.
As far as the writ petition, i.e. W.P. No. 5165 of 2010 is concerned, it is also stands on a similar footing as the appellant/writ petitioner in
W.A. No. 1833 of 2009. The petitioner, in order to avail of the benefit of subsidy concession granted by the Government of Pondicherry for the
industries established in the Union Territory, set up its own industry for the manufacture of Potassium Chlorate in the backward area of
Melakasakudy Village of Karaikal District at a total cost of Rs. 1.07 Crores by obtaining term loans from nationalized banks. The petitioner had
paid Rs. 11.52 lakhs by way of security deposit to the third respondent, thus spending about 70% of the total project cost before getting the
benefit of the power subsidy. However, in view of G.O. Ms. No. 1680/72-IND dated 16.10.1975, as was the case with the appellant/writ
petitioner hereinabove, the petitioner was saddled with the task of paying full consumption charges and thereafter apply for subsidy once in six
months, which would be paid out of the available Budget allocation of the Industries Department. The petitioner was informed that they will be paid
tariff subsidy from September, 1996 to March, 1997. However, the petitioner claimed subsidy for the subsequent period too, viz. April, 1997 to
March, 2001, which worked to Rs. 54,00,000/-. The petitioner filed W.P. No. 11569 of 2000, which was disposed of by this Court directing the
petitioner to give a fresh representation to the second respondent, who was in turn directed to pass orders within a stipulated time. Upon rejection
of the petitioner''s request, as was the fate met by other similarly placed industries, the batch of writ petitions were filed, which were decided by the
Full Bench as stated hereinbefore. The petitioner claimed interest on the delayed payment from the year 1997 till the date of payment along with
the principal amount and made several representations. On 7.2.2008, the second respondent sanctioned the subsidy amount to the tune of Rs.
48,00,000/- and another payment of Rs. 6,00,000/- was made on 1.3.2008, after the lapse of eleven years. However, the claim of the petitioner
for interest was not considered by the respondents. According to the petitioner, as per Section 47(4) of the Electricity Act, 2003, payment of
interest by the distribution licensee equivalent to bank rates or more is contemplated. It is settled law that any unlawful retention of money will entail
payment of interest on the sum so retained and in view of the immense hardship suffered by the petitioner on account of the withholding of the
subsidy amount, the petitioner is entitled to interest on the sum withheld by the respondents. The petitioner has placed reliance on the decision of
the Supreme Court in Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State Electricity Board and Others, where the Supreme Court
has directed the consumer to pay interest at the rate of 18% to the Electricity Board, and the petitioner contends that the Board is also conversely
liable to pay interest on the sum withheld, from the date on which the principal amount falls due.
As pointed out in the writ appeal, the petitioner in the writ petition stands on a similar footing. The Government of Pondicherry decided to grant
power subsidy to new industries established in the Union Territory in order to encourage growth of industries and this subsidy is paid from out of
the Government funds. As observed by the learned single Judge, the subsidy is only a concession shown by the Government towards industries
setting up their units in the Union Territory. If at any point of time the Government decides to withdraw such concession or if on any occasion such
concession is not granted in time, then the industry claiming such concession cannot claim interest over non-payment of subsidy or delayed
payment thereof and it will be too much on their part to seek such a relief. Moreover, neither in the writ petition filed by the petitioner nor before
the Full Bench, the petitioner herein claimed any interest on the subsidy amount paid to it and only after the petitioner received the subsidy from the
respondents, a fresh claim for payment of interest was raised. Therefore, the petitioner industry is also not entitled to claim interest on the tariff
subsidy amount paid to it and the writ petition is also liable to be dismissed.
In result, the writ appeal as well as the writ petition stand dismissed. There shall be no order as to costs. The connected miscellaneous petitions
in the respective cases are closed.