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Our Legal Correspondent

`No right to withdraw scheme mid-way'

Chennai , June 20

A Full Bench of the Madras High Court has held that the Union Territory of Pondicherry was bound to extend to promoters of industries the subsidised electricity tariff announced by it for the entire period of five years and it had no right to withdraw the scheme mid-way.

By its order dated May 28, 1997, the Pondicherry Government, Industries Department, withdrew its earlier order dated February 11, 1991 granting a scheme of subsidised electricity tariff to all industries which were energised on or after March 1, 1991 in Karaikal and Mahe regions.

The petitioner, Vairavikulam Lime Products P Ltd, Chennai, challenged the order of withdrawal of the scheme of incentive contending that having invested huge amounts in setting up new industries on the assumption that they would be eligible for the benefit of the scheme for the full five years, by the Government's order of withdrawal of the concessional power tariff they had been put to severe financial problems.

Prior to the present writ petition, another unit in the union territory had moved the High Court praying for setting aside the order of withdrawal by the Government, and the First Bench by its order dated January 14, 2000 dismissed the petition holding that the Government of the Union Territory had the right to withdraw the concessional power tariff scheme.

The present writ petitioner submitted that the Pondicherry Government was bound by the principle of promissory estoppel to extend the benefits for the new industries for the entire duration of the scheme. Hence, the order of the Government withdrawing the scheme would amount to a breach of promise.

On behalf of the respondent, the Pondicherry Government, it was submitted that its action in withdrawing the subsidised power tariff scheme was legal.

A Full Bench, comprising Mr Justice M. Karpagavinayam, Mr Justice AR. Ramalingam and Mr Justice V. Dhanapalan, while allowing the writ petition said the observation made by the First Bench relating to the withdrawal of the scheme was not ratio dicendendi, and it was only an observation. The Government should extend the scheme for the entire five-year period.

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