Date:02/01/2008 URL: http://www.thehindu.com/2008/01/02/stories/2008010255371400.htm

National

Benefits cannot be revoked, rules court

Legal Correspondent

Instant case relates to hill development rebate given by the U.P. Power Corporation
When there is global economy, the question of faith is very important, says court

NEW DELHI: The Supreme Court has held that the State or its instrumentality must abide by its commitments and cannot revoke the concessions or benefits granted to entrepreneurs.

“In this 21st century, when there is global economy, the question of faith is very important. Government offers certain benefits to attract the entrepreneurs and the entrepreneurs act on those beneficial offers. Thereafter, the government withdraws those benefits. This will seriously affect the credibility of the government and would show the short-sightedness of the governance”, said a Bench of Justice A.K. Mathur and Justice Markandey Katju in a recent judgment.

The Bench said, “In order to keep the faith of the people, the government or its instrumentality should abide by their commitments. In order to keep the faith and maintain good governance, it is necessary that whatever representation is made by the government or its instrumentality which induces the other party to act, the government should not be permitted to withdraw from that. This is a matter of faith.”

Public interest paramount

Writing the judgment, Justice Mathur said “there is no gainsaying that the public interest is paramount and the private interest has to be sacrificed for the larger interest. But the judicial consensus that emerges is that whenever the State has made a representation to the public and the public has acted on that representation and suffered economically or otherwise, then in that case the State should be stopped from withdrawing such benefit to the detriment of such people.”

In the instant case, a steel and alloys company and certain other units availed themselves of the 33.3 per cent hill development rebate granted by the U.P. Power Corporation in the electricity bill.

This concession was withdrawn by a notification, which, on writ petitions, was struck down by the Allahabad High Court. The Corporation appealed against this judgment.

Disposing of the appeals, the Bench said, “The action taken by [the] Corporation in revoking the benefits given to the entrepreneurs in the hill areas will sadly reflect their credibility and people will not take the word of the government. That will shake the faith of the people in the governance.”