A) ABSTRACT / HEADNOTE

This analysis examines Puja Ferro Alloys P. Ltd. v. State of Goa & Ors., [2025] 3 S.C.R. 138 : 2025 INSC 217, a consolidation of civil appeals challenging recovery notices issued under the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 for 25% electricity tariff rebates originally provided by State notifications. The central question was whether the appellants industrial consumers who applied for supply while the 30.09.1991 notification was on the statute-book were entitled to the rebate when actual power connections were effected after 31.03.1995, the date on which the 1991 notification was rescinded.

The Court canvassed the history of notifications and amendments (including 15.05.1996 and 01.08.1996), earlier writ litigation culminating in GR Ispat Ltd. and Manohar Parrikar, the legislative recovery mechanism in the 2002 Act, and doctrines of promissory estoppel, public interest, and res judicata. It held that the 1991 notification stood rescinded w.e.f. 01.04.1995, that subsequent amending notifications were declared non-est/void ab initio in earlier proceedings, that the appellants (except one) received supply after rescission and therefore could not claim the 1991 rebate, and that the recovery notices under the 2002 Act were valid.

The Court also applied res judicata in light of the prior GR Ispat proceedings and emphasised that promissory estoppel yields to overriding public interest where the State demonstrates unviability of the incentive.

Keywords: Rebate on electricity tariff; Rescission of notification; Promissory estoppel vs public interest; Res judicata in writ jurisdiction; Goa (Recovery of Rebate) Act, 2002.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute turns on a sequence of State notifications granting a 25% rebate to new industrial consumers for five years from the date of electricity supply, beginning with the 30.09.1991 notification issued under ss. 23 and 51-A of the Indian Electricity Act, 1910. The State issued a rescinding notification dated 31.03.1995 (effective 01.04.1995), but later purportedly amended the 1991 notification by notifications dated 15.05.1996 and 01.08.1996 to extend or enlarge the rebate category.

The State then issued a circular of suspension (31.03.1998) and rescinded the amending notification (24.07.1998). A cluster of writ petitions followed; the Bombay High Court in GR Ispat Ltd. interpreted the rescission as restricting benefit to units entitled before 01.04.1995 and held certain petitioners entitled to rebate up to suspension. Later, Manohar Parrikar struck down the 1996 notifications for procedural non-compliance, and Parliament enacted the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002, providing for recovery of amounts disbursed under the now-invalid notifications.

The present appeals arise out of demand notices served under s.3 of the 2002 Act on industrial units (the appellants) that had applied for power while the 1991 notification was in place but obtained supply after 31.03.1995. The High Court dismissed the appellants’ writs; they now appealed. The matter required analysis of whether entitlement crystallised on application, whether rescission could be retrospective, and the interplay of promissory estoppel with overriding public interest.

D) FACTS OF THE CASE

The State’s tariff notification series began with 27.06.1988; subsequently 30.09.1991 afforded eligible industrial units a 25% rebate for five years from the date supply was made available. Several appellant-companies applied for supply during the life of the 1991 notification and executed supply agreements; most obtained physical connections only after 01.04.1995 (dates: 16.05.1995, 17.11.1993 for Karthik Alloys an outlier, 28.07.1995, 29.04.1995, 10.02.1995, etc.).

The State rescinded the 1991 notification effective 01.04.1995 by 31.03.1995. Notwithstanding rescission, amendments in 1996 attempted to extend benefits; these amendments and later acts (suspension by circular 31.03.1998 and rescission 24.07.1998) generated litigation. The Bombay High Court in GR Ispat Ltd. held that rescission affected only new applicants after 01.04.1995 and that those already entitled retained rights until suspension; the Supreme Court refused interference with that balanced view. Manohar Parrikar later declared the 1996 notifications void for breach of rules of business.

The Goa Legislature enacted the 2002 Act to recover benefits extended under the void notifications. Demand notices under s.3 of the 2002 Act sought recovery from the appellants; writs were dismissed by the High Court and review applications were refused. Appellants claimed investments made in reliance on the State’s promise and argued crystallisation of rights on application; State maintained rescission terminated entitlement and recovery under the 2002 Act was valid.

E) LEGAL ISSUES RAISED

i. Whether industrial applicants who applied while the 30.09.1991 notification was in force but who received supply after 01.04.1995 are entitled to the 25% rebate under that notification?
ii. Whether a State rescission (notification 31.03.1995) can be given retrospective effect to deny rebate to consumers who obtained supply after rescission?
iii. Whether promissory estoppel prevents the State from withdrawing rebate promised by notification when the State pleads overriding public interest and financial unviability?
iv. Whether recovery notices issued under s.3 of the Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 are valid against those who availed benefits under the void 1996 notifications?
v. Whether the proceedings were barred by res judicata in view of earlier GR Ispat decisions?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The counsels for Petitioner / Appellant submitted that the appellants are covered by the 30.09.1991 notification as they applied for power while it remained in force, thereby crystallising a right to rebate irrespective of the date of physical connection.
ii. The counsels for Petitioner / Appellant submitted reliance was placed on Pawan Alloys & Casting (P) Ltd. v. UP SEB to argue that a promise by the State inducing investments gives rise to equitable protection under promissory estoppel.
iii. The counsels for Petitioner / Appellant submitted that a rescission cannot operate retrospectively to defeat vested expectations and that the 2002 Act cannot be used to recover amounts legitimately due under the 1991 scheme.
iv. The counsels for Petitioner / Appellant submitted that newly discovered departmental correspondence (letter dated 06.04.1999) warranted review of the High Court order as material to the entitlement of the appellants.

G) RESPONDENT’S ARGUMENTS

i. The counsels for Respondent submitted that the 30.09.1991 notification was rescinded w.e.f. 01.04.1995 and therefore applicants who received supply after that date cannot claim rebate.
ii. The counsels for Respondent submitted that subsequent notifications (15.05.1996, 01.08.1996) were declared non-est/void ab initio by Manohar Parrikar and affirmed in subsequent litigation, so the appellants cannot rely on them.
iii. The counsels for Respondent submitted the 2002 Act validly provides for recovery of amounts disbursed pursuant to the void notifications and that this Court’s prior rulings (e.g., Goa Glass Fibre Ltd.) sustain the recovery scheme.
iv. The counsels for Respondent submitted that public interest and the State’s financial exigency justified withdrawal of the rebate and that promissory estoppel must yield in such circumstances.

H) RELATED LEGAL PROVISIONS 

i. Indian Electricity Act, 1910 — s.23 and s.51-A (state power to determine tariffs/conditions).
ii. General Clauses Act, 1897 — s.21 (effect of rescinding instruments).
iii. Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 — s.3 (liability to refund benefits under void notifications).
iv. Constitutional law: Art.226 (writ jurisdiction) and doctrine of res judicata in writ proceedings.

I) JUDGEMENT

The Supreme Court dismissed the appeals, holding that appellants (except for the one who had supply within the relevant period) were not entitled to rebate under the 30.09.1991 notification because the notification stood rescinded with effect from 01.04.1995; physical supply dates subsequent to rescission precluded entitlement. The Court emphasised that the 1996 amending notifications had been declared void ab initio in Manohar Parrikar and could not be relied upon. The Court reiterated that the 2002 Act validly authorises recovery of amounts disbursed pursuant to the void notifications and upheld the High Court’s dismissal of writs and review applications.

The judgment applied res judicata the appellants were bound by the earlier GR Ispat proceedings and could not re-open matters already adjudicated. The Court also addressed promissory estoppel, acknowledging that while representations may bind the State in equity (see Pawan Alloys), public interest and financial unviability constitute a justifiable ground for withdrawal of incentives; where public equity and unviability are proved, an estoppel cannot immune the State from rescinding a policy. The Court concluded that the demand notices under s.3 of the 2002 Act suffered no illegality.

a. RATIO DECIDENDI

The operative ratio is three-fold:

(i) rescission of a notification takes effect as declared and entitlement to benefits under that notification requires supply within its operative period; applicants who obtain supply after rescission cannot rely on the earlier scheme;

(ii) where amending notifications have been judicially declared void ab initio, they cannot create rights enforceable against the State; and

(iii) promissory estoppel cannot prevail against an overriding public interest demonstrated by the State financial unviability of the rebate suffices to justify withdrawal and recovery, especially where prior litigation (GR Ispat and subsequent appeals) has defined the permissible ambit of entitlements.

The Court therefore validated recovery under the 2002 Act and applied res judicata to bar relitigation by the same parties on the same cause of action.

b. OBITER DICTA 

The Court observed (obiter) that amendments to a rescinded notification create interpretative complexity but do not automatically resurrect a rescinded scheme where procedural non-compliance is found. The Court noted that administrative instruments must comply with rules of business and that remedial legislation like the 2002 Act can be a valid mechanism to regularise fiscal consequences of void executive action.

The Court also commented that equities invoked by industry (investments made in reliance on incentives) attract judicial sympathy but cannot override public interest or bind the State where fiscal sustainability is demonstrably impaired. These observations reinforce known limits of estoppel against the State.

c. GUIDELINES

i. Where a notification grants time-bound benefits, entitlement depends on supply/acts within the notification’s operative period.
ii. Rescission of a notification takes effect as published; subsequent amendments that are judicially invalidated cannot be relied upon.
iii. Res judicata binds parties in writ jurisdiction where identical questions and parties arise and final adjudication exists.
iv. Promissory estoppel against the State is subject to the qualification that overriding public interest (e.g., fiscal unviability) will prevail.
v. Recovery statutes enacted to address liabilities created by void executive action may be constitutionally valid when tailored to public interest and legal finality.

J) CONCLUSION & COMMENTS

The decision underscores the limits of administrative promises when tested by procedural infirmity, rescission, and compelling public interest. Industrial actors relying on incentive notifications must ensure that the operative acts conferring entitlement occur while instruments remain alive; mere application does not always crystallise a right if supply/accrual happens after rescission. The Court’s emphasis on res judicata promotes finality and prevents multiplicity of litigation on identical causes, particularly where prior balanced judicial decisions exist.

The ruling also clarifies that equitable doctrines like promissory estoppel have finite operation against State action when withdrawal is shown to serve overriding public interest a principle that balances investor reliance with fiscal governance. Practically, the judgment cautions governments to adopt clear, procedurally compliant incentive measures and businesses to obtain consummation of entitlements promptly and to document reliance.

The 2002 Act’s validation signals legislative competence to remedy consequences of void executive acts, but it also places a compliance burden on affected beneficiaries to challenge invalid executive action expeditiously. Overall, the Court preserved doctrine and finality while acknowledging equitable tensions but resolving them in favour of public interest and statutory recovery.

J) REFERENCES

a. Important Cases Referred

i. Puja Ferro Alloys P. Ltd. v. State of Goa & Ors., [2025] 3 S.C.R. 138 : 2025 INSC 217.
ii. GR Ispat Ltd. v. Chief Electrical Engineer, 1999 (1) Goa L.T. 218.
iii. Manohar Parrikar v. State of Goa, 2001 SCC OnLine Bom 350.
iv. MRF Limited v. Manohar Parrikar & Ors., (2010) 11 SCC 374.
v. Goa Glass Fibre Limited v. State of Goa & Anr., (2010) 6 SCC 499.
vi. Pawan Alloys & Casting (P) Ltd. v. UP SEB, (1997) 7 SCC 251.
vii. Inderchand Jain v. Motilal, (2009) 14 SCC 663.
viii. Satyadhyan Ghosal v. Deorajin Debi, [1960] 3 SCR 590.
ix. Hope Plantations Ltd. v. Taluk Land Board, (1999) 5 SCC 590.
x. T.P. Moideen Koya v. State of Kerala, (2004) 8 SCC 106.

b. Important Statutes Referred

i. Indian Electricity Act, 1910 (ss.23, 51-A).
ii. General Clauses Act, 1897 (s.21).
iii. Goa (Prohibition of Further Payments and Recovery of Rebate Benefits) Act, 2002 (s.3).