While disposing of a batch of writ petitions filed by Madras Cements and others, the court has upheld the contention of the petitioners that they are eligible for concession despite the sudden withdrawal of the government order granting the incentive.

The Tamil Nadu government through an order GO Ms No 29 Energy (A-2) dated January 31, 1995 announced a three-year tariff concession for high tension industries that are to be set up in areas other than Madras Metropolitan areas. The concession in the high tension tariff rates during the first year was 40 per cent followed by 30 per cent and 20 per cent in the next two years.

These concessions were significant, especially to the power intensive cement industry and resulted in a savings of Rs4-6 crore per year. Both Madras Cements and India Cements had factored this when they put up their 0.9 million tonne greenfield projects in Alathiyur and Dalavoi respectively.

But the government vide its order GO Ms No 17 Energy dated February 14, 1997, withdrew the earlier order by saying that ``new high tension industries set up in any area on or after February 15, 1997 shall not be eligible for any tariff concession.''

Eventhough both the plants were set up prior to February 14, 1997 and had applied to TNEB for power connection, the government and TNEB refused to grant the concession on the grounds that they had not obtained the power connection as on the cut off date. They opined that the expression `set up' meant `the date of obtaining high tension services connection'. It is then Madras Cements and others filed writ petitions in the Madras High Court.

The Court disagreed with government's definition of the term `set up' and said that the term ``should be construed as having reported theirreadiness to the electricity board for getting power connection, irrespective of the fact whether actual power supply was given or not'' and directed the government and TNEB to extend the concession for three years in accordance with the government order.

Both Madras Cements and India Cements are already taking into account the concessions while drawing up the accounts based on the interim stay granted earlier by the Court. They were also providing for the contigent liability in case the case went against them. Madras Cements had provided for Rs 4.59 crore as of March 31, 1998 (for the first year) while India Cements also had a contingent liability of a similar amount. Had the case gone in favour of the government both the companies would have to provide not only for Rs 4-5 crore for the first year but also to consider the full tariff for the next two years which would have had a significant impact to their bottomlines.

The court also dismissed petitions which challenged the order withdrawing theconcession.