S. Narayan Iyer Vs. Union of India
& ANR  INSC 133 (30 April 1976)
RAY, A.N. (CJ) RAY, A.N. (CJ) BEG, M.
HAMEEDULLAH SARKARIA, RANJIT SINGH SHINGAL, P.N. SINGH, JASWANT
CITATION: 1976 AIR 1986 1976 SCR 486 1976 SCC
Jurisdiction of courts under Art. 226 of the
Constitution in matters of fiscal planning-Legislative judgments are outside
the scope of judicial determination- Reasonableness of telephone rates is a matter
for legislative judgment Indian Telegraph Act-Section 7(2) read with Indian
Telegraph Amendment Rules,1966.
The appellant challenged under Art. 226 the
reasonableness of the increase in the telephone rental and call charges brought
about by the Indian Telegraph Amendment Rules. 1966 on the ground that (1) The
telephone system is a public utility service and the charges can be only in the
nature of a fee which must be commensurate with the cost of rendering the
service; and (2) The loss incurred by the Government in another establishment
service is not a legitimate ground for raising the rates.
The writ petition was accepted and on appeal
the judgment was reversed holding that (1) the High Court could not interfere
with the tariff. and (2 ) the principle upon which the public utility rates
regulation as developed in the United States is not applicable in our country.
Dismissing the appeal by certificate, the
HELD: (I) The courts have no jurisdiction
under Article 226 to go into the reasonableness of rates. These rates are
decided as policy matters in fiscal planning. There is legislative prescription
of rates. Rates are a matter for legislative judgment and not for judicial
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 325 of 1970.
From the Judgment and order dated 28th March
1969 of the Madras High Court in Writ Appeal No. 490/68.
K. S. Ramamurthy, K. Jayaram and R.
Chandrashekhar for the Appellant.
L. N. Sinha, Solicitor General of India, S.
N. Prasad and Girish Chandra for the Respondents.
The Judgment of the Court was delivered by
RAY J. This appeal is by certificate from the judgment dated 28 March 1469 of
the High Court of Madras. The question in this appeal is whether the appellant
in a writ petition can challenge the telephone rates and charges and obtain any
relief in that behalf.
The appellant is a retired District Manager
(Telephones), Madras. He filed a writ petition in the High Court for a writ of
prohibition, directing the General Manager (Telephones), Madras to forbear from
preferred to the Appellate Tribunal but that too proved abortive. The Tribunal,
however, referred the following question of law for the opinion of the High
Court:- ----------------------- (1). 60 I.T.R. 293.
487 enforcing the revised Telephone Tariff as
per the Indian Telegraph Amendment Rules, 1966. Under the rules, the rental and
call charges were increased by 50 per cent and Trunk call charges by about 30
to 35 per cent. The petitioner alleged that the telephone system is a public
utility service and not a Revenue earning establishment and the charges can be
only in the nature of a fee which must be commensurate with the cost of
rendering the service. The petitioner further alleged that the loss incurred by
the Government in another establishment service is not a legitimate ground for raising
The Trial Court held that Telephone Tariff
was unjust and unreasonable. The Trial Court allowed the writ petition.
The High Court on appeal held that the High
Court could not interfere with the Tariff. The High Court said that the principal
upon which public utility rates regulation as has developed in the United
States is not applicable here in our country.
It should be said at the outset that there
was some discussion in the judgment on Article 19 but counsel for the appellant
properly abandoned any reference to Article 19.
The appellant's contentions are three. First,
the expression. "rates" in section 7(2) of the Indian Telegraph Act
means rates which are to be determined should be fair, just and reasonable from
the point of view of both the consumer and the producer. Second, the Court has
jurisdiction to determine whether the rates filed by the Government are
reasonable. Third, the rates are increased expressly for the purpose of
off-setting the E losses in the Post and Telegraph Services. If a proper
allocation. is made according to proper commercial accounting it will be found
that there is a wrongful deduction of crores of rupees as revenue expense and
unlawful debit. These errors in the accounting have resulted in reducing the
profits earned by the Telephones.
There are three principal reasons why the
writ petition is incompetent and not maintainable and the appeal should fail.
First, when any subscriber to a telephone enters into a contract with the
State, the subscriber has the option to enter into a contract or not. If he
does so, he has to pay the rates which are charged by the State for
installation. A subscriber cannot say that the rates are not fair. No one is
compelling one to subscribe. Second. Telephone Tariff is subordinate
legislation and a legislative process. Under Indian Telegraph Act, section 7
empowers the Central Government to make rules inter alia for rates. These rules
are laid before each House of Parliament. The rules take effect when they are
passed by the Parliament. Third, the question of rates is first gone into by
the Tariff Enquiry Committee. The Committee is headed by non officials. The
Tariff rates are placed before the House in the shape of Budget proposals. The
Parliament goes into all the Budget proposals. The rates are sanctioned by the
Parliament. The rates. therefore, become a legislative policy as well as a
488 The Courts have no jurisdiction under
Article 226 to go into reasonableness of rates. These rates are decided as
policy matter in fiscal planning. There is legislative prescription of rates.
Rates are a matter for legislative judgment and not for judicial determination.
The appeal is dismissed. There will be no
order as to costs.
S.R. Appeal dismissed.