Kanoria
Chemicals and Industries Ltd. & Anr Vs. State of U.P. & Ors [1992] INSC
11 (16 January 1992)
Rangnathan,
S. Rangnathan, S. Fathima Beevi, M. (J) Ojha, N.D.
(J) Reddy, K. Jayachandra (J) Agrawal, S.C.
(J) Sahai, R.M. (J) Sahai, R.M. (J)
CITATION:
1992 SCR (1) 151 1992 SCC (2) 124 JT 1992 (1) 199 1992 SCALE (1)107
ACT:
:
Electricity (Supply) Act, 1948: Section 60 (As introduced by section 7 of
Electricity Laws (U.P. Amendment) Act, 1983.
:
Company-Electricity Board-Contract for supply of electricity at concessional
rates on special considerations-Power of Electricity Board to revise rates-
U.P. Gazette Notification dated 29.10.82-Schedule-Levy of HV-2 rates i.e.
uniform tariff applicable to "bulk power" consumers in substitution
of contracted rates-Validity of- Held fixation of rates was not
vitiated-Revision of rates can be given retrospective effect-Failure to specify
the precise manner in which the rates were arrived at does not vitiate the
rates fixed-Power or revise tariff can be exercised more than once-Electricity
Board can fix rates higher than HV-2 rates-But levy of rates higher than HV-2
rates on the Company held not justified under the circumstances.
Section
49-Electricity Board-Revision of rates-Factors to be taken into
account-Distinction between section 49 and 60 explained.
Electricity
Laws (U.P. Amendment) Act, 1983 (Act 12 of 1982) : Section 7-Difference in
English and Hindi version of Act, Absence of words "for this first
time" in Hindi version of Act-Effect of.
HEAD NOTE:
The appellant-company
set up a caustic soda industry at Renukoot involving the use of electricity as
the main raw material. On 30.9.63 it entered into a contract with the State of
Uttar Pradesh for supply of electricity for the period of 25 years from 1.4.64,
to the extent of 6.5 NW from the Rihand Hydel station at a fixed rate of 2.5 paise
per unit and an additional supply of 1.5 NW from an inter- connection at the
rate of 5 NP per unit. The terms of the contract provided that the transmission
and distribution losses were to be borne by the company and that the rates
could be raised after sixteen years but any enhancement in rates was not to
exceed 10 per cent of the rates agreed upon.
Subsequently,
the UP Government enacted the Electricity Laws (Uttar Pradesh Amendment) Act,
1983 which came into force from 152 20.5.1983. Section 7 of the said Act
amended section 60 of the Electricity Supply Act, 1948 by inserting sub-section
(3) to (5) with retrospective effect from April 1, 1965.
The
Amended Act enabled the State and the Board to modify the rates of supply of
Electricity to appellant under the contract of 30.9.63. Simultaneously the
Parliament also amended Section 59 of the Electricity Supply Act by the Act 18
of 1983 enabling the Electricity Board to fix the tariff in such a way so as to
build up a statutory surplus fixed by the State Government.
On the
passing of the Amendment Act, the Electricity Board informed the
appellant-company that the rates were proposed to be revised and later it
informed the appellant- company that on 28.9.83 the State Government, by its
Gazette Notification dated 29th October, 1982, had approved the levy of HV-2
rates (i.e. uniform tariff applicable to `Bulk power' consumers) in
substitution of the rates mentioned in the agreement of 30th September, 1963.
The effect of the revision was to oblige the appellant-company to pay 57.71 paise
per unit for 1983-84 and 61.60 paise per unit for 1984-85. Accordingly,
supplementary bills were raised demanding Rs. 3.07 crores from the appellant-company.
The appellant filed a writ petition in the High Court of Allahabad assailing
the Validity of section 7 of the amending Act and the right of the Board to
enhance the rates.
By its
order dated 2.4.87 the High Court allowed the writ petition and quashed the
approval dated 28.9.83 given by the State Government to the new rates and the
consequential demands of the Electricity Board but left it to the Board and
State to fix revised rates afresh by directing the respondents (1) not to
charge the uniform tariff rate for the period beginning from 20th May, 1983
till the rates were fixed in accordance with section 60(5) (a); and (ii) that
the rates applicable to the appellants should be determined having regard to
the individual circumstances of the appellant.
The
Electricity Board and the State Government preferred an appeal to this Court.
Aggrieved by the fact that in applying the HV-2 rates the Board and the State
had not taken into account the special factors relevant to the supplies made to
it, the appellant also filed an appeal in this Court.
In the
meantime, pursuant to the directions of the High Court the Board fixed the
revised rates on 28.3.88 for the supply from 20th May, 1983 which were much higher than the HV-2 rates fixed earlier
and 153 quashed by the High Court.
The
appeals came to be heard by this Court on April 10, 1991 when this Court
directed that the appellant should make a representation to the State
Electricity Board setting out the individual factors which should be taken into
account in fixing the rates applicable to them within the meaning of section
60(5) (a) of the 1948 Act and that the State Government should reconsider the
fixation after considering the recommendations made by the Board as well as the
representations of the appellant.
Accordingly
the State reconsidered the matter and by its order dated 31.8.92 approved the
rates fixed by the State Government on 28.3.88.
The
appellant challenged the validity of the rates fixed contending that (i) the
fixation of rates as on 31.8.1992 was not valid because (a) the respondents
have not complied with this court's directions dated 10.4.1991 as they have
neither disclosed the factors based on which the rates were revised in March
1988 nor indicated the monetary incidence or impact of the factors taken into
account; (b) in the process of refixation of the rates there was no genuine
exercise to consider relevant factors in determining the rate under section 60
(5) (a); (c) that the Board had not set out anywhere the precise manner in
which the rates recommended by them were arrived at; (ii) Section 60 cannot be
interpreted so as to give power to the Board to fix rates retrospectively
because (a) such an interpretation precludes the Board and the State from
revising the rates prospectively; (b) if the power is held exercisable more
than once, it will permit successive revisions each superseding the earlier
one, a position that could lead to harassment; (c) that the Hindi version of
the Amendment Act is differently worded and does not contain the words
"for the first time" found in the English version and in case of a
conflicting version between Hindi and English version the Hindi text should be
the key to find out the true intention of the Legislature; and (iii) in view of
a facts (a) that the company established its industry in a backward area at the
request of the State and in public interest; (b) the transmission and
distribution losses are borne by the appellant and (c) electricity is one of
the raw materials needed for its industry the appellant should be charged less
than the HV-2 rates.
On
behalf of the Electricity Board it was contended that the 154 demand of rates
higher than HV-2 rates was justified because (a) the Company has been getting
substantial supplies of electricity at nominal rates from 1963 to 1983; (b) The
Board has incurred heavy losses over the years by supplying electricity at concessional
rates; and (c) there was a necessity to build up a statutory surplus prescribed
by section 59.
Allowing
the Company's appeal in part and dismissing the Electricity Board's appeal,
this Court, HELD: 1.The fixation of revised rates is not vitiated.
[173-E]
2.
Section 60 does not require the Board or the State Government to explain each
and every step in its calculation. All that the Electricity Board has to do is
to take into consideration the factors relevant under section 60(5) and propose
rates for fixation to the State Government. It is in order to ensure that these
recommendations take into account all relevant factors that an opportunity has
been provided to the consumer to satisfy the Board as well as the State
Government that the fixation has taken into account certain relevant factors.
Therefore, the rate revision proceedings were not vitiated for the reason that
the Board has not set out the precise manner in which the rates recommended by
them were arrived at. [172 D- E, 172-C]
2.1
Apart from the general factors which have been taken into account in fixing the
general tariff rates, the Board has, in making its recommendations, taken into
account the purpose for which supply was required by the appellant along with
the factor of recurring losses incurred by the Board year after year and its
statutory requirements to maintain a minimum surplus of 3 per cent as required
under section 59 of the Supply Act, 1948. [173-D]
2.2
The rates recommended by the State Electricity Board and approved by the State
Government were within the knowledge of the appellant-company. The
appellant-company filed its representation. After considering the
representation, the Board made its recommendations to the State Government and
a copy of the recommendations were also available to the appellant. The
appellant had full opportunity to meet the various points set out in the
recommendations of the Board. The comments of both the Board and the Appellant
were taken into account by the State Government before finally approving of the
rates proposed by the Board. Therefore, the appellant-company had full
opportunity to place all its special feature before the Board and the 155 State
Government. [171H, 172A,B, 173E]
2.3 If
one compares the two provisions viz. sections 49 and 60 one will find that most
of the elements are common to the two provisions. Both under section 49 and
section 60 the authorities have to take into account the geographical position
of any area, the nature of supply and purpose for which supply is required and
any other relevant factor. The only difference between the two provisions is
that since section 49 deals with a general fixation while section 60(5) deals
with a fixation for a particular individual case, there may be some special
factors to be taken into account which may or may not be germane while fixing
the general tariff under section 49. [172H, 173-A] Indian Aluminium Company
Ltd. v. Kerala State Electricity Board, [1976] 1 S.C.R. 70; cited.
3. A
retrospective effect to the revision of rates is clearly envisaged by section
60. One can easily conceive a weighty reason for saying so. If the section were
interpreted as conferring a power of revision only prospectively, a consumer
affected can easily frustrate the effect of the provision by initiating
proceedings seeking an injunction restraining the Board and thus getting the
revision deferred indefinitely. Or, again, the revision of rates, even if
effected promptly by the Board and State, may prove infructuous for one reason
or another. Therefore, it would be a very impractical interpretation of the
section to say that the revision of rates can only be prospective.
[174E-G]
3.1
The mandate of section 60 is only that the rates to be charged on supplies for
which payment becomes due after 20.8.83 shall be as fixed by the Board. The
powers of the Board in fixing the rates-including the dates from which they
will be operative are not restricted in any manner.
The
Board is at complete liberty to fix different rates from different dates and
that scheme of fixation will be read with the contract. Only the Board cannot
revise the rates in respect of supplies for which payment under the contract
fell due before the Amendment Act came into force. [175-B-C]
3.2
The power under section 60 is exercisable more than once. However, while making
a subsequent revision, the authorities will not normally tamper with an earlier
revision or alter the dates of effectiveness fixed for the earlier revision
without a valid reason to do so. If this is done, it will be open to a court to
examine the basis thereof and 156 sustain it only where the earlier fixation
was based on an error or misconception or the like and called for modification.
[175D-E]
3.3
Although the Hindi version of the Amendment Act is differently worded and does
not contain the words "for the first time" found in the English
version, the Hindi version does not really alter the position; actually it is
the presence of the words "for the first time" in the English version
that create ambiguity. Without these words, the clause clearly provides that
all supply of electricity, for which payment is to be made after 20.5.83, i.e.
coming into force of the Amendment Act, will be charged at the rates to be
fixed by the Board. Therefore, the fixation by the Board of rates from 20.5.83,
and, at different rates for different period of time, is unexceptionable.
[175F-H, 176-A] Mata Badal Pandey v. Board of Revenue, (1974) U.P.T.C. 570;
referred to.
4.
There are no obstacles, statutory or theoretical, standing in the way of the
Board fixing rates for the company which will be higher than the rates
applicable to bulk consumers. The provision in s. 60(5)(a) is intended to
enable the Board and State to cut off the shackles cast by an ancient contract
entered into at a time when conditions were totally different. It confers an
absolute and unrestricted enabling power to revise the rates in an appropriate
manner. [174-A] While revising rates, the only limitation which the statute
requires the authorities to keep in mind are the factors mentioned in the
section. Whether the revised rates for the consumer governed earlier by the
contract should be higher or lower than, or equal to, the tariff rates would
depend on a large number of considerations, in particular, the basis on which,
and the point of time at which, those general rates were fixed. In principle,
it is quite conceivable that, in an appropriate case, a consideration of the
relevant factors may justify even a rate higher than the general tariff rates
intended for the particular category of consumers. [174B-D]
4.1
However, there is no material to justify any departure from the HV-2 rates in
the case of the appellant.
The
special circumstances pleaded by the appellant-company have lost their
importance with the passage of time. The conditions that prevailed in 1963 are
not valid and the appellant has had the benefit of concessional rates for
twenty years. The consideration that electricity is a "raw material"
in the assesee's 157 business is, again irrelevant for it can mean nothing more
than that the appellant needs substantial quantities of the energy and there is
no reason why it should not pay for it at the normal market rates. Therefore,
the appellant has no valid justification for staking a claim to less than the
HV- 2 rates. [177B-D]
4.2
Equally, the authorities have no case to raise the rates beyond the HV-2 rates.
The huge losses that the Board has been incurring and the statutory
justification for escalation in the rates keeping in view the necessity to
build up a surplus is an aspect of working which should affect all the
consumers equally. May be the Board can, in appropriate circumstances, seek to
make up for a part of the losses by hiking up the rates to one particular
category of consumers but that would not be justified here as the transmission
and distribution losses in respect of the supply to the appellant are borne by
it and, in the absence of some special vital reason, it would not be equitable
to fix the rates of supply to the appellant above the rates applicable to other
HV-2 consumers. Therefore, there is no justification to charge more than HV-2
rates from the appellant. [177EG, 178-B] 4.3 The determination of 1988 and 1991
are quashed.
The
State Electricity Board is directed to charge the appellant-Company from
20.5.83 to 31.3.89 at the HV-2 rates applicable to other consumers. [178-B]
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 1306 of 1988.
From
the Judgment and Order dated 2.4.1987 of the Allahabad High Court in Writ
Petition No. 1818 of 1984.
H.N.
Salve, P.P.Tripathi, Manoj Swarup and K.J. Johan for the Appellants.
B.Sen,
Gopal Subramaniam, Prashant Kumar and Mrs. S. Dikshit for the Respondents.
The
Judgment of the Court was delivered by RANGANATHAN, J. There was a time when,
in almost every State in India, people were invited to avail of the supply of
the electric energy produced in the State and offered special concessions when they
agreed to 158 do so in bulk under long-term contracts. A situation, however,
has since developed when the demand for the energy increased so rapidly that,
despite the quantity of available electric energy also having gone up
tremendously the rates of supply agreed upon became uneconomical. The State and
its instrumentalities, who were supplying the energy, found themselves without
power to revise the rates to meet the altered situation until the legislature
came to the rescue.
It is
this situation in the case of Kanoria Chemicals and Industries Ltd.
(hereinafter referred to a `the appellant') which has given rise to these
appeals.
The
Electricity (Supply) Act, 1948, (hereinafter referred to as `the 1948 Act')
entrusted the control over the generation and distribution of electric energy
to Electricity Boards constituted under the Act. In the State of Uttar Pradesh,
the U.P. State Electricity Board (hereinafter referred to as `the Board,) was
constituted on 1.4.1959. At that time, the State Government (hereinafter
referred to as `the State') was in the process of establishing the Rihand
Hydro-Electric Generating Plant, which become operational w.e.f. 1.2.62, and
attained an ultimate installed capacity of 300 M.W. The control of this
remained with the State till 31.3.1965. Since the supply of electrical energy
was then available in abundance and only the eastern area of the State was
served by the plant, the State considered it expedient to enter into contracts
with bulk purchasers both with a view to ensure maximum utilisation of the
electricity available and with a view to the industrialisation of the eastern
areas of the State. In particular the State was keen on the industrial
development of the district of Mirzapur, which was considered to be an extremely
backward area. The State was keen that power intensive units be set up in close
proximity of Rihand so that electricity could be supplied to these units from
the Rihand power plant. One feature of the supply of electricity from Rihand
was that the metering was done at the point of generation so that transmission
and distribution losses and costs could be borne by the consumers of
electricity.
The
appellant set up an industry for manufacture of caustic soda at Renukoot
sometime in 1964. According to the appellant, this industry involved the use of
electricity as the main raw material, the other raw material needed being salt.
It is said that there were considerable disadvantages in setting up the
proposed caustic soda unit in the district of Mirzapur, principally due to its
distant location from areas from which salt had to be transported. The
appellant, it is said, could easily have set up its factory in some other State
with greater facilities and advantages but it was induced to set up the caustic
soda plant at Pipri in the district of Mirzapur on account of the assurance
given by the State that it will supply hydro electric 159 power to the assessee
from the Rihand power plant on a long term basis at a cheap rate. It is claimed
that, but for this promise, the appellant would never have chosen Pipri or the
district of Mirzapur for the location of this plant.
After
elaborate discussions between the State Government and the promoters of the
appellant company, the plant was set up at Pipri and a contract was entered
into between the State Government and the appellant on 30.9.1963 ensuring the
supply of electricity from the point of generation to the appellant for a
period of 25 years from 1.4.64. The supply, to the extent of 6.5 MW. was to be
from Rihand hydel station at a fixed rates of 2.5 paise per unit.
An
additional supply of 1.5 MW was also promised from an inter-connection at the
rate of 5 N.P. per unit. The rates could be revised after the first sixteen
years but any enhancement in rates was not to exceed 10 per cent of the rates
agreed upon.
The
State agreed further to supply 4.5 MW to the appellant from the Obra
Hydro-Electric Project on such rates as would be fixed subsequently. It may be
mentioned that this clause gave rise to disputes which were referred to
arbitration. An award was made by justice D.P. Madan, a retired judge of this
Court, which was made a decree of this Court by an order dated 1.4.1987. Under
the award, the rate of supply was fixed at 8.69 paise per unit. The State's
grievance is that it incurred a loss of Rs. 10.55 crores by supplying
electricity from Rihand between 1.4.64 and 19.5.83 at concessional rates
instead of applying the uniform tariff applicable to other "bulk
power" consumers, briefly referred to as "HV-2 rates." It says
also that it likewise suffered a loss of 12.4 crores due to the supply at 8.69 paise
instead of normal rates, from Obra between 1.4.71 and 31.3.89, when the
agreement, came to an end by efflux of time.
Obviously,
it was not economical to continue supplying energy at the preposterously low
rates to which the State had committed itself in 1963 on account of the
conditions that prevailed at the time of the agreement. The powers of the State
or the Boards to revise contractual rates unilaterally were examined by this
Court in Indian Aluminium Company Ltd. v. Kerala State Electricity Board [1976]
1 SCR
70. It
is sufficient to say that, after considering the provisions of section 49 and
59 of the Supply Act, the Court held that the Electricity Board were not
entitled to enhance charges in derogation of stipulations contained in
agreement entered into between parties. This decision led to the provisions of
the Supply Act being amended by various States. The State of Karnataka, Orissa and Rajasthan brought in amendments
enabling the Electricity Board to supersede contracts and 160 revise the rates
contained in earlier agreements. The U.P. Government, also enacted the
Electricity Laws (Uttar Pradesh Amendment), Act, 1983, to vest the State's
agreement with the Board and to enable the Board to revise the contractual
rates. The Act came into force from 20.5.1983. Section 7 of the said Act
amended Section 60 of the Supply Act, 1948 by inserting the following
sub-sections (3) to (5) with retrospective effect from April 1, 1965 :
(3)
All expenditure which the State Government may, not later than two months from
the commencement of the Electricity Laws (Uttar Pradesh Amendment) Act, 1983,
declare to have been incurred by it on capital account in connection with the
purposes of this Act in respect of the Rihand Hydro Power System shall also be
deemed to be a loan advanced to the Board under section 64 on the date of
commencement of this sub-section and all assets acquired by such expenditure
shall vest in the Board with effect from such commencement.
(4)
The provisions of the sub-sections (1) and (1- A) shall, subject to the
provisions of sub-section (5) apply in relation to the debts and obligations
incurred, contracts entered into and matters and things obliged to be done by,
with or for the State Government in respect of the Rihand Hydro Power system
after the first constitution of the Board and before the commencement of this
sub-section as they apply in relation to debts and obligations incurred,
contracts entered into, matters and things engaged to be done by, with or for
the State Government for any of the purposes of this Act before the first
constitution of the Board.
(5)
All such contracts entered into by the State Government for supply of
electrical energy based on or connected with the generation of electricity from
the Rihand Hydro Electric Generating Station to any consumer and any contract
entered into by the Board on or after April 1, 1965 for the supply of
electrical energy to such consumer shall operate subject to the modifications
specified in the following clauses, which shall have effect from the date of
the commencement of the Electricity Laws (Uttar Pradesh Amendment) Act, 1983
(hereinafter referred to as the said date):- 161 (a) the rates to be charged by
the Board for the energy supplied by it to any consumer under any contract for
which the payment will be due for the first time on or after the said date
shall be such as may with the previous approval of the State Government be
fixed by the Board, having due regard to the geographical position of the area
of supply, the nature of the supply and purpose for which supply is required
and any other relevant factor.
(b) If
the State Government directs the Board under Section 22-B of Indian Electricity
Act, 1910 or under any other law for the time being in force to reduce the
supply of energy to a consumer and thereupon the Board reduces the supply of
energy to such consumer accordingly, the consumer concerned shall not be
entitled to any compensation for such reduction, and if the consumer consumes
energy in excess of the reduced limit fixed under the said section 22-B or any
other law for the time being in force as the case may be, then the Board shall
have the right to discountinue the supply to the consumers without notice ,and
without prejudice to the said right of the Board, the consumer shall be liable
to pay for such excess consumption at double the normal rate fixed under clause
(a);
(c)
Any arbitration agreement contained in such contract shall be subjects to the
provisions of this sub-section.
Parliament
also, at about the same time, amended s. 59 of the Act by Act 18 of 1983. The
amended s. 59(1), which is sufficient for our purpose reads thus :
59.
General principles for Board's finance - (1) The Board shall, after taking
credit for any subvention from the State Government under Section 63, carry on
its operation under this Act and adjust its tariffs so as to ensure that the
total revenues in any year of account shall, after meeting all expenses
properly chargeable to revenues, including operating, maintenance and
management expenses, taxes (if any) on income and profits depreciation and
interest payable on all debentures, bonds and loan, leave such surplus as is
not less than three per cent, or such higher percentage, as the State
Government may, by notification in the official Gazette, specify in this
behalf, of the value of the fixed assets of the Board in service at the 162
beginning of such year.
Explanation
- For the purposes of this sub-section.
"value
of the fixed assets of the Board in service at the beginning of the year"
means the original cost of such fixed assets as reduced by the aggregate of the
cumulative depreciation in respect of such assets calculated in accordance with
the provisions of this Act and consumer's contributions for service lines.
It has
been pointed out to us that the U.P. State amendment is somewhat different from
those of the other States. The Karnataka legislature amended s. 49 of the 1948
Act and the Orissa and Rajasthan legislatures inserted s. 49A in the said Act.
These provisions enabled the Boards' to prescribe tariffs and these rates were
to prevail over those specified in the agreement. The latter two amendments
actually declare the relevant clauses in the agreement void from inception. The
U.P. amendment. however, retains the effectiveness of the earlier contracts and
only reads into them the rates that may be prescribed by the Board. This is the
first difference. The second is that while the other legislations affect all
agreements entered into before a specified date, the U.P. amendment is
restricted to contracts for supply of electricity from the Rihand Hydro-
Electric Generating Station. We are informed that, when the above amendment was
sought to be effected, the only outstanding contract of the State for the
supply of electricity from the Rihand Hydro-Electric Generating Station was the
contract with the appellant on the 30th of September, 1963. There had been two
agreements entered into for supply of electricity from this power station but
the other one with Hindustan Aluminium Company had become ineffective since
that company gave up its claim to supply from the above power plant in 1975-76
having been successful in putting up a power plant for its captive use. Thus,
though the Act purports to be one of general application, it was really
intended to enable the State and the Board to modify the rates of supply of
electricity to appellant under the contract of 30.9.1963.
At
this stage it may be useful to refer also to the terms of s. 49 of the Act. It
reads thus :
(1)
Subject to the provisions of this Act and or regulations, if any, made in this
behalf, the Board may supply electricity to any person not being a licensee
upon such terms and conditions as the Board thinks fit and may for the purposes
of such supply frame uniform tariffs.
163
(2) In fixing the uniform tariffs the Board shall have regard to all or any of
the following factors, namely :- (a) the nature of the supply and the purposes
for which it is required :
(b) the
co-ordinated development of the supply and distribution of electricity within
the State in the most efficient and economical manner, with particular
reference to such development in areas not for the time being served or adequately
served by the licensee:
(c) the
simplification and standardisation of methods and rates of charges for such
supplies :
(d) the
extension and cheapening of supplies of electricity to sparsely developed
areas.
(3)
Nothing in the foregoing provisions of this section shall derogate from the
power of the Board, if it considers it necessary or expedient to fix different
tariffs for the supply of electricity to any person not being a licensee,
having regard to the geographical position of any area, the nature of the
supply and purpose for which supply is required and any other relevant factors.
(4) In
fixing the tariff and conditions for the supply of electricity, the Board shall
not show undue preference to any person.
After
the statute was thus amended, the Additional Chief Engineer of the Board wrote
to the appellant on 6.2.1984 stating that, though the bills were being drawn on
the basis of the agreement, the rates were subject to revision with effect from
May 20, 1983 with the approval of the State Government and that a supplementary
bill would be sent for the arrears as and when the rates were revised in
pursuance of section 60(5) (a). On 5th April, 1984, the appellant filed Writ Petition
No. 1818 of 1984 in the High Court of Allahabad assailing the validity of
section 7 of the amending Act and the right of the Board to enhance the rates.
While admitting the writ petition, the High Court passed an interim order to
the effect that the State Government should provide an opportunity of hearing
to the appellant before bringing about any change in the terms and conditions
of the Agreement or tariff rates and that no revised rates shall be charged
from the 164 appellant till it is heard, and the matter decided, by the State
Government. On June 11,
1984, the Law Officer
of the Board wrote to the appellant requesting it to give in writing the points
which they wanted to urge before the rates were approved by the State
Government. According to the appellant, this was not sufficient compliance with
the court's order and it moved the High Court for amending its petition and
made further applications to the Court. It may be mentioned that the stand
taken up by the Board in the writ petition was that the writ petition was
premature as the State's approval had not been obtained and no injury had been
caused to the appellant. But, suddenly, on 31.1.85, the Board wrote to the
appellant informing it that the State Government had approved the levy of rates
as per Schedule HV-2 (as defined in the U.P. Gazette Notification dated 29th
October, 1982) applicable to heavy power consumers in substitution of the rates
mentioned in the agreement of 20th September, 1963. It was stated-curiously
enough-that the approval of the State Government had been given on 28.9.1983.
The effect of the revision was to oblige the petitioner to pay 57.71 paise per
unit for 1983- 84 and 61.60 paise per unit for 1984-85. An idea of the
magnitude of the revision can be had by pointing out that supplementary bills
raised on the basis of the revision for the period 20.5.83 to 31.12.1984 were
to the tune of Rs. 3.07 crores. The appellant's allegation is that no such
approval had been given and it is asserted that the internal correspondence
between Board and State would show that the legal Department of the Board had
raised certain objections to the levy of HV-2 rates on the appellant, and that
consequently Board had sent a fresh proposal in December 1983 seeking approval
of the State Government for imposing a flat rate in respect of supplies to the
appellant in place of earlier proposal. It is also stated no proposal was made,
or approval sought, for imposing the revised rates w.e.f. 20.5.1983.
The
Board, however, proceeded to make demands against the appellant on the basis of
the revised rates. According to the Board, reference was made to a resolution
dated 30.1.85 to the withdrawal on that date of the proposal for a flat rate in
place of HV-2 rates. Thus, demands on the basis of HV-2 rates were sought to be
sustained. The demands amounted to several crores of rupees and disconnection
was threatened in case of nonpayment. The appellant obtained certain interim
orders from High Court (which have been subsequently considered and modified
from time to time by this court during the pendency of these appeals). It is,
however, not necessary to refer to these interim orders as the final liability
of the appellant will have to be decided on the basis of the orders of this
Court on the appeals.
165
The writ petition was heard by a Bench of two judges.
Both
judges repelled the challenge to the validity of the Amendment Act but differed
on some of the points which came up for their consideration. Srivastava, J. was
of the opinion that the intention and purpose of the Amendment Act was to
revise the existing contractual rate of energy charges and charge higher rates upto
the extent of uniform tariff rates for the supply of electricity to the
consumers whose contract stood modified by the said statute. The rates so fixed
had to be dependent upon the factors enumerated in section 60(5). According to
him, the material on record showed that the factors enumerated in section 60(5)
had not been taken into account by the Board before fixing the rates or by the
State Government in according its approval to the same. The Board and the
Government appeared to have acted upon a consideration of the factors mentioned
in section 49(2) of the Act of 1948 while framing a uniform tariff but this was
not sufficient compliance with the provisions of section 60(5).
On the
other hand, Mathur. J. was of the opinion that the move for amendment of the
Act and enforcement of HV-2 tariff was initiated by the Board and that the notings
contained a detailed justification for enforcing the said tariff. It also
appeared from the statement of objects and reasons of the amending bill that
the supply of electricity at concessional rates despite losses and the
desirability of replacing the said rate by uniform tariff came up for
discussion in the State Legislature and that the Board did not act wrongly or illegally
if it felt that it had no option but to apply uniform rates in view of the
statement contained in the objects and reasons of the bill and the discussion
in the State Legislature. He was also of the opinion that the factors
contemplated by section 60(5) (a) were similar to those envisaged by section
49(2), and since consideration had been given to the latter factors while
farming the uniform tariff, no consideration of factors relevant to individual
consumers was called for. The two learned judges thus differed on the following
two points :
(a)
Whether the language of section 60 (5) (a) of U.P. Act No. 12 of 1983 required
consideration of factors prescribed in section 60 (5) (a) viz., geographical
position of the area of supply, the nature of supply and purpose for which
supply is required and other relevant factors with reference to petitioner
company for revising the existing contractual rate of H.C. tariff? (b) Whether
the factors mentioned in section 49(2) of Electricity (Supply) Act, 1948, having
already been considered at the time of farming uniform tariff no fresh
consideration of any factors mentioned in section 60(5)(a) of U.P. Act No. 12
of 1983 was required when the uniform tariff itself was being fixed while 166
revising the rate ? The difference of opinion was, therefore, referred to a
third Judge, Mehrotra, J. This learned Judge answered that question referred to
him as follows :
(a)
The language of section 60(5)(a) of U.P. Act 12 of 1983 requires consideration
of factors prescribed in it with reference to the petitioner company for
revising the existing contractual rate;
and
(b) Fresh consideration of the factors mentioned in section 60(5)(a) was
required irrespective of the fact that factors mentioned in section 49(2) of
the Electricity (Supply) Act, 1948 had already been considered at the time of
framing of the uniform tariff which was being fixed for the petitioner company
while revising the rates.
Consequent
on the opinion of this learned Judge the writ petition was allowed and a writ
of certiorari was issued quashing the approval dated 28.9.1983 given by the
State Government to the new rates and the consequent resolutions, sanctions,
bills and demands of the Board and the State Government. A writ of mandamus was
also issued commanding the respondents not to charge the uniform tariff rate
for the period beginning from 20th May, 1983 till the rates were fixed in
accordance with section 60(5) (a) of U.P. Act no. 12 of 1983. The Order
disposing of the Writ petition finally is dated 2.4.1987.
Immediately
the judgement was pronounced the State Electricity Board and the State
Government sought a certificate of fitness for preferring an appeal to this
Court and the High Court granted the certificate, as prayed for. This appeal
has not been numbered on account of delay.
Though
the High Court had quashed the revision of the rates, it had left it to the
board and State to fix revised rates afresh. That apart, the appellant had also
a grievance that, in applying the HV-2 rates which were applicable to other
consumers, the Board and the State had not taken into account the special
factors relevant to the supplies made to it. The appellant also, therefore,
filed S.L.P. No. 13967 of 1987 for leave to appeal from the judgement dated
2.4.1987. Leave has been granted by this Court on 8.4.1988 and the appeal of
the company had been registered as C.A.
1306 of 1988.
In the
meantime the Board and State were, apparently carrying on an 167 exercise for
the revision of the rates afresh as directed by the High Court and, on
28.3.1988, the Board purported to fix the following revised rates for the
supply from 20th May,
1983.
Period
Rate (Paise per unit) 20.5.1983 to 31.3.1984 70.21 1.4.1984 to 31.3.1985 74.93
1.4.1985 to 31.3.1986 85.14 1.4.1986 to 31.3.1987 88.60 It will be observed
that rates thus fixed, and said to have been approved by the State Government,
were much higher than the HV-2 rates fixed earlier, objected to by the
appellant and quashed by the High Court. Having done this, this Board sought leave
to withdraw the appeal preferred by it. So far the appellant's appeal was
concerned, it was contended that the appellant's remedy was to challenge the
revision of 28.3.1988, if so advised, in fresh proceedings.
This
was the position when these appeals came to be heard by us on April 10, 1991.
We
heard the appeals at length and reserved orders. In doing so we passed the
following order :
"The
appeals pertain to the fixation of tariff rates for supply of electricity to
the appellants caustic soda plant at Renukoot. The appellants originally came
to court challenging the levy of the electricity charges on the basis of HV-II
rates applicable generally to consumers drawing supply from the U.P. State
Electricity Board.
However,
the High Court held that the rates applicable to the appellants should be
determined having regard to the individual circumstances of the appellants.
This was by a majority judgement in the High Court. Subsequently, the
Electricity Board had proposed, and the State Government has approved, certain
rates for the period from 20.5.1983 to 31.3.1987 which are somewhat higher than
the HV-II rates originally approved. This is the bone of controversy between
the parties
We
find that the State Government and Board have filed no counter affidavits in
regard to the challenge by the appellants to the revision of rates effected
subsequent to the High Court 168 judgment. In the circumstances, before we
pronounce our judgment we think that, in the interests of justice, it would be
proper to direct the State Board and the State Government to reconsider the
fixation effected by them on the basis of the following directions :
1.
Within a period of three weeks from today, the appellants will file before the
State Electricity Board (with a copy to the State Government) a representation
setting out what, according to them, are the individual factors which should be
taken into account in fixing the rates applicable to them within the meaning of
section 60(5)(a), 1948 as amended in 1983.
2. The
State Electricity Board will consider this representation and make appropriate
recommendations to the State Government. However, before doing so, and
particularly if the Board intends to take into account any factors other than
those mentioned in the appellants' representation, they should indicate the
factors which they so wish to take into account, in their recommendations to
the State Government. A copy of the recommendations should be forwarded to the
appellants within seven weeks from today.
3. On
receipt of the recommendations made by the Board, the appellants may submit to
the State Government, if they so desire, any representation which they wish to
make regarding the recommendations within a period of three weeks thereafter.
4. The
State Government will consider the recommendations of the State Board as well
as the representations made by the appellants to the Board as well as to
themselves and approve of the rates which they consider proper in the
circumstances of the case by a reasoned order, giving a board indication of the
factors which they have taken into account in fixing the rates. This decision
should be arrived at within a period of four weeks from the date of the receipt
of the representation of the appellants.
5. As
indicated above, since the High Court has decided that in fixing the rates the
individual circumstances of the appellants should be taken into account, the
State Board as well as the State Government should take into consideration the
special 169 circumstances of the appellants in fixing the rates.
6. The
Government's order may also, in case different rates for different periods are
fixed, indicate the respective dates from which the several rates will come
into operation. The rates and dates so fixed by the Government, will naturally
be subject to the decision on these appeals." Subsequent to our order, the
appellant made a representation to the Board on 29.4.91. The Board made its
recommendations thereon to the State Government on 26.6.91.
Thereafter
the appellant made its representation to the State Government on 22.7.91. The
State Government has subsequently passed an order on 31.8.91 and submitted the
same to us. It is perhaps sufficient to extract the concluding paragraphs of
the order.
"After
analysing the contentions of Kanoria Chemicals and the State Electricity Board,
the State Govt. comes to the conclusion that M/s. Kanoria Chemicals and
Industries Ltd. has taken benefit of establishing this unit in a backward area
for the last 19 years and there is no justification in giving this benefit in
continuously future also because this area has been developed in comparison to
earlier years. The request of M/s. Kanoria Chemicals and Industries Ltd. that
the factors shown by State Electricity Board should be limited to Rihand Hydel
Power Station, is without justification since at present, they are getting
supply from U.P. Grid and not from Rihand Power Station. Hence, the point of
view of the State Electricity Board is justifiable.
8.
After due consideration of representation dated 24.2.91 and 22.7.91 of M/s. Kanoria
Chemicals and Industries Ltd. and the recommendations of the State Electricity
Board dated 26.6.91, the State Govt. comes to the conclusion that M/s. Kanoria
Chemicals and Industries Ltd. has failed to indicate any fact which comes under
the provisions of Sec. 60(5)(a) of the Electricity (Supply) Act, 1948 and which
has not been considered by the State Electricity Board while fixing the rates
in March 88 has kept in mind the decision of Hon. High Court of Allahabad and
170 complied with the provisions of sec. 60(5)(a) of the Electricity (Supply)
Act, 1948. Since keeping in view the factors enumerated in sec. 60(5)(a) of the
Electricity (Supply) Act, 1948, the Rules were revised in March, 1988 in the
following manner, hence there appears no necessity to change these rates :- S.No.
Period Rate
1.
20.5.83 to 31.3.84 70.21 paise/unit
2.
1.4.84 to 31.3.85 74.93 paise/unit
3.
1.4.85 to 31.3.86 85.14 paise/unit
4.
1.4.86 to 31.3.87 88.60 paise/unit In other words, the State and Board adhere
to the rates fixed on 28.3.88.
It may
be interesting to set out a comparative table of the revisions effected by the
Board originally (which was quashed by the High Court) and the rates now approved
:
Period
HV-2 rate Revised rate Paise/unit paise/unit 20.5.83 to 31.3.84 55.71 70.21
1984-85 59.86 74.93 1985-86 63.89 85.14 1986-87 80.88 88.60 *1987-88 84.64
88.60 *1988-89 93.39 88.60 * The revised rates for 1987-88 and 1988-89 are
stated to be provisional but so far till today no fresh rates have been fixed
in respect of these periods.
171
The resultant position is that the appellant is now facing huge demands in
respect of the period since 20.5.1983 and till 31.3.1989 when the agreement
expires, at rates which will be higher than the HV-2 rates which had been
sought to be applied in the first instance. The appellant vehemently challenges
the fixation of rates on 28.3.88 and 31.8.91.
A good
part of the argument before us in these appeals, in the first instance, was
addressed on the question whether the State Government was obliged to give a
hearing to the consumer before revising the rates under section 60(5) and
whether the factors relevant under s.60(5) can be said to have been taken into
account on the ground that they had already been taken into account while
fixing uniform rates under s.49. In this context, reference was made to several
decisions and contentions where canvassed in regard to the nature of the
process of fixation of rates of charges for supply of electricity. It is,
however, unnecessary to go into all these aspects because, in pursuance of the
directions of this Court dated 10.4.1991, the matter has been re-considered by
the Board and the State Government and fresh rates have been fixed along with
the respective dates of operation after hearing the appellant's
representatives.
Broadly
two principal submissions have been addressed before us at this stage on behalf
of the appellants. The first is that the fixation of rates as on 31.8.1991 is
not valid as the respondents have not complied with the directions given by
this Court in the order dated 10.4.1991.
It is
argued that the respondents have neither disclosed the factors based on which
the rates were revised in March 1988 nor have they indicated the monetary
incidence or impact of the factors taken into account, though a specific
request was made in this regard by the appellant to the Board and to the State
Government. The appellant, it is said, has been gravely prejudiced and
handicapped, in the absence of any such disclosure, in making any effective
representation.
Further
in the final order dated 31.8.91, the State Government has stated that the
fixation of rate by the State Government was based upon the consideration of
facts and data communicated by the Board to the State Government in March 1988
but, admittedly, no facts, data or basis had been placed before this court at
the time of the original writ petition on the basis of which the State
Government had fixed the rates in March, 1988 compelling this Court to remand
the matter for fresh consideration. Suddenly the Board, while concluding its
recommendation to the State Government on 26.9.91 reminded the State Government
that prior approval of the State Government for the rates had already been
obtained in March 88 and persuaded the State Government to mechanically uphold
the pre-determined rates.
Finally,
it is contended that even in this process of re- fixation of the 172 rates
there was no genuine exercise to consider relevant factors in determining the
rate under section 60(5)(a).
We do
not think that there is any force in these contentions. By the time the matter
came up before us for hearing in the first instance the State Government had
already passed its order of revision dated March 28, 1988.
The
rates which had been recommended by the State Electricity Board and approved by
the State Government were within the knowledge of the appellant. It was of
course necessary and equitable that, before giving effect to these rates (if
not even before they were recommended), the consumer should have had no
opportunity of placing before the Electricity Board and the State Government
its side of the picture. This opportunity has, however, been provided by to the
appellant. The appellant has also filed its representation. After considering
the representation, the Board made its recommendations to the State Government
and a copy of these recommendations were also available to the appellant. The
appellant also had full opportunity to meet the various points set out in the
recommendations of the Board. The comments of both the Board and the appellant
have been taken into account by the State Government before finally approving
of the rates proposed by the Board. The grievance of the appellant seems to be
that the Board has not set out anywhere the precise manner in which the rates
recommended by them were arrived at and that this has considerably handicapped
any effective representation being made by it to the Board and to the State
Government. We do not think the proceedings are vitiated for this reason. It is
true that the actual computations of the rates were not set out by the Board in
its recommendations made in 1983 or 1985 or 1988 but the proper approach to the
issue is not the one adopted by the petitioner. The section does not require
the Board or the State Government to explain each and every step in its
calculation. All that the State Government has to do is to take into
consideration the factors relevant under section 60(5) and propose rates for
fixation to the State Government. It is in order to ensure that these
recommendations take into account all relevant factors that an opportunity has
been provided to the consumer to satisfy the Board as well as the State
Government that the fixation has not taken into account certain relevant
factors. We, therefore, think the appellant must be held to have been given a
fair opportunity under s. 60(5)(a) so long as it had an opportunity to explain
to the Board and the State Government the factors individual to its case and
also as to how and why the rates recommended by the Board need modification.
Moreover, the issue here was in a narrow compass for the following reason. On
the passing of the Amendment Act, the Board decided to substitute the contract
rates by the HV-2 rates. But this was rendered infructuous because of the terms
of section 60(5)(a) which, it was said, were 173 different from those of s. 49.
If the factors under section 49 were alone to be taken into account then the
consumers, one and all, would have been liable to pay for the electricity at
the tariff rates. The claim of the appellant was that in applying these rates
certain factors individual to it had not been taken into account. If one
compares the two provisions, one will find that most of the elements are common
to the two provisions. Both under section 49 and section 60 the authorities
have to take into account the geographical position of any area, the nature of
supply and purpose for which supply is required and any other relevant factor.
The
only difference between the two provisions is that since section 49 deals with
a general fixation while section 60(5) deals with a fixation for a particular
individual case, there may be some special factors to be taken into account
which may or may not be germane while fixing the general tariff under section
49. Hence the only point which needed to be considered, when the matter was
reexamined pursuant to our directions, was whether, having regard to the
factors prevailing in the case of the appellant the rates to be fixed should be
higher or lower than the HV-2 rates or whether they should be the same. It was
open to the petitioner to contend, as it in fact did, that there are special
features in its case which make it legitimate to fix some concessional rates as
compared to other consumers. On the other hand, it is equally open to the State
Electricity Board to contend that having regard to the prevalence of certain
circumstances, the rates to be fixed should be higher than the tariff rates
applicable generally. This is a short aspect on which both parties have made
their positions clear. Apart from the general factors which have been taken
into account in fixing the general tariff rates, the Board has, in making its
recommendations, taken into account the purpose for which supply was required
by the petitioner along with the factor of recurring losses incurred by the
Board year after year and its statutory requirements to maintain a minimum
surplus of 3 per cent as required under section 59 of the Supply Act, 1948. We
are, therefore, satisfied that the appellant had full opportunity to place all
its special features before the Board and the State Government and that all
aspects have been fully considered by the authorities. The fixation of rates on
31.8.1991 is not, therefore, vitiated for the reasons urged by the appellant.
The
only other aspect that requires consideration is regarding the maintainability
of the rates as now fixed by the Board and the State. Three questions arise in
regard to this :
(i)
Can the Board fix rates higher than HV-2 rates in respect of bulk consumers
like the company for whom a concessional rate had been granted on special considerations
? 174
(ii)
Can the Board determine rates in 1991 and make them retrospective w.e.f. 1983?
(iii)Was
there material for the Board to fix rates which they have eventually fixed? We
find that the answer to the first two questions posed only be in the
affirmative.
On the
first issue, there are no obstacles, statutory or theoretical, standing in the
way of the Board fixing rates for the company which will be higher than the
rates applicable to bulk consumers. The provision in s.60(5)(a) is intended to
enable the Board and State to cut off the shackles cast by an ancient contract
entered into at a time when conditions were totally different. It confers an
absolute and unrestricted enabling power to revise the rates in an appropriate
manner and contains no restriction of the nature suggested for the appellant.
In doing this, the only limitation which the statute requires the authorities
to keep in mind are the factors mentioned in the section. Whether the revised
rates for the consumer governed earlier by the contract should be higher or
lower than, or equal to, the tariff rates would depend on a large number of
considerations, in particular, the basis on which, and the point of time at
which, those general rates were fixed. In principle, it is quite conceivable
that, in an appropriate case, a consideration of the relevant factors may
justify even a rate higher than the general tariff rates intended for the
particular category of consumers. We shall examine later whether this was
justified in the present case. At the moment, all we are concerned with is the
legality of fixing such higher rates and we see no difficulty in this either on
the language of the Statute or on other considerations.
A
retrospective effect to the revision also seems to be clearly envisaged by the
section. One can easily conceive a weighty reason for saying so. If the section
were interpreted as conferring a power of revision only prospectively, a
consumer affected can easily frustrate the effect of the provision by
initiating proceedings seeking an injunction restraining the Board and State
from revising the rates, on one ground or other, and thus getting the revision
deferred indefinitely. Or, again, the revision of rates, even if effected
promptly by the Board and State, may prove infructuous for one reason or
another. Indeed, even in the present case, the Board and State were fairly
prompt in taking steps. Even in January 1984, they warned the appellant that
they were proposing to revise the rates and they did this too as early as in
1985. For reasons for which they cannot be blamed this proved ineffective. They
revised the rates again in March 1988 and August 1991 and, till today, the
validity of their action is under challenge.
In
this 175 state of affairs, it would be a very impractical interpretation of the
section to say that the revision of rates can only be prospective.
The
language of the section also supports this view.
Slightly
rearranging the syntax of the clause to facilitate easier understanding, what
it provides is that the revised rates fixed by the Board shall be the rates to
be charged by the Board for the energy supplied by it to any consumer for which
the payment will be due for the first time on or after the 20th May, 1983. In other words, the rates
eventually fixed will, by force of statute, apply to all supply of electricity
for which the charges become payable in terms of the contract, after 20.5.1983.
There are three objections suggested against this interpretation. The first is
that it precludes the Board and State, where they choose to do so, from
revising the rates prospectively or with effect from such dates, after
20.5.1983, which they may consider appropriate. We think this consequence does
not flow from the language of the provision. The mandate is only that the rates
to be charged on supplies for which payment becomes due after 20.8.83 shall be
as fixed by the Board. The powers of the Board in fixing the rates- including
the dates from which they will be operative-are not restricted in any manner.
The Board is at complete liberty to fix different rates from different dates
and that scheme of fixation will be read with the contract. Only the Board
cannot revise the rates in respect of supplies for which payment under the
contract, fell due before 20.5.83.
The
second objection, which is a follow up of the first, is that if the power u/s
60 is held exercisable more than once, the interpretation will permit
successive revisions, each superseding the earlier one, a position that could
lead to immense harassment. We have no doubt the power u/s 60 is exercisable
more than once. All the same, the answer to the appellant's objection is that,
while this could be a basis of substantial harassment if repeated revisions are
automatically dated back to 20.5.83 (as argued, on the first point, for the assessee),
it loses all force on our interpretation leaving it open to the Board and State
to fix the dates with effect from which revisions will be effective. In view of
this, one can take in that, while making a subsequent revision, the authorities
will not normally tamper with an earlier revision (s) or alter the dates of
effectiveness fixed for the earlier revision (s) without a valid reason to do
so. If this is done, it will be open to a court to examine the basis thereof
and sustain it only where the earlier fixation was based on an error or
misconception or the like and called for modification. The third objection is
that the Hindi version of the Amendment Act is differently worded and does not
contain the words "for the first time" found in the English version.
Reliance is placed on the decision of a Bench of seven judges of the Allahabad
High Court in Mata Badal Pandey v. Board of Revenue, (1974) U.P.T.C. 570 to 176
the effect that, where there appears a doubt or ambiguity on a plain reading of
the English words as to the true intention of the legislature and the Hindi
version is conflicting or different. the Hindi text will be the key for finding
the answer. We do not think the Hindi version really alters the position;
actually it is the presence of the words "for the first time" in the
English version that create an ambiguity. Without these words, the clause
clearly provides that all supply of electricity, for which payment is to be
made after 20.5.83, will be charged at the rates to be fixed by the Board. We,
therefore, reject the appellant's contention and hold that the fixation by the
Board of rates from 20.5.83 and, at different rates for different periods of time,
is unexceptionable.
This
takes us to the real and crucial question in the case as to whether rates to be
fixed in the present case should, on proper consideration, be less than, equal
to or higher than the general HV-2 rates. The appellant contends that it should
be charged at the cost of generation plus a reasonable margin of profit or at
the rate at which the supply is made to the Madhya Pradesh State Electricity
Board. At any rate, it is said, the rates charged to the appellant should be
less than HV-2 rates. For this it relies on:
(a) the
special circumstance that the appellant, at great detriment to itself, agreed
to set up a caustic soda plant in a backward area at the request of the State
Government and in public interest only because of a promised concession in
rates of electricity supply;
(b)
the fact that the supply to the appellant is metered at the point of generation
with the result that the transmission and distribution losses, in so far as the
appellant is concerned, are borne by the appellant and not by the Board as in
the case of other consumers and
(c) the
important fact that electricity, in the case of the appellant, is one of the
only two raw materials needed for its business. On the other hand, for the
Electricity Board, it is contended that the appellant should be called upon to
pay higher than HV-2 rates for the following reasons :
(i)
The appellant has been having substantial supplies of electricity at nominal
rates of 2.5 paise and 2.75 paise per unit between 1963 and 1983.
(ii)
The supply to the assessee is being made only from the State Grid and there is
no reason why it should draw the supply at lower rates than others :
(iii)
The Board had been incurring heavy losses over the years. This is to a
considerable extent due to the spiraling demand for electricity, the Board's
responsibilities under the statute to co- 177 ordinate development of the
supply of energy throughout the State and the necessity to supply energy at concessional
rates to certain sectors such as the agricultural sector.
(iv)
The Board is also entitled, under s.59 of the 1948 Act, to take into account
the necessity of building up a surplus, statutorily fixed, in the fixation of
rates of supply to all or any of its consumers.
We
have given careful thought to the considerations urged before us and we are of
opinion that there is no material to justify any departure from the HV-2 rates
in the case of the appellant. We find no force in the contentions put forward
on behalf of the appellant to reduce the rates applicable to the appellant
below HV-2 level. The special circumstances pleaded have lost their importance
with the passage of time. It is obvious that the conditions that prevailed in
1963 are not valid and the appellant has had the benefit of concessional rates
for twenty years. No doubt the benefits would have continued for five more
years but for statutory intervention. But the statute permits a reconsideration
of the situation as in May 1983 and it is unarguable, it seems to us, that the
rate of 2.75 p. should continue even after 1983 or that the appellant should be
entitled to any special concession. The consideration that electricity is a
"raw material" in the assessee's business is, again, irrelevant for
it can mean nothing more than that the appellant needs substantial quantities
of the energy and there is no reason why it should not pay for it at the normal
market rates. The point regarding take off of supply at the generating point
will no doubt have some relevance on the question of rates and we shall refer
to this aspect later in the context of the pleas put forward by the Board.
We
are, therefore, of the view that the appellant has no valid justification for
staking a claim to less than the HV- 2 rates.
Equally,
it seems to us, the authorities have no case for seeking to raise the rates
beyond the HV-2 rates. They are supplying energy to the appellant from the grid
since 1968 and they cannot justifiably seek to demand higher rates from the
appellant than from the HV-2 consumers. This is sought to be justified on the
basis of the huge losses that the Board has been incurring and the statutory
justification for escalation in the rates keeping in view the necessity to
build up a surplus. This, however, is an aspect of working which should affect
all the consumers equally. May be the Board can, in appropriate circumstances,
seek to make up for a part of the losses by hiking up the rates to one
particular category of consumers but that would not be justified here as the
transmission and distribution losses 178 in respect of the supply to the
appellant are borne by it and, in the absence of some special vital reason, it
would not be equitable to fix the rates of supply to the appellant above the
rates applicable to other HV-2 consumers. Some reference was made to the
difficulties in completely fitting the scheme of computations for determining
the HV_2 rates into the scheme under the appellant's contract. It is, however,
unnecessary to go into that aspect as we are only on the question of rates and
holding that there is no justification for charging more than HV-2 rates from
the appellant. Moreover, the appellant has been paying for the Obra supply at
HV-2 rates since 1989. We have also been informed that in 1972 the appellant
took a further additional supply of 8 MW and agreed to pay therefor at HV- 2B
rates as applicable to other Bulk Power Consumers in the State.
In
these circumstances, we have reached to the conclusion that there is no
justification to charge more than HV-2 rates from the appellant. We, therefore,
allow this appeal in part, quash the determinations of 1988 and 1991 and direct
that the appellants should be charged from 20.5.83 to 31.3.89 at the HV-2 rates
applicable to other consumers. The appeal of the appellant is partly allowed to
the above extent. The Board's appeal has not yet been numbered as it is delayed
by a few days. It was, however, stated that the Board wishes to withdraw its
appeal because of the subsequent developments. For these reasons and also in
view of our above conclusion the Board's appeal also stands dismissed. In the
circumstances, we direct each party to bear its own costs.
T.N.A.
C.A. 1306/88 Partly allowed.
C.A.
128/92 dismissed.
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