Zilla Vyavasayadarula Sangham Vs. A.P.
State Electricity Board & Ors 
INSC 534 (3 November
Hegde. MISRA, J.
Leave granted in all the special leave petitions.
raised in these appeals are:
Whether the Andhra Pradesh Electricity Board (hereinafter referred to as the
Board) is competent to put an end to the policy decision of the State to supply
electricity to the agricultural sector at subsidised uniform flat rate and
convert the same into multi different tariff rates discarding the principle of
fixation of uniform tariff as contemplated in Section 59 of the Electricity
(Supply) Act, 1948. (b) Whether the Board is competent to fix tariff as per use
of smaller or bigger H.P. motor and whether this fixing has any
rational basis which discriminate between one from the other agriculturists.
present appeals are directed against the orders of the Andhra Pradesh High
Court dismissing appellants writ petitions, holding that the Board decision in
fixing different rates based on the capacity of motor is neither arbitrary nor
order to appreciate the controversy we are herein giving short matrix of facts.
The appellant is a registered society having farmers in various districts of
Andhra Pradesh as its members. According to the case of the appellant, a
farmer-consumer of electricity for his agricultural purpose is classified by
the respondent-Board as a low tension consumer entitled for a subsidised price
in the light of the policy of the State Government. In pursuance to the same,
the Board reduced the tariff rates for a very short period, in the light of the
assurance given on the Floor of the Assembly in January, 1995 by the then Chief
Minister. Accordingly the tariff was reduced to Rs.50/- per H.P. per annum with
effect from 1.4.1995 under B.P.Ms. No.110, dated 5.6.1995. Subsequently the
Board after consultation with the State revised the impugned tariff. The
question raised is, whether revision of this tariff could be justified when it
runs counter to the said policy decision of the State, based on the assurance
of the Chief Minister and in view of the social and statutory obligation, both
on the Board and the State to supply electricity economically towards its
subject. The revised new tariff rate through B.P.Ms. No.32, dated 29.7.1996
rate year i) Upto 3 H.P. Rs.250/- per H.P. per year ii)
Between 3 H.P. to 5 H.P. Rs .350/- per H.P. per year iii) From 5 H.P. to 10
H.P. R s.450/- per H.P. per unit iv) 10 H.P. and above Metered supply @ Rs.0.50
per per of Rs.600/- subject to a minimum H.P. per year. Thereafter on the representation from the
farmers this tariff was reduced, first through B.P.Ms. No.35, dated 14.8.1996:
rate i) Upto 3 H.P. Rs.200/- per H.P. per year ii) Between 3 H.P. to 5 H.P.
Rs.300/- per H.P. per year iii) From 5 H.P. to 10 H.P. Rs.400/- per H.P. per year iv) 10 H.P. and above Rs.500/- per H.P. per
year Finally, came the impugned revised rates as per B.P.Ms.
dated 3.9.1996 which is:
rate DPAP Area Othersi) Upto 3 H.P. Rs.100/- per H.P. per
yearRs.150/- ii) Between 3 H.P. to 5 H.P. Rs.200/- per H.P. per
yearRs.250/- iii) From 5 H.P. to 10 H.P. Rs.300/- per H.P. per
yearRs.350/- iv) 10 H.P. and above Rs.400/- per H.P. per
yearRs.400/- Before reaching this stage, it is necessary to give
some historical background of the imposition of the tariff from the year 1982
till the date of the impugned tariff.
TDP Government headed by Mr. N.T. Rama Rao in exercise of powers under Section
78A of the aforesaid Act, directed the Board, through letter dated 15.12.1982
from the Secretary to the Government of Energy, Environment, Science and
Technology Department to revise the electricity tariff for Borewell/Tubewell pumpset
to Rs.50/- per H.P.
annum without installation of meters. The relevant portion of the said letter
is quoted hereunder:
agriculturists owning lands under flow irrigation from major projects for both
reliable and cheap irrigation, farmers depending on ground-water based
irrigation, most of whom are small and marginal farmers, have to incur
relatively higher expenditure in lifting water, besides being vulnerable to
recurring drought resulting in lowering of the water table in the wells.
in rural areas maintenance of electricity meters and the billings of individual
farmers based on meter reading is be set with administrative defects leading to
loss of revenue, hardship to the farmers and high collection cost. Keeping all
the above factors in view, the Government feel that the present power tariff
for agricultural pump sets needs rationalisation and that a flat rate system
based on the horse-power of each pump-set would be more appropriate in such
cases. Government have therefore, decided that with effect from 1st November,
1982 the revised power tariff for agricultural pumpsets in the State should be
a flat rate of Rs.50/- per H.P. per annum.
view to mitigate hardship to small and marginal farmers depending solely on
well irrigation and to give a fillip to agricultural production in the State,
the Government under Section 78-A of the Electricity (Supply) Act, 1948 direct
that, in supersession of the instructions issued in the letter cited (dated
20.1.1982), the APSEB shall revise the electricity tariff for irrigation wells
to Rs.50/- per H.P. per annum, and that this rate shall take effect from
the Board fixed the tariff at Rs.50/- per H.P per annum.
the change of the Government the tariff were again revised. Thereafter when
again Government of Mr.
Rao came into power, it gave assurance to the State Legislature on 20.1.1995,
as aforesaid that the farmers in the State would be supplied with power @
Rs.50/- per H.P. per annum. Based on this assurance, followed by the communication
of the Government dated 27th
May, 1995 the Board
issued B.P.Ms. No.110, dated 5.6.1995, revising tariff to Rs.50/- per H.P. per
annum for all pumpsets upto 75 H.P.. At that point of time B.P.Ms. No.147 dated
18.11.1992 issued by the Board was in operation as amended from time to time
through B.P.Ms. No.100, dated 29.12.1992, B.P.Ms. No.471, dated 15.3.1994,
through B.P.Ms. No.64 dated 24.4.1995, B.P.Ms. No.70 dated 8.5.1995 and through
B.P.Ms. No.72 dated 9.5.1995.
the change of the Government again the present impugned B.P.Ms. No. 40, dated
3.9.1996 was issued.
for the appellant is, this impugned B.P.Ms.
divided the agriculturists into multi groups, based on the consumption of the
horse power by the pumpsets into various slabs which runs contra to the uniform
tariff as contemplated under Section 49 of the Act.
Senior counsel Mr. P.P. Rao appearing for the appellant submits, the impugned
tariff rates are contrary to the Government policy issued under Section 78A, in
pursuance to the assurance given by the Chief Minister, as it instead of being
at flat rates, is based on slab rates and is also discriminatory inter se
between the same class of agriculturists. He also submits, even otherwise the
revision of rate is based on factual misrepresentation by showing deficit to
the Board for 1996-97, the year in question, wherein as per figures placed
before the public in the Power Development in Andhra Pradesh (Statistics)
1997-98, shows surplus for the same year. In fact this inconsistency was placed
before the High Court by some of the connected appellants through review
petition but the High Court without application of mind rejected the same.
support of the first part of submission, it is submitted that the policy
decision of the State cannot be changed by mere consultation. The change could
only be broughtforth by the issuance of fresh policy order by the State under
Section 78 A and communicating the same. He submits under General Clauses Act
(Central) and also under Section 15, State General Clauses Act, a thing can
only be undone in the same way as it was done earlier. In other words, when
there is an order under Section 78A based on the assurance of the Chief
Minister there has to be another such order by the State withdrawing the same
under the same Section. In the present case, submission is, admittedly even as
per Board there was no such order passed. He also referred to Section 49 to
show that Board while supplying the electricity has to frame uniform tariffs
and while fixing such tariffs it has to take into consideration what is stated
under sub-section (2).
also laid emphasis that justification to enhance the tariff cannot be sustained
when admitted losses of electricity through transmission and theft etc. are to
the extent of 33%. He fairly admits, under Section 78A direction by the State
Government would be confined to the policy decision only and the fixation of
rate of tariff is within the domain of the Board.
other hand, learned senior counsel for the respondent-Board Mr. Shanti Bhushan
submits, the impugned tariff does not suffer from any illegality and have been
validly revised. In fixing the tariff, the Board has kept in view, Sections 49
and 50 of the Act. For ready reference Sections 49 and 50 are quoted hereunder:
Provision for the sale of electricity by the Board to persons other than
licensees. (1) Subject to the provisions of this Act and of 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.
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.
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;
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.
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.
fixing the tariff and terms and conditions for the supply of electricity, the
Board shall not show undue preference to any person.
General Principles for Boards finance (1) The Board shall, after taking credit
for any subvention from the State Government under section 63, carry on its
operations 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) or income and profits, depreciation and interest
payable on all debentures, bonds and loans, [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 beginning of such year.
For the purposes of this sub-section, value if 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
consumers contributions for service lines.
specifying [any higher percentage] under sub- section (1), the State Government
shall have due regard to the availability of amounts accrued by way of
depreciation and the liability for loan amortization and leave (a) a reasonable
sum to contribute towards the cost of capital works; and (b) where in respect
of the Board, a notification has been issued under sub-section (1) of section
12A, a reasonable sum by way of return of the capital provided by the State
Government under sub-section (3) of that section and the amount of the loans
(if any) converted by the State Government into capital under sub-section (1)
of section 66A.
supplies electricity and fixes tariff from time to time under Section 49. In
doing so, it has classified the consumers into low tension consumers and high
tension consumers. Under low tension consumers among the 7 categories the
agriculturists is category no.5 (to which we are concerned) and under high
tension consumers fall factories, industries and also agriculture of high
tension consumers. Different tariff rates are being fixed from the very
inception by the Board for each class or category.
impugned tariff revision was undertaken by the Board keeping in view its
statutory responsibility it has to undertake in terms of Section 59. In doing
so, it has to ensure that the total revenue in any year, after meeting all
expenses properly chargeable including operation, maintenance and management
expenses, taxes (if any) on income and profits, depreciation and interest
payable on all debentures, bonds, and loans, leave such surplus as is not less
than 3%, or such high percentage as State Government may, by notification in
the official Gazette, specify. It is one of the statutory obligation cast on
the Board. It is also relevant to reproduce Section 78 A hereinunder to
properly test the scope of the direction of the State. Section 78 A: 78A.
Directions by the State Government.- (1) In the discharge of its functions, the
Board shall be guided by such directions on questions of policy as may be given
to it by the State Government.
any dispute arises between the Board and the State Government as to whether a
question is or is not a question of policy, it shall be referred to the
Authority whose decision thereon shall be final.
submission for the Board is, the communication by the Government dated
27.5.1995 cannot be construed to be a direction issued under Section 78A of the
Act. Any direction under Section 78A could only be for the furtherance to
discharge its function by the Board. Any direction which makes Board travel
outside such Sections 49 and 59 cannot be covered by Section 78 A. The Board in
order to honour the assurance given by the Chief Minister, notwithstanding it
not to be a direction under Section 78A, through B.P.Ms. No.110 as aforesaid,
brought the tariff to Rs.50/- per H.P. per annum to all the pump sets upto
Rs.75/- H.P. But later, in consultation with the State Government, once again
revised the tariff to bring it within the norms as envisaged by Section 59.
Thus submission for the Board is, firstly issuance of letter dated 27.5.1995 is
not a policy direction issued under Section 78A and even if such direction
could be read implicitly as a policy decision then subsequent revision of the
impugned tariff after consultation with the Government has also to be construed
implicitly as withdrawal of the said policy direction. He submits, so far the
Government policy of supply of electricity to the Ryots (agriculturists) at a
cheaper and subsidised rates is still maintained by the Board and the impugned
revision is still in consonance within the same. He has also placed figures
before us, about which we shall be referring later, to show that the supply of
power to the agriculturists, even as per the impugned tariff, the average
supply is at the subsidised rate of about 90%. The actual cost incurred by the
Board in generation and supply of the electricity is Rs. 1.77 per unit.
denied that any misrepresentation was made by the Board before the High Court.
The submission is, that in the counter affidavit filed by the Board in the High
Court it is true - it records projected losses for 1996-97 showing revenue
deficit of Rs.1,533/- crores. These projected losses are shown with reference
to the tariff if imposed at the rate of Rs.50/- per H.P. per annum. This figure
is not actual loss. It is only to overcome these projected losses, the tariff
has been revised. Hence in the statistics of 1997- 98 rightly for 1996-97 surplus
is shown. This surplus is still within 3% as referred in Section 59.
the appellant it is submitted that the subsidies tariff @ Rs.50/- per H.P. per
annum fixed by the Board in 1982 and also on 5.6.1995 was by way of
implementation of the directions issued by the State Government under Section
78A which is binding on the Board. It is relevant here to record the assurance
of the Chief Minister, dated 20.1.1995 in the Andhra Pradesh Legislative
have assured that electricity will be supplied for cultivation to Ryots at the
rate of Rs.50/- per horse power per annum. I once again respectfully reiterate
the assurance that for the development and welfare of Ryots electricity will be
supplied at the rate of Rs.50/- only.
our responsibility to ensure that according to the Government policy Ryots are
supplied electricity at the rate of Rs.50/- per H.P. per annum.
was followed by a letter dated 25.5.1995 from the Secretary of the State
Legislature to the Member-Secretary to the Government of Andhra Pradesh
referring to the assurance given by the Chief Minister and this was followed by
letter dated 27.5.1995 from the Joint Secretary of Government to the Member-Secretary
of the Board. It records:
A.P. Leg. Assembly Assurance regarding supply of power at the rate of Rs.50/-
per one House power to the Agriculturists implementation report Ref: From Secy.
To Legislature, Lr. No.1959 (assu/95-1, dt: 20.5.95. --- I am directed to
enclose herewith a copy of the reference cited, together with Assurance
No.1959, dt: 20.1.95, regarding supply of power at the rate of Rs.50/- per one
horse power to the Agriculturists and request you to send the implementation
question is whether such letter could be an order under Section 78A and to be
such as to bind the Board for its compliance. Strong reliance has been placed
the certain observations made by this Court in Real Board & Ors., 1995 (3)
SCC 295. The reliance is on the following observations:
does appear that the view expressed by the State Government on a question of
policy is in the nature of a direction to be followed by the Board in the area
of the policy to which it relates In the present case, the flat rate per H.P.
for the agricultural pump-sets indicated by the State Government, appears to
have been found acceptable by the Board as appropriate particularly because it
is related to the policy of concessional tariff for the agriculturists as a
part of the economic programme.
submission is, this decision holds State Government policy direction has to be
followed by the Board and flat rate of charging tariff is part of the policy of
the State Government. Hence, the letter dated 27.5.1995 is a direction of the
State Government under Section 78A according to which the rate of tariff has to
be Rs. 50/- per H.P. per annum which is binding on the Board. The Board
notwithstanding this, when it revised its tariff upwards is in contravention of
this direction hence liable to be quashed. Emphasis is that fixation of flat
rate, namely, in the present case Rs. 50/- per H.P. per annum is a part of the
policy though it is open to the Board to escalate the rate, viz., it may be Rs.
100/- per H.P. per apnnum, Rs. 200/- per H.P. per annum but it cannot vary the
policy from flat rate to slab rate.
necessary first to examine the periphery of the statutory fields within which
the Board and the State Government has to function. Admittedly both are
statutory functionaries under the Central Act. They have to perform their
obligations within the limits they have been entrusted with. Section 78 A
empowers the State Government to issue directions to the Board on question of
policy, on the other hand the Board has to perform its statutory obligations
under the said Act and with reference to the fixation of tariff it has to act
in term of what is contained in Sections 49 and 50. But this field of policy
direction is not unlimited. There cannot be any policy direction which pushes
the Board to perform its obligations beyond the limits of the said two
sections. Any policy direction, which in its due performance keep the Board
within its permissible statutory limitations would be binding on the Board. So,
both State and the Board have to maintain its cordiality and co- ordination in
terms of the statutory sanctions. If any policy direction pushes the Board in
its compliance beyond statutory limitations, it cannot be a direction within
the meaning of Section 78 A.
significant that opening words of Section 78 A is, in the discharge of its
functions, the Board shall be guided by such directions. So, the direction of
the State is for the guidance to the Board, in the discharge of its functions.
Thus this direction has also limitation to give such direction which will subserve
in performing its statutory obligation. We would be returning later to test, if
direction to charge tariff at the rate of Rs. 50 per H.P. per annum would have
been followed by the Board, whether it would have travelled beyond Section 59.
we proceed to see to what extent the Board as per impugned revised rates is
charging the tariff from agriculturists. Learned counsel for the Board has
placed before us the rate per unit charged from the agriculturalists in
question from 1983-84 till 1997-98. It is said in spite of this upward revision
of tariff, even now the rate is heavily subsidised.
Flat rate per unit Charged 1983-84 9.20 Paisa.
4.27 P 1989-90 4.29 P.
is this chart shows, in spite of increase in the cost escalation in every
field, even in the impugned tariff for 1996-97, the year in question, the Board
is merely charging 13.51 per unit when the cost of production is Rs.1.77 per
unit. In other words, it is subsidised approximately 90% of the average cost.
On the other hand, if the same tariff, in terms of the letter dated 27th May, 1995 would have been charged there would
have been heavy loss to the Board and thus compliance of the same would have
resulted in contravention of Section 59 of the Act.
we proceed to examine what this Court held in the Real Food Products Ltd.,
(supra). This Court examined the nature and effect of the direction given by
the State Government under Section 78-A. It was examined in the context of
charging a flat rate per H.P. for agricultural pumpsets. It holds, view
expressed by the State on a question of policy to be followed by the Board in
the context of Boards function under Sections 49, 59 and other provisions of
the Act. This Court held, that the flat rate per H.P. for the agricultural pump
set was found acceptable by the Board. What does, acceptable to the Board
means? It only means, it to be within the parameters of Sections 49 and 59 of
the Act. In other words, Board has not to travel outside its obligations under
decision records: However, in indicating the specific rate in a given case the
action of the State Government may be in excess of the power of giving a
direction on the question of policy, which the Board, if its conclusion be
different, may not be obliged to be bound byif the view expressed by the State
Government in its direction exceeds the area of policy, the Board may not be
bound by it unless it takes the same view on merits itself At any rate, there
is no material in the present case to indicate that the flat rate indicated by
the State Government for the agricultural pump- sets was so unreasonable that
it could not have been considered appropriate by the Board.
it is clear Board would not be bound to follow every policy directions.
According to the Board, if tariff was charged at the rate of Rs.50/- per H.P.
per annum, as per the direction in question, loss to the Board would have been
to the extent of Rs.1,553 crores for the year 1996-97.
would have gone contrary to the obligation cast on the Board under Section 59.
Section 59 mandates the Board to leave such surplus not less than 3% of the
revenue, after meeting all its expenses referred to therein. This Board has not
to supply electricity at such rate to be in deficit, leaving no hope for its extensions
for the benefit of persons living in an uncovered area. It is for this and
other reason statute mandates Board to maintain this surplus in every year. If
it has to perform this statutory obligation, how can it do so, if it follows
any such direction which takes it away from it. It is true government can to
cater to the popular demand in order to earn its legitimate favour, give any
such policy direction, but it should have to be within permissible limit.
seems Board initially, in order to maintain cordiality and cohesion in
functioning did honour the said assurance by issuing B.P.Ms. No. 110 dated
5.6.1995 and reducing the tariff to Rs. 50/- per H.P. with effect from
1.4.1995. However, subsequently, in view of the aforesaid facts, the Board it seems
did bring it to the notice of the State by consulting it and thereafter issued
the aforesaid impugned increased tariff B.P.No.40 dated 3rd September, 1995. On the facts of this case the
policy decision by the State Government, for the year in question, can only be
construed to mean to supply the electricity to ryots at the subsidised and concessional
tariff rates. The other part of the assurance, namely, to supply electricity at
the rate of Rs. 50/- per H.P. per annum which results into the aforesaid loss
to the Board cannot be construed to be part of the policy direction under
Section 78 A. The reliance by Mr. Rao that in Real Food Products Ltd. (supra)
the flat rate of charging tariff has been held to be a policy decision cannot
be construed to be so on the facts of the present case. In that case first we
find there is clear order under Section 78 A, which leaves no room of doubt it
to be so. The relevant portion of the same is quoted hereunder:
view to mitigating hardship to small and marginal farmers depending solely on
well irrigation and to give a fillip to agricultural production in the State,
the Government under Section 78-A of the Electricity (Supply) Act, 1948 direct
that, in supersession of the instructions issued in the letter cited (dated
20.1.1982), the APSEB shall revise the electricity tariff for irrigation wells
to Rs. 50 per H.P. per annum, and that this rate shall take effect from
even this direction was only approved by this Court because such direction of
the State was held to be acceptable by the Board, as there was no material in
that case to indicate that the flat rate @ Rs.50/- per H.P. per annum was so
unreasonable that it could not have been considered appropriate by the Board.
In the present case, the Board has accepted broadly the policy of the State
Government to supply electricity to the Ryots at the subsidised and concessional
rate but could not have accepted the rate @ Rs.50/- per H.P. per annum as it
would have run contra to Section 59. In the present case, for the year 1996-97,
according to the Board its fixed assets were Rs. 135 crores and after taking
into consideration of all the expenses, as aforesaid, the net amount to be
harnessed by the Board was to the tune of Rs.1,668/- crores in terms of Section
59, which could not have been achieved if the aforesaid direction is question
fact, if flat rate as a policy was to be charged, the submission of Mr. Rao is,
the Board could have fixed at 200, 300 etc. H.P. per annum in order to overcome
the deficit then it would have been in consonance with policy decision. This
submission lacks merit. If this would have been implemented, it would have put
heavy burden on small farmers who are using minimum electricity and would have
run contra to the central theme of the policy. Even submission of Mr. Rao, the
small agriculturist who get water at the deeper level has to consume more
electricity than bigger farmers who get water at higher level, thus consuming
more electricity and paying more in slab system, though at the first look is
attractive but cannot be accepted. Big farmers have to irrigate larger area
than small farmers and have to consume more electricity. There may be small
range of farmer, in the situation as submitted but for this there are no
material on the records to sustain such a submission. The imposition, on the
facts of this case, of the slab system is in keeping the interest of small
farmer to pay less for consuming less electricity hence is reasonable and
cannot be faulted. In doing so, it also does not violate Section 49 as
submitted, by not framing uniform tariff. Firstly, the pattern of tariff fixed
is uniform, even otherwise in terms of sub-section (3) of Section 49, Board
could make departure from it, for any relevant factor. Hence we do not find any
may conclude, on the facts of this case, the aforesaid letter of the Government
following assurance of the Chief Minister, could not be construed to be a
binding direction under Section 78 A, except to the extent which is implicit,
to supply electricity to the Ryots at the subsidised and concessiosnal rate,
which the Board has followed.
submission on behalf of the appellant is, High Court committed error, when it
decided by accepting the misrepresented figures placed by the Board. According
to the learned counsel, the figure accepted by the High Court for the year
1996-97 was deficit of Rs. 1,533 crores while the very Board while issuing its
statistics published through Power Development in Andhra Pradesh (Statistics)
1997-98 it showed the figure of Rs. 1,049 crores and Rs.
crores for the years 1996-97 and 1997-98 respectively as surplus. We have
considered this submission and as per the submission for the Board, the figure
recorded by the High Court was based on the figures in the counter affidavit
filed by the Board, which showed these figures as projected loss, not actual
loss. The submission is this projected loss was shown in case if the assurance
of charging tariff at the rate of Rs. 50/- per H.P. per annum would have been
accepted, while in the 1997-98 statistics published the actual figure is shown
to be in surplus. This resulted on account of upward revision of tariff. The
relevant portion of the said counter affidavit is reproduced below:
for 1996-97 have revealed a revenue deficit of Rs. 1,533/- crores with
reference to the revenues expenses to be met as per provisions under Section. 59
of Supply Act. Further the said section refers to a three per cent return on
the fixed assets for which another R. 135/- crores have to be earned as
revenue. Thus an amount of Rs. 1,668/- crores have to be mobilised through
tariff revision to achieve the three per cent statutory surplus prescribed in
the said reason the submission for the appellant has no force. We do not find
any mis-representation made by the Board before the High Court.
last submission by Mr. Rao with vehemence is that the loss incurred by the
Board is on account of theft and transmission loss which is as high as 33% on
average and Board if not able to control this, the burden should not be passed
on to the consumers including the poor agriculturists. It is true transmission losses
by theft is on high side. It is a matter of concern. It is an onerous duty of
the Board to be vigilant and keep on guard and check such transmission losses.
The Board must take steps at the highest level to see these transmission losses
of such high order does not take place in future, as this high percentage of
loss is bound to have impact on the rate of tariff and the total revenue of the
Board. The person found responsible should be dealt with strictly so that there
is no future reoccurrence. However, such losses itself would not be sufficient
for this Court to strike down the impugned tariff.
out of the two questions posed, to the first question (a), we hold, the Board
has not put an end to any policy decision of the State. In fact, it has
followed such direction falling under Section 78A, by supplying electricity to
the Ryots at subsidized and concessional rate, and imposition of tariff based
on slab system cannot be said to be illegal. To the second question (b), we
hold, this slab system applied by the Board on the facts and circumstances of
this case is not discriminatory but has rationale behind it in the interest of
into consideration the overall facts and circumstances of the present case, in
view of the findings we have recorded, we hold the impugned revised increase
tariff to be valid and uphold the order of the High Court, for the reasons
stated above by us. Accordingly, the aforesaid appeals are dismissed with