Maharashtra Electricity Regulatory Commission
Vs. Reliance Energy Ltd. & Ors. [2007] Insc 825 (14 August 2007)
A.K.Mathur
& Markandey Katju
1.
This appeal under Section 125 of the of the Electricity Act, 2003 (hereinafter
for short "the Act") is directed against the judgment and order dated
29th March, 2006 passed by the Appellate Tribunal for Electricity whereby the
Appellate Tribunal has allowed the appeals filed by the distribution companies
and set aside the orders passed by the Maharashtra Electricity Regulatory
Commission (hereinafter for short "The Commission") dated 23.2.2005.
The Commission on 3.8.2004 addressed a notice to all its licensees/distribution
companies in Maharashtra and made an inquiry from them with
regard to raising of the bills by the said licensees/distribution companies on
the basis other than the actual meter reading for the relevant period, when
large variations in consumption were noticed, or for other reasons. The notice
dated 3.8.2004 sent by the Commission to all its licensees/distribution
companies reads as under :- "Several instances have come to the
Commission's notice of so- called "amendment",
"supplementary" or other such bills being raised by some licensees to
consumers, often several years later, on a basis other than the actual meter
reading for the relevant period, when large variations in consumption are
noticed, or for other reasons. Computerised systems have sometimes been put in place
which generate such bills automatically.
Wide
variations observed in recorded consumption and other such apparent anomalies
may be useful for monitoring, checking/testing of meters and for taking
corrective action. However, billing on a basis other than recorded consumption,
and raising amended bills accordingly (often after several years later, and
without giving reasons), is not mandated by law.
The
electricity statutes (in the past, and at present) provide inter alia that, in
case of metered consumers, energy consumption charges have to be billed on the
basis of meter readings. Moreover, the licensee, and not the consumer, is
responsible for maintaining, rectifying, or having such meters replaced where
necessary. Thus, no "amendment" bills of the kind referred to above
can be raised, and any additional billing has to follow due process and the
provision of law.
In the
context of such "amendment" bills, I am directed to ask that the
billing practices followed be immediately reviewed and brought into conformity
with the statutory provisions. An affidavit stating the corrective action taken
(including withdrawal of all such pending bills, and refund, though adjustment
in energy bills or otherwise, of amounts received from consumers on or after
10.6.2003) may be furnished by 3rd September, 2004."
2. In
response to the said notice all the licensees/distribution companies in Maharashtra made their respective submissions
before the Commission explaining under what circumstances the
supplementary/amended bills were sent to the consumers. They tried to justify raising
of such bills and stated that the these bills were rightly sent as they found
that some time the meters were not registering proper consumption and on that
basis they tried to justify their action.
3. The
Commission examined the matter in detail and vide its order dated 23.2.2005 in para
46 directed as under:- "46. After considering all these factors and the
submissions made, the Commission directs that the supplementary/amendment bills
issued in the circumstances set out at para 42 and 43 above from 10th June, 2003 (the date of coming into force of
EA, 2003) and upto notification of the Supply Code.
a.
should be withdrawn, if due meter testing has not been done with the results
intimated to the consumer.
b. any
amounts collected should be refunded to the concerned consumers (without
interest considering the earlier lack of clarity on this meter on the part of
the licensees);
c.
where meters have been found to be defective upon subsequent due testing (and
the results intimated to the consumer), the bills may be adjusted for upto 3
months prior to the date of testing or meter replacement, whichever is earlier,
and any amounts recovered in excess refunded without interest (in the case of
'stopped' meters, the analogy of the Supply Code provisions should be applied
for assessment);
d. the
above action should be completed by 30th May, 2005, so as to give the licensees more
than 3 months' time in view of the work likely to be involved;
e.
compliance should be submitted on affidavit by 15th June, 2005, with a list of consumers involved, and certifying that no
further action remains to be done in terms of this Order."
By
another order dated 23.8.2005 in the case of M/s. Prayas (Energy Group) Pune,
the Commission in para 45 directed as under:- "45. Considering the
foregoing, the Commission disposes of Prayas' petition with the following
directions, which would apply for the period from 1st June, 2004 (i.e. around 3
months after the detailed Tariff Order dated 10th March, 2004, uptil 19th
January, 2005 (following which the Supply code Regulations were notified):
(a) no
billing using past consumption or some related 'average' basis should be
resorted to for more than a period of 3 months. (where average billing has been
continuing for more than that period just prior to 1st June, 2004, then it cannot be continued from that date.
In
case average billing has been resorted to for, say, 2 months prior to that, it
can be continued only for upto one month more). During that period 3 months,
the meter should have been tested/replaced, with the results intimated to the
consumer, and appropriate bill adjustments carried out thereafter (where such
average billing is being done on the basis of presumed faulty meter, and where
defectiveness of the meter has accordingly been established). If due and timely
diligence has not been exercised by the licensee, he cannot claim the right to
continue billing on a presumptive, average basis. The same principle will apply
to all other situations in which such 'average' billing has been resorted to,
except in cases where the meter is not accessible. (However, the Commission
notes that, in the case of locked/inaccesible meters, the licensees have
recourse to the remedies provided under Section 163 of EA, 2003, and it would
be expected that MSEB would exercise it sooner rather than later).
(b) In
all cases where bills have been raised and/or recoveries made which are not in
accordance with (a) above, the bills should be withdrawn and/or amounts
refunded to the consumers, through energy bills or other means, as may be
relevant, by 30th November, 2005, with interest at the same rate as payable by
consumers to MSEB for delayed payments."
4.
Aggrieved against both these orders, the matter was taken up in appeal before
the Appellate Authority. The Appellate Authority by the impugned order dated 29th March, 2006 set aside the orders passed by the
Commission and directed that each consumer should approach the forum created
under Section 42(5) of the Act for the individual grievances. 5. Aggrieved
against the order dated 29.3.2006 passed by the Appellate Authority, the
present appeal has been filed under Section 125 of the Act.
6. We
have heard learned counsel for the parties and perused the record.
7.
Learned counsel for the appellant-Commission has submitted before us that the
Commission has the power to give a general direction to its
licensees/distribution companies and he also submitted that in exercise of the
power under the Act, the Commission was competent to issue the aforesaid
direction. As against this, the learned counsel appearing for the
respondent-licensees/distribution companies submitted that the Commission has
no power to issue a direction like the one issued in the present case and
entertain individual complaints and direct refund of the whole amount by a blanket
order.
8. The
question before us is : what is the power of the Commission and to what extent
the Commission can issue directions. Suffice it to say that the Regulatory
Commission was constituted under the Electricity Act, 2003. The Act was a new
enactment which was promulgated by superseding the Indian Electricity Act, 1910
and the Electricity Supply Act, 1948. The Statement of Objects and Reasons of
the Act which have been summarized in the Preamble, reads as under:- "An
Act to consolidate the laws relating to generation, transmission, distribution,
trading and use of electricity and generally for taking measures conducive to
development of electricity industry, promoting competition therein, protecting
interest of consumers and supply of electricity to all areas, rationalisation
of electricity tariff, ensuring transparent policies regarding subsidies,
promotion of efficient and environmentally benign policies, constitution of
Central Electricity Authority, Regulatory Commissions and establishment of
Appellate Tribunal and for matters connected therewith or incidental
thereto."
"Appropriate
Commission" as defined in Section 2(4) of the Act means the "Central
Regulatory Commission referred to in sub-section (1) of Section 76 or the State
Regulatory Commission referred to in Section 82 or the Joint Commission
referred to in Section 83, as the case may be". In exercise of its power
under Section 82 of the Act, the State of Maharashtra constituted the Maharashtra Electricity Regulatory
Commission. The Commission exercises all the powers which are enumerated in the
Act. Though various provisions were pointed out to us by learned counsel for
the parties, but Section 82 which is relevant for our purposes reads as under
:- "82. Constitution of State Commission-(1) Every State Government shall,
within six months from the appointed date, by notification, constitute for the
purposes of this Act, a Commission for the State to be known as the (name of
the State) Electricity Regulatory Commission :
Provided
that the State Electricity Regulatory Commission, established by a State
Government under Section 17 of the Electricity Regulatory Commissions Act, 1998
(14 of 1998) and the enactments specified in the Schedule, and functioning as
such immediately before the appointed date shall be the State Commission for
the purposes of this Act and the Chairperson, Members, Secretary, and officers
and other employees thereof shall continue to hold office on the same terms and
conditions on which they were appointed under those Acts :
Provided
further that the Chairperson and other Members of the State Commission,
appointed, before the commencement of this Act, under the Electricity
Regulatory Commissions Act, 1998 (14 of 1998) or under the enactments specified
in the Schedule, may, on the recommendations of the Selection Committee
constituted under sub-section (1) of Section 85, be allowed to opt for the
terms and conditions under this Act by the concerned State Government.
(2)
The State Commission shall be a body corporate by the name aforesaid, having
perpetual succession and a common seal, with power to acquire, hold and dispose
of property, both movable and immovable, and to contract and shall, by the said
name, sue or be sued.
(3)
The head office of the State Commission shall be at such place as the State
Government may, by notification, specify.
(4)
The State Commission shall consist of not more than three Members, including
the Chairperson.
(5)
The Chairperson and Members of the State Commission shall be appointed by the
State Government on the recommendation of a Selection Committee referred to in
Section 85."
9. We
are not concerned with the provisions of appointment of Members of the
Commission as they are dealt with by Sections 84 and 85 of the Act. Section 86
deals with the functions of the Commission and is relevant for our purposes.
For ready reference, the same is reproduced hereunder.
"86.
Functions of State Commission:-
(1)
The State Commission shall discharge the following functions, namely :-
(a) determine
the tariff for generation, supply, transmission and wheeling of electricity,
wholesale, bulk or retail, as the case may be, withing the State:
Provided
that where open access has been permitted to a category of consumers under
section 42, the State Commission shall determine only the wheeling charges and
surcharge thereon, if any, for the said category of consumers;
(b)
regulate electricity purchase and procurement process of distribution of
licensees including the price at which electricity shall be procured from the
generating companies or licensees or from other sources through agreements for
purchase of power for distribution and supply within the State;
(c) facilitate
intra-State transmission and wheeling of electricity;
(d) issue
licences to persons seeking to act as transmission licensees, distribution
licensees and electricity traders with respect to their operations within the
State;
(e)
promote congeneration and generation of electricity from renewable sources of
energy by providing suitable measures for connectivity with the grid and sale
of electricity to any person, and also specify, for purchase of electricity
from such sources, a percentage of the total consumption of electricity in the
area of a distribution licensee;
(f) adjudicate
upon the disputes between the licensees and generating companies and to refer
any dispute for arbitration;
(g) levy
fee for the purposes of the Act;
(h) specify
State Grid Code consistent with the Grid Code specified under clause (h) of
sub-section (1) of Section 79;
(i) specify
or enforce standards with respect to quality, continuity and reliability of
service by licensees;
(j) fix
the trading margin in the intra-State trading of electricity, if considered,
necessary;
(k) discharge
such other functions as may be assigned to it under this Act.
(2)
The State Commission shall advise the State Government on all or any of the
following matters, namely :-
(i) promotion
of competition, efficiency and economy in activities of the electricity
industry;
(ii) promotion
of investment in electricity industry;
(iii)reorganisation
and restructuring of electricity industry in the State;
(iv) matters
concerning generation, transmission, distribution and trading of electricity or
any other matter referred to the State Commission by that Government;
(3)
The State Commission shall ensure transparency while exercising its powers and
discharging its functions.
(4) In
discharge of its functions, the State Commission shall be guided by the
National Electricity Policy, National Electricity Plan and Tariff Policy
published under section 3.
10.
Thus, from the above provision it is clear that the primary purpose of the
Commission is to determine tariff for generation, supply, transmission of
electricity etc. and to regulate the electricity purchase and procurement
process of distribution licensees, to facilitate intra-State transmission, to
promote congeneration and generation of electricity from renewable sources of
energy, to adjudicate upon the disputes between the licensees and generation
companies and to refer any dispute for arbitration, to levy fee for the
purposes of this Act, specify State Grade Code consistent with the Grid Code
specified under clause (h) of sub-section (1) of Section
79.
Sub-Section (2) of Section 86 also empowers the State Commission to advise the
State Government on any of the matters including promotion of competition,
efficiency, matters concerning generation, transmission, distribution and
trading of electricity etc. Sub-Section (3) provides that the Commission shall
ensure transparency while exercising its powers and discharging its functions.
Sub-section (4) provides that in discharge of its functions the Commission
shall be guided by the National Electricity Policy, National Electricity Plan
and Tariff Policy published under Section 3.
11. We
are not going into other questions as to how licenses were granted to all these
utilities, i.e., various distribution companies. It is not necessary for us to
go into these questions as in the present case, we are primarily concerned to
decide the powers of the Commission and to what extent it can issue directions
and whether the direction given by the Commission in the present case is sustainable
or not.
12. It
may be noted from a perusal of Section 86(1)(f) of the Act that the State
Government has only power to adjudicate upon disputes between licensees and
generating companies. It follows that the Commission cannot adjudicate disputes
relating to grievances of individual consumers. The adjudicatory function of
the Commission is thus limited to the matter prescribed in Section 86(1)(f).
13.
Section 14 of the Act provides for grant of licence; Section 16 provides for
conditions of licence; Section 61 lays down the tariff regulations and Section
62 provides for determination of tariff. The Commission under Section 94 has
civil powers also and under Section 96 it has power of entry and seizure. Under
Section 126 the Commission has the power to investigate and make assessment.
Section 127 provides for an appeal to the appellate authority. Under Section
128 the Commission can make investigation of certain matters where it is
satisfied that the licensee has failed to comply with any of the conditions of licence
or failed to comply with any of the provisions of the Act or the rules and
regulations made thereunder. Sub-Section (6) of Section 128 empowers the
Commission to take any action against the licensee/generating company.
Sub-section (6) reads as under :-
(6) On
receipt of any report under sub-section (1) or sub-section (5), the Appropriate
Commission may, after giving such opportunity to the licensee or generating
company, as the case may be, to make a representation in connection with the
report as in the opinion of the Appropriate Commission seems reasonable, by
order in writing :-
(a)
require the licensee or the generating company to take such action in respect
of any matter arising out of the report as the Appropriate Commission may think
fit; or
(b) cancel
the licence; or
(c) direct
the generating company to cease to carry on the business of generation of
electricity.
Section
142 of the Act provides for punishment for non-compliance of directions issued
by the Commission and Section 143 empowers the Commission to adjudicate after
holding an inquiry in such manner as may be prescribed by the Government.
Section
181 empowers the Commission to make regulations.
14. A
comprehensive reading of all these provisions leaves no manner of doubt that the
Commission is empowered with all powers right from granting licence and laying
down the conditions of licence and to frame regulations and to see that the
same are properly enforced and also power to enforce the conditions of licence
under sub- section (6) of Section 128.
15.
Thus, insofar as the first contention of the learned counsel for the
respondents that the Commission has no power is concerned, we are of the view
that the same is wrong. In this behalf the provisions of The Electricity Act,
2003 are quite clear and categoric and Section 128(6) empowers the Commission
to get the conditions of licence enforced. But the question is whether the said
power under Section 128(6) has been rightly exercised by the Commission or not.
After clearing the first hurdle, that the Commission has power to issue
directions, we shall now examine whether the direction given by the Commission
in the present case is correct or not.
16.
When the Commission received a spate of complaints from consumers against its
licensees/distribution companies that they are arbitrarily issuing
supplementary/amended bills and charging excess amounts for supply of
electricity, it felt persuaded to invoke its general power to supervise the
licensees/distribution companies and in that connection issued notice dated
3.8.2004. There can be no manner of doubt that the Commission has full power to
pull up any of its licensee or distribution company to see that the rules and
regulations laid down by the Commission are properly complied with. After all,
it is the duty of the Commission under Sections 45(5), 55(2), 57, 62, 86, 128,
129, 181 and other provisions of the Act to ensure that the public is not
harassed.
17. In
exercise of this general power notice dated 3.8.2004 was issued when mass scale
supplementary/amended bills were issued to the consumers. When these consumers
approached the Commission, the Commission directed its licensees to immediately
review their billing policies and bring the same in conformity with the
statutory provisions of the Act. The Commission did not get an investigation
made under Section 128(1) which it could have done, and without that, and
without getting a report under Section 128(5) it passed an order directing
refund of the amounts collected by the licensees/distribution companies, which
in our opinion was not permissible, since such a direction could, if at all, be
given after getting a report of the investigation agency. The Commission could
have made an investigation and got a report from the investigation agency and
on that basis directions could have been given. However, that was not done. In
these circumstances, in our opinion, the view taken by the Appellate Authority
in the impugned order to that extent is correct that the individual consumers
should have approached the appropriate forum under Section 42(5) of the Act.
18.
Thus while we hold that the Commission has power to issue a general direction
to licencees that they should abide by conditions of the licence issued by them
and charge only as per the tariff fixed under the Act so that the public at
large should not be harassed, we are of the opinion that so far as the blanket
direction given by the Commission for refunding the entire amount without
making a proper investigation whether the issue of supplementary/amended bills
was really warranted in every case or not is unsustainable. Here the Commission
has gone beyond its jurisdiction. After all the distribution/ generating
companies have to incur expenses for generation/distribution of power, and we cannot
at the same time give license to the consumers to commit theft of electricity
or to be benefited by improper functioning of the meter to the disadvantage of
the distribution/generating company. Thus, keeping in view the equity of both
the parties, we think it will be proper for us to direct that all the
licensees/distribution companies in the State of Maharashtra issue a general public notice in two daily newspapers
having wide circulation in the State, one English newspaper and one in
vernacular language. The notice shall state that whoever feels aggrieved by the
supplementary/amended bill, he/she can approach the licensee/distribution
company for redressal of their grievance within a period of three months from
the date of publication of the notice. In our view, that would meet the ends of
justice instead of passing a blanket order as given by the Commission for
refunding the money charged by the licensees/distribution companies by issuing
supplementary/amended bills. The individual consumers may make a grievance
before the licensee/distribution company that they have not consumed the
electricity for which they are charged or that the meter reading was not proper
or that they have been excessively charged for the power which they have not
actually consumed.
Therefore,
we direct that all the licensees/distribution companies shall issue a public
notice in two daily newspapers having wide circulation in the State of Maharashtra, one in English language and the
other in vernacular language requiring their respective consumers to make their
representations for redressal of their grievances in respect of the
supplementary/amended bills. The licensees/distribution companies shall decide
the individual cases received by them after giving a fair opportunity of hearing
to the consumers. The consumers who still feel not satisfied with the order
passed by the licensees/distribution companies can approach the appropriate
forum constituted under Section 42(5) of the Act and, if still not satisfied,
with the order passed by the appropriate forum to approach the Ombudsman under
Section 42(6) of the Act.
Accordingly,
we hold that while the Commission had a power to issue general directions to
prevent harassment to the public at large by its licensees/distribution
companies, but a blanket direction to refund the amounts collected by the
licensees/distribution companies which has been given by the Commission was not
warranted.
19.
Although, the Appellate Authority has set aside the order passed by the
Commission and issued a direction that the individual consumers may approach
the appropriate orders under Sections 42(5) and (6) we are not interfering with
that direction, but we direct that before that the licensees/distribution
companies shall hear the parties as directed hereinabove and decide whether the
supplementary/amended bills issued by them are proper or not.
20. In
view of the above discussion, this appeal stands disposed of with no order as
to costs.
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