Punjab-Haryana High Court
M/S Antarctic Industries And Others vs Punjab State Electricity Board And ... on 9 September, 2011
Author: Hemant Gupta
Bench: Hemant Gupta
IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH
Date of Decision: 09.09.2011
(1) LPA No. 605 of 2009
M/s Antarctic Industries and others ...Appellants
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellants.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(2) LPA No.670 of 2009
M/s Northern India Steel Rolling Mills ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. D.S.Bali, Senior Advocate with
Mr. Salil Bali, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(3) LPA No. 681 of 2009
M/s Waryam Steel and others ...Appellants
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellants.
LPA No.605 of 2009 2
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(4) LPA No. 708 of 2009
Pepsi Foods Private Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Rohit Khanna, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(5) LPA No.710 of 2009
M/s Arihant Threads Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Anand Chhibbar, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(6) LPA No.712 of 2009
M/s Vardhman Polytex Limited ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
LPA No.605 of 2009 3
(7) LPA No.755 of 2009
M/s Shreyans Industries Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
(8) LPA No.756 of 2009
M/s Shreyans Industries Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
(9) LPA No.757 of 2009
M/s Gillanders Arbuthnot & Co. Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellant(s).
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(10) LPA No.808 of 2009
M/s Krishna Alloys Private Limited ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: None for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
LPA No.605 of 2009 4
Mr. Sanjeev Pabbi, Advocate for the Commission.
(11) LPA No.925 of 2009
M/s Poddar Tyres ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellants.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(12) LPA No.930 of 2009
M/s Govind Rubber Ltd. (Unit-II) ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
(13) LPA No.931 of 2009
M/s Govind Rubber Ltd. (Unit-I) ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Sham Lal Bhalla, Advocate, for the appellant(s).
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
LPA No.605 of 2009 5
Mr. Sanjeev Pabbi, Advocate for the Commission.
(14) LPA No.941 of 2009
M/s Didar Steel Complex (Pvt.) Limited ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Tushantdeep Garg, Advocate, for
Mr. Sanjiv Bansal, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(15) LPA No.1093 of 2009
M/s Surendra Steel Rolling Mills ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Anand Chhibbar, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(16) LPA No.1272 of 2009
M/s Singla Steel Pvt. Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
LPA No.605 of 2009 6
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(17) LPA No.417 of 2010
M/s Rana Polycot Limited ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Rahul Sharma, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
(18) LPA No.1313 of 2010
M/s JMP Casting Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Ashok Aggarwal, Senior Advocate with
M/s Puneet Jindal and Mukul Aggarwal,
Advocates, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
LPA No.605 of 2009 7
(19) LPA No.298 of 2011
M/s Cheema Spintex Ltd. ...Appellant
Versus
Punjab State Electricity Board and others ...Respondents
Present: Mr. Rahul Sharma, Advocate, for the appellant.
Mr. Rupinder Khosla, Senior Standing Counsel and
Mr. Puneet Gupta, Advocate, for the PSEB.
Mr. Sanjeev Pabbi, Advocate for the Commission.
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MR. JUSTICE VIJENDER SINGH MALIK
HEMANT GUPTA, J.
This order shall dispose of aforesaid 19 Letters Patent Appeals arising out of common judgment passed by the learned Single Judge of this Court on 27.04.2009, whereby writ petitions filed by the appellants challenging surcharge on their large supply connections were dismissed.
The facts are taken from LPA No.605 of 2009 arising out of CWP No.8451 of 2007 even though the facts in all these are identical raising common issues. In LPA No.605 of 2009, the appellant has sought amendment of the writ petition so as to take additional legal grounds in support of its challenge to the claim of surcharge. The said application was allowed by this Court on 14.10.2009.
The present set of appeals fall in two categories i.e. first set of cases pertaining to industrial units, who have set up induction furnaces with sanctioned load of 2500 kVA or more prior to 25.06.1995 and; the second set being LPA Nos.298 of 2011, 417 of 2010, 712 of 2009, 925 of 2009 & LPA No.605 of 2009 8 708 of 2009 by other industrial consumers of large supply, who have been granted large supply connections in post-June 1995 period. Their grievance is primarily in respect of calculation of surcharge beyond the sanctioned contract demand of more than 2500 kVA.
Firstly, we take up for decision, the cases pertaining to large supply consumers granted connection at 11 kV prior to June, 1995.
The Punjab State Electricity Board (for short 'the Board') transmits the electricity in three kinds of voltage supply system i.e. (i) low tension (LT) at 440 volt - normally fed to domestic, small power or medium supply electric connection below 100 KW; (ii) high tension (HT) at 11000 voltage (11 kV) to large supply industrial connections; and (iii) extra high tension (EHT) at 66000 voltage (66 kV) - supplied to very big industrial consumers for whom a dedicated 66 kV line directly from sub-Station of the Board is provided. All the pre-1995 consumers have been granted large supply industrial connection at 11 kV with contract demand of more than 2500 kVA.
On 23.06.1995, a circular (Annexure P-2) was issued in respect of policy for release of connections to Power Intensive Units inclusive of Induction Furnace Units. It was communicated that it has been decided that all Induction Furnaces, prospective as well as existing furnaces with a contract load of 1500 kVA and above shall be supplied electricity under the category of 66 kV. It was decided to give option to Induction Furnaces to convert to 66 kV within 18 months i.e. by 31.12.1996 after which they will be liable to pay surcharge at the rate of 17.5% on the tariff already being charged. The Induction Furnaces consumers were to take action for getting supply at 66 kV at their cost. The said circular reads as under: "CC No.62/95
Issued vide memo No.67602 / 68352 / SSM-6 dated 23.06.1995 LPA No.605 of 2009 9 Sub: - Policy for release of connection to power Intensive Units. In continuation of this office CC No. 3/59 dated 6.1.1995.
2. It has been decided to bring all the Induction Furnaces-prospective as well as existing with a load of 1500 KVA and above under the category of 66 kV. Accordingly, Form CS-1(c) of Power Intensive Units registered upto 26.3.1993, which had earlier been cancelled in light of CC No. 55/93 and now have been revived in accordance with CC No. 3/95 dated 6.1.1995 and also those forms CS-I (C) which have been individually revived after being cancelled/withdrawn prior to 31.10.1992 on account of terrorist threats/disturbed conditions etc., provided they requested upto 31.12.1994, as well as all those causes of Induction Furnace applications where demand notice has not been issued by 19.6.1995 shall be released on 66 kV.
3. Regarding existing Induction Furnace consumers, it has been decided to give option to them to convert to 66 kV within 18 months i.e. by 31.12.1996 after which they will be liable to pay surcharge at the rate of 17 ½ % on the tariff already being discharged. Registered notices be, therefore, sent to all the existing Induction Furnace consumers to take action for conversion of getting supply at 66 kV, the cost of which shall have to be borne by the consumers as per standing instructions."
The Association of Induction Furnace Industries objected to such circular. A High Powered Committee was constituted to consider the Circular dated 23.06.1995. In terms of the report of High Powered Committee, the Board issued another Commercial Circular No.25/99 on 08.06.1999 (Annexure P-6). Such circular reads as under:
"Sub: - Policy for release of connections to Power Intensive Units Induction Furnaces).LPA No.605 of 2009 10
Vide Commercial Circular Nos. 62/95 dated 23.6.1995 and 64/95 dated 28.6.1995 instructions were issued that all Induction Furnace consumers in the State with a load of 1500 KVA and above, shall get power supply on 66 kV only. The existing induction furnace consumers who were getting power at 11 kV, were given the option to convert to 66 kV voltage within a time period of 18 months i.e. upto 31.12.1996 failing which they were also required to pay surcharge @ 17.5 % on the existing tariff. Also those with pending applications (having load upto 2500 KVA) were given the options for 11 kV supply, but in this case, they were required to pay 17.5% surcharge on the applicable tariff from the date of release of their connections.
2. Only a few consumers, however, changed over their supply to 66 kV in compliance of the above instructions, and many representations were received on the subject. Consequently, it was decided that PSEB will not disconnect the connections of induction furnace consumers, who did not pay 17.5% surcharge as mentioned above.
3. To resolve the issue, a Committee comprising of officers of PSEB and representatives of Public & Industry, was constituted on the intervention of State Government. The Committee was asked to study the grievances of Induction Furnace Industry in details and give its recommendations acceptable to both PSEB and Industry. Accordingly, the Committee went into this issue in detail and has submitted the following recommendations to PSEB which have now been accepted by the Board.
i) Board may not insist to levy 17.5% surcharge for non-conversion by the consumers as existing in 6/95 and also by those consumers who were released connections at 11 kV with an undertaking to pay 17.5% surcharge after 6/95.
ii) The 17.5% surcharge already billed and the late payment surcharge already levied w.e.f. 1.1.1997 may be written back. Wherever certain consumers have deposited this surcharge, the same may be refunded through subsequent energy bills.
iii) All future connections above 1500 KVA/2500KW shall be at 66 kV only. However, where feasibility at 11 kV has already been given before 3/97, the same need not be reviewed. (This para has been corrected vide CC No. 30/99).
You are, therefore, requested to implement the above. The 17.5% surcharge wherever already billed may now be treated as withdrawn in case of Induction Furnace consumers covered under recommendations/decisions as in para-3 above. Similarly, where 17.5% surcharge has been paid by Induction Furnace consumers, the same may be adjusted against their future monthly energy bills. LPA No.605 of 2009 11
All other instructions pertaining to the supply of power to Induction Furnaces, will however remain unchanged.
This issue with the approval of Competent Authority." In view of the decision circulated vide Commercial Circular (Annexure P-6), surcharge was not charged from the Induction Furnace Units, who have availed large supply electric connection prior to 23.06.1995 availing energy at 11 kV.
In the year 1998 "The Electricity Regulatory Commission Act, 1998" (for short '1998 Act') came to be enacted and in terms of such Act, Punjab State Electricity Regulatory Commission Tariff Regulations, 2002 (for short 'the Tariff Regulations') were promulgated. The 1998 Act was repealed by the Electricity Act, 2003 (for short 'the Act'), which came into force on 26.05.2003. "The Punjab State Electricity Regulatory Commission" (for short the Commission) has been constituted under the Act. The Tariff Regulations framed under the 1998 Act were notified to continue for the purposes of determining tariff under the Act as well vide notification dated 08.07.2004. It is not disputed by any of the parties that under the licensee i.e the Board cannot recover any amount towards the electricity charges not contemplated under the Tariff Order published under the Tariff Regulations. Some of the relevant Regulations read as under:
"Tariff Fixation Guidelines xxx xxx xxx (2) Neither the Board (or any of its successor entities) nor the utilities for transmission (intra-State transmission), distribution and supply of power shall charge any tariff without prior approval of the Commission.
Provided that the existing tariff being charged by generating companies and other utilities shall, subject to any specific order passed by the Commission in this behalf to the contrary, continue to be charged until the revised tariff is notified by the Commission, LPA No.605 of 2009 12 without prejudice to the powers of the Commission within the scope of Section 22 and 29 of the Act.
Annual Revenue Reports and Tariff Filings
4. (1) Each year, every utility and licensee shall file with the Commission a report for each of its Separate Business on its expected aggregate revenue from charges under its currently approved tariff and its expected cost of service.
Tariff filings
5. xxx xxx xxx (3) Tariff application shall include the following: -
(a) Where the proposed date of implementation falls within a financial year for which the Commission has previously determined a permitted aggregate revenue requirement, the filing of proposed tariff should be accompanied by a copy of the relevant Annual Revenue Report as submitted by the utility/licensee, plus a copy of the order passed by the Commission in relation to that report.
Where no determination of a permitted aggregate revenue requirement has been made for the financial year in which the proposed tariff is to be implemented, the filing of proposed tariff should be accompanied by the Annual Revenue Report for that Financial year and a copy of the order passed if any, by the Commission thereon for tariff filing.
(b) The information to be provided by the utility/licensee must
include
(i) A statement of the current tariff rates and all
applicable terms and conditions and the expected
full year revenue from the current tariff rates in the year in which the new tariff is to be implemented.
(ii) A statement of the proposed tariff rate prices and changes, including a full statement of all applicable terms and conditions. This statement should be shown in a form appropriate to the proposed tariff structure. Details should also be supplied of the publicity intended to be given to new tariff options when they are proposed to be implemented.
(iii) A statement of the expected full year revenue of the proposed tariff for the year in which the tariff is to be implemented.
xxx xxx xxx
LPA No.605 of 2009 13
(4) If the utility/licensee believes that the amendments being proposed
are minor in nature and will not change significantly either the expected aggregate revenues of the bills of any class of consumer, the utility/licensee may request waiver of any of the requirements of paragraph (5) (3) (6) subject to the approval of the Commission. (5) Within 7 days after the Commission has notified the utility/licensee that it has received all necessary information, the utility/licensee shall arrange for publication of a notice of its tariff application and send copies to the commission and relevant local authorities in accordance with the Conduct of Business Regulations of the Commission. The notice shall include a general description of the tariff amendment being applied for and its effect on the bills of different categories of consumers, and an invitation to submit written comments and objections to the tariff application to the Commission within 30 days. The utility/licensee shall also paste the notification in each of its offices.
xxx xxx xxx
General
11. The utility/licensee shall publish a notice informing its consumers of each change in the tariff rate at least seven days before the change is required to be implemented."
The process for the fixation of Tariff for the year 2003-04 was initiated by the Commission. The Board proposed levy of 17.5% surcharge on the consumers who have not migrated to supply at 66 kV. The North India Induction Furnace Association objected to proposed Tariff hike by 17.5% surcharge vide objections dated 25.2.2003 (Annexure P-7) on Induction/Arc Furnace Industries, who do not change to 66 kV Sub-Station in view of circular dated 08.06.1999. In response to such objection, the Board communicated on 17.03.2006 (Annexure P-8) that imposition of 17.5% surcharge on Arc/Induction Furnaces for supply at 11 kV is not applicable under the present and proposed Tariff Schedule and the position reflected in the Tariff petition is not correct. Thus no surcharge was claimed till the year ending 31.03.2004.
LPA No.605 of 2009 14
It may be mentioned here that the load limit of 1500 kVA as mentioned in Circular dated 23.06.1995 was revised to 2500 kVA vide commercial circular No 51/200 dated 17.7.2000. The limit for release of connections at 11 kV supply voltage to Power Intensive Units was again revised vide Commercial Circular No.44/03 dated 24.06.2003 from 2500 kVA to 4000 kVA with the condition that energy recorded at 11 kV shall be increased by 10%, whereas Arc Furnaces Consumers and other consumers having contract demand exceeding 4000 kVA at 11 kV supply voltage, the surcharge @ 17.5% is to be levied.
The appellants have been issued separate bills during the months of March to October, 2008 claiming surcharge @ 10% from the units having contract demand of 2500 kVA to 4000 kVA and 17.5% from 01.04.2004 as surcharge from the consumers having contract demand of more than 4000 kVA at 11 kV supply for not switching over to supply at 66 KV.
Mr. Ashok Aggarwal, learned Senior counsel for the appellants has vehemently argued that as per the Tariff Regulations, the Board has to file a claim titled "Annual Revenue Requirement" before the each Financial Year before the Commission constituted under the Act. The abridged version is also to be made available by the Board in terms of such Tariff Regulations. Such Annual Revenue Requirement or the general description (abridged version) is required to be published in the daily newspapers so as to give an opportunity to all affected consumers to submit their objections as contemplated by Regulation 5(5) of the Tariff Regulations. It is after considering the objections filed against the proposed Tariff, the Commission fixes the Tariff, which is valid for the period fixed by the Commission. It is contended that in the Public Notice of abridged Annual LPA No.605 of 2009 15 Revenue Requirement and Tariff Applications for the year 2004-05, there is no reference in respect of surcharge from the large supply consumers having connections at 11 kV. Such Public Notice had 'Note 5', which is to the effect that all other charges, which are being collected by the Board as per sales regulation for supply of energy to the consumers will be continued at the existing rates. It is, thus, contended that since the existing rates do not include the right of surcharge from pre-1995 consumers, therefore, it cannot be said that the Board has claimed variation in the tariff in terms of Tariff Regulations. It is contended that even minor variation could be carried out only after taking prior exemption from the Commission. But in the present case, the Board has not taken any prior exemption nor proposed any change in the tariff as per the Public Notice (Annexure P-19) and that surcharge not being the existing rate, the claim of the Board in respect of surcharge is not tenable.
The Commission published Tariff Order (Annexure P-21) dated 30.11.2004 but enforced the same with effect from 01.10.2004. 'Note ii' in Table 10.1 of the Tariff Structure (Annexure P-20-A) published by the Commission is that all other charges including rentals, parallel operation charges and deposits, which are being collected by the Board as per the Sales Regulations for Supply of Energy to Consumers, will continue at the existing rates. The said note is almost same as proposed in Note 5. It is pointed out in the Table that there is no reference of surcharge from the consumers like the present appellants. It was, in pursuance of such Tariff Structure, Commercial Circular No.57 of 2004 (Annexure P-20) was also issued by the Board. The Note 9 of such Circular is that existing surcharge for 11 kV Arc/Induction Furnace to continue as per existing rates. It is pointed out the Arc Furnace Units were paying surcharge and also post LPA No.605 of 2009 16 1995 consumers, therefore, surcharge from such units alone was to continue.
On the basis of such documents, it is sought to be contended that 10% or 17.5% surcharge was not the existing tariff, which was being levied and collected by the Board prior to enforcement of Tariff Order 2004-05 with effect from 01.10.2004. The abridge Annual Revenue Requirement does not contain any proposal of surcharge and that the Board has raised demands of electricity charges from 1.4.2004 even though the Tariff was made effective from 1.10.2004. Therefore, the claim of the Board to claim surcharge from 01.04.2004 is wholly illegal and unjustified. Any electricity charge not authorized by the Tariff Order cannot be claimed in terms of Section 45 of the Act. It is also contended that the General Conditions of Tariff and Schedule of Tariff issued by the Board on 14.07.2006 with effect from 01.04.2006 is not applicable to the consumers such as the appellants; as such General Conditions of Tariff is meant only for the new consumers.
Controverting the said arguments, Mr. Khosla has submitted that the claim of the Board to claim surcharge on large supply consumers at 11 kV is based upon Tariff Order for the year 2004-05 dated 30.11.2004, but made effective from 01.10.2004 and not on the basis of General Conditions of Tariff and Schedule of Tariff. It is contended that the Board filed Annual Revenue Requirement or the Aggregate Revenue Requirement (hereinafter referred to as ARR) for the Financial Year 2004-05 initially on 08.12.2003 for the tariff of the year 2004-05. But on the directions of the State Government, the said ARR was withdrawn in view of the exceptional circumstances of the restructuring efforts of the Board being underway. The Commission allowed the Board to withdraw ARR on 06.04.2004 and, LPA No.605 of 2009 17 thereafter, fresh ARR was filed on 31.05.2004 within the time granted by the Commission. In such ARR, the Board in respect of voltage surcharge claimed to the following effect (page 91):
"9. Revenue for tariffs Except for the Agricultural supplies, tariffs for all other categories are based on metered supplies. Thus, the tariffs are derived from the actual consumption of electricity. As of now PSEB does not have demand charges for any consumer category, and all charges are energy based. However several of the categories have monthly minimum charges (MMC) to ensure that a minimum cost recovery is assured from the consumers.
In addition to the MMC, Peak Load Energy Charges (PLEC), Voltage Surcharges and Power Factor Surcharges are also applicable for large supply. These charges are in place to ensure that the utilization of power by consumers is done in an optimal manner. The receipts from the various charges during FY 2003-04 are based on the actual billing data obtained. The same is presented in the table below. The consumption in the various slabs in the tariff categories involved is also based on actual billing data. The same has been utilized to project future consumption." In respect of proposed Tariff in terms of ARR, the Board said to the following effect (page 8):
"6.5 Large Supply Large supply represents the key source of sales and revenues. This category also has the maximum choice in terms of moving over to alternate supplies under Open Access or availing captive generation of power......
Accordingly, the Board proposes to introduce two part tariffs. Initially, this is planned only for Large Supply to industry including the following sub-categories: -
-- General Industry;
-- Power Intensive Units
Consumers in the Arc Furnace category are proposed to be merged with the Power Intensive Units (PIU) consumer. The present basis minimum charge is proposed to be discontinued. The proposed rates consider the voltage of supply."
Annexure I to the proposed Tariff depicts existing Tariff Schedule and General Conditions of Tariffs. Annexure II is the LPA No.605 of 2009 18 proposed amendments in existing Tariff Schedule and General Conditions of Tariffs. The said Anenxure II has been amended by filing a corrigendum petition dated 15.09.2004. The Tariff proposed originally and the modified Tarif in Clause 82.3.4 read as under:
Original "82. Schedule of tariff for Large Industrial Power Supply (LS):
1. 82.3.4 The above tariff covers supply at 11 kV. For supply at 400 volts, a surcharge of 20% is leviable. A consumer getting supply at 33 kV and above will get a rebate of 6%. Surcharge @ 17.5% on the above tariff shall be leviable for all the arc/induction furnace consumers which are being given supply at 11 kV." Modified "82.3.4 The above tariff covers supply at 11 kV. For supply at 400 volts, a surcharge of 20% is leviable. The consumer getting supply at 33 kV and above will get a rebate of 6%. If the Contract Demand exceeds 2500 kVA and upto 4000 kVA can be catered at 11 kV (except arc furnaces) provided the consumer is ready to pay for transformation losses, incremental line losses and service charges for which energy recorded at 11 kV shall be enhanced by 10% for billing purposes. Surcharge @ 17.5% on the above tariff shall be leviable for all arc furnace consumers above 2500 kVA and other consumers having contract demand above 4000 kVA, which are being given supply at 11 kV."
Objections regarding claim of surcharge were received by the Commission in pursuance of the public notice issued after the ARR was submitted by Board. Two of such objections were produced by the learned counsel appearing for the Commission during the course of hearing before this Court. One was on behalf of North India Induction Furnace Association dated 13.08.2004, wherein it was said to the following effect:
"High voltage Surcharge:- A surcharge of 17.5% proposed for Arc and Induction Furnace getting supply of 11 kV, is very much on the higher side and should be Nil."
Another set of objections dated 16.08.2004 received on behalf of Derabassi Industries Association, wherein it was said to the following effect:
LPA No.605 of 2009 19
"7. High Voltage Surcharge:- A Surcharges of 17.5% proposed for Arc and Induction Furnace getting furnace getting supply of 11 kV, is very much on the higher side."
The representatives of the various Associations were heard by the Commission in the month of August/September, 2004. The Commission in its report in the Tariff Order (Annexure P-21) noticed as under:
"6.9 REBATE FOR POWER SUPPLY AT HIGHER VOLTAGE Objections Raised Steel Furnace Association of India, CII, PACL & North India Induction Furnace Association and a number of other organizations of industrial consumers welcomed the proposal of PSEB to increase the percentage of rebate from 3% to 6 % to consumers receiving supply at 33 kV & above. It was, however, felt that the rebate was not adequate and further requested that H.T. rebate should be on total consumption charges i.e. demand charges, energy charges and any other component which forms part of cost of energy as applicable.
Ludhiana Hand Tools Association and Chamber of Industrial and Commercial Undertakings were of the view that since Board has specified the supply voltage at which heavy loads can be fed, the question of high voltage rebate does not arise and the rebate of 3% already allowed should also be withdrawn. Derabassi Industries Association and PHD Chamber of Commerce and Industry opined that the proposed surcharge of 17.5% for Arc and Induction Furnaces getting supply at 11 kV is very much on the higher side.
Northern Railway requested that 6% rebate proposed for large supply consumers getting supply at 33 kV and above may also be extended to Railways as it draws power at 132 KV and 220 KV.
Response of PSEB The Board submitted that the provision of supply at higher voltage levels by the Board cause significant cost saving to the Board in terms of infrastructure provisioning for supply and associated savings in technical losses. Thus, the provision of incentives has been proposed considering these cost savings to the Board and the persistent demand across the industry to share these savings in costs with the consumer. It was pointed out that the incentive has been proposed by the Board considering such incentives in other states and financial implications to the Board. The Board considered level of incentive appropriate at this stage and stated that a higher rebate would cause lower revenues to the Board, requiring the Board to propose higher base rates for industry.LPA No.605 of 2009 20
Regarding surcharge for supply at 11 kV to Arc and Induction Furnaces, it was submitted that tariff applicable to various categories are worked out at a base voltage level for each category. The rebates/surcharges to incentives/penalize the consumers for shifting from the base voltage to higher/lower voltage have been structured keeping in view the likely additional transformation and line loss saved/incurred by the Board by such shift.
The tariffs have been computed for railways without considering the voltage rebate. If the rebate is to be included the base tariffs would require upward revision to preserve the revenue neutrality to the Board. View of the Commission The Commission decides to allow 3% rebate on energy consumption charges for power supply to Large Supply consumers catered supply at 33kV/66kV and 5% rebate on energy consumption charges for consumers with supply voltage at 132 kV/ 220 kV. This issue is discussed in detail in Chapter - 9."
The levy of surcharge was discussed in Chapter 9, when the Commission said to the following effect:
"9.11 17.5% SURCHARGE FOR 11 kV ARC/INDUCTION FURNACE CONSUMERS Some Industrial Consumers Associations have objected to the proposal of PSEB to levy 17.5% surcharge on induction furnace consumers catered supply at 11 kV especially when tariff has been fixed at 11 kV. As per present policy, all Large Supply consumers except arc furnaces with contract demand exceeding 2500 kVA and upto 4000 kVA can be catered at 11 kV provided they are ready to compensate for transformation losses, incremental line losses and service charges incurred in this regard. For this purpose, energy recorded at 11 kV is enhanced by 10% for billing purposes. For all arc furnace consumers and other consumers having demand above 4000 kVA which are given supply at 11 kV, surcharge @ 17.5% is leviable.
The Board in its reply has stated that the tariffs for various categories are worked out at a base voltage level for each category. The rebate/surcharge is offered to incentivise/penalize the consumer for shifting from the base voltage to higher/lower voltage, keeping in view the additional transformation cost, transformation losses and line losses saved/incurred by the Board by such shifting. Hence the energy recorded at 11 kV is to be enhanced by 10% for consumers with demand exceeding 2500 kVA & LPA No.605 of 2009 21 upto 4000 kVA (except arc furnaces) to cover for transformation losses, incremental line losses and service charges. It has been further stated by the Board that surcharge @ 17.5% shall be leviable on all arc furnace consumers above 2500 kVA and other consumers with Contract Demand exceeding 4000 kVA catered supply at 11 kV. It has also been stated that surcharge @ 17.5% is levied on arc furnace consumers catered supply at 11 kV since last 30 years.
The Commission notes that Large Supply Consumers with bulk demand are required to be catered supply at 33 kV or higher voltage. Where they are allowed to avail supply at lower than permitted voltage, the same involves number of costs to the Board by way of setting up sub-station and its operation and maintenance. It also involves additional line losses and transformation losses for the Board. As such, these consumers are definitely liable to pay.
The Commission, therefore, decides to uphold the version of PSEB and continue levy of surcharge."
We have heard learned counsel for the parties at some length, but do not find any merit in the appeals. The pertinent argument raised by Mr. Aggarwal is that in the Annual Revenue Requirement, the Board has not claimed surcharge from the consumers, who are availing contract demand of more than 2500 kVA at 11 kV supply. In support of such argument, the primary reliance is on Public Notice (Annexure P-19) containing the abridged Annual Revenue Requirement. The requirement to publish Annual Revenue Requirement in abridged form arises on account of Section 64(2) of the Act as well as Regulation 5(5) of the Tariff Regulations.
The Annual Revenue Requirement published in abridged form is not an application giving the tariff proposals in detail. The tariff proposals are contained in Annual Revenue Requirement, which was filed by the Board on 31.05.2004. The public notice was issued in respect of the application so filed. There was a proposal for imposition of surcharge as is evident from Clause 82.3.4 of Annexure II of the proposed tariff. Not only LPA No.605 of 2009 22 there was a proposal, but representations including of the Association of the Appellants objecting to such proposals were submitted. Two of such proposals have been produced from the voluminous record of the Commission. The tariff order dated 30.11.2004 deals with some other objections as well. It may be noticed that the representative of North India Induction Furnace Association was heard by the Commission on 24.08.2004 and that of Derabassi Industries Association on 31.08.2004. Such objectors have specifically objected to levy of surcharge at the rate of 17.5%. It may be noticed that Annexure P-7, objection against the tariff proposals for the year 2003-04, was also submitted by North India Induction Furnace Association through its President Shri K.K.Garg. It was Shri Garg, who was present before the Commission on 24.08.2004. Thus, the Associations of the appellants have understood the proposals submitted by the Board. The Commission has heard the representatives of the appellants and after considering such objections, approved the levy of surcharge.
The perusal of the tariff order dated 30.11.2004 further shows that insistence of the Board for conversion of supply of Large Scale Power Consumers to 66 KV supply has a public purpose. It was explained that supply at higher voltage levels causes significant cost saving to the Board in terms of infrastructure provisioning for supply and associated savings in technical losses. The connections at higher voltage are to avoid the technical losses, transformation losses and line losses. Therefore, while giving incentives to large supply consumers getting supply at 33 kV or above, the levy of surcharge on the consumers, who are not availing connections of higher voltage serves the public purpose.
Still further, the categorization of consumers having contract demand of more than 2500 kVA after June, 1995 and pre June, 1995 is not LPA No.605 of 2009 23 justified. Both set of consumers are power intensive units. There is no reason as to why pre June 1995 consumers should be dealt with separately and distinctively except for the reason that they are old units. Being old units, they may require additional time to shift to supply at 66 kV. But even after 16 years, such units have not shifted to supply at 66 kV.
In view of the said fact, we find that not only the Board has proposed surcharge in respect of consumers of prior to June 1995 period, but also the Commission has discussed and approved such surcharge. The failure to mention such surcharge in the abridged Public Notice is inconsequential, when the complete Annual Revenue Requirement was available on the website of the Commission as also of the Electricity Board. The contents of Annual Revenue Requirement were known to the Induction Furnace units, which is evident from the fact that objections were filed and dealt with by the Commission.
It may be noticed that review was sought on behalf of Shri K.K.Garg, President, Induction Furnaces Association of the levy of surcharge levied in the tariff order of the subsequent year 2006-07 on 25.05.2006. The Board replied to such review petition on 19.07.2006 (Annexure P-10). Such review petition was dismissed by the Commission vide Annexure P-12.
It is also argued by the learned counsel for the appellants that an application for substitution of Clause 82.3.4 was moved on 15.09.2004 i.e. after granting hearing to the representatives of the industrial units. Therefore, such corrigendum cannot be considered, as the principles of natural justice were not complied with after such corrigendum. We do not find any merit in the said argument as well. Amended Clause 82.3.4 is modification of the clause in favour of the industrial units than the original LPA No.605 of 2009 24 proposal published on 31.05.2004. It is open to the Commission to give concession unilaterally to the industrial units as per the suggestion of the Board. Such concession does not violate any principles of natural justice as by such corrigendum, the levy of surcharge has been reduced and not increased. Still further, the appellants have not availed the remedy of appeal provided under the Act against the Tariff Order. The appellants have not availed such remedy, therefore, they cannot be permitted to challenge the Tariff Order by way of Writ Petition.
Therefore, we do not find that claim of surcharge from the large industrial consumers for not shifting to 66 kV suffers from any illegality or irregularity. The learned Single judge has examined the tariff order from various angles and did not find any illegality. We have re- examined the issue and find no illegality in the tariff order claiming surcharge.
Learned counsel for the appellants in second set of cases i.e. LPA Nos.298 of 2011, 417 of 2010, 712 of 2009, 925 of 2009 & 708 of 2009 have argued that the Board has earlier issued a Commercial Circular No.44/03 dated 24.06.2003 (Annexure P-1 in LPA No.298 of 2011) to levy surcharge at the rate of 10% in respect of consumers, with contract demand above 2500 kVA and upto 4000 kVA fed at 11 kV, shall bear transformation losses, increment line losses and service charges. Relevant part of the said Commercial Circular reads as under:
"2. (i) The supply voltage limit for release of PIU/General Industry has been revised from 2500 kVA to 4000 kVA for supply at 11 kV without changing the contract demand limit for other supply voltage. However, the applicant/prospective consumer(s), who want contract demand above 2500 kVA and upto 4000 kVA to be fed at 11 kV shall bear transformation losses, increment line losses and service charges for feeding the load of 11 kV instead of 66 kV. Therefore, energy recorded at 11 kV shall be increased by 10% and then billed at the prevalent tariff."LPA No.605 of 2009 25
Vide subsequent Commercial Circular No.52/2004 dated 11.10.2004 (Annexure P-2 in LPA No.298 of 2011), a clarification was issued that consumption (KWH) recorded at 11 kV corresponding to the demand recorded over and above 2500 kVA shall be increased by 10% and not the total energy consumption. Relevant part of the said circular reads as under:
"In this connection, it is clarified that consumption (KWH) recorded at 11 kV corresponding to the demand recorded over and above 2500 kVA shall be increased by 10% and not the total energy consumption. For example, if the MDI records a demand of 3000 kVA, then the consumption corresponding to 500 kVA shall be worked out on prorate by multiplying the recorded consumption by 1/5 (500/2500) and then energy charged enhanced by 10% for levying surcharge for getting supply at 11 kV above 2500 kVA loads."
The appellants challenged Commercial Circular No.66/07 dated 28.11.2007, wherein it was communicated that surcharge is to be levied on the consumption charges including demand charges as per Commercial Circular No.36/06. It was said to the following effect:
"It is further clarified that for energy consumption with CD above 2500 kVA and upto 4000 kVA (except Arc Furnace) catered at 11 kV, is to be enhanced by 10% for the period 01.04.2004 to 31.03.2006 and w.e.f. 01.04.2006 10% surcharge is to be levied on the consumption charges including demand charges, if any, as per CC No.36/06."
The aforesaid Circular also mentions that Chapter 9.11 of the Tariff Order 2004-05 contemplates that energy recorded at 11 kV is to be enhanced by 10% for consumers with demand exceeding 2500 kVA & upto 4000 kVA (except Arc Furnaces) to cover for transformation losses, incremental line losses and service charges. Such levy of voltage surcharge has been ordered to be continued in the Tariff Order 2005-06 in Chapter 8.11 and in subsequent Tariff Order for the year 2006-07. It has been circulated that the arrears, if less than of 18 months, are to be recovered in LPA No.605 of 2009 26 five equal monthly installments and if more than 18 months, then to recover the same in ten equal installments.
It is, thus, argued that now the appellants have been issued demands not in respect of surcharge on the consumption more than 4000 kVA or consumption over and above 2500 kVA, but on the entire consumption. Since the appellants have set up their industrial units after the aforesaid communication contained in Commercial Circular No.52/2004 dated 11.10.2004 (Annexure P-2 in LPA No.298 of 2011), therefore, the Board is estopped to claim any other tariff then what was circulated in the aforesaid Circular. Reliance is placed upon LML Ltd. Vs. State of Uttar Pradesh and others (2008) 3 SCC 128 and Badri Kedar Paper Private Limited Vs. Uttar Pradesh Electricity Regulatory Commission and others (2009) 3 SCC 754.
We do not find any merit in the said argument as well. Soon after the Commercial Circular No.52/2004 (Annexure P-2 in LPA No.298 of 2011) was issued on 11.10.204, the tariff order was published on 30.11.2004 though made effective from 01.10.2004 i.e. prior to the date of issuance of said circular. The Tariff Order passed by the Commission does not contemplate that surcharge has to be on the consumption after giving benefit of 2500 kVA or 4000 kVA, as the case may be. After the Act came into force, the Board can charge for consumption of electricity only in terms of the Tariff Order. There cannot be any variation by the Board unilaterally against the terms of the Tariff Order. Since the Circular has the effect of variation of the Tariff Order, therefore, such Circular is contrary to law and violates the mandate of the Act and the Regulations framed there under.
The doctrine of promissory estoppel sought to be invoked against the Board is not applicable to the facts of the present case, as on the LPA No.605 of 2009 27 day when such promise was made, it was against Statute i.e. the Act and the Tariff Regulations. Such terms of the Commercial Circular were against the Tariff Order for the year 2004-05 as well as for the subsequent Tariff Orders. Any promise, which is contrary to law, cannot be enforced. Therefore, the judgments referred to by the learned counsel for the appellants are not applicable.
Another argument, which is required to be noticed, is that the Circular dated 28.11.2007 cannot withdraw the manner of calculations of surcharge conveyed vide Circular dated 11.10.2004. In the Circular dated 28.11.2007, it has been pointed out that the Commercial Circular earlier issued on 11.10.2004 is against the Tariff Order and has no effect. It is to give the effect to law i.e Tariff Order, the said Circular has been issued. It is not the retrospective withdrawal of the Circular, but only to state that the surcharge is to be levied only in terms of Tariff Order.
In view of the above, we do not find any merit in the second set of appeals as well.
However, we find merit in the arguments raised by the appellants that the surcharge is being claimed from 01.04.2004 though the tariff order for the year 2004-05 was made effective from 1.10.2004. In view of the said fact, we are of the opinion that such surcharge can be claimed from the power intensive units such as the appellants from 01.10.2004 alone in terms of the tariff order Annexure P-21 and not from any date earlier than the date notified by the Commission. Therefore, the appeals are allowed to the limited extent that the surcharge at the rate of 10% from units having sanctioned contract demand of 2500 kVA to 4000 kVA and at the rate of 17.5% from the units having contract demand of more than 4000 kVA shall be applicable from 01.10.2004. LPA No.605 of 2009 28
Another argument raised by learned counsel for the appellants, common to both set of cases, is that in terms of Section 56 of the Act the Board can claim arrears of the electricity charges for a period of two years alone. It is contended that the bills for the supply of electricity were issued between the months of March to October, 2008 but with effect from 01.04.2004 i.e. for the period exceeding two years. Therefore, such recovery is not tenable. We find that in the writ petitions, no such assertion based upon Section 56 of the Act has been made. Even otherwise, we find that Section 56 of the Act deals with power of disconnection of supply in default of payment of the electricity charges without prejudice to the rights of the Licensee in a suit. The bar under sub-section 2 of Section 56 of the Act is in respect of the action under the aforesaid Section. Therefore, Section 56 of the Act is a provision which gives right to the Board to recover the arrears of electricity on the threat of disconnection of the supply. Such arrears are restricted for a period of two years, but it does not wipe off the recovery of arrears for more than two years. The right to recover arrears by way of suit has been specifically protected. Therefore, whether the electric supply can be disconnected in terms of Section 56 on the basis of arrears claimed, require verification of the facts. Therefore, we give liberty to the consumers to submit representation, if so advised, in respect of claim of arrears for a period exceeding two years. As and when such representations are filed, the Board shall consider the same and initiate appropriate proceedings for recovery either in terms of Section 56 of the Act or in other manner authorized by law.
With the said observations, all the appeals are disposed of.
(HEMANT GUPTA)
JUDGE
LPA No.605 of 2009 29
09.09.2011 (VIJENDER SINGH MALIK)
Vimal JUDGE