Allahabad High Court
Maa Vind Vasini Industries (A ... vs Purvanchal Vidut Vitran Nigam Ltd. ... on 12 December, 2007
Equivalent citations: 2008(1)AWC1002, AIR 2008 (NOC) 1546 (ALL.) = 2008 (2) ALJ 456 (DB), 2008 (2) ALL LJ 456, 2008 A I H C 1697, (2008) 71 ALL LR 60, (2008) 1 ALL WC 1002
Author: Sudhir Agarwal
Bench: Vineet Saran, Sudhir Agarwal
JUDGMENT Sudhir Agarwal, J.
1. Heard Sri U.N. Sharma, Senior Advocate assisted by Sri May auk Agrawal and Sri Krishna Agrawal, Advocates for the petitioners, Sri H.P. Dube, Advocate for respondents No. 1 to 3 and learned Standing Counsel for respondent No. 4.
2. Since the counter and rejoinder affidavits have already been exchanged, as requested by learned Counsel for the parties, this writ petition has been heard and is being decided finally at the admission stage under the Rides of the Court.
3. The petitioners, M/s Maa Vind Vasini Industries and another have filed this writ petition under Article 226 of the Constitution of India, aggrieved by the demand notice issued for the month of May, 2007 and also the letters dated 24.02.2007 and 05.05.2007 issued by the Chief Engineer (Commercial) U.P. Power Corporation Ltd., Lucknow and the Executive Engineer, Electricity Distribution Division-II. Purvanchal Vidyut Vitran Nigarh Ltd. Mohaddipur, Gorakhpur respectively and have sought a writ of certiorari for quashing the same. They have also sought a writ of mandamus commanding respondents to extend benefit of Government Order dated 14.06.2006 to the petitioners and not to disconnect electricity supply of the petitioners pursuant to the impugned demand notice.
4. The facts in brief, giving rise to the present dispute are that the petitioner is an industry, having installed a number of power looms, situated in urban area i.e. Industrial Area, Gorakhpur. For running its industrial unit, it applied for electric connection with the contracted load of 102 Horse Power (in short "HP"). The electric connection was released on 03.08*^004. The rates of electricity are payable by the consumers in the State of U.P. in accordance with the rate schedule/tariff of the supplier of electricity in the area concerned approved by U.P. Electricity Regulatory Commission (hereinafter referred to as the "UPERC"). The UPERC approved a tariff applicable to U.P. Power Corporation Limited (hereinafter after referred to as the "UPPCL"), Paschimanchal Vidyut Vitran Nigam Limited (Meerut Discom)(in short "PWNL"), Madhyanchal Vidyut Vitran Nigam Limited (Lucknow Discom)(in short MVVNL), Dakshinanchal Vidyut Vitran Nigam Limited (Agra Discom)(in short "DVVNL") and Purvanchal Vidyut Vitran Nigam Limited (Varanasi Discom)(in short the "Supplier") by its order dated 10.11.2004. It classified various consumers of electricity in the following categories:
1. LMV-1 -- Domestic light, fan and power
2. LMV-2 -- Non-domestic light, fan and power
3. LMV-3 -- Public lamps
4. LMV-4 -- Light, fan and power for public institutions and private institutions
5. LMV-5 -- Small power for private tube-wells/pumping sets for irrigation purposes
6. LMV-6 -- Small and medium power having connected load up to 100 HP for industrial/processing or agro-industrial purposes, power loom, etc
7. LMV-7 -- Public Water Works
8. LMV-8 -- State Tube-Wells/Panchayati tube-wells and pump canals
9. LMV-9 -- Temporary supply
10. LMV-10 -- Departmental employees and pensioners
11. HV-2 -- Large and Heavy Power for industrial and other purposes having contracted load of above 100 HP
12. HV-3 -- Railway traction
13. HV-4 -- Lift irrigation works having load of more than 100 HP
5. Amongst the aforementioned categories, in the present case we are concerned only with three categories namely, LMV-2, LMV-6 and HV- 2.
6. The petitioners having contracted load of more than 100 HP are covered by tariff HV-2. The State Government, sought to provide some concessional rates for power loom consumers and sent a letter dated 14.06.2006 (Annexure-1 to the writ petition) to UPPCL directing it to apply flat rate tariff to power loom consumers during financial year 2006-07 giving effect from 01.04.2006. Copy of the said letter was endorsed to UPERC and various Discoms mentioned above. Since the aforesaid letter of the government has the effect of altering rate schedule approved by UPERG, as soon as it came to know of the aforesaid letter, it issued an order dated 03.07.2006 restraining all electric supply undertakings in the' State of U.P. from implementing directions of the State Government contained in the letter dated 14.06.2006. Thereafter, Chairman, UPPCL, who also happens to be the Chairman of other Discoms filed an affidavit before UPERC giving an undertaking that billing to power loom consumers shall be made as per the applicable tariff but payment shall be collected as per the directions of the government and, the difference in the amount would be collected as subsidy from the government in one or maximum two half yearly instalments. Pursuant thereto, the aforesaid matter was considered again by UPERC and on 11.07.2006 it passed a detailed order permitting electricity suppliers in the State of U.P. to raise bills as per the tariff applicable to power loom consumers but to collect payment as per the directions issued by the government vide letter dated 14.06.2006 and the amount of difference was to be collected from the government as subsidy in two half yearly instalments. There were some other directions also issued by UPERC which we propose to discuss later as and when, if necessary.
7. It appears, while implementing directions of UPERC, the electricity supply companies felt some doubt as to whether the benefit of the Government Order dated 14.06.2006 would be applicable to power loom consumers who are governed by tariff HV-2 and, therefore, sought clarification from UPERC. Vide order dated 14/15.09.2006 (Annexure-3 to the writ petition), UPERC made it clear that the findings contained in its order dated 11.07.2006 shall apply mutatis mutandis to all power loom consumers irrespective of their load which would include HV-2 category also. Thereafter the State Government sent a letter dated 06.10.2006 (Annexure-4 to the writ, petition) to Chairman. UPERC stating that the government intended to provide benefit of flat rate to only such power loom consumers who were covered by the tariff LMV-2 and LMV-6 and not to HV-2 category consumers. It accordingly requested UPERC to modify its order dated 14/15.09.2006. The Commission replied to the government vide letter dated 18.10.2006 (Annexure-5 to the writ petition) that the Government Order dated 14.06.2006 did not confine benefit to any particular, category of consumers and, therefore, the order was passed on 11.07.2006 granting benefit to all power loom consumers irrespective of category. It thus requested the government to modify Government Order dated 14.06.2006 appropriately so that further action may be taken by UPERC. It appears that the State Government did not take any action thereafter but the Chief Engineer (Commercial), UPPCL, Lucknow sent a letter* dated 01.11.2006 (Annexure-6 to the writ petition) to the Secretary Energy, U.P. Government. Lucknow proposing an amendment in the government letter dated 14.06.2006 so as to exclude HV-2 category power loom consumers and also appended a draft amendment to the said letter for appropriate action. The State Government, however, did not take any action but the Chief Engineer (Commercial), UPPCL, on his own, sent a letter dated 24.2.2007 to the Chief Engineer (Distribution), Purvanchal Vidyut Vitran Nigam Ltd., Varanasi informing him that the benefit under Government Order dated 14.06.2006 was not applicable to HV-2 category of the consumers but is confined only to LMV-2 and LMV-6 category and, therefore, the authorities of Purvanchal Vidyut Vitran Nigam Ltd., Varanasi should act accordingly. As a consequence, the respondent No. 2 issued order dated 05.05.2007 (Annexure-10 to the writ petition) informing that six industrial consumers including the petitioners, who are HV-2 category of the consumers, are not entitled for the benefit of the Government Order dated 14.06.2006. It also issued, consequently, a bill requiring the petitioners to pay the entire amount as per the bill raised instead of the UPERC's direction contained in order dated 11.07.2006 that the billing shall be done as per the tariff but the payment shall be collected as per the Government Order dated 14.06.2006. Aggrieved by the aforesaid, the petitioners, thus, have filed the present writ petition.
8. On behalf of State of U.P. a counter affidavit has been filed wherein it is not disputed that the government issued order dated 14.06.2006 pursuant to its policy decision for giving benefit of subsidy to the weavers. The government intended to provide the said benefit to the businessman of power loom sector and not to industrialists and, therefore, intended to confine the said benefit to those weavers only who are having electric connections under LMV-2 and LMV-6 categories and not to HV-2 categories. In furtherance thereof, it has also issued a letter dated 01.05.2007 (Annexure-CA-2 to the counter affidavit of respondent No. 4) clarifying the Government Order dated 14.06.2006 that flat rate schedule would be applicable to only LMV-2 and LMV-6 categories power loom consumers and not to any other category of consumers. It is further stated that in view of Section 108 of Electricity Act, 2003 (hereinafter referred to as the "Act 2003") the State Government has power to frame policy for extending benefit to any class or classes of consumers which is subject to compliance of Section 65 of the Act 2003. The respondent No. 4 has categorically taken a stand that it has never granted any subsidy to the consumers like the petitioners having electric connection of HV-2 category and, therefore, it is said that the petitioners are not entitled for such benefit and the UPPCL has taken decision strictly in accordance with the policy decision of the State Government, and, therefore, the action of UPPCL is valid.
9. On behalf of respondents No. 1 to 3, counter affidavit has been filed which has been sworn by respondent No. 2 and therein also the stand as taken by the government has been reiterated. It is further contended that a similar contention was raised before a Division Bench of this Court in Writ Petition No. 2204 (M/B) of 2007 (Hiltex Industrial Fabrics Pvt. Ltd. v. Managing Director, Madhyanchal Vidyut Vitran Nigam Ltd., Lucknow and Ors.) which has been dismissed by a Division Bench vide judgment dated 10.05.2007 and it is contended that the issue in the present case is covered by the said judgment, against the petitioners, and in favour of the respondents.
10. We have heard learned Counsel for the parties and perused the record.
11. The contention of learned Counsel for the petitioners is that in view of the provisions of U.P. Electricity Reforms Act, 1999 (hereinafter referred to as the "Reforms Act, 1999") and the Act 2003, the respondents No. 1 and 2 can raise electricity bills to the petitioners and compel them to pay electricity charges strictly in accordance with the tariff as approved by UPERC. The aforesaid statutes also permit amendment of the tariff by UPERC which would also be binding on the Suppliers of electricity. It is thus, contended that once UPERC has passed order directing the Supplier to charge a consumer in a particular manner, it is not open to the Supplier to raise electricity bill in a manner other than what has been directed by UPERC. He further contends that the order of the UPHRC is final and binding, so long as it is not upset by the competent appellate authority or by a Court of Law. The supplier has no authority or jurisdiction to issue an order or letter which is not consistent with the order of UPERC. He said that the order of the government, issued from time to time, even if referable to Section 108 of the Act 2003, would not be final and binding ipso facto on the Supplier unless UPERC has considered the same and passed appropriate order giving effect to such direction of the State Government. It is only the order of the UPERC which would ultimately prevail and has to be followed by the supplier. In other words, the Supplier has no authority or jurisdiction on its own to proceed and act in accordance with the order of the State Government, since, neither the Supplier is a subordinate authority or department of the government nor the order of the government on its own, is binding upon the Supplier. It is the order of the UPERC, on the contrary, which is binding and has to be followed and implemented by the Supplier. He lastly contended that UPERC specifically adviced the State Government to modify Government Order dated 14.06.2006 so that further action may be taken but admittedly, no order was passed by the State Government amending Government Order dated 14.06.2006 in the financial year 2006-07 and, therefore, the Chief Engineer (Commercial), UPPCL has acted wholly without jurisdiction by writing letter dated 24.02.2007 directing the authorities of respondent No. 1 to confine benefit of Government Order dated 14.06.2006 to only LMV-2 and LMV-6 category consumers and not to others. It is contended that the letter dated 05.05.2007 issued by the respondent No. 2, therefore, is also wholly without jurisdiction. In support of his contention, the learned Counsel for the petitioners placed reliance on a Division Bench decision of this Court in L.M.L. Ltd. v. State of U.P. and Ors. 2001 (2) AWC 1472.
12. Per contra, learned Counsel appearing for the respondents, however, placed reliance on the Division Bench judgment of this Court in Hiltex Industrial Fabrics Pvt. Ltd. (Supra) and contended that the writ petition is liable to be dismissed for the reasons stated therein.
13. In the light of the rival submissions, in order to consider the validity of the orders dated 24.02.2007 and 05.05.2007 and the resultant demand notice, impugned in this writ petition, in our view, the following issues need to be adjudicated:
1. Whether in the matter of framing of tariff and realisation of charges from the consumers the order of UPERC is final and binding or it can be altered, modified or changed by the Suppliers or the State Government.
2. Whether a decision of the State Government in respect to policy is ipso facto binding and enforceable by an electricity supplier in the State of U.P. or it can be enforced only in such manner as considered and applied by UPERC.
3. Whether the UPPCL or respondent No. 1 or any other electricity supply company working in the State of U.P. is justified in acting and implementing the order of the State Government directly as if it is suo moto binding and enforceable by them.
4. Whether the Chief Engineer (Commercial) UPPCL can issue an order directly to respondent No. 1 to act and function in a particular manner.
5. Whether the orders dated 24.02.2007 and 05.05.2007 having been issued pursuant to the letters of the State Government, are valid.
14. Before answering the aforesaid issues, it would be appropriate to have a bird eye view of the statutory provisions with respect to generations, distribution and transmission of electrical energy, as prevailed earlier and have undergone various changes later on bringing present scenario.
15. In the State of Uttar Pradesh, generation, distribution and transmission of electrical energy initially, and in particular after 1975, was solely in the hands of the U.P. State Electricity Board (in short 'UPSEB'), a statutory body constituted under Section 5 of the Electricity (Supply) Act, 1948 (in short '1948 Act'). With the expansion of the generation units, a government company, namely, U.P. Rajya Vidyut Utpadan Nigam Limited (in short 'UPRVUNL') was incorporated under the Companies Act, 1956 in the year 1980. It is wholly owned by the State Government of Uttar Pradesh. Similarly, in 1985, another company, U.P. Jal Vidyut Nigam Limited (in short 'UPJVNL') was incorporated which was also wholly owned by the State Government of U.P. A major power reform was brought into force in the year 1999 by the legislature enacting Reforms Act, 1999 which was assented to by the President of India on 23.6.1999 and published in U.P. Gazette (Extraordinary) on 7.7.1999. Section 13 of Reforms Act, 1999 provides for formation of a company namely UPPCL registered under the Companies Act, 1956, which is required to undertake planning and coordination in regard to transmission, to determine electricity requirement in the State in consultation with the generation companies etc. and be a legal successor of UPSEB in relation to all power purchase and transmission agreements. Section 23(1) of Reforms Act, 1999 provides that on and from the date specified in the Transfer Scheme prepared by the State Government to give effect to the objectives of the Act, all properties, interest, right and liabilities of UPSEB shall be vested in the State Government and, thereafter, shall re-vest in UPPCL and generating companies in accordance with the Transfer Scheme so specified, on such terms and conditions as may be determined, by the State Government.
16. The state Government in exercise of the powers under Section 23(1) & (2) of Reforms Act, 1999 published U.P. Electricity Reforms Transfer Scheme, 2000 (hereinafter referred to as 'Transfer Scheme, 2000'), which came into force on 14th January 2000. Under clause 4 and 5 of Transfer Scheme 2000 all thermal generating undertakings stood transferred to UPRVUNL, hydro generating undertakings transferred to UPJVNL and the undertakings forming pan of transmission and distribution to UPPCL.
17. In brief, the situation as emerges is that till 14.01.2000 the electricity was being generated, distributed and transmitted in the state of U.P. substantially by the UPSEB and thereafter by the abovementioned three companies.
18. In the matter of framing of tariff, UPSEB possessed statutory power under Section 49 of 1948 Act which reads as under:
49. 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.
(2) Infixing the uniform tariffs, the Board shall have regard to all or any or the following factors, namely:
(a) the nature of the supply and the purposes for which it is required;
(b) the co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee;
(c) the simplification and standardization of methods and rates of charges for such supply;
(d) the extension and cheapening of supplies of electricity to sparsely developed areas.
(3) Nothing in the foregoing provisions of this section shall derogate from the power of Board, if it considers it necessary or expedient to fix different tariff's for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
(4) Infixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.
19. 1948 Act also confer power upon the State Government to issue directions in respect to policy matters to UPSEB and Section 78-A of 1948 Act reads as under:
78-A. 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.
(2) If 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.
20. For the purpose of rationalisation of tariffs of various Electricity Boards in the country, Electricity Regulatory Commissions Act, 1998 (hereinafter referred to as the "1998 Act") was enacted by Parliament. The Regulatory Commission under the said Act could not be made functional in the State of U.P. till the enactment of Reforms Act, 1999. Section 54 of Reforms Act, 1999 gives overriding effect to the said Act over various provisions of Electricity Act. 1910 (hereinafter referred to as the "1910 Act") and 1948 Act which included Section 49 and 78-A of 1948 Act. As already observed, pursuant to Reforms Act, 1999, the transfer scheme was notified on 14.01.2000, and as a result, existence of UPSEB came to an end and in its place three companies namely, UPPCL. UPRVUNL and UPJVNL came into existence. However, UPPCL did not have any independent power of framing tariff unlike erstwhile UPSEB. It was obliged to implement a tariff approved by UPERC under Section 24 of Reforms Act, 1999. It would be appropriate to reproduce Section 24 of the Reforms Act, 1999 as under:
24. Licensee's revenues and tariffs-(1) The licensee shall follow the procedure specified in the regulations in calculating the expected revenue from charges which he is permitted to recover and in determining tariffs.
(2) Save as provided in Sub-section (3), the Commission may specify in regulations the terms and conditions for the determination of the revenue and tariffs and, in doing so, the Commission shall he guided by the following, namely:
(a) the financial principles and their application provided in Sections 46, 57 and 57-A of the Electricity (Supply) Act, 1948 and in the Sixth Schedule thereto;
(b) the factors which would encourage efficiency, economical use of the resources, good performance, optimum investments, observance of the conditions of the licence and other matters which the Commission may consider appropriate for the purposes of this Act; and
(c) the interest of the consumers.
(3) Where the Commission departs from the facts specified in Clauses (a) to (c) of Sub-section (2), it shall record the reasons for such departure.
(4) (a) Every licensee shall provide to the Commission at such time and in such manner as may be provided by the regulations, full details of its calculation for the ensuing financial year of the expected revenue from charges which it believes to have been permitted to recover and thereafter it shall also furnish such further information as the Commission may reasonably require to assess the licensee's calculation.
(b) The licensee shall also publish, within three days of submission of his proposal for the tariff for the ensuing year, a notice in at least two daily newspapers, widely circulating in the area of supply, outlining the proposed tariff and calling for objections from the interest persons and the State Government.
(c) The Commission while determining the tariff shall also take into consideration the objections, if any, received within one month from the date of last publication of the notice referred to in Clause (b).
(5) The Commission shall, within ninety days from the date on which the licensee has furnished the information under Sub-section (4), give notice to the licensee that it-
(a) accepts the licensee's calculation; or
(b) does not consider the licensee's calculations to be in accordance with the procedure given in the license or considers that it is otherwise incorrect, specifying the reasons therefor and proposing modifications or alternative calculations.
(6) The Commission may, after notifying its decision on the licensee's calculations as provided in Sub-section (5), determine whether the tariff charged by the licensee is required to be modified, and if so, require the licensee to modify the tariff or any part thereof with immediate effect.
(7) Each holder of a supply licence shall publish in at least two daily newspapers, widely circulating in the area of supply, and make available to the public on request, the tariff for the electricity within its area of supply and such tariff shall come into force after seven days from the last date of such publication, and any tariff implemented under this section.-
(a) shall not show any preference or favour to any consumer of electricity, hut may differentiate on the ground of the consumer's load factor or purpose of use or power factor, the consumer's total consumption of electricity during any specified period, or the time during which the supply is required;
(b) shall he just and reasonable and be such us to promote economy and efficiency in the supply and consumption of electricity; and
(c) shall accord with all other relevant provisions of this Act and the conditions of licence.
(8) Tariff shall not be determined more than one in a financial year except in respect of any changes expressly permissible under the terms of any fuel surcharge formula as max be provided by regulations. At least one hundred days before tire proposed dale for implementation of any tariff, the licensee shall provide details of the proposed tariff to the Commission, together with such further information as the Commission may require with a view to determining whether the proposed tariff is in accordance with Sub-section (7). If the Commission considers that the proposed tariff of a licensee does not fulfil any one or more of the requirements of Sub-section (7), it shall, within ninety days of receipt of all the information which it required, and after consultation with the Electricity Advisory Committee constituted under Section 29, and the licensee, inform the licensee that the tariff is not acceptable to the Commission, and it shall provide to the licensee an alternative tariff which shall be implemented by the licensee. The licensee shall not implement any tariff unless it has been approved by the Commission.
(9) Notwithstanding anything contained in Sections 57-A and 57-B of the Electricity (Supply) Act, 1948, no "Rating Committee" shall be constituted after the commencement of this Act and the Commission shall ensure compliance of the terms and conditions of the licence by the licensee in relation to charges for the sale of electricity, both wholesale and retail, and for the connection to an use of their assets or systems in accordance with the provisions of this Act.
Explanation.--For the purposes of this section.
(a) the word "licensee" shall include a person authorised to transmit, sell, distribute or supply electricity;
(b) "the expected revenue from charges" means the revenue which a licensee is expected to recover from charges on supply forecast used in the determination of tariff under Sub-section (4); and
(c) "tariff" means a schedule of standard prices or charges for specified services, which are applicable to all such specified services, provided to the category or categories of customers specified in the tariff.
21. The power of the State Government to issue direction on policy matters is contained in Section 12 of Reforms Act, 1999 which also included the provision pertaining to subsidy, if such directions are to grant subsidy for supply of electricity to any class or classes of persons or in respect of any area. Section 12 of Reforms Act, 1999 reads as under:
12. Powers of the State Government.--(1) The State Government may, from time to time, issue directions not inconsistent with this Act, on a policy matter in regard to electricity and if any dispute arises between the Commission and the State Government as to whether a question is or is not a policy matter, it shall, be referred to the Central Electricity Regulatory Commission whose decision thereon shall be final and binding.
(2)(a) The State Government shall be entitled to issue policy directions with respect to the subsidies to be granted for supply of electricity to any class or classes of persons or in respect of any area in addition to the subsidies adjusted by the Commission while regulating and approving the tariff structure:
Provided that the State Government shall contribute the amount to compensate the licensee or person affected by the grant of the subsidies to the extent of the subsidies granted.
(b) The amount of the subsidy to be paid under Clause (a) and the method and manner of payment and the time within which such amount is to be paid by the State Government shall be determined by the Commission and the Commission will calculate such amount in accordance with the procedure provided in the regulations.
22. Act, 2003 was enacted by the parliament to consolidate laws relating to generation, transmission, distribution, trade and use of electricity. Vide Section 185(1) of Act, 2003, the 1910 Act, 1948 Act and 1998 Act were repealed except as otherwise provided in Act, 2003. However, the Reforms Act, 1999 has been continued to apply in the State of U.P. in so far as it is not inconsistent with the provisions of Act, 2003. It would be appropriate to reproduce Section 185 of Act, 2003 as under:
185. Repeal and Saving.--(1) Save as otherwise provided in this Act, the Indian Electricity Act, 1910 (9 of 1910), the Electricity (Supply) Act, 1948 (54 of 1948) and the Electricity Regulatory Commissions Act, 1998(14 of 1998) are hereby repealed.
(2) Notwithstanding such repeal,-
(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorisation, or exemption granted or any document or instrument executed or any direction given under the repealed laws shall, insofar as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;
(b) the provisions contained in Sections 12 to 18 of the Indian Electricity Act, 1910 (9 of 1910), and rules made thereunder shall have effect until the rules under Sections 67 to 69 of this Act are made;
(c) the Indian Electricity Rules, 1956 made under Section 37 of the Indian Electricity Act, 1910 ( 9 of 1910) as it stood before such repeal shall continue to be in force till the regulations under Section 53 of this Act are made.
(d) all rules made under Sub-section (1) of Section 69 of the Electricity (Supply) Act, 1948 (54 of 1948) shall continue to have effect until such rules rescinded or modified, as the case may be;
(e) all directives issued, before the commencement of this Act, by a State Government under the enactments specified in the Schedule shall continue to apply for the period for which such directions were issued by the State Government.
(3) The provisions of the enactments specified in the Schedule, not inconsistent with the provisions of this Act, shall apply to the States in which such enactments are applicable.
(4) The Central Government may, as and when considered necessary, by notification, amend the Schedule.
(5) Save as otherwise provided in Sub-section (2), the mention of particular matters in that section, shall not be held to prejudice or affect the general application of Section 6 of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of repeals.
This clause seeks to repeal the Indian Electricity Act, 1910 (9 of 1910), the Electricity (Supply) Act, 1948 (54 of 1948) and the Electricity Regulatory Commissions Act, 1998 ( 14 of 1998) and save certain matters specified in that clause.
The Schedule Enactments (See Sub-section (3) of Section 185)
1. The Orissa Electricity Reform Act, 1995 (Orissa Act No. 2 of 1996)
2. The Haryana Electricity Reform Act, 1997 (Haryana Act No. 10 of 1998)
3. The Andhra Pradesh Electricity Reform Act, 1998 (Andhra Pradesh Act No. 30 of 1998)
4. The Uttar Pradesh Electricity Reform Act, 1999 (Uttar Pradesh Act No. 24 of 1999)
5. The Karnataka Electricity Reform Act, 1999 (Karnataka Act No. 25 of 1999)
6. The Rajasthan Electricity Reform Act, 1999 (Rajasthan Act No. 23 of 1999)
7. The Dehi Electricity Reforms Act, 2000 (Delhi Act No. 2 of 2001)
8. The Madhya Pradesh Vidyut Sudhar Adhinixam 2000 (Madhya Pradesh Act No. 4 of 2001)
9. The Gujarat Electricity Industry (Reorganization and Regulation) Act 2003 ( Gujarat Act No. 24 of 2003).
(emphasis added)
23. The net effect is that in the State of U.P., Reforms Act, 1999 and Act, 2003 both are operative and the provisions of Reforms Act, 1999 in so far as are not inconsistent with Act, 2003, are continuing to operate. The power of the UPERC to determine tariff has been provided under Section 62 of Act, 2003 and the provision for subsidy by the State Government has been made under Section 65 of Act, 2003. The State Government has power to issue directions in policy matters under Section 108 of Act, 2003 and it would be appropriate to reproduce Sections 62, 65 and 108 of Act, 2003 as under:
62. Determination of tariff.--(1) The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for-
(a) supply of electricity by a generating company to a distribution licensee:
Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix and minimum and maximum ceiling of tariff' for sale or purchase of electricity in pursuance of an agreement entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.
(2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmission and distribution for determination of tariff.
(3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required.
(4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.
(5) The Commission max require a licensee or a generating company to comply with such procedure as may he specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover.
(6) If any licensee or generating company recovers a price or charge exceeding the tariff determined under this section, the excess amount shall he recoverable by the person who has paid such price or charge alongwith interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee.
65. Provision of subsidy by Slate Government.-- If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under Section 62, the State Government shall, notwithstanding any direction which may be given under Section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government.
Provided that no such direction of the State Government shall be operative if the payment is not made in accordance with the provisions contained in this section and the tariff fixed by the State Commission shall be applicable from the date of issue of the orders by the Commission in this regard.
108. Directions by State Government.--(1) In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy involving public interest as the State Government may give to it in writing.
(2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the State Government thereon shall be final.
24. In the light of the aforesaid provisions of Act, 2003 and Reforms Act, 1999 we would consider to adjudicate the aforesaid issues raised in this writ petition.
Issue No. 125. As observed earlier before the enactment of 1998 Act, the power to frame tariff solely possessed by the concerned State Electricity Board in accordance with Section 49 of 1948 Act. The said statutory power could not have been diluted in any manner even by the State Government though it possessed power to issue directions on question of policy under Section 78-A of 1948 Act. The directions issued by the State Government ipso facto and as such neither could have been treated to be a part and parcel of the tariff framed by State Electricity Board under Section 49 of 1948 Act nor could have force of law on its own but required to be considered by the concerned State Electricity Board while framing its tariff and only when it resolve and decide to implement such directions in a particular manner, the same could have been enforced and not otherwise.
26. In Andhra Steel Corporation Ltd. and Ors. v. The Andhra Pradesh State Electricity Board and Ors. it was held that decision of the State Government under Section 78-A of 1948 Act to fix concessional tariff is not sufficient to absolve the consumer from the liability undertaken to pay certain charges under the tariff of the Electricity Board unless the decision of the Government is considered by the Board and made part and parcel of its tariff. Similar view was expressed by the Apex Court in Ester Industries Ltd. v. U.P. State Electricity Board and Ors. . It goes without saying that once the Electricity Board decide to give effect to the policy decision of the State Government, it was enforceable and had to be given effect to and could not have been ignored either by the Electricity Board or by the consumer. In K.D. Industries v. Bihar State Electricity Board and Ors. it was clearly held that the Bihar State Electricity Board having adopted the directions of the Government is bound to comply with those directions thereafter.
27. After the enforcement of Reforms Act, 1999 and Act, 2003 the only change which has taken place in the situation is that now the tariff has to be determined and approved by UPERC but in discharge of its functions, the UPERC shall be guided by such directions in matter of policy involving public interest, as the State Government may give to it in writing. The word 'tariff' has not been defined under any of the aforesaid statutes and thus has to be considered in common parlance. Normally, tariff is a cartel of commerce and it is a book of rates. It will mean "a schedule of standard prices or charges provided to the category or categories of customers specified therein." It also includes various terms and conditions with which, and the manner, in which such cartel of rates or charges are realised and payable, and. they all comprehensively constitute tariff.
28. A Division Bench of this Court while considering the provisions of Reforms Act, 1999 in L.M.L. (Supra) held:
The licensee cannot implement any tariff unless it has been approved by the Commission. Thus the provisions of the Act and the Regulations framed thereunder show in an unmistakable terms that it is a tariff as approved by the Commission which is final and binding and it is not permissible for the licensee, consumer or any one else to vary or alter the same.
(para 18) The scheme of the act which we have referred to in detail clearly shows that a tariff approved by the Commission alone can be implemented by licensee and it has no power to alter or vary the same.
(para 22)
29. Considering pari material provision contained in 1998 Act, the Apex Court in BSES Ltd. v. Tata Power Co. Ltd. and Ors. held:
The provisions of the Act and Regulations show that the Commission has the exclusive power to determine the tariff. The tariff' approved by the Commission is final and binding and it is not permissible for the licensee, utility or anyone else to charge a different tariff.
30. Ousting the authority of the State Government to alter tariff in any manner, the Apex Court in BSES Ltd. (Supra) in para 18 of the Judgment also held:
Therefore, it is not permissible to accept the contention of Shri Nariman that the State Government had the authority or jurisdiction on 22.3.2000 to determine or quantify the charges which BSES had to pay to TPC under the terms of the licence granted to the former as this was subsequent to the formation of the Maharashtra Electricity Regulatory Commission.
31. In view of the aforesaid binding precedent and authority, we have no hesitation but to hold that under Act, 2003 read with Reforms Act. 1999, in the matter of framing of tariff and realisation of charges from the consumers, the final authority lay with UPERC and neither any supplier nor the State Government nor anyone else has any jurisdiction or authority to make any alteration, modification etc. in the aforesaid matter. The question No. 1 is, therefore, answered accordingly.
Issues No. 2 & 332. The questions No. 2 and 3 can be answered together. The distinction in Section 12(1) of Reforms Act, 1999 and 108(1) of the Act, 2003 is that Section 12(1) only empowers the State Government to issue directions not inconsistent with the Act on policy matters in regard to electricity but Section 108(1) of Act, 2003 further provides that the State Government nor only can issue directions in the matter of policy involving public interest but the said directions have to be given in writing to the Commission and the Commission in discharge of its functions shall be guided by such directions. Therefore, under Section 108 of Act, 2003. the policy directions issued by the State Government have to be given due weightage by the Commission. In other words, in discharge of its functions the Commission shall be guided by such directions and cannot simply ignore it. In view of Section 185 of Act, 2003, since Section 108 of Act, 2003 is different than Section 12 of the Reforms Act, 1999, therefore, in our view, Section 108 shall prevail and would govern the directions issued by the State Government provided the same have been issued in the manner as required under Section 108 of Act, 2003. This by itself does not mean that the directions issued by the State Government ipso facto would be enforceable and binding on the supplier inasmuch as the said directions have to be issued to the Commission who shall consider the same and would guide itself in discharge of its functions. However, the Supplier can follow such directions only to the extent the same are implemented in the form of approved tariff and not otherwise. In view of the aforesaid, it is thus evident that the Chief Engineer (Commercial) had no authority or jurisdiction to issue letter dated 24.02.2007 directing the respondent No. 1 to confine the benefit of the Government Order dated 14.06.2006 only to LMV-2 and LMV-6 category consumers and not to HV-2 category consumers since it was bound to act only in accordance with the orders of the Commission which were otherwise and had not been amended till 24.02.2007. It is also evident from the record that a proposal had been given by UPPCL to the Government for making amendment in the Government Order dated 14.06.2006 but so long as the State Government did not make amendment and thereafter acted upon by UPPCL, it was not open to the Chief Engineer (Commercial) to issue an order or letter on his own. We have no hesitation in holding that the said letter of Chief Engineer (Commercial) is patently without jurisdiction and has caused an unnecessary harassment to the consumers including the petitioners resulting in an avoidable litigation.
33. On behalf of the State Government it is said that the Government Order dated 14.06.2006 was clarified/amended vide State Government's order dated 01.05.2007 (Annexure-CA-2 to the counter affidavit filed on behalf of respondent No. 4) but in our view nothing turned there upon for the reason that the benefit under Government Order dated 14.06.2006 was confined to the financial year 2006-07 and admittedly, there was no change or amendment in the aforesaid Government Order dated 14.06.2006 till 31.03.2007 i.e. till the end of the financial year 2006-07. Assuming that any subsequent letter was issued by the State Government i.e. on 01.05.2007, that would not make any difference since it would not alter the situation retrospectively when financial year 2006-07 has already come to an end. The issues No. 2 and 3 are answered accordingly.
Issue No. 434. Another interesting aspect has been raised, inasmuch as UPPCL and various Discoms are admittedly, independent companies incorporated under the Companies Act, 1956. Though 100% share holding of UPPCL is owned by State Government and various Discoms and supplier i.e. respondent No. 1 are subsidiary companies of UPPCL but the fact remains that each company is an independent juristic personality having its own independent identity. That being so, whether an official of one company can issue an order to other companies having binding effect and, if so, in what capacity, is an incidental question needs to be answered to consider the validity and authority of the letter dated 24.02.2007 issued by the Chief Engineer (Commercial), UPPCL. The concept of subsidiary company only implies that the newly incorporated company which is a subsidiary company has its share holding owned by the promoting company hut neither it dilutes, in any manner the concept of conferment of legal personality nor the independence of the companies is effected. The distinction between the company and its share holder has been pointed out by the Apex Court in R.C. Cooper v. Union of India the Apex Court held as under:
A company registered under the Companies Act is a legal person, separate and distinct from its individual members. Property of the Company is not the property of the shareholders. A shareholder has merely an interest in the Company arising under its Article of Association measured by a sum of money for the purpose of liability, and by a share in the profit.
35. The aforesaid view was reiterated in Heavy Engineering Mazdoor Union v. State of Bihar and Ors. , Andhra Pradesh State Road Transport Corporation v. Income Tax Officer , Western Coalfields Ltd. v. Special Area Development Authority . A Constitution Bench of the Apex Court in Electronics Corporation of India Ltd. v. Secretary, Revenue Department, Government of A.P. of the judgment held as under:
A clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government. In the eye of the law, a company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares.
36. The company where shareholding is owned by the Government can never be treated to be a department of the Government and it has a separate legal existence for all purposes, and, has to function in accordance with the Article of Association and the provision of the Companies Act.
37. In (Praga Tools Corporation v. C.V. Imanual) it was held though 80% of the capital of the said company was subscribed by the Union Government and State Government, even then it cannot be regarded as equivalent to government department, since, it is registered under the companies act. It has a separate legal existence and could not be a government concern run by or under the authority of the Union Government.
38. Thus it is evident that once independent companies have come into existence, rights, property and obligations have also vested therein separately, they are all totally separate and individual bodies and have to function in an autonomous manner without any influence from any third party except to the extent the statutory provisions otherwise require. We have not been shown any provision under which an officer of UPPCL can issue binding orders to other companies like various Discerns including the respondent No. 1. It appears to us that though the UPSEB has been disbanded and its entire functions and obligations etc. have been decentralised in various companies yet the authorities of erstwhile UPSEB who have now been transferred and absorbed in newly incorporated companies are yet working in the same old atmosphere as if the hierarchy as it was existing in the erstwhile UPSEB is still continuing. I he respondents, it appears, have not been able to accept and adopt the legal changes which have taken place in the last 6 or 7 years. The issuance of letter dated 24.07.2007 by Chief Engineer (Commercial). UPPCL to various Discoms is an illustration of the aforesaid continuing understating of the respondents. It cannot be disputed that even shareholders of company cannot interfere in the day to day functioning of the company which has to be managed by the Board of Directors of that company. In these circumstances, the officials of UPPCL, in our view. neither in any law nor under the provisions of Article of Association nor otherwise can have any power or authority to issue any direction to various other companies like respondent No. 1 to act and function in a particular manner. Issue No. 4 is answered accordingly.
Issue No. 539. In view of our answer to issues No. 2, 3 and 4 it is evident that the order dated 24.02.2007 issued by the Chief Engineer (Commercial) is patently illegal and without jurisdiction and, therefore, the consequential order dated 05.05.2007 issued by the Executive Engineer is also illegal.
40. The matter does not rest here inasmuch as it leads us to consider whether the Division Bench of this Court in Hiltex Industrial Fabrics Pvt. Ltd. (Supra) has taken a view contrary to what we have noticed above warranting reference of the matter to Larger Bench. A perusal of the judgment would show that the question which has been considered by the Division Bench is whether a consumer can compel the Government to provide subsidy under Section 65 of Act, 2003 with respect to certain matters though the Government is not inclined to do so. It appears that the parties proceeded on the assumption that in the matter of directions issued by the State Government and its implementation, the State Government is the final authority and the Commission's directions are also required to be acted upon by the State Government. Neither the provisions, as we have noticed above nor the issues which have been formulated hereinabove have been considered. The Court has held that the State Government in its policy letter dated 14.06.2006 has mentioned that it is a scheme for weavers, it cannot be extended to companies like the petitioners in that case. It appears that the Hon'ble Court had no occasion to consider the issue that the direction of the State Government once has been converted into an order of Regulatory Commission, it is only the order of the Regulatory Commission which is enforceable and has to be followed by the supplier and not that of the State Government. The law laid down by the Apex Court in various judgements, as referred above, has also not been noticed by the Hon'ble Court. In our view, the Judgment is ex facie per incurium since binding relevant provisions and biding authorities of the Apex Court have not been considered.
41. What constitute "per incurium" need not detain our attention since time and again it has been explained by the Apex Court. Recently a Full Bench of this Court in Farhat Hussain Azad v. State of U.P. and Ors. 2005 ALJ 647 after referring to the law with respect to "per incurium" laid down by the Apex Court in catena of decisions, has observed as under:
The concept of "per in curium" has been considered by the Apex Court time and again explaining that the expression means through inadvertence or a point of law is not consciously determined. If an issue is neither raised, nor argued, a decision by the Court after pondering over the issue in depth would not be precedent binding on the Courts, Per incurium are decisions given in ignorance or forgetfulness of some statutory provisions or where the Court omits to consider a binding precedent of the same Court or the superior Court rendered on the same issue or where Court presumes something contrary to the facts of the case (Vide Mamleslnvar Prasad and Anr. v. Kanahaiya Lal (Dead) ; Rajpur Ruda Meha and Ors. v. State of Gujrat ; A.R. Antule v. R.S. Novak ; Municipal Corporation of Delhi v. Gurnam Kaur ; Punjab Land Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court, Chandigarh and Ors. (1990) 5 SCC 682; State of West Bengal v. Synthetics and Chemicals Ltd. (1991) 1 SCC 139; Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd and Anr. v. Employees' Union and Anr. 1994 Supp (3) SCC 385; Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P. State Electricity Board and Ors. ; Ram Gopal Baheti v. Girdharilal Soni and Ors. ; Samam Singh v. Dy. Director of Consolidation and Ors. ; Govt. of Andhra Pradesh v. B. Satyanarayana Rao AIR 2000 SC 1729; Arnit Das v. Slate of Bihar ; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. ; A-One Granites v. Stale of U.P. and Ors. ; Suganthi Suresh Kumar v. Jagdeeshan ; Director of Settlements A.P. and Ors. v. M.R. Apparao and Anr. ; S. Shanmugavel Nadar v. State of T.N. and Anr. ; State of Bihar v. Kaliku Kuer Kalika Singh and Ors. ; and Manda Jaganath v. K.S. Ratnam and Ors. ).
In B. Shyama Rao v. Union Territory of Pondichery and Ors. , the Constitution Bench of the Supreme Court observed as under:
It is trite to sax that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein.
In State of U.P. and Anr. v. Synthetics & Chemicals Ltd. and Anr , the Apex Court followed the aforesaid judgment in B. Shyama Rao and held as under:
Any declaration or conclusion arrived without application of mind or proceeded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent.... A conclusion without reference to relevant provision of law is weaker than even casual observation.
Similar view has been reiterated in Divisional Controller, KSRTC v. Mahadeva Shetty and Anr. , observing that casual expressions in a judgment carry no weight at all, nor every passing remark, however eminent, can be treated as an excathedra statement having the weight of authority.
42. In N. Bhargavan Pillai v. State of Kerala the Apex Court said that it a view has been expressed without analysing the statutory provision, it cannot be treated as a binding precedent and at the most is to be considered as having been rendered per incuriam. The same law has been reiterated in Faujdar v. Deputy Director of Education and Ors. 2006 (3) AWC 2243.
43. In Civil Misc. Writ Petition No. 47754 of 2005 (J.K. Construction Engineers and Ors. v. Union of India and Ors.) decided on 28.02.2006, a Division Bench of this Court held:
The doctrine of per incuriam is applicable where by inadvertence a binding precedent or relevant provisions of the Statute have not been noticed by the Court....(Para 106)
44. Similar view has been taken by another Division Bench in Brahma Prakash v. State of U.P. and Ors. 2006 (2) ESC 1017. In para 40 of the judgment this Court held as under-
Thus in view of aforesaid discussion, it is clear that while rendering the decision in Radha Krishna Gupta's case earlier Division Bench of this Court with all respect did neither ascertain the ratio of decisions referred in the judgment, nor discussed, as to how the factual situation fits in with the fact and situation of the decision on which reliance was placed. Contrary to it the decision of Hon'ble Apex Court which requires consideration of various factors in this regard, referred herein before in our judgment has been completely ignored by the Division Bench, therefore, being a decision given per incuriam, cannot be held to be binding authority under law.
45. In the judgements referred to above, the aforesaid doctrine of per incuriam has been discussed in detail and it has been held that a judgment per incuriam does not lay down a binding precedent.
46. There is another aspect of the matter. The State Government's order dated 14.06.2006 by itself, in our view, cannot be said to be a direction under Section 108 of Act, 2003 inasmuch as the aforesaid order is not addressed to the UPERC and on the contrary it is addressed to UPPCL. The direction was issued by the State Government straightway to UPPCL to charge particular category of consumers which can not be said to be a direction under Section 108 of Act, 2003 issued to UPERC. It is in these circumstances UPERC had to issue an order dated 03.07.2006 restraining Supplier and other Discoms from giving effect to such Government Order. The UPPCL, on its own and on behalf of other Discoms, thereafter submitted a proposal before UPERC stating that they would raise electricity bills to the consumers as per the tariff approved by the Commission but would realise charges as directed by the State Government and the difference would be compensated by the Government in the form of subsidy to which an affidavit was also filed by the Chairman, UPPCL and it appears that the State Government had also consented thereto pursuant whereto UPERC passed order on 11.07.2007 permitting UPPCL and other suppliers to proceed accordingly.
47. We are informed that the State Government has actually released amount of subsidy with respect to difference of charges pertaining to HV-2 category consumers as communicated by Chief Engineer's letter No. 3142/Mu.A.Vi.(Go.)/Va./Si-1/35 (Bunkar) dated 29.10.2007, a copy whereof has been placed before this Court by learned Counsel for the respondents and the same has been taken on record. This also fortify the fact that an arrangement was made by the UPPCL and State Government inter se with respect to the subsidy to be paid as per Government Order dated 14.06.2006. UPERC only permitted UPPCL to realise dues as per the Government Order dated 14.06.2006. As such, the Government Order dated 14.06.2006 cannot be said to be a direction to UPERC under Section 108 of Act, 2003.
48. In the result, the writ petition succeeds and is allowed. The orders dated 24.02.2007 and 05.05.2007 issued by the Chief Engineer (Commercial) U.P. Power Corporation Ltd., Lucknow and the Executive Engineer, Electricity Distribution Division-11, Purvanchal Vidyut Vitran Nigam Ltd. Mohaddipur. Gorakhpur respectively are hereby quashed. The respondents are directed to charge petitioners in accordance with order dated 11.07.2006 issued by UPERC after issuing a revised demand, if necessary. The petitioners shall be entitled for cost which is quantified to Rs. 20,000/- payable by the respondent No. 3.