Kerala High Court
Ramavarama District Club vs Kerala State Electricity Board on 13 July, 2016
Author: Dama Seshadri Naidu
Bench: P.R.Ramachandra Menon, Dama Seshadri Naidu
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
&
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
FRIDAY, THE 30TH DAY OF SEPTEMBER 2016/8TH ASWINA, 1938
WA.No. 1925 of 2016 () IN WP(C).33948/2014
--------------------------------------------
AGAINST THE JUDGMENT IN WP(C) 33948/2014 of HIGH COURT OF KERALA DATED
13-07-2016
APPELLANT(S)/PETITIONER :
------------------------
RAMAVARAMA DISTRICT CLUB
ALAPPUZHA, KERALA, REPRESENTED BY ITS SECRETARY.
BY ADV. SRI.C.S.MANU
RESPONDENT(S)/RESPONDENTS :
---------------------------
1. KERALA STATE ELECTRICITY BOARD
VYDHUTHY BHAVANAM, THIRUVANANTHAPURAM-695 001,
REPRESENTED BY THE SECRETARY.
2. KERALA STATE ELECTRICITY BOARD
REPRESENTED BY THE ASSISTANT EXECUTIVE ENGINEER,
ELECTRICAL SECTION, ELECTRICAL SUB DIVISION ALAPPUZHA,
TOWN ALAPPUZHA WITHIN THE ELECTRICITY CIRCLE,
ALAPPUZHA-688 001.
3. THE ASSISTANT ENGINEER
ELECTRICAL SECTION, TOWN ALAPPUZHA KSEB,
VYDHUTHY BHAVANAM, ALAPPUZHA-688 007.
4. CONSUMER GRIEVANCE REDRESSAL FORUM
POWER HOUSE, KSEB, ERNAKULAM-682 018.
5. THE ELECTRICITY OMBUDSMAN
CHARANGATU BHAVAN, BUILDING NO.34/895,
MAMANGALAM-ANJUMANA ROAD, EDAPPALLY, KOCHI-682 024.
BY SRI.JAICE JACOB,SC,KERALA STATE ELECTRICITY BOARD
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 30-09-2016, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
P.R. RAMACHANDRA MENON
&
DAMA SESHADRI NAIDU, JJ.
~~~~~~~~~~~~~~~~~~~~~~
W.A. No. 1925 of 2016
~~~~~~~~~~~~~~~~~~~~~
Dated, this the 30th day of September, 2016
JUDGMENT
Ramachandra Menon, J.
The writ petitioner, who lost the battle before the learned Single Judge [after suffering defeat before the statutory authorities], is the appellant before this Court. Grievance is against the interference declined with regard to the claim put up by the appellant that there was no rhyme or reason to have changed tariff from LT VII C to LT VII A and that the appellant Club is not a commercial establishment to be mulcted with any higher liability.
2. The sequence of events as discernible from the proceedings is that the appellant Club was got registered under the Travancore - Cochin Literary, Scientific and Charitable Society Act, 1955. The Club was doing various sports and cultural activities and electric connection was applied for and obtained under LT VII C category, as applicable to the Arts and Sports Institutions. Subsequently, the W.A. No. 1925 of 2016 : 2 : appellant Club applied for FL 3 licence under the Kerala Abkari Shops [Disposal and Auction] Rules, 1994 to start a 'Bar' and the same was obtained. By virtue of this, liquor was being procured and supplied to the members, at lesser cost, which according to the appellant is on 'no-profit no-loss' basis. In addition to these activities, the appellant is also running a 'Restaurant' with facility to have 'Rooms' to be let out to the members and there is an 'Auditorium' as well, for arranging various functions, being given on lease to the members.
3. On 04.05.2013, there was a surprise inspection by the Anti- Power Theft Squad of the KSEB. According to them, the activity which was being pursued by the appellant was 'commercial' in nature. It was accordingly, that they prepared Ext. P1 mahazar, referring to the facts and figures noted by them during the course of inspection; followed by Ext. P2 Bill issued by the 3rd respondent, proposing to impose penalty of Rs.13,09,977/- for the alleged unauthorised use of electricity in terms of Section 126 (6) of the Electricity Act, 2003.
4. On receipt of Ext. P2 Bill issued under Regulation 24 (5) of the Kerala Electricity Supply Code, 2005, the appellant submitted Ext.P3 objection, mainly contending that absolutely no commercial activity was being pursued in the premises of the Club and that it was intended only for Arts & Sports activities and further that no profit was W.A. No. 1925 of 2016 : 3 : being generated under any circumstances. Since nothing had transpired for some time, the petitioner filed Ext. P4 representation before the 3rd respondent. Since Ext. P3 objection and Ext. P4 representation were not acted upon, the petitioner filed a compliant before the Consumer Grievance Redressal Forum [CGRF] at Ernakulam by way of Ext. P5. The CGRF allegedly did not consider the matter in the proper perspective and rejected the same as per Ext.P6 order, which was subjected to challenge by way of Ext. P7 appeal before the Ombudsman. According to the appellant, the Ombudsman also dealt with the issue in a casual manner, leading to Ext. P8 order dated 22.08.2014 dismissing the appeal.
5. On a fine morning, without any further notice to the appellant, pursuant to a petition/objection filed by the Electricity Board, seeking for review of Ext. P8 order, the matter was considered by the Ombudsman, who passed Ext. P9 order dated 13.11.2014, reviewing Ext. P8 order and deleting the direction to have the matter considered by the Appellate authority, however permitting the appellant/consumer to have the liability satisfied by way of installments. This made the petitioner to approach this Court by filing W.P.(C) No. 33948 of 2014, challenging Exts. P6, P8 and P9. W.A. No. 1925 of 2016 : 4 :
6. The relief sought for by the appellant was vehemently opposed from the part of the Electricity Board. After hearing both the sides, the learned single Judge observed that there was nothing wrong on the part of the Board, CGRF or the Ombudsman in having passed the relevant orders, which accordingly were held as not assailable under any circumstances. The learned Judge also observed that no prejudice was caused to the writ petitioner with regard to the course and proceedings pursuant to Ext. P8, as modified by Ext. P9 in exercise of the power of review. It was accordingly, that interference was declined and the writ petition was dismissed, which in turn is under challenge in this appeal.
7. Heard the learned counsel for the appellant as well as the learned standing counsel for the respondent Board.
8. During the course of hearing, the learned counsel for the appellant asserted the contentions in terms of the pleadings already raised to the effect that the activities being pursued by the appellant are not 'commercial' at all. Reliance was sought to be placed on the verdict passed by the learned single Judge of this Court in 2007 (4) KLT 779 [N.S.S. Hindu College Vs. K.S.E.B] [paragraphs 3 and 4], which was subsequently considered in 2009 (3) KLT 1022 [Bro. Joseph Antony Vs. Kerala State Electricity Board] [paragraph W.A. No. 1925 of 2016 : 5 : 18], besides relying on the decision rendered by another learned Judge of this Court reported in 2013 (4) KLT 455 [Gopinathan Vs. Kerala State Electricity Board]. The learned counsel pointed out that, to treat the activity as a 'commercial activity', there has to be an element of 'profit', more so, in view of the definition of the term commercial activity as given in Black's Law Dictionary, the 9th Edition.
9. Admittedly, the appellant/petitioner applied for the connection under 'LT VII C' category, claiming that the Institution/Club was constituted for promotion of 'Sport activities', where the rate of electricity charges was to be of lesser tariff as given in 'LT VII C'. After getting the electric connection as above, the petitioner applied for and obtained licence under the Kerala Abkari Shops [Disposal and Auction] Rules 1994 in the year 2003, to vend liquor in the Club to its members and guests. It may be true that the petitioner is purchasing liquor from the given source, supplying the same to the members on 'no-profit-no-loss' basis. It may also be true that there may not be any entry to the general public and that the benefit stands restricted only to the members. But, merely for the reason that the petitioner is not generating profits of its own, it cannot be said that the club is not benefited in any manner, for various reasons. Similarly, the question to be considered is, not, whether the W.A. No. 1925 of 2016 : 6 : appellant is generating profit or not; but, whether any commercial activity is being pursued so as to reap the fortune in any manner, at least to a limited extent.
10. There is no dispute to the fact that benefit in fact is being enjoyed by the members of the Club, who are not required to satisfy price of liquor, at the normal rate as levied by the Bar Hotels. This goes without saying that the benefit or profit, which otherwise would have come to the pocket of the 'Club' is being distributed among the members of the Club, who are turned to be the beneficiaries. What is the reciprocal arrangement between the Club and its members is not the concern of this Court. The appellant Club also admittedly generates income from letting rooms and its Auditorium. We only mean to say that the activities being pursued, cannot but be declared as the 'commercial activity', more so, since the activity definitely generates commerce and nothing more.
11. It is also easy to visualize a situation where profit may not be there, due to various circumstances. A person, who is having no requisite knowledge in the field, skill or experience, may be a failure in doing business and may suffer loss. Merely for the reason that he has not generated any profit, it cannot be termed as a 'non- commercial activity'. Similarly, there may be a situation where, W.A. No. 1925 of 2016 : 7 : somebody may be doing such activities for the cause of somebody else, whether it be a philanthropic exercise or for some other reason. The balance sheet may reflect 'no profit' but the person doing such activity may be enjoying the said exercise by virtue of the nature of performance and the satisfaction received; whether it be with a real intent to do some favours to anybody or otherwise. But, that by itself cannot be change the colour and characteristics of the activity from 'commercial activity' and will continue to be so.
12. With regard to the decision rendered by the learned Single Judge in 2007 (4) KLT 779 (cited supra), it was a case where the 'Hostel' attached to an Educational Institution was sought to be levied at LT VII A tariff by the Electricity Board treating it as a 'commercial establishment', which was sought to be challenged by the consumer, stating that the Institution would fall only under 'LT VI B' category. The Bench observed that the 'Hostel' was part of the Educational Institution, so as to have the students accommodated, to pursue their studies and whether the said Hostel was being run directly or through a contractor was not a deciding factor; thus holding that it cannot be treated as a 'private hostel' doing some or other 'commercial activity'. It was accordingly, that the writ petition filed by NSS College against the Electricity Board was allowed, which does not come to the rescue W.A. No. 1925 of 2016 : 8 : of the petitioner in any manner.
13. Coming to the verdict of the Division Bench reported in 2009 (3) KLT 1022 [cited supra], it is true that a reference has been made to the above verdict passed by the learned single Judge in Paragraph 18, which reads as follows :
"18. It may, in this connection, be noticed that even the order issued by the Kerala State Electricity Regulatory Commission shows that freezing plants, cold storage, bakeries, CD recording/duplication, computer consultancy services etc. are to be classified as LT VII (A) Commercial. On a mere glance of the various other consumers included in this category, it can be seen that it admits of no doubt that they are commercial establishments and there cannot be two opinion on that.
It is along with such commercial establishment that Self-Financing Educational Institutions are also brought in. As we have already stated, when it is admitted by the respondents that they are not commercial, there is no justification for treating and including them under LT VII Tariff as commercial. The decision of the Commission at para 8.5 of the said order shows that the Commission has recognised the Self-Financing Educational Institutions, seafood processing, milk chilling plants and call centres as new consumer groups and W.A. No. 1925 of 2016 : 9 : included them under appropriate Commercial Category. Therefore, the averments in the counter affidavit that they are not treated as commercial goes contrary to the decision of the Commission contained in the order. It only shows that at the time of inclusion of the Self- Financing Educational Institutions, they were only on the point as to whether they should be treated as commercial or not and even gone to the extent of saying that there is a new class emerged after 2002.
Therefore, the basis on which the Self-Financing Educational Institutions are treated as commercial are clearly illegal and are not sustainable."
14. Applying the very same logic and reasoning as discussed above, we find that the above decision also will not help the appellant in any manner, as the issue considered by the Division Bench in the said case was something different. It will be worthwhile to note the questions considered by the Division Bench therein. Altogether, 'five questions' were considered in the said case. In so far as the present case is concerned, reference to questions ii, iv and v are relevant, which are reproduced below:
"(ii) When no proposal has been made to include self Financing Institutions under commercial category, whether they can be included in commercial category treating it W.A. No. 1925 of 2016 : 10 : differently from other educational institutions?
(iv) Differentiating Self Financial Institutions and categorizing them as commercial whether valid?
(v) Categorizing Self Financing Institutions alone as "commercial" while treating other educational institutions as "Non-domestic" whether violative of Art.14 ?"
15. From the above, it is quite clear that the issue considered was, whether self-financing institutions will fall under the 'commercial category', treating it differently from other Educational Institutions and whether a 'self-financing Institution' alone is 'commercial', when compared with the other educational institutions treated as non-domestic, having lesser tariff rate. The said decision is not applicable to the case of the appellant. That apart, we have been given to understand that the said verdict has already been subjected to challenge by the Electricity Board and an appeal is pending; wherein interim stay of the judgment has already been granted.
16. In respect of the case dealt with by a subsequent single Bench in 2013 (4) KLT 455 (cited supra), the point considered was, whether providing accommodation/facility for stay of the petitioners' own workers could be termed as a hostel or private hostel to be branded as a commercial activity and to realize commercial tariff. W.A. No. 1925 of 2016 : 11 : Paragraph 4 sought to be relied on by the petitioner/appellant is in the following terms :
"4. The first question to be decided is as to whether the purpose for which the electricity is used is domestic or commercial. When the Regulatory Commission, which derives power under the statute had categorized the usages into different tarrifs, undoubtedly the billing has to be done on the basis of such categorization considering the nature of usage. The schedule of the tarrif orders issued by the Regulatory Commission, brought into effect on 1.12.2007 as well as on 1.1.2010, indicate that the tariff applicable to "domestic use" is categorized under LT-I. But the tariff order does not define or illustrate the term, "domestic use".
Commercial use is categorized under LT-VII, Sub category LT-VII A clearly illustrate the commercial usages coming within the said category. It is the tariff applicable for commercial consumers such as display lights, cinema studios, commercial premises, hotels and restaurants, show rooms business houses, private hostels/lodges/guest/rest house, freezing plants, cold storages etc. When the tariff order defines/illustrates nature of the commercial use or activity, only the commercial use falling within any one of such specific categories alone can be treated under the said category. Private Hostels/lodges/guest houses/rest houses are usages included in the category of LT-VII A tariff. W.A. No. 1925 of 2016 : 12 : Whether the usage in the present case will fall within any of the said categories is the question to be decided. There is no allegation that the building is used as a lodge or guest/rest house. Therefore the only question is whether it will fall within the ambit of a 'private hostel'. The meaning of the word Hostel contained in "Chambers 21st Century Dictionary' revised edition 2004 is, "a residence providing shelter for the homeless, especially one run for charitable rather than for profitable purpose and a residence for students or nurses outside the confines of the college or youth hostel". On the facts of the case at hand, there is no dispute that the petitioner is using the building only for accommodating workers in their own Hotel establishment. There is no case that any activity connected with the hotel business is carried on in the building in question. The owner of the building is not providing accommodation to any homeless persons or to any students. Providing accommodation or facility for stay to own workers cannot be termed as Hostel or as private Hostel. The tarrif under LT- VII A will be attracted only if a Hostel activity is run in the building in question. When specific categorization is made through illustrations with respect to usage contained in the Tariff Order issued by the Regulatory Commission, meaning of any term in common usage or in common parlance cannot be imported for deciding the issue. The use cannot be W.A. No. 1925 of 2016 : 13 : categorized as 'Private Hostel' included in LT-VII A categorization under the tariff order. In view of the discussions contained in Ext.P8 decision of this court, the observation made by the 2nd respondent in Ext.P7 that, this court has not conclusively ordered that the employees hostel accommodation as one falling under domestic tariff, is not a correct appreciation of the dictum contained in the judgment."
17. From the above, it is quite evident that the learned Judge was considering the question whether the purpose for which the electricity was used was 'domestic or commercial'. The petitioner therein was not doing any commercial activity at all; but was using the premises for accommodating his own workers. The purpose of the building still remains to be 'residential' and by virtue of the specific tariff provided by the Electricity Board [in so far as 'domestic' use is concerned], the rate that could have been made applicable is only the 'domestic tariff rate'. This being the position, the idea and understanding of the petitioner/appellant to have placed reliance on the said decision is not liable to be accepted.
18. The learned counsel for the appellant put up a contention with reference to the scope of amendment brought about in the year 2007, particularly with reference to Section 126 (6) (v) of the W.A. No. 1925 of 2016 : 14 : Electricity Act 2003. The learned counsel submits that specific change with regard to the unauthorised use, to have branded the activity as a 'commercial activity', if at all any, would arise only after the amendment i.e. from the year 2007 and this being the position, the bill raised upon the petitioner, imposing penalty for the entire period from 24.11.2003 is liable to be interfered. We are not impressed with the said proposition. This is for the reason that, even at the time when the connection was provided to the petitioner, separate tariffs were stipulated by the Electricity Board treating it as a 'commercial activity' at a higher rate under LT VII A, while providing lesser rate for the activities of Sports and Clubs under LT VII C. It was with this intent, that the petitioner had applied for and obtained connection under LT VII C tariff and the activity got widened subsequently, starting a 'Bar' and such other functions, particularly turning the exercise to be a 'commercial one'. In so far as the activity was done based on the licence issued by the competent authority, from 24.11.2003 onwards and since the appellant was enjoying the benefit right from that period, the connection was still intercepted, pursuant to the inspection conducted by APTS, holding that the period during which the unauthorised use of electricity was resulted was quite identifiable. By virtue of the specific provision in W.A. No. 1925 of 2016 : 15 : the Statute, the restriction of the penalty for a specific period of one year (previous twelve months) will arise only for the exact period during which the unauthorised use of electricity is not identifiable. The very same provision says that the liability is for the entire period if the extent of unauthorised use is deducted from the factual data. In view of the admitted or undisputed facts and figures as to the activity that was going in the appellant club and in view of the finding that it is none other than the 'commercial activity', the liability cannot be segregated and as such, the demand raised by the Electricity Board in this regard is sustainable.
19. The only remaining point is with regard to the loss of opportunity in respect of the review petition filed by the Electricity Board, leading to Ext. P9 order. The said contention was considered by the learned single Judge and the relevant portions of the orders passed by the Ombudsman earlier i.e. after passing Ext. P8 and the position as it stands as per Ext. P9, have been taken note of and extracted at appropriate place. When the challenge against Ext. P6 order was repelled by the Ombudsman as per Ext. P8 order, the stand of the Electricity Board was upheld and the matter was directed to be considered by the Appellate authority. But the fact that no appeal is pending before any Appellate authority and that the appeal had W.A. No. 1925 of 2016 : 16 : already been considered and decided by virtue of the proceedings [i.e. Ext. P6 passed by CGRF], this position or factual error apparent on the face of the record was sought to be brought to the notice of the Ombudsman and on verification of the facts and figures and since the said factual point was not disputable under any circumstances, the said portion, as contained in Ext. P8 order, was deleted and the order was recasted as borne by Ext. P9. At the same time, the Ombudsman was very conscious enough to extend some benefit to the consumer and the consumer was permitted to clear the liability by way of installments, which benefit/order was not there in Ext. P8. This being the position, apart from the fact that no prejudice has been resulted to the consumer by virtue of Ext. P9 order passed by the Ombudsman in review, it has virtually stood to the benefit of the appellant herein, which hence cannot be heard to say that no prejudice was there, because of not giving any opportunity of hearing before passing Ext.P9 order.
20. In the above circumstances, we find that the judgment passed by the learned Single Judge is perfectly within the four walls of the law and is not liable to be interfered under any circumstances. We find no merit in the appeal. The appeal stands dismissed. It is made clear that dismissal of appeal will not place any bar on the right W.A. No. 1925 of 2016 : 17 : of the appellant to avail the benefit of 'One Time Settlement', if any such benefit is available and considered to be extended by the Board in favour of the appellant.
sd/-
P. R. RAMACHANDRA MENON, JUDGE sd/-
DAMA SESHADRI NAIDU, JUDGE kmd /True copy/ P.A. to Judge