Delhi High Court
Shri Nand Kishore Garg & Anr. vs Government Of Nct Of Delhi & Ors. on 18 February, 2011
Author: Dipak Misra
Bench: Chief Justice, Manmohan
* HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on : 11th February, 2011
% Judgment Pronounced on: 18th February, 2011
+ WP(C) No.4821/2010
SHRI NAND KISHORE GARG & ANR. ..... Petitioners
Through: Mr.Laliet Kumar with Mr.Deepak Vohra,
Advocates
Mr.Jayant Bhushan, Sr. Advocate with
Ms.Pyoli, Advocate for the Intervenor.
Versus
GOVERNMENT OF NCT OF DELHI & ORS. ....Respondents
Through: Mr.Goolam E. Vahanvati, Attorney
General along with Mr.Atul Nanda,
Advocate for Union of India.
Mr.Dushyant Dave, Sr. Advocate with
Mr.N.Waziri and Ms.Neha Kapoor,
Advocates for the Respondent No.1.
Mr.Parag P. Tripathi, ASG with Mr.H.S.
Chandhoke and Mr.Kunal Bahri,
Ms.Purnima Sapra, Advocates for the
Respondent No.2.
Mr.V.P. Singh with Mr.Aashish Gupta,
Advocates for the Respondent No.3.
Mr.Sudhir Nandrajog, Sr. Advocate with
Mr.Amit Kumar and Mr.Anupam Varma,
Advocates for the Respondent No.4.
Dr.A.M.Singhvi, Sr.Advocate with
Mr.V.P. Singh, Mr.Anuj Berry and
Mr.Jaiveer Shergil, Advocates for the
Respondent No.5.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether reporters of the local papers be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
WP(C) No. 4821/2010 Page 1 of 19
DIPAK MISRA, CJ
In this public interest litigation the petitioner describing himself as
pro bono publico has prayed for issue of a writ of mandamus commanding
the respondent No.2, Delhi Electricity Regulatory Commission (for short
„the Commission‟), to issue the tariff approved by it on 28/29.4.2010 and
pass such other order / orders as may be deemed fit in the facts and
circumstances of the case.
2. At the very outset, we may state with profit that various assertions
and asseverations have been made with regard to the issues relating to
finalization of the tariff by the Commission under the provisions of The
Electricity Act, 2003 (for brevity „the 2003 Act‟), the illegality committed
by the Government of National Capital Territory of Delhi in asking the
Commission not to issue the tariff and further how the consumers have
been affected by non-issuance of the tariff order. But after impleadment of
certain respondents, namely, BSES Yamuna Power Ltd., BSES Rajdhani
Power Ltd. and North Delhi Power Ltd. the question, apart from other
issues, that fundamentally cropped up whether the State Government could
have passed the order in the manner it has done in exercise of power under
Section 108 of the 2003 Act.
3. In this regard, we think it apposite to reproduce the relevant
submissions advanced on 9.9.2010:
"The submission of Mr. Laliet Kumar, learned counsel
for petitioner, is that the State Government could not
WP(C) No. 4821/2010 Page 2 of 19
have intervened after the tariff was determined by the
Commission as the same is not permissible under any of
the provisions of the statute. The learned counsel for
the petitioner further submitted that the tariff fixation
does not come within the ambit and sweep of a policy
decision and further after a decision has been taken by
the Commission, the State Government has no authority
to issue any direction or intervene in the matter.
Quite apart from that, it has been submitted by
Mr. Laliet Kumar that the letter dated 4th May, 2010
issued by the State Government does not meet
the requisite criteria of a policy decision, though the
same has been couched in a different language. To
bolster the said aspect, the learned counsel for
the petitioner has commended us to the provisions
contained in Sections 61, 62, 64 and 92 of the
Electricity Act, 2003 (for brevity "the Act").
Mr.Harish N. Salve, learned senior counsel
appearing for NDPL, and Mr.Neeraj Kishan Kaul,
learned senior counsel appearing for BSES Rajdhani
Power Ltd., contended that the State Government has
the power to issue directions as is evincible from
Section 108 of the Act. Section 108 reads as under:-
"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."
The learned senior counsel have also drawn
inspiration from Section 86(4) of the Act which reads as
under:-
"86. Functions of State Commission:
xxxx xxxx xxxx xxxx
(4) In discharge of its functions, the State
Commission shall be guided by the National
WP(C) No. 4821/2010 Page 3 of 19
Electricity Policy, National Electricity Plan and
Tariff Policy published under section 3."
It is submitted by Mr. Salve that if both the
provisions are read in a purposeful and harmonious
manner, it would convey that the State Government
has the authority to issue such directions which fall in
the realm of policy decision involving public interest
and fixation of tariff or determination of tariff in
accordance with National Electricity Policy, National
Electricity Plan and Tariff Policy as published under
Section 3 of the Act do come within the concept of
policy.
The learned senior counsel would further submit
that the „public interest‟ cannot be narrowly construed
in the conceptual canvas of the Act inasmuch as in a
democratic body polity, the State Government has a role
to see that there is electricity supply regard being had
to the industrial growth as well as protection of the
consumers.
Mr. Najmi Waziri, learned standing counsel for
GNCT of Delhi, would contend that if the
communication of the State Government is read in an
apposite manner, it is clear as crystal that the State
Government was seeking clarification from the
Commission and pending clarification had directed not
to issue the tariff order."
4. Thereafter, this Court by order dated 27.10.2010 sought the
assistance of the learned Attorney General to address the Court on the first
issue. It is appropriate to note that learned Attorney General only
addressed this Court with regard to the first issue and the matter was
adjourned for adjudication on other issues.
5. When the matter was listed on the adjourned dates arguments were
heard on other issues but finally it was felt while hearing the matter on
11.2.2011 that the first issue should be decided and thereafter the other
WP(C) No. 4821/2010 Page 4 of 19
issues should be taken up. We may note with profit learned counsel for the
parties very fairly acceded to the same.
6. At this juncture, it is obligatory on our part to mention that
Mr.Dushyant Dave, learned senior counsel along with Mr.N. Waziri,
learned standing counsel appearing for the GNCTD submitted that the State
Government has taken a decision to withdraw the communication sent to
the Commission. Had the same been stated at the very initial stage the
matter would have been absolutely different. As a colossal grievance was
made and arguments were canvassed at length and we had sought the
assistance of the learned Attorney General who addressed us at length, we
have thought it seemly to delve into the said issue and answer the same.
We may also note with profit that we had indicated it to Mr.Dave and
Mr.Waziri and, therefore, learned counsel for the GNCTD while reiterating
the stand of withdrawal of the communication also addressed the Court on
merits on the said score.
7. Mr. Goolam E. Vahanvati, learned Attorney General being assisted
by Mr.Atul Nanda, submitted that the nature of communication that has
been made does not come within the ambit and sweep of Section 108 of the
2003 Act. It is urged by him that if Section 108 of the 2003 Act is
appropriately and appositely interpreted it would clearly convey that the
State Government has no jurisdiction to pass such an order as that would
tantamount to interference in the statutory functioning of the Commission.
It is contended by him the words used under Section 108 of the 2003 Act
WP(C) No. 4821/2010 Page 5 of 19
are that "the State Commission shall be guided by such directions in
matters of policy involving public interest" and, therefore, the State
Government can only issue guidelines which would relate to a larger public
interest in the field of social structuralism or any kind of benefit to a class
but by no stretch of imagination can issue a command to the Commission
not to issue a tariff order. It is his further submission that policy and public
interest are inseparably connected and the policy must reflect such larger
public interest by which the Commission shall be guided. It is urged by
him that Section 86 of the Act sets the guidance / guidelines for functioning
of the Commission and the said provision does not confer any power on the
State Government to interdict. Learned Attorney General further proponed
that the Section 108 of the 2003 Act is almost similar to Section 78A of the
Electricity (Supply) Act, 1948 (for short „the 1948 Act‟) and the
interpretation placed on the said provision in many an authority would have
application for understanding the contour and sweep of the present
provision. To buttress the said submission, he has taken us through the
scheme of the Act and commended to the authorities in Indian Metal &
Ferro Alloys Ltd. v. State of Orissa & Ors., (1987) 3 SCC 189, M/s.Real
Food Products Ltd. and others v. Andhra Pradesh State Electricity Board
and others, (1995) 3 SCC 295, Ester Industries Ltd. v. U.P. State
Electricity Board & Ors., (1996) 11 SCC 199, Pawan Alloys and Casting
Pvt. Ltd. v. U.P. State Electricity Board & Ors., (1997) 7 SCC 251 and
Chittoor Zilla Vyavasay Adarula Sangham v. A.P. State Electricity Board
& Ors., (2001) 1 SCC 396. He has also drawn inspiration from a passage
WP(C) No. 4821/2010 Page 6 of 19
in Laker Airways Ltd. v. Department of Trade, (1979) 2 WLR 234
especially wherein Lord Denning M.R. has adverted to the concept of
guidance and directions.
8. Mr.Dave, learned senior counsel along with Mr.Waziri, learned
standing counsel for the GNCTD submitted that Section 108(1) has been
broadly couched and, therefore, the authorities under Section 78A would
not be applicable and deserve to be distinguished. Learned senior counsel
has submitted that Section 108 of the 2003 Act uses the words "involving
public interest" and, hence, it has a dynamic concept which has to be
understood regard being had to the purpose / action / interest which would
subserve the interest of the public at large at the relevant time. What would
constitute public interest would depend on the facts and circumstances of
the case obtaining at the time when it is determined and the same has to be
left to the executive. It is urged that if sub-section (2) of 108 of 2003 Act is
purposively understood it would be clear as day that the Parliament has
wisely left the decision of defining and determining public interest to the
State Government and whether a direction relates to a matter of policy
involving public interest is in the domain of the State Government and the
said decision is final. Learned senior counsel has commended us to the
decisions in Kusumam Hotels v. Kerala SEB, (2008) 13 SCC 213, A.P.
State Electricity Board Vidyut Soudha & Ors. v. Gowthami Solvent Oils
& Anr., AIR 1991 A.P. 141, Management of Fertilizer Corp. of India v.
The Workmen, (1969) 2 SCR 706, Food Corporation of India and Ors. v.
WP(C) No. 4821/2010 Page 7 of 19
Bhanu Lodh and Ors. (2005) 3 SCC 618, G.D. Zalani and another etc. v.
Union of India and others, 1995 Supp (2) SCC 512, Pure Helium India
Pvt. Ltd. v. Oil and Natural Gas Commission, (2003) 8 SCC 593,
M/s.Real Food Products Ltd. (supra), Hotel Venus International v. State
of Andhra Pradesh and others, AIR 1998 AP 78 and Hindustan Zinc Ltd.
v. APSEB, 1991 (3) SCC 299 and also placed reliance on certain
paragraphs of the decisions which have been placed reliance upon by the
learned Attorney General.
9. Mr.Dave, learned senior counsel has also drawn inspiration from the
statements of objects and reasons of 2003 Act. It is also contended by him
that the basic purpose of the GNCTD while issuing the communication in
question was to ensure that in the public interest, the National Tariff Policy
should be duly adhered to by the DERC in fixing power tariff. It was the
intention of the State that DERC should be guided by the National Tariff
Policy.
10. The question that emerges for consideration is whether the
communication dated 4.5.2010 could have been made in exercise of power
vested in the State Government under Section 108 of the 2003 Act. Section
108 of the 2003 Act reads as under:
"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.
WP(C) No. 4821/2010 Page 8 of 19
(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."
11. Section 78A of the 1948 Act reads thus:
78A. Directions by the State Government - (1) in the
discharge of its functions, the Board shall be guided by
such directions on questions of policy as may be given
to it by the State Government.
(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."
12. In Indian Metal & Ferro Alloys Ltd. (supra), while interpreting
Section 22-B of the Electricity Act, 1910, the Apex Court has held thus:
"It appears to us to be clear on a reading of Section 22-
B of the Act that what is contemplated by it is that the
State Government should only lay down policy
guidelines to be adopted by the Board for regulating
supply, jurisdiction (sic distribution), consumption or
use of energy. The implementation of the policy after
working out the details is a matter to be carried out by
the Board. It is therefore somewhat strange that the
State Government has taken upon itself the task of
allocating the quantum of power that may be consumed
by the different industrial units mentioned in the
Annexures to the Government Orders passed in respect
of the years 1984-85, 1985-86 and 1986-87 under
Section 22-B of the Act. However, the High Court is in
our opinion right in holding that under the aforesaid
section, the Government may for the purposes of
securing equitable distribution of energy regulate its
consumption or use and decide as a matter of policy
whether the benefit of clubbing should be allowed to the
consumers of energy...."
WP(C) No. 4821/2010 Page 9 of 19
13. In Chittoor Zilla Vyavasay Adarula Sangham (supra), the Apex
Court came to hold as follows:
"22. It is necessary first to examine the periphery of
the statutory fields within which the Board and the State
Government have to function. Admittedly both are
statutory functionaries under the Central Act. They
have to perform their obligations within the limits they
have been entrusted with. Section 78-A empowers the
State Government to issue directions to the Board on
the question of policy, on the other hand the Board has
to perform its statutory obligations under the said Act
and with reference to the fixation of tariff it has to act in
terms of what is contained in Sections 49 and 50. But
this field of policy direction is not unlimited. There
cannot be any policy direction which pushes the Board
to perform its obligations beyond the limits of the said
two sections. Any policy direction, which in its due
performance keeps the Board within its permissible
statutory limitations would be binding on the Board.
So, both the State and the Board have to maintain their
cordiality and coordination in terms of the statutory
sanctions. If any policy direction pushes the Board in
its compliance beyond statutory limitations, it cannot be
a direction within the meaning of Section 78-A. It is
significant that the opening words of Section 78-A are,
"in the discharge of its functions, the Board shall be
guided by such directions". So, the direction of the
State is for the guidance to the Board, in the discharge
of its functions. Thus this direction has also limitation
to give such direction which will subserve in
performing its statutory obligation. We would be
returning later to test, if direction to charge tariff at the
rate of Rs.50 per HP per annum would have been
followed by the Board, whether it would have travelled
beyond Section 59.
xxx
xxx
25. Now, we proceed to examine what this Court
held in the Real Food Products Ltd.1 This Court
examined the nature and effect of the direction given by
the State Government under Section 78-A. It was
examined in the context of charging a flat rate per H.P.
for agricultural pumpsets. It holds the view expressed
WP(C) No. 4821/2010 Page 10 of 19
by the State on a question of policy to be followed by
the Board in the context of Board‟s function under
Sections 49 and 59 and other provisions of the Act.
This Court held that the flat rate per HP for the
agricultural pumpset was found acceptable by the
Board. What does acceptable to the Board means? It
only means it to be within the parameters of Sections 49
and 59 of the Act. In other words, the Board has not to
travel outside its obligations under Section 59. This
decision records:
"However, in indicating the specific rate in a
given case the action of the State Government
may be in excess of the power of giving a
direction on the question of policy, which the
Board, if its conclusion be different, may not be
obliged to be bound by... If the view expressed
by the State Government in its direction exceeds
the area of policy, the Board may not be bound
by it unless it takes the same view on merits
itself.
*** *** *** *** *** ***
At any rate, there is no material in the present
case to indicate that the flat rate indicated by the
State Government for the agricultural pumpsets
was so unreasonable that it could not have been
considered appropriate by the Board."
Thus it is clear that the Board would not be bound to
follow every policy direction. According to the Board,
if tariff was charged at the rate of Rs. 50 per HP per
annum, as per the direction in question, loss to the
Board would have been to the extent of Rs. 1,553 crores
for the year 1996-97. This would have gone contrary to
the obligation cast on the Board under Section 59.
Section 59 mandates the Board to leave such surplus not
less than 3% of the revenue, after meeting all its
expenses referred to therein. Thus Board has not to
supply electricity at such rate to be in deficit, leaving no
hope for its extensions for the benefit of persons living
in an uncovered area. It is for this and other reason
statute mandates Board to maintain this surplus in every
year. If it has to perform this statutory obligation, how
can it do so, if it follows any such direction which takes
it away from it. It is true the Government can (sic has)
WP(C) No. 4821/2010 Page 11 of 19
to cater to the popular demand in order to earn its
legitimate favour, give any such policy direction, but it
should have to be within permissible limit."
[Emphasis supplied]
14. In Real Food Products Ltd. & Ors. (supra), a three-Judge Bench of
the Apex Court has observed thus:
"8. The only surviving question is with regard to the
nature and effect of the direction given by the State
Government under Section 78-A of the Act. The
question has to be examined in the context of the facts
of the present case which is confined to the charging of
a flat rate per H.P. for agricultural pump-sets. The
nature of the function of the board in fixing the tariffs
and the manner of its exercise has been considered at
length in the earlier decisions of this Court and it does
not require any further elaboration in the present case.
Section 78-A uses the expression "the Board shall be
guided by such directions on questions of policy as may
be given to it by the State Government". It does appear
that the view expressed by the State Government on a
question of policy is in the nature of a direction to be
followed by the Board in the area of the policy to which
it relates. In the context of the function of the Board of
fixing the tariffs in accordance with Section 49 read
with Section 59 and other provisions of the Act, the
Board is to be guided by any such direction of the State
Government. Where the direction of the State
Government, as in the present case, was to fix a
concessional tariff for agricultural pump-sets at a flat
rate per H.P., it does relate to a question of policy which
the Board must follow. However, in indicating the
specific rate in a given case, the action of the State
Government may be in excess of the power of giving a
direction on the question of policy, which the Board, if
its conclusion be different, may not be obliged to be
bound by. But where the Board considers even the rate
suggested by the State Government and finds it to be
acceptable in the discharge of its function of fixing the
tariffs, the ultimate decision of the Board would not be
vitiated merely because it has accepted the opinion of
the State Government even about the specific rate. In
such a case the Board accepts the suggested rate
WP(C) No. 4821/2010 Page 12 of 19
because that appears to be appropriate on its own view.
If the view expressed by the State Government in its
direction exceeds the area of policy, the Board may not
be bound by it unless it takes the same view on merits
itself."
[Underlining is ours]
15. In Pawan Alloys and Casting Pvt. Ltd. (supra), their Lordships of
the Apex Court have observed thus:
"For the purpose of the present discussion we may
proceed on the basis that while fixing general tariffs and
making them subject to schemes of rebate, the Board
exercises delegated legislative function flowing from
the Statute. However once incentive rebate is granted in
the general rate of tariffs on directions by State under
Section 78A, the said incentive rebate offered by the
Board would remain in the realm of exercise of
statutory power-cum-duty. In the exercise of the same
power the Board in its discretion can grant rebate in
appropriate cases within the fore corners of Sections 49
and 78A of the Act. Of course this exercise will be
subject to legally permissible limits and subject to the
said concessional rates being found reasonable on the
touchstone of Article 14 of the Constitution of India. It
is, therefore, not possible to countenance the submission
of Shri Dave that there cannot be any promissory
estoppel against the Board when it exercises its powers
under Section 49(1) of the Act whatever may be the
settings for exercise of this power and even if it is
exercised as a part of a scheme of incentive package:
required to be offered to new industries as enjoined on
the Board as per statutorily binding directions issued by
the State to the Board under Section 78A of the Act."
[Underlining is ours]
16. In this context, we may fruitfully refer to the decision in Ester
Industries Ltd. (supra), wherein their Lordships of the Apex Court have
held thus:
WP(C) No. 4821/2010 Page 13 of 19
"4. Section 78A(1) of the Act postulates that 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. In other words, the
Electricity Board has a statutory function to discharge in
determination of the rates of tariff and terms and
conditions subject to which the electrical energy be
supplied to the consumers and enforcement thereof.
This being a legislative policy, while exercising the
power under Section 78A policy directions issued by
the Government may also be taken into consideration by
the Electricity Board which has a statutory duty to
perform. But so long as the policy direction issued by
the Government is consistent with the provisions of the
Act and the tariff policy laid down by the Board, it may
be open to the Board to either accept it or may not
accept the directions as such. It is for the State
Government to consider whether the Board has laid
down the policy or whether the direction issued by the
State Government has not been properly implemented."
[Emphasis added]
17. In Hindustan Zinc Ltd. Etc. Etc. (supra), a three-Judge Bench of the
Apex Court while interpreting the provisions under the Electricity (Supply)
Act, 1948 has opined thus:
"16. ... The question, therefore, reduces itself to this:
Whether the failure of the Board to place the matter
before and seek the advice of the Consultative Council
on this question renders the revision of tariffs made by
it invalid? The common premise for the purpose of this
case that revision of tariffs by the Board is a question of
policy may indicate that it would be open to the
Consultative Council to advise the Board also on the
question of revision of tariffs, and if such advice is
given, then the Board must consider the same before
taking the final decision. That, however, does not
necessarily mean that where no such advice was taken
from the Consultative Council or was rendered on
account of the absence of any meeting of the
Consultative Council during the relevant period, it
would necessarily render invalid the revision of tariffs
made by the Board."
WP(C) No. 4821/2010 Page 14 of 19
18. In Kusumam Hotels Pvt. Ltd. (supra), the Apex Court interpreted
Section 78-A(1) and (2) and held as under:
"37. The State of Kerala in this case did not grant any
concession by itself. The Central Government took a
larger policy of treating tourism as an industry. A wide
range of concessions were to be granted by way of one-
time measure; some of them, however, had a recurring
effect. So far as grant of benefits which were to be
recurring in nature is concerned, the State exercises its
statutory power in the case of grant of exemption from
payment of building tax wherefor it amended the
statute. It issued directions which were binding upon the
Board having regard to the provisions contained in
Section 78-A of the 1948 Act. The Board was bound
thereby. The Board, having regard to its financial
constraints, could have brought its financial stringency
to the notice of the State. It did so. But the State could
not have taken a unilateral decision to take away the
accrued or vested right. The Board's order dated
11.10.1999 in law could not have been given effect to.
The Board itself kept the said notification in abeyance
by reason of the order dated 8.11.1999."
19. In this regard, we may fruitfully reproduce a passage from Laker
Airways Limited (supra). It is as follows:
"The word "direction" in section 4 is in stark contrast
with the word "guidance" in section 3. It is used again
in section 24(2) and (6)(b) and section 28(2). It denotes
an order or command which must be obeyed, even
though it may be contrary to the general objectives and
provisions of the statute. But the word "guidance" in
section 3 does not denote an order or command. It
cannot be used so as to reverse or contradict the general
objectives or provisions of the statute....."
20. Regard being had to the aforesaid pronouncement of law in the field,
the justifiability and the legal substantiality of the communication made by
WP(C) No. 4821/2010 Page 15 of 19
the State has to be tested. As is demonstrable the State is entitled to change
or alter economic policies and the said decision has to be in public interest.
In the case at hand, the nature of directions issued by the State Government
has a different contour. To appreciate the controversy in proper
perspective it is necessitous to reproduce the communication sent by the
State Government to the Commission:
"The Secretary,
Delhi Electricity Regulatory Commission,
Viniyamak Bhawan,
Shivalik, Malviya Nagar,
New Delhi - 10 017
Sir,
Through separate representations to the
Government, the three distribution companies, BRPL,
NDPL and BYPL have raised the issue of severe
cash flow constraints affecting their ability to purchase
power in 2010-11. A copy of this representation is
enclosed. They have broadly drawn the attention of the
Government on the following issues:
1. Ability to supply power contingent on Cost
Reflective Tariff.
2. Precarious Financial Position on Discoms.
3. Accumulation of revenue gaps beyond
sustainable levels.
4. Continuation of the practice of assuming higher
surplus for tariff fixation.
5. Power purchase cost/quantum.
6. Continuous recourse to addition debt to
finance operations, and
7. Critical need to additional financing.
The issues raised by the Discoms are very serious and
needs to be examined thoroughly so that the sustainable
model of tariff setting as prescribed under section 61
and 62 of the Electricity Act is not jeopardized. Further,
the National Tariff Policy at clause No. 5.3(h)-4 has
prescribed that uncontrollable costs should be recovered
speedily to ensure that the future consumers are
WP(C) No. 4821/2010 Page 16 of 19
not burdened with the past costs. It is felt that non-true-
up of the account of the year 2009-2010 where quantum
of uncontrollable costs were very high, would mean that
future consumers would be burdened with the interest
cost of the year 2009- 2010 which goes against the
above quoted clause of National Tariff Policy.
As the issues raised by the Distribution Companies as
well as the issue of burdening future consumers with
past liabilities are issues which are very serious in
nature, the Government in exercise of its power under
section 86(2)(iv) directs the DERC to give statutory
advise and clarification to the Government on the issue
raised by the Distribution companies in the enclosed
representations as well as on the issues covered under
clause 5.3(h)-4 of the National Tariff Policy. The
Government further directs under section 108 of the
Electricity Act, 2003 that the Delhi Electricity
Regulatory Commission will not issue the tariff order
till the statutory advice given by the Commission as
asked for, is thoroughly examined by the Government
and the Government gives a go ahead for passing of
tariff orders."
[emphasis supplied]
21. On a close scrutiny of the aforesaid directions, it is clear as noon day
that there has been an order of prohibition to the Commission not to pass
the tariff order. Mr. Dave, learned senior counsel for the respondent would
contend that it was issued keeping in view the public interest. The same is
not discernible. It is neither evident nor demonstrable. It was an
unwarranted interdiction. It is understandable that the State Government
could have suggested some kind of a matter relating to policy having nexus
with public interest, but unfortunately that is not so. By the impugned
communication contained in Annexure P-7, the State Government could
not have prevented the Commission from exercising its statutory powers.
In any event, under Section 108, the State Government could have only
WP(C) No. 4821/2010 Page 17 of 19
issued policy direction, not pre-emptory directions, like it did. As
submitted by the learned Attorney General for the Union of India, the
interpretations placed by the Apex Court on Section 78-A in the decisions
which we have quoted in extenso would clearly convey that the State
Government as well as the Board functions in different fields within the
statutory limits. Any encroachment is not permissible. The case at hand
projects that no iota of policy, any way, is discernible and the concept of
public interest appears to be a subterfuge, in fact, totally divorced from the
arena of public interest. Quite apart from that the communication is in the
form of injunction, which we are absolutely indubitable, the State
Government cannot issue. This interdiction is decidedly beyond the scope
of language employed in Section 108 of the 2003 Act and, in fact, contrary
to the legislative intent. Thus, we are disposed to think that the
submissions canvassed by learned Attorney General deserve acceptation
and, accordingly, we hold that the communication of the present nature
made by the State Government is absolutely unjustified, unwarranted and
untenable and, accordingly, the same stands quashed.
22. We will be failing in our duty if we do not mention that Mr. Salve,
learned senior counsel though had initially supported the order passed by
the State, yet later on conceded to the proponement canvassed by the
learned Attorney General for the Union of India.
23. In view of our aforesaid analysis, the instruction given by the State
vide Annexure-P7 is quashed.
WP(C) No. 4821/2010 Page 18 of 19
24. The writ petition be listed on 23rd February, 2011 for hearing on
other issues before regular DB-1.
CHIEF JUSTICE
MANMOHAN, J.
FEBRUARY 18, 2011 Dk/pk WP(C) No. 4821/2010 Page 19 of 19