Allahabad High Court
Suman Engineering And Chemicals Pvt. ... vs U.P.P.C.L. And 4 Others on 21 November, 2023
Author: Manoj Kumar Gupta
Bench: Manoj Kumar Gupta
HIGH COURT OF JUDICATURE AT ALLAHABAD Neutral Citation No. - 2023:AHC:219951-DB AFR Reserved Court No. 21 Case :- WRIT - C No. - 6072 of 2016 Petitioner :- Suman Engineering And Chemicals Pvt. Ltd. Respondent :- U.P.P.C.L. And 4 Others Counsel for Petitioner :- Ranjit Saxena, Bidhan Chandra Rai Counsel for Respondent :- C.S.C., Anadi Krishna Narayana, Awadhesh Kumar Saxena, Krishna Agarawal, Narendra Kumar Tiwari Hon'ble Manoj Kumar Gupta,J.
Hon'ble Manish Kumar Nigam,J.
(per Manoj Kumar Gupta, J.)
1. The prayer made in the writ petition is for a direction to the respondents to refund Rs. 42,14,181/- to the petitioner, along with interest on the said amount and further interest for the period of six months for delay caused in refunding the security amount as a result of cancellation of 3200 KVA power load by order dated 22.11.2014.
Background Facts -
2. The petitioner, a private limited company, applied for 2975 KVA load for running an induction furnace. Along with the application, the petitioner deposited Rs.1,000/-. Shortly thereafter on 10.9.2009, it filed another application for sanction of load of 3200 KVA instead of 2975 KVA. A sum of Rs.4,000/- was further deposited along with the application. The load was sanctioned by Paschimanchal Vidyut Vitaran Nigam Limited (respondent no. 2) vide Office Memorandum dated 18.1.2011, subject to the condition that the petitioner would obtain No-Objection Certificate (NOC) from the U.P. Pollution Control Board. The case of the petitioner is that it applied for NOC from U.P. Pollution Control Board on 22.2.2011. By letter dated 3.10.2012, estimate for releasing the electricity load amounting to Rs.80,54,181/- was sent to the petitioner. The breakup of the said amount is as follows: -
Service Charges Rs. 5,49,181/-
Security Deposit Rs. 38,40,000/-
System Loading Charges Rs. 32,00,000/-
Charges as per letter of Executive Engineer dated 8.8.2012.
Rs. 4,65,000/-
3. The petitioner was required to deposit the said amount within fifteen days, failing which, the sanction order would stand cancelled automatically. Consequently, the petitioner deposited the entire amount on 8.11.2012 and communicated the said fact to the respondents. However, even after lapse of considerable time, the U.P. Pollution Control Board did not issue NOC and consequently the respondents cancelled the sanction vide order dated 22.11.2014.
4. Upon cancellation of the sanction order, the respondents refunded the security amount of Rs.38,40,000/- vide order dated 4.3.2015. By another order dated 17.3.2015, Rs. 6,38,400/- was paid as interest on the security amount to the petitioner. The respondents however refused to refund other amounts to the petitioner on the ground that the same were non-refundable. The petitioner therefore filed the writ petition for the reliefs noted above.
5. The writ petition was initially allowed by a Co-ordinate Bench on 25.9.2018. It was held that the petitioner was not issued NOC by the U.P. Pollution Control Board despite all efforts. The agreement could not be executed between the parties for want of NOC, for which the petitioner was in no manner responsible. It was also observed that no material was filed by the respondents to prove that they actually incurred any expenses after sanction of the load, nor could place any provision under the Electricity Act or the U.P. Electricity Supply Code, 2005, which would entitle them to appropriate the amount deposited by the petitioner in pursuance of sanction order. Accordingly, the petitioner was held entitled to a refund of the amount deposited by it along with interest @ 8.5% per annum from the date of deposit upto the date of payment.
6. The respondents being aggrieved by the order and judgment of this court, challenged the same before the Supreme Court. The Supreme Court by order dated 29.11.2022 remanded the matter to this court, granting opportunity to the respondents to file additional counter affidavit with supporting documents to prove actual expenses incurred by them. This court was required to "deny refund, to the extent" the respondents are able to prove "the actual expenses incurred". It was clarified by the Supreme Court that all contentions which may be available to the respective parties, would remain open for consideration by this court while deciding the writ petition afresh on remand. The relevant portion from the order of the Supreme Court is extracted below: -
"If the appellant would have been called upon to produce such documents and thereafter prove the actual expenses/amount incurred and if it is ultimately found that some amount was actually spent, to that extent, the respondent-original writ petitioner may not be entitled to refund. Therefore, we remand the matter to the High Court by giving one additional opportunity to the appellant to produce the relevant documents/materials/evidences to show actual amount incurred by the appellant while completing the system and other formalities required for getting the connection. For that purpose, it will be open for the appellant to file additional counter with supporting documents, which can be rebutted by the respondent-original writ petitioner and thereafter appropriate order be passed by the High Court denying the refund, to the extent, the appellant is able to prove the actual expenses incurred.
The impugned judgment and order passed by the High Court is set aside and the matter is remanded to the High Court to do the exercise, as observed hereinabove. The aforesaid exercise shall be completed by the respective parties within a period of 3 months from today and thereafter, the High Court to finally decide and dispose of the petition, on remand, within a period of 3 months thereafter.
All contentions which may be available to the respective parties are kept open to be considered by the High Court, while deciding the writ petition afresh on remand."
(emphasis supplied by us)
7. After remand, the respondents have filed supplementary counter affidavit and additional supplementary counter affidavit and the petitioner has filed affidavits in rejoinder.
8. We have heard Sri B.C. Rai for the petitioner, learned Standing Counsel for the State respondents, Sri Shambhu Chopra, learned Senior Advocate, assisted by Sri N.K. Tiwari for respondent nos. 2, 3 and 5 and Ms. Vishaka, Advocate, holding brief of Sri Krishna Agarawal for respondent no. 1.
Submissions -
9. Sri Shambhu Chopra, learned counsel appearing on behalf of respondent nos. 2, 3 and 5, submitted that under Clause 4.6(b) of U.P. Electricity Supply Code, 2005 (hereinafter referred to as 'the Code'), the estimate would include security deposit, charges for laying the service line, distribution mains (if required) & material, and system-loading charges, etc. as determined by the licencee with the approval of the Commission once in two years. Per Clause 4.6(c) of the Code, the respondents had published cost data book and according to which, processing fee is non-refundable and it is also provided therein that in case system-loading charge for the new load is lower than what is already paid by the consumer, no refund shall be made. Therefore, the claim of the petitioner for refund of system-loading charges is not sustainable in law. He also invited our attention towards the balance sheet of respondent no. 2 as on 31.3.2013 to show that the consumer's contribution towards service line and other charges constitutes the capital reserve of the Company and thus it is submitted that the amount deposited towards system-loading charges was non-refundable. He also urged that the Corporation was compelled to establish new feeder of 220 KVA to supply electricity in rural areas, because load of 3200 KVA was reserved for the petitioner's industrial unit for two years. He also urged that the Executive Engineer of the concerned Division by letter dated 8.8.2012 requested for sanction of Rs. 4.65 lakhs as the estimated cost for strengthening of one number 33 KV Bay for furnace - IV Feeder at 220 KV Sub Station, Nara to facilitate supply of electricity to the petitioner. He further relied on letter of Chief Engineer dated 21.8.2012 to Executive Engineer (Technical), written in reference to proposed power connection to the petitioner-company. It mentioned that the new power connection is to be supplied from 33 KV Shahpur Bay which till that time was a rural feeder. Since, it was to be utilized for industrial units and therefore the apparatus on the aforesaid Bay were required to be upgraded to ensure uninterrupted power supply to industrial units. The said letter was in continuation of the letter of Executive Engineer dated 8.8.2012 aforenoted. According to the respondents, the work of strengthening of equipments for commissioning of 33 KV Bay at 220 KV Sub Station, Nara was carried out through the contractor M/s Pal Electricals. The contract given in its favour was for Rs. 28,020/-. He also submitted that the respondents had to undertake bifurcation of 33 KV line and construct a new 33 KV line and install four-pole structure near the place of consumer. He places reliance on Clause 4.21 of U.P. Electricity Supply Code, 2005 and the provisions of Chapter IV of Cost Data Book in support of his contention that Rs. 32,00,000/- realized as system-loading charges was non-refundable. A letter of the Superintending Engineer dated 19.3.2013 has also been filed to show that the respondents were in a position to release power connection as soon as NOC was submitted. A letter of Executive Engineer dated 19.12.2014 addressed to Superintending Engineer mentioning that according to Cost Data Book, system-loading charge was non-refundable, has also been relied upon. Reliance has been placed on the judgment of the Supreme Court in Central GST Delhi-III vs. Delhi International Airport Ltd.1
10. On the other hand, learned counsel for the petitioner submitted that it is the primary duty of the respondents to maintain an efficient distribution system in its area. They were under obligation to upgrade and strengthen the distribution system. The respondents were only authorized to deduct processing fee and line charges, which were actually spent, whereas the amount realized as system-loading charge was refundable, as it is realized from new customers or those seeking enhancement of load to recover the cost of upgradation of the system. Since the sanction order was cancelled even before any electricity was supplied to petitioner-company, therefore it was not liable to bear the system-loading charges. It is also submitted that the reliance placed on Explanation to Note No. 4 of Chapter IV of the Cause Data Book is wholly misplaced, as it only permits the licensee to retain higher amount paid as system-loading charges, in case the consumer subsequently opts for new load of lower capacity. Such a consumer continues to be beneficiary of the distribution system and thus made liable to share the burden. However, the same analogy cannot be applied to the petitioner. In support of his contention, he has placed reliance on Section 42, 43, 45 and 46 of the Electricity Act, 2003 and has tried to draw a distinction between the expenses realizable as expenditure under Clause 4.6 of the Electricity Supply Code, 2005 as against amounts which are realized as normative cost from the consumers. According to him, it is only the actual cost incurred which can be realized and not the normative cost, unless the licensee starts availing the services. He has placed reliance on various orders passed by the Appellate Tribunal for Electricity in various States and certain orders of the Ombudsman.
ANALYSIS:
Statutory regime -
11. Respondent no. 2 is a distribution licensee, defined under Section 2(17) of the Electricity Act, 2003 (for short referred to as 'the Act'), as follows: -
"distribution licensee" means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply.
12. Under Section 42 of the Act, it is the duty of a distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act. Section 42(1) runs thus: -
42. Duties of distribution licensees and open access - (1) It shall be the duty of a distribution licensee to develop and maintain an efficient co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act.
13. Under Section 43 of the Act, it is the duty of the licensee to supply electricity to the premises owned or occupied by an applicant within one month from the date of receipt of application or where supply requires extension of distribution mains, or commissioning of new supply stations, after such extension or commissioning or within such period as may be specified by the Appropriate Commission. Under sub-section (2), every distribution licensee is obligated to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1), subject to the applicant paying to the licensee such price for the electric plant or electric line as determined by Appropriate Commission, to the licensee. Section 43 is reproduced below for convenience of reference: -
43. Duty to supply on request.- (1) Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply:
Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission:
Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider necessary for electrification of such village or hamlet or area.
(2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1):
Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission.
(3) If a distribution licensee fails to supply the electricity within the period specified in sub-section (1), he shall be liable to a penalty which may extend to one thousand rupees for each day of default.
14. Section 43 contemplates two kinds of work to be undertaken by the licensee depending on the fact situation. The first one is extension of distribution mains and commissioning of new sub-stations where needed. The second obligation is to provide electric plant or electric line for giving electric supply to the premises in respect of which request is made for supply of electricity. 'Electric line' and 'electric plant' are mutually exclusive terms and have been defined thus :-
"(20) "electric line" means any line which is used for carrying electricity for any purpose and includes -
(a) any support for any such line, that is to say, any structure, tower, pole or other thing in, on, by or from which any such line is, or may be, supported, carried or suspended; and
(b) any apparatus connected to any such line for the purpose of carrying electricity;
.........................
(22) "electrical plant" means any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of electricity but does not include -
(a) an electric line; or
(b) a meter used for ascertaining the quantity of electricity supplied to any premises; or
(c) an electrical equipment, apparatus or appliance under the control of a consumer;"
15. Section 45 of the Act empowers the licensee to recover charges for electricity supplied whereas Section 46 empowers it to recover expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply. Section 45 and 46 which are pertinent to the controversy involved, are reproduced below: -
45. Power to recover charges. - (1) Subject to the provisions of this section, the prices to be charged by a distribution licensee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and conditions of his licence.
(2) The charges for electricity supplied by a distribution licensee shall be -
(a) fixed in accordance with the methods and the principles as may be specified by the concerned State Commission;
(b) published in such manner so as to give adequate publicity for such charges and prices.
3) The charges for electricity supplied by a distribution licensee may include -
(a) a fixed charge in addition to the charge for the actual electricity supplied;
(b) a rent or other charges in respect of any electric meter or electrical plant provided by the distribution licensee.
(4) Subject to the provisions of section 62, in fixing charges under this section a distribution licensee shall not show undue preference to any person or class of persons or discrimination against any person or class of persons.
(5) The charges fixed by the distribution licensee shall be in accordance with the provisions of this Act and the regulations made in this behalf by the concerned State Commission.
46. Power to recover expenditure. - The State Commission may, by regulations, authorise a distribution licensee to charge from a person requiring a supply of electricity in pursuance of section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply.
16. Section 46 speaks of "expenses reasonably incurred in providing electric line or electrical plant'. It does not speak of expenses incurred in extension of distribution mains or commissioning of new sub-station, which a distribution licensee has to undertake where required as part of its statutory obligation under the first proviso to sub-section (1) of Section 43. Under the direction of the Supreme Court also, the refund is to be disallowed only to the extent the respondents are able to prove "the actual expenses incurred." In other words only such expenses which would fall within the ambit of Section 46 could be permitted to be retained by the respondents. In order to determine the same, we would like to refer to few more statutory provision which have bearing on the issue.
17. Section 47 empowers the licensee to realise reasonable security as may be determined by the Regulations to facilitate supply of electricity. The provision entitles the consumer to interest at bank rate on the security amount and refund of such amount on request.
18. Section 61 empowers the Appropriate Commission to frame regulations and lays down guidelines for determination of the tariff. Section 62 confers power on the Appropriate Commission to determine the tariff and Section 64 lays down the procedure for passing tariff order.
19. Section 50 of the Act empowers the State Commission to frame Electricity Supply Code, providing for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity and payment thereof etc. Section 50 reads thus: -
50. The Electricity Supply Code - The State Commission shall specify an Electricity Supply Code to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment thereof, restoration of supply of electricity, measures for preventing tampering, distress or damage to electrical plant or electrical line or meter, entry of distribution licensee or any person acting on his behalf for disconnecting supply and removing the meter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and such other matters.
20. The Electricity Supply Code, 2005 framed by the State Commission in exercise of power under Section 50 of the Act, deals with the procedure for grant of electric supply to consumers. Under Chapter IV thereof, Clause 4.1 obligates the licensee to supply electricity to the consumers as per the mandate of Section 42 of the Act. Under Clause 4.2, it is the licensee's obligation to extend the distribution system. It reads as follows:-
4.2 Licencee's Obligation to Extend the Distribution System
(a) The Licencee shall have obligation for ensuring that its distribution system is upgraded, extended and strengthened to meet the demand for electricity in its area of supply. Wherever the existing transformation capacity is loaded upto 80% of its capacity, the licencee shall prepare a scheme report for augmentation of such transformation capacity.
Provided that the responsibility of laying the distribution network for new street lights shall be that of the concerned local body.
Provided also that for prospective connections in un-electrified areas in his area of supply, the Licencee may intimate to the Commission the details of such un-electrified colonies/areas along with approximate no. of prospective consumers. The licencee may also submit detailed plan for electrification of such areas by any licencee / developer / Authority / Private Colonizers / Promoters / local body or any collective body of the consumers. The plans may be updated each year before submission to Commission.
(b) The Licencee shall meet the cost for strengthening/ upgradation of the system to meet the enhanced demand of the existing consumers as well as future growth in demand. Such expenditure shall be allowed to be recovered from the consumers through tariff subject to financial prudence check by the Commission.
21. Clause 4.6 deals with estimates which includes -
(i) Security deposit;
(ii) Charges for laying the service line;
(iii) Distribution mains, if required and material, and
(iv) System-loading charges, etc. It reveals that system-loading charges and the establishment cost are realized as a percentage of the normative estimates, specified in Cost Data Book to be deposited with the licensee before work begins. Although system-loading charge is not defined anywhere, but Clause 4.6(h) reveals that system-loading charge is the cost of extension and upgradation of the system for meeting demand of new consumers/consumers desiring enhancement of load. In areas where distribution mains do not exist, the cost for installation of new distribution mains is normally to be recovered by grant from the State Government, or the local body, or any collective body of the consumers, or a consumer. It is open to the licensee to install new distribution mains from the surplus available with the licensee, after meeting all expenses. However, the cost of extension of service line from the distribution mains to the point of supply, has to be borne by the applicant himself in all cases. Clause 4.6 is extracted below: -
4.6 Estimate
(a) After sanction of load, an estimate shall be prepared, which shall remain valid for three months from the date of sanction letter to the applicant.
(b) The estimate shall include security deposit, charges for laying the service line, distribution mains (if required) & material, and system-loading charges etc, as determined by the Licencee with the approval of the Commission once in two years.
(c) After approval of the Commission, the Licencee shall publish a cost data book, and make it available to any interested person at a reasonable charge and shall also place it on their website.
(d) The above estimate shall be based on Rs/KW (or Rs /KVA) of the sanctioned/contracted load, or on Rs per service installation for specific bands of contractual load applied for OR sanctioned load at each voltage level up to 33 KV voltage on which supply is to be given. Beyond 33 KV voltage level, the charges for laying shall be based on actual estimates of the licencees.
Provided that the estimates for independent feeder shall be in accordance to requirements laid down in clause 3.4 of this code.
Note: Commission had specified a time frame for release of new connection in the Code subject to certain conditions. Commission observes that estimates to be made by licencee for the initial connection has uncertain elements-the uncertainty of time, as well as uncertainty of what consumer has to pay. The commission is therefore constrained to direct the licencee to notify in advance the normative estimated charges as specified above, within 3 months from the date of enforcement of this revised Code, failing which, the licencee shall charge on such provisional normative charges that may be specified by Commission.
(e)(i) LT Loads upto 50 kW shall be developed by the licensee only, for which no supervision charges shall be applicable.
(ii) If the work is to be done by the developer / applicant / development authority, the Licensee shall charge supervision charges (on the estimated labour cost, cost of material handling and storage/inventory, but excluding the system loading charges and the establishment costs), as a percentage of the normative estimates, specified in cost data book, which shall be deposited with the licensee before work begins.
For LT Loads upto 50 KW, if the supply released on HT on the request of consumers (in such cases, metering will be done on LT and billing as per LT tariff) - 15%.
For Loads exceeding 50 KW (56 KVA) upto 3600 KW (4000 KVA) - 15%.
For Loads exceeding 3600 KW upto 9000 KW (10,000 KVA) - 8%.
For Loads exceeding 9000 KW (10,000 KVA) - 5%.
(iii) The Licensee shall commence the work after the applicant has deposited the full amount of the estimates."
(f) Disputes regarding the estimate may be referred to the authority that is one level higher than the sanctioning authority and if the applicant is still aggrieved he may approach the Consumer Grievance Redressal Forum for adjudication.
(g) A final bill shall be prepared after completion of the work by the Licencee.
- If the final bill exceeds the value of the estimate, the difference shall be deposited by the applicant before connection is energized.
- If it were less, the difference shall be adjusted in subsequent electricity bills or refunded by cheque within 60 days.
Provided further that, in case of revision of charges, if the estimates were sanctioned prior to the date of revision, the estimates in excess shall not be charged on completion of works on the basis of revised charge. However, if the work is completed at an estimate less than that prepared in revised charges, the excess amount deposited by the applicant on the basis of unrevised charges, shall be refunded within 60 days.
Provided also that, if the licencee has published updated normative charges in the cost data book, and has included the same in preparing the estimate, the final bill and above proviso, shall not be necessary.
(h) Consumer's Share in the Cost Estimate
(i) The cost of extension and up-gradation of the system for meeting demand of new consumers/consumers desiring enhancement of load shall be deemed to have been recovered from them through system loading charges as approved by the Commission.
(ii) In areas where distribution mains do not exist, the costs for installation of new distribution mains shall normally be covered by grant from State Government or the local body or any collective body of the consumers or a consumer. The licencee may also install new Distribution Mains from the surplus available with the licencee after meeting all expenditure.
(iii) In all cases the applicant shall bear the cost of the extension of service line from the Distribution Mains to the point of supply.
22. Clause 4.21 relates to cost of servicing of new connection, reduction/enhancement of load and reads thus: -
4.21 Cost of Servicing a New Connection Reduction/Enhan cement of Load
(a) The consumer shall pay the cost of service line etc. and system loading charges as a cost of servicing a New Connection/Enhancement of Load to the licencee. These charges shall be either on the basis of the schedule of standard charges specified in the cost data book duly approved by the Commission, or in its absence, the actual cost of works as given in the estimate (clause 4.6) prepared by the Licencee. For reduction of load, system loading charges shall not be refunded, but if the load is enhanced again by the same consumer, only enhanced system loading charges over and above the system loading charges already deposited shall be charged.]
(b) For Conversion from 1 phase to 3 phase LT & vice-versa, and Conversion from LT to HT & vice-versa, the procedure laid down for new connection, and clause 3.3 shall be followed.
23. Clause 4.29 indicates that the service line and other apparatus provided to a consumer to supply electricity vests in him and for a limited period only the licensee is permitted to use the same for providing supply to other consumers. Clause 4.29 is reproduced below: -
4.29 Use of Service line of consumers by Licencee
(a) The Licencee may use the service line and other apparatus to give supply to other consumers provided that the supply to the consumer who has paid for them is not affected.
(b) Further, even if the supply to the consumer who has paid for the line / apparatus is disconnected for whatever reason, the consumer shall permit the Licencee continued access to the service line and other apparatus if they are required to give supply to other consumers, and no payment shall be due to the consumer for such access/facility, until alternate arrangements are made.
(c) However, it is expressly provided, that the Licencee shall make all possible efforts to make alternate arrangements, as early as may be practicably possible. For this purpose, the Licencee may explore a mutually acceptable arrangement for continuation of the installation at the existing place.
24. 'Service line' is defined under Section 2(61) as follows :-
"Service line means any electric supply-line through which electricity is, or is intended to be, supplied-
(a) to a single consumer either from a distributing main or immediately from the Distribution Licensee's premises; or
(b) from a distributing main to a group of consumers on the same premises or on contiguous premises supplied from the same point of the distributing main;
Processing fees:
25. As per cost data book processing fees was non-refundable. Chapter-II of cost data book deals with processing fees. According to it, for load above 300 KVA the processing fees stipulated at the relevant time was Rs. 5000/-. Although, the load applied was slightly less than 3000 KVA but the petitioner deposited Rs. 5000/- under the said head. This amount was non-refundable.
Charges for laying service Line Clause 4.6(h)(iii) of the Code enjoins upon the petitioner to bear the cost of extension of service line from the Distribution Mains to the point of supply. While under sub-section (i) of Section 43, the obligation to extend the distribution system or commission new Sub Station or extend the Distribution Mains to an area where no provision of supply of electricity exist is on the licensee, the duty to provide electric plant and electric line to an applicant is dependent upon his agreeing to pay to the licensee, such price therefor as determined by the appropriate commission. Again under Section 46, the licensee has been empowered to realise expenses reasonably incurred in providing any electric line or electric plant directly from the consumer. As per Clause 4.21, the cost of service line charge shall be either on basis of schedule of standard charges specified in the Cost Data Book, duly approved by the Commission or in its absence the actual cost of work as given in the estimate (clause 4.6) prepared by the licensee.
26. The estimate shows that the respondents have realised Rs.5,49,181/- as service connection charges and another sum of Rs.4,65,000/- as per letter of Executive Engineer dated 08.08.2012. The respondents have not led any evidence to prove expenditure of Rs. 5,49,181/- and 4,64,000/-. The only evidence brought on record is regarding expenditure of a sum of Rs.28,020/- towards strengthening of equipments for commissioning of 33 KVA at 220 KVA sub-station, Nara through the contractor M/s Pal Electricals.
27. As per condition No. (ii) of sanction order dated 18.1.2011, a new 33 KVA line was to be constructed from 220/132 KV sub-station Nara to Furnace Feeder No.1 for which entire expenses was to be borne by the petitioner. Again, no evidence has been brought on record to prove actual expenditure incurred for the said purpose. In para 12 of supplementary counter affidavit it is pleaded that on 8.8.2012, the Executive Engineer addressed a communication to the Zonal Officer. By the said letter, the previous demand of Rs.18.37 lakh for providing new infrastructure for supply of power to the petitioner was cancelled and in its place an estimate of Rs. 4.65 lakh was submitted.
28. The pleading in reference to letter dated 08.08.2012 in para 12 on the supplementary counter affidavit is as follows:-
"That, corporation was compel to establish new feeder of 220 KVA to supply electricity in rural area beca1-28use the load of 3200 KVA was reserved for the petitioner industrial unit for two years. The Transmission executive Engineer and Superintending Engineer Distribution Circle Muzzafar Nagar wrote letter dated 08.08.2012 and 21.08.2012 that new infrastructure is required for proper supply to rural area as 3200 KVA load is proposed for industrial supply. Copy of letter dated 08.08.2012 and Superintending Engineer Distribution Circle Muzzafar Nagar filed herewith and 1-28marked as Annexure No. SCA-2 to this affidavit. "
29. In para 13 of supplementary counter affidavit, it is pleaded that the work was got executed through M/s Pal Electricals under a contract. Para 13 is reproduced below:-
"That, the necessary Communication made by the Transmission executive Engineer and Superintending Engineer Distribution Circle Muzzafar Nagar is part of record. The work was performed by the M/s Pal Electricals and Feeder of 220 KVA was established. The copy of agreement with M/s Pal Electrical dated 29.01.2013 and payment to the concern firm are jointly filed herewith and marked as Annexure No. SCA-3 to this affidavit."
30. In para 19 and 20 of the supplementary counter affidavit dated 3.03.2023, it is pleaded as follows:-
"19. That, the letter dated 08.11.2011, further poignantly stipulate that for providing electricity load of 3200 KVA, the power corporation has to incur expenses for bifurcation of 33 KVA line and also to construct new 33 KVA line with 4 pole structure at the door step (manufacturing unit) of consumer. Petitioner has submitted affidavit accepting such conditions.
20. That, petitioner admitted in his letter dated 16.03.2013 that he is ready to get connection without having NOC from pollution control Board. It proves that power corporation has bifurcated 33 KVA line, laid a separate 33 KV line constructed 4 pole structure. Copy of letter dated 16.03.2016 of petitioner to Executive Engineer is being filed herewith as ANNEXURE NO.SCA-3 to this affidavit."
31. No evidence has been filed to prove the above expenditure, but in para 21 it is pleaded thus:-
"21. That, the Executive Engineer responded vide letter dated 19.03.2013 and categorically emphasis that 30 days time is given to take NOC. It shows that corporation has already completed its work to release new electricity connection. Copy of letter dated 16.03.2016 of Executive Engineer to Managing Director of company is being filed herewith as ANNEXURE NO.SCA-4 to this affidavit.
32. We proceed to accept the statement on oath in para 21 read with letter dated 16.03.2016 as evidence of the fact that 4 pole structure and service line was constructed as in that event only, the respondents were in position to write to the petiti1-28oner to complete the formalities so that the line is energised. There is also no challenge by learned counsel for the petitioner that the respondents had completed these works. Therefore, sum of Rs.5,49,181/- and Rs.4,65,000/- was rightly retained by the respondents.
Security :
33. Counsel for the petitioner did not dispute that security amount with interest has been refunded. Although the petitioner has claimed certain more amount towards interest on the security amount, but the said claim was not pressed during oral arguments.
34. The real bone of contention between the parties is regarding refundability of system loading charges. The entire arguments by counsel for the parties revolved around it only. We, therefore, proceed to advert to the said issue.
System Loading Charges
35. Clause 4.6 of the Code as noted above stipulates that the estimate shall include (i) security deposit (ii) charges for laying the service line distribution mains (if required) and material and (iii) system loading charges, etc. as determined by the licensee with the approval of the Commission in two years. It further provides that after approval of the Commission, the licensee shall publish a cost data book specifying the charges realisable from a new applicant or a person seeking variation in supply. System loading charges is not separately defined, either under the Act or under the Code. However, it is evident from Clause 4.6(h) that system loading charge is the normative cost realized by the licensee for extension and upgradation of the system for meeting demand of new consumers/consumers desiring enhancement of load. The same conclusion is deductible from Clause 8 of Chapter I of Cost Data Book. It reads as follows:-
"8. Presently, the licensees are charging a part of the expenditure incurred or to be incurred to upgrade its system of supply from the applicants of new connection/enhancement of load as System Loading Charges, and also recovering a part of it from consumers through tariff. Analysis of this charge is given in Annexure-1."
36. Clause 4.21 of the Code requires the consumer to pay system loading charge as cost of servicing a new connection/enhancement of load to the licensee. Clause 4.21 which is relevant is reproduced below: -1-28 "4.21 Cost of Servicing a New Connection / Reduction / Enhancement of Load : (a) [The consumer shall pay the cost of service line etc. and system loading charges as a cost of servicing a New Connection / Enhancement of Load to the licensee. These charges shall be either on the basis of the schedule of standard charges specified in the cost data book duly approved by the Commission, or in its absence, the actual cost of works as given in the estimate (clause 4.6) prepared by the Licensee. For reduction of load, system loading charges shall not be refunded, but if the load is enhanced again by the same consumer, only enhanced system loading charges over and above the system loading charges already deposited shall be charged.]
(b) For Conversion from 1 phase to 3 phase LT & vise-versa, and Conversion from LT to HT & vice-versa, the procedure laid down for new connection, and clause 3.3 shall be followed."
37. As per cost data book (annexure-1), upgradation of system includes the construction/increasing capacity of distribution sub station, secondary sub station and primary sub station and strengthening/construction of LT, 4KV, 33KV, 132KV and 220KV lines. The respondents have realized Rs. 32 lakhs from the petitioner as system loading charges. It is at the rate of Rs. 1,000/- for load of 3,200KVA in accordance with annexure-1 to the cost data book. The cost data book justifies charging of system loading charges at the aforesaid rate on the footing that it is only a small part of the total expenditure. It also states that though the liability of the licensee in respect of strengthening of system decreases on higher voltage, but for social reasons, the rate of system loading charge are higher at higher voltage to cross subsidise the consumers having lower load, which would be phased out in future. The upgradation of the system as per the scheme of the Act is the primary responsibility of a distribution licensee. The initial expenses as noted above, is met from the grants received from the State Government or the local body or any collective body of the consumers or a consumer or the surplus available with the licensee after meeting all expenditure. Unlike service line over which the licensee retains right of user for a limited period after supply is disconnected, as stipulated under Clause 4.29 of the Code, the system upgradation carried out by the licensee and in respect of which normative charges as per cost data book is realized as part of estimate from a consumer, continues to be property of the licensee even after the supply is disconnected. The distribution licensee retains full control over its usage.
38. It is thus clear that system loading charges is a permissible mode of recovering expenditure already incurred or likely to be incurred in future by the distribution licensee in strengthening and upgrading the distribution system in its area of operation. It is a compulsory exaction from a person who enjoys the benefit of the distribution system and its upgradation and strengthening by the licensee. Although the said amount is recovered as a component of the 'estimate' from a prospective consumer, but the actual liability accrues once the prospective consumer starts consuming electricity using the distribution system of the licensee. If a prospective consumer does not become actual consumer for any reason whatsoever, and thus does not use the distribution system, he cannot be fastened with the liability towards upgradation of the system i.e. system loading charges. The position would be completely different if once the supply commences. The distribution licensee, would then be within its right to retain the amount. It is for the said reason that even when load is reduced, the Code vide Clause 4.21 (a) stipulates that system loading charges shall not be refunded.
39. In Delhi International Airport Authority Ltd. (supra) cited by counsel for the respondents, the issue was whether service tax could be charged on 'user development fee' (UDF). The Supreme Court held that it was in nature of 'tax or cess' collected for recovering the cost of future projects and there was no consideration for services provided by the assessee to the customer and thus could not be subjected to service tax. In that case, the assessees were entrusted with the management and development of the Airport in pursuance of joint venture agreement with Airport Authority of India, created under the Airport Authority of India Act, 1994. The UDF was being charged by the assessees from every departing domestic passengers in terms of Rule 3 of the Rules framed under the Act. There was no dispute in that case that UDF was collected by the assessees from persons actually liable to pay it. As noted above, the Court in that case was only considering the leviability of service tax on UDF. The said judgement is thus of no help to respondents.
Conclusion :
40. Bearing in mind the scheme of the Act and the provisions of the Code, we have no hesitation in holding that the petitioner who only remained a prospective consumer and did not become actual consumer, had not incurred the liability to share the burden of upgradation and strengthening of the distribution system. He is therefore, entitled to refund of the system loading charges, i.e. Rs.32 lakhs alongwith interest @ 8.5% per annum from date of deposit till the date of refund. It is ordered accordingly.
41. In the result, the writ petition succeeds and is allowed in part. Costs made easy.
Order Date :- 21.11.2023 Jaideep/-
(Manish Kumar Nigam,J.) (Manoj Kumar Gupta,J.)