Indian Kanoon - Search engine for Indian Law

1. In this batch of writ petitions, the petitioners challenge the validity of the proceedings issued by the Andhra Pradesh State Electricity Board (for short, 'the Board') in B.P. Ms. No.40, daled 3-9-1996, fixing different tariff rates for the energy supplied to the electric pump sets installed by the petitioners in their respective agricultural fields basing on the capacity of the pump set installed, as illegal and unconstitutional.

2, Brief facts :-- The petitioners, who are agriculturists, owning lands in various parts of the State, mainly dependant upon the ground water for the purpose of irrigating their lands. They dug borewells in their fields and by installing electric pump sets of different capacities, they are lifting water. It is their case that capacity of the motor depends upon the depth of the well. In some areas, where underground water is available in abundance at lesser depth, they need not dig deep and in such cases, motors of lesser capacity (which is measured in 'Horse Power') will serve their purpose but in areas where the underground water is scarce and is at greater depth, they have to dig deep and for lifting water from such wells, they have to instal motors of higher capacity. Naturally, an electric pump set of higher capacity will consume more energy (han the pump set of lesser capacity. In areas where the depth of the wells is less, pump sets of even 3 II.P. capacity may be sufficient for lifting water but in areas where the depth is more, pump sets of higher capacity ranging from 5 H.P. to 10 H.P. have to be installed for the very same purpose. Those who installed motors of lesser capacity are fortunate enough in paying nominal amount of electricity charges whereas the farmers who had to instal motors of higher capacity are already over-burdened to pay more amounts towards charges of electricity supplied by the Board, as they consume more energy when compared to the farmers who installed motors of lesser capacity. While so, the Board initially used to charge the fanners at uniform rates for the energy consumed by them by fixing fiat rate, i.e., @ Rs.50/- per Horse Power per year for each pump set upto the capacity of 75 H.P. (vide B.P. Ms. No. 110, dated 5-6-1995). But, subsequently, in the year 1996, the Board revised the tariff rates in the State by issuing B.P. Ms. No.32, Operation & Commercial, dated 29-7-1996 enhancing the tariff rates basing on the capacity of the pump set. The following are the rates introduced through the said proceedings :

"78-A. Directions by the State Government :--(1) In 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."

A combined reading of the aforementioned provisions raises not even an iota of doubt in our minds about the role of the State Government that is played in controlling the affairs of the Board. The State Government is endowed with ample powers under the Act to oversee the affairs and business of the Board and to give suitable directions whenever it feels necessary. The Act made the Board answerable to the State Government in matters touching the finances of the Board. It must submit all its annual reports to the Stale Government detailing its activities in the previous financial year and also the activities, if any, that will be taken up in the succeeding financial year. It should also furnish to the State Government all the relevant statistics, if any required, in regard to any scheme proposed or any existing scheme and the State Government is bound to guide the Board by issuing suitable instructions to it from time to time for the purpose of successful implementation of the schemes. Under Section 78-A, the State Government has got power to issue suitable directions to the Board in discharge of its functions and can guide the Board by such directions on questions of policy. This provision makes it abundantly clear that the State Government can intervene in the affairs of the Board which involves decision making on any particular issue and the State Government can give suitable suggestions/ instructions to the Board in that regard. Therefore, the power of the State Government in issuing directions to the Board in matters of policy under Section 78-A is not in doubt. Of course, it is always open to the Board to consider the said suggestion given by the State Government independently and if it feels that such a suggestion is in the interests of the Board, it may adopt the said advice. If its opinion is otherwise, it may omit to implement such suggestions; (see M/s. Real Food Products Lid v. A.P.S.E.B., ).

C-I Industrial 17.34 264.92 1312.68 46.25 C-II Non Indl.

314.82 168.43 5.93 C III Power Intensive 1.63 262.29 118.03 4.16 C-IV Agricultural 0.18 135.50 6.78 0.24 C-V Rly. Tracton 2.75 265.00 201.40 7.09 C-VI Colony 0.43 160.00 19.20 0.68 Inter State 0.36 8.00 0.80 0.02 RESCOS 2.28 5.00 3.15 0.11 Total H.T. 27.51 240.85 1830.47 84.51 Grand Total 27625 102.73 2837.78 100.00 The above statistics relate to the year 1996-97 of the Board. A cursory glance at the said statistics crystallises the whole picture. Out of 20,025 MU (million units) of energy that is supplied to various categories in L.T. Division, Category-V Agricultural sector alone consumes 13,768 MU of energy and the percentage of its consumption is nearly half of the total consumption (49.84%) whereas the rate fixed for this category is very meagre when compared with the rates fixed for other categories in that division. It is 3.34 per KWH. The next lowest rate that is fixed in this Division is Rs.90.00 per KWH for Category VI. The revenue received from Category V is Rs.45.99 crorcs and the figures show that the percentage of revenue (16.21 %) is very less in proportion when compared with the revenues received from other categories. For example, Category-11! Industrial sector which is grouped in the very same L.T. Division is sold out only 1,253 MU (4.54% of the total consumption) whereas the revenue received from the said category is Rs.315.51 crores (11.12% of the total revenues). The rate fixed for this category is Rs.251.80 per KWH. . Even though it may not be proper to compare Category V with Category III in view of the basic difference in the purposes for which energy is supplied to these two sectors, but with a view to emphasise how much revenue the Board is loosing every year on Category V, this comparison is done. It is also brought to our notice by the learned Advocate-General appearing for the Board that the Board spends 177 paise per unit for generating energy whereas it realises a pallry sum of 17 paise per unit by way of tariff from Category V. It is also brought to our notice that the projections revealed a huge revenue deficit of Rs.1,533 crores during the year 1996-97. It is contended that the said deficit is only because of the Government's policy to supply energy to various sections of the society at subsidised rates. Of course, under the provisions of the Act, energy can be supplied to any particular section of the society at subsidised rate with a view to give helping hand to such section and such subsidised supply can be continued till there is some amount of progress and as long as the Board does not incur losses. The State Government is free to withdraw such subsidies when the purpose which was sought to be achieved by such supply is over. In the case on hand, Category V in L.T. Division enjoyed subsidised supply of energy for quite a long time. Subsequently, in view of the tremendous increase in the quantity of energy consumed by this category and the meagre percentage of revenue that is received from them, the Board decided to put an end to the partice of subsidised supply to this category and enhance the tariff rates for them also. While enhancing tariff rates, it reclassified the category of agriculturists into sub-classes depending upon the percentage of energy consumed by them. As already stated, the percentage of energy depends upon the capacity of the motor. Thus, the ryots who installed motors of higher capacity have been grouped into a separate class and fixed higher rate of tariff for them. Similarly, the ryots who installed motors of lesser capacity have been grouped into another class and fixed lesser rate of tariff for them. Those who consume more percentage of energy, by virtue of the capacity of the motors installed by them, are now required to pay higher rate than those who consume lesser percentage of energy. Of course, even in the present revision also, flat rates are fixed for Category-V. For example, the ryot who installed motor of 3 H.P. capacity is now required to pay tariff a( the rate of Rs.450/-per annum i.e., Rs.150/- per horse power. Similarly, a ryot who installed motor of 10 H.P. capacity is now required to pay tariff at the rale of Rs.4000/- per annum i.e., at the rate of Rs.400/- per horse power, irrespective of actual energy which he consumes. Thus, the pattern of price fixation is based on the percentage of energy consumed. In K.S.E. Board v. Ms, S.N. Govinda Prabhu and Bros. (supra), the Supreme Court held that Section 49(3) of the Act expressly reserves the power of the Board, if it considers it necessary or expedient, to fix different tariffs for the supply of electricity to 'any person' depending upon the geographical position of any area, nature of supply and the purposes for which such supply is required and also any 'other relevant factors'. The Apex Court accordingly upheld the action of the Board in that case in differentiating the tariffs for High Tension and Low Tension consumers and for different classes of consumers, as reasonable and far from arbitrary. Similarly, in M/s. Hindustan Zinc Ltd. v. APSEB (supra), the Supreme Court held that the Board, under the provisions of the Act, has got ample powers in fixing higher rate of tariff for such of those power-intensive consumers who consume more energy than those consumers who consume lesser quantity of energy. Thus, as per the law laid down by the Supreme Court, the Board is empowered under Section 49(3) of the Act to classify its consumers into different categories or even sub-categories basing on the percentage of energy consumed by them and fix different tariff rates for different categories or sub-categories. In the cases on hand, as already observed, the category of agriculturists in L.T. Division, is the dominant user of electricity and in view of the percentage of energy consumed by this category, it requires no hesitation to categorise this category as power-intensive category in L.T. Division. Further, even within this category also, the percentage of energy that is consumed varies form ryot to ryot. As already noticed, the ryot who installs motor of higher capacity consumes more percentage of energy than the ryot who installs motor of lesser capacity. Those who installed motors of higher capacity have, therefore, formed themselves into a different class being distinct and separate from the other class of consumers in this category who consume lesser quantity of energy. Under Section 49(3) of the Act, the Board is entitled to identify such of those consumers who consume higher percentage of energy and rcelassify all of them into a separate class and fix higher rate for them. This classification is based on intelligible differentia which has got its rational relation with the object sought to be achieved by the State Government as part of its new policy which is implemented by the Board under the impugned proceedings. In our view, the Board is empowered under Section 49 of the Act to classify the agriculturists into subclasses by taking into account various factors like the purpose for which the energy is supplied, the nature of supply and the other relevant factors. In this case, the factor that is most relevant for the purpose of classification among ryots is the capacity of the motor installed by them as the percentage of energy that is consumed depends upon the capacily of the motor. Therefore, the Board's decision in fixing different rates by taking the capacity of the motor as basis is neither arbitrary nor discriminatory. As a matter of fact, it is most unfortunate to hear from a consumer, whose livelihood is entirely dependant upon the services rendered by the Board, that he would only enjoy the services rendered by the Board but is not concerned with the losses caused to the Board by such services. In view of what is stated supra, we do not find any arbitrariness nor discrimination in the classification made by the Board in fixing tariff rates under the impugned proceedings. This contention is accordingly rejected,