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29. The Commission while fixing the tariff for the years 2000-2001 and 2001-2002, called for objections/ representations from persons concerned, through newspaper publications. Pursuant to the same, it heard the Company, association or group of consumers in the proceedings before it. It had also appointed the Administrative Staff College of India (ASCI) as its Consultant.

30. The Commission before which the Company had filed its application for fixing of tariff for the year 2002-2003, did not entertain the said application, on the ground that the same was belated. But on the Company's application for the year 2000-01, the Commission after hearing the parties and taking into consideration other materials on record, including the report of the consultants, fixed the tariff for the said year @ Rs. 3.39 per unit, which is an increase of 1.15 per cent on the rate of tariff of the Company for the previous year. The Commission also fixed Rs. 3.41 per unit for the year 2001-2002. While so determining the tariff, the Commission followed the provisions of the 1998 Act and the regulations framed by it.

52. For deciding this question we will have to first notice the objects and reasons of enacting the 1998 Act. A perusal of the same shows that the Parliament felt that in spite of the existing enactments, it was necessary to bring about a new law which would facilitate the implementation of reforms contemplated by it, which reforms pertained to fundamental issues facing the power sector, namely, lack of rational retail tariff, high level cross subsidies, poor planning and operation, inadequate capacity, neglect of consumer, limited involvement of private sector's skills and resources and the absence of an independent regulatory authority. The view of the Administrative Staff College of India (ASCI) which strongly recommended the creation of an independent electricity regulatory Commission both at the center and the State are also noticed. It is with the above object, an Ordinance was promulgated on 25th April, 1998 which later came to be replaced by the 1998 Act. We also notice that while promulgating the said Ordinance it was mentioned that one of the salient features of establishing the Central and State Electricity Commissions was to determine the tariff for electricity, wholesale, bulk, grid and retail, apart from determining the tariff payable for use of the transmission facilities. Therefore, it is to be seen that in spite of the fact that the 1948 Act was in existence, the Parliament thought that it was necessary to constitute a regulatory authority both at the center an the State, which was to be an autonomous independent body. We have earlier noticed the composition of this body and the statutory provisions made in the Act to protect the autonomy of this Commission. Therefore from the Objects and Statements of this Act, as also from the provisions of this Act, it is clear that this is an enactment specially to provide for a procedure for determining the tariff for electricity, as also to confer the power of determination of tariff on an expert body like the Commission. In this regard we take note of Section 22(1)(a) of the 1998 Act, which in specific terms lays down that the Commission shall discharge the function of determining the tariff for electricity in the manner provided in Section 29. A plain reading of this Section leaves no room for doubt that so far as the State Commission is concerned, the Act has solely entrusted the responsibility of determining the tariff to it. Section 29 firstly requires the Commission to determine the tariff in accordance with the provisions of that Act. It then requires the Commission to frame Regulations providing for the terms and conditions for fixation of tariff. In exercise of this latter power of framing the Regulations, the Commission is mandated to be guided by the factors mentioned in Clause (a) to (g) of Sub-section (2) of Section 29. Thereafter Sub-section (3) of Section 29 mandates the State Commission not to show any undue preference while determining the tariff to any consumer of electricity subject, of course, to the exceptions found in the said sub-section. Sub-section (4) mandates the holder of a licence or other person to distribute or supply electricity, by observing the methodologies and procedures specified by the State Commission from time to time while supplying electricity and in collecting the revenue. Sub-section (5) of that Section provides if the State Government wants any subsidy to be given to any class of consumer in the tariff determined by the Commission, then the State Government is obligated to pay such subsidy in the manner in which the State Commission may direct. Sub-section (6) lays down that notwithstanding anything contained in Section 57 A and B of the 1948 Act no Rating Committee shall be constituted after the date of commencement of the 1998 Act, which is a natural consequence of the creation of the Commission. It also further lays down that the Commission should ensure that the licensees comply with the provisions of their licences, regarding the charges for sale electricity in accordance with the provisions of the 1998 Act. Section 30 of the 1998 Act provides that if the Commission wants to depart from the factors specified in Clauses (a) to (d) of Section 28 or (a) to (f) of Sub-section (2) of Section 29, the Commission shall record reasons for such departure in writing. A collective reading of these Sections namely 22, 29 and 30, in our opinion, leaves no room for doubt that under the 1998 Act, it is the Commission and the Commission alone which is authorised to determine the tariff and in our opinion the State Commission in this case rightly understood its statutory obligation. However as noticed above we find that the High Court took a totally contrary view. It proceeded on the basis that in view of the reference made to Schedule VI to the 1948 Act and reference to Sections 46, 57 and 57A of the 1948 Act in Clause (a) of Section 29(2) of the 1998 Act and in view of the language of Section 57 of the 1948 Act, the primary right to determine the tariff lies with the licensee or the utility concerned and it is only when the concerned licensee or the utility has erred on a matter of principle in so fixing the tariff, the role of the Commission comes into play in correcting the same. This is evident form the following observations of the High Court:

84. By this, we see that though the consultant ASCI came to the conclusion that the T&D losses in total, claimed by the Company was unjustified, still for no expressed reasons it concluded by saying conditional claim of actual loss of 22.36% (of which 12% is transmission loss) be allowed with a reduction in a phased manner, meaning thereby, the ASCI recommended the acceptance of actual distribution loss without there being any deduction for the contribution of the Company towards this loss for the year 2000-2001.

Working capital:

90. In regard to the working capital, the Company in its application had requested the Commission to accept Rs. 23,897 lacs for the year 2000-01. When the issue was referred to the ASCI, it noted that this request was not in conformity with the provisions of Schedule VI to the 1948 Act and in that process, it considered 4 alternatives and after detailed discussion it recommended a positive figure of Rs. 10,247 lacs. The Commission after considering the claim of the Company as also the recommendations of the ASCI, though it came to the conclusion that the recommendation of the consultant was most appropriate, still after taking into account the plea of the Company, held: