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Dismissing the appeals of the Board and allowing those of the consumers, the Court HELD: 1.1. The significance of the question as to whether fixing the rate of fuel surcharge is a legislative function or a non-legislative function is that if the function is held to be legislative, in the absence of any provision in that regard the principles of natural justice would not be applicable and the scope of judicial review would also be limited to the plea of discrimination i.e. violation of Article 14 of the Constitution of India, 1950. [Para 21] [311-C, D] Prag Ice and Oil Mills v. Union of India AIR 1978 SC 1296; Rohtas Industries v. Bihar State Electricity Board AIR 1984 SC 657 and Kerala State Electricity Board v. M/s S.N. Govind Prabhu & Brothers AIR 1986 Supreme Court 1999, relied on. Saraswati Industrial Syndicate Limited v. Union of India AIR 1975 SC 460; Union of India v. Cynamide India Ltd. AIR 1987 SC 1802 and Shri Sitaram Sugar Company Ltd. v. Union of India 1990 (3) SCC 223, referred to. 1.2. In a sense, fixing rate of fuel surcharge under clause 16.10 of the Tariff notification is different from fixing the tariff u/s 49 of the Electricity (Supply) Act. Fuel surcharge is undoubtedly a part of tariff. But fixing rates of consumption charges or the guaranteed charges or the fixed charges or the delayed payment surcharge etc. and fixing rates of fuel surcharge do not stand on par. Though rates of consumption charges etc. are based on objective materials, there is enough scope for flexibility in fixing the rates. It also involves policy to fix different rates for different categories of consumers. Such is not the position with the fuel surcharge. [Para 26] [313-B, C] 1.3. Clause 16.10.1 specifies the categories coming in the net of the levy and clause 16.10.3 provides the formula. The formula envisages addition of units generated or purchased and increased average cost of fuel and average unit rate of purchase rates and division of the total by the quotient is the average fuel surcharge per unit (expressed in terms of paise) described by denominator S1 in the formula. The whole exercise, it would appear, involves arithmetical accounting. There is no scope for exercise of any discretion or flexibility. If fixing rate of fuel surcharge is just an arithmetical exercise, giving opportunity of hearing would hardly serve any useful purpose. [Para 26] [311-D, E] 1.4. Where the fixation of rate or determination of the amount is made individually, depending on the context in which this is to be done, there may be justification or necessity to give opportunity of hearing to the person(s) concerned. But where the rate is fixed for persons at large the only way by which such opportunity can be given is to notify the rates and then invite objections. There is no such provision. In the absence of any mechanism provided in the Tariff notification, it would not be feasible at all. [Para 27] [315-F, G] 2.1. The validity of the formula had been upheld earlier. High Court noted that though by the impugned circular dated 31.5.1999 the rates of fuel surcharge have been fixed for the years 1993-94 (July 1993 to March 1994) to 1997-98, the correctness of the rates fixed for the years 1993-94 (July 1994 to March 1994) to 1995-96 were not challenged and correctness of the rates for the subsequent years only was under challenge. [Para 29] [317-C, D] Bihar State Electricity Board and anr. v. Bihar 440 Volt Vidyut Upbhokta Sangh and Ors. 1997 (11) SCC 380 and Kerala State Electricity Board v. S.N. Govind Prabhu & Brothers AIR 1986 SC 1999, referred to. 2.2. The Electricity Board is entitled to levy fuel surcharge on the consumers receiving high tension supply leaving out the consumers coming in other categories. [Para 30] [317-F] Maharashtra State Electricity Board v. Kalyan Borough Municipality AIR 1968 SC 991; M/s Rohtas Industries Limited v. Chairman, Bihar State Electricity Board AIR 1984 SC 657, relied on. 3.1. It is not in dispute that TVNL came into existence in 1996-97 whereas while calculating the electricity 1991-92 is to be treated as the base year. As a matter of fact, it was on that ground, namely, that a different base year i.e. 1992-93 was provided for computing the increase in the average unit rate of purchase of electricity from external sources, that the High Court directed the Board to consider amending clause 16.10.3 so as to provide for the same base year i.e. 1991-92 with respect to both the increase in the average cost of generation and increase in the rates of purchase, and accepting the verdict of the High Court the Board amended the last part of clause 16.10.3. Purchase of electricity from TVNL which admittedly came into existence in the year 1996-97, therefore, cannot be treated as component of H3 i.e. increase in the average unit rate of purchase of electricity from “any other source”. As a matter of fact, the case of writ petitioners was that the TVNL is nothing but a unit of the Board in disguise of a subsidiary company and, therefore, could not be treated as a component of H3. It may not be necessary to go behind the veil of the separate legal character of the TVNL. The fact that TVNL did not exist in the year 1991-92 and came into existence only in the year 1996-97 is sufficient to justify its deletion as component of H3. [Para 33] [319-F, G, H; 320-A, B, C] 3.2. The relevant clause of the formula, after amendment, reads, “the said increase to be calculated with respect to the year 1991-92” ( last para of clause 16.10.3). The amendment has been made in the light of the decision of the High Court which rightly held that it is not possible to allow the Board to include purchase of electricity as a component of H3 without suitably amending the formula in accordance with law. [Para 33] [320-F, G, H; 321-A] 3.3. As regard “deemed supply” by the Board to TISCO, the High Court noticed that under a tripartite agreement between the Board, the DVC and the TISCO, with the consent of the State Government, the electricity is being supplied directly by the DVC to the TISCO but such supply is treated as made by the Board to the TISCO. High Court held that the Board cannot treat the sale of electricity by the DVC to the TISCO as a separate class or category for the purpose of computing D3. The computation of D3 to this extent, was rightly held to be not correct. [Para 34] [321-A, B; 322-D] 4.1. The computation of the rates of fuel surcharge by the impugned circular for the years 1996-97 and onwards so far as it relates to the purchase of electricity from TVNL and “deemed supply” by the Board to TISCO thus does not appear to be in accordance with the formula. Fuel surcharge has to be calculated strictly within the framework of the formula. If any extraneous element has crept in, the computation to that extent must be held to be not in accordance with law and accordingly modified. [Para 35] [322-E, F] 4.2. The fact that the Board has had to pay large amounts as delayed payment surcharge (DPS) to the external agencies from which it has been purchasing electricity is more or less an admitted position. The case of the Board, however, is that the default in payment was mainly on account of defaults committed by the consumers themselves. High Court found substance in the stand of the Board. The fact that the consumers at large have not been paying the dues on time and many of them have been making only part payment on the strength of interim orders of Courts are facts which are not disputed. If the consumers do not pay the dues to the Board, they cannot be heard to make any complaint against payment of DPS by the Board to the external agencies. [Para 37] [323-E, F, G, H] 5. As regards the non-accounting of Rs.100 Crores paid by Coal Companies to the Board, the High Court observed that payment of the amount would be relevant consideration while calculating the rate of fuel surcharge for the year 1998-99 and not 1997-98. It is directed that adjustment of Rs.100 crores be worked out accordingly. [Para 45] [326-A, C, D] 6. Nothing material could be highlighted as to how the reasons of the High Court suffer from any infirmity. [Para 44] [325-G] Case Law Reference: 1997 (11) SCC 380 referred to para 2 AIR 1978 SC 1296 relied on para 21 AIR 1984 SC 657 relied on para 22 AIR 1986 Supreme Court 1999 relied on para 22 AIR 1975 SC 460 referred to para 23 AIR 1987 SC 1802 referred to para 24 1990 (3) SCC 223 referred to para 25 AIR 1968 SC 991 relied on para 30 AIR 1984 SC 657 relied on para 30 AIR 1986 SC 1999 referred to para 31 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7220-7239 of 2000. From the Judgment & Order dated 26.06.2000 of the High Court of Judicature at Patna in CWJC No. 5542, 2009, 2087, 1655, 1807, 1971, 1861, 5592, 5624, 5728, 5819, 5861, 5993, 6054, 6079, 6248, 6249, 6275, 6358 and 6490/1999. WITH C.A. Nos. 2560/2009, 2561/2009, 2555-2559/2009. V.R. Reddy, Mir Jha, Sunil Kumar, Harish N. Salve, D.A. Dave, Navin Prakash, Sumant Bhardwaj, Anita Kanungo, Mridula Ray Bharadwaj, L.K. Bajla, Praveen Kumar, Gopal Prasad, R.N. Karanjawala, Nandini Gore, Debmalya Banerjee, Bharat Singh, Manik Karanjawala, Jayant Mohan, Pragya Singh Baghel, Ajit Kumar Sinha, Shree Prakash Sinha, Sunita Sharma, Manjula Gupta, Gopal Prasad, S. Chandra Shekhar, Himanshu Shekhar, Gopal Singh, Vivek Singh for the appearing parties.

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 REPORTABLE

 IN THE SUPREME COURT OF INDIA

 CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NOS. 7220-7239 OF 2000

Bihar State Electricity Board ...Appellant

 Versus

M/s Pulak Enterprises and Ors. ...Respondents

 WITH

 Civil Appeal No. 7219 of 2000

 Civil Appeal Nos. 2555-2559 of 2009
 (Arising out of SLP (C) Nos.456-460/2001)

 Civil Appeal 2560 of 2009
 (Arising out of SLP (C) No.12624/2001)

 Civil Appeal 2561 of 2009
 (Arising out of SLP (C) No.12625/2001)

 JUDGMENT

Dr. ARIJIT PASAYAT, J.

1. Leave granted in Special Leave Petitions.
2. These appeals are directed against the common judgment of the Patna

High Court allowing the batch of writ petitions. The dispute relates to fuel

surcharge. The validity of levy has been upheld by this Court in Bihar State

Electricity Board and Anr. v. Bihar 440 Volt Vidyut Upbhokta Sangh and

Ors. (1997 (11) SCC 380). Therefore, the dispute before the High Court

related to method of calculation and in substance the rate of fuel surcharge.

3. The Board has its own power generation units namely, Patratu

Thermal Power Station, Barauni Thermal Power Station and Muzaffarpur

Thermal Power Station. The power generating from these units is not

sufficient and, therefore the Board purchased from other sources in order to

meet the requirements of power supply to its consumers. The sources from

which the Board purchases power are Damodar Valley Corporation,

National Thermal Power Corporation, Tenughat Vidyut Nigam Ltd., Uttar

Pradesh Electricity Board, Orissa State Electricity Board, Power Grid

Corporation of India Ltd. According to the Board, the power purchased

from outside sources forms the bulk of the total power supplied by the

Board. In other words, power generated by the generating units of the Board

is much less in comparison to the purchased power from outside sources.

 2
4. The Tariff framed by the Board in exercise of its powers conferred

upon it under the provisions of Section 49 of the Electricity (Supply) Act,

1948 (in short the `Act') vide Tariff Notification dated 21.6.1993 published

in the Bihar Gazette on 23.6.1993 which came into effect from 1.7.1993

prescribes rates for supply of power to the consumers of the Board. Because

of infrequent revision of tariffs and in order to neutralize increase in the cost

of generation and purchase of power, the 1993 Tariff provides for levy and

collection of fuel surcharge from the consumers of the Board.

5. It is submitted that fuel surcharge is a part of tariff and, in reality, a

surcharge levied to meet the increased cost of generation and purchase of

electricity. This Court in a number of decisions has upheld levy of fuel

surcharge.

6. The 1993 Tariff provides for a formula for levy and collection of fuel

surcharge from the consumers of the Board from time to time. The validity

of the formula for levy of fuel surcharge has been upheld by this Court in

Bihar State Electricity Board's case (supra).

 3
7. Section 49 of the Act empowers the Electricity Board to frame tariff

and lay down the terms and conditions of supply of electricity as it thinks

fit. In exercise of the said power the Bihar State Electricity Board

(hereinafter referred to as the `Board') framed tariff vide notification dated

21.6.1993, published in the Bihar Gazette on 23.6.1993 superseding the

earlier tariff notifications dated 26.8.1991 and 3.7.1992. The tariff

notification dated 21.6.1993 is effective from 1.7.1993. Under clause

16.10.1 of the said tariff the consumers of the categories specified therein

are required to pay operational surcharge at a rate to be determined every

year in accordance with the formula prescribed, in addition to other charges

as laid down in the tariff schedule. In terms of clause 16.10.2 the

operational surcharge consists of two elements (i) fuel surcharge and (ii)

other operational surcharge. Clause 16.10.3 lays down the formula for

determining fuel surcharge applicable during the financial year in terms of

paise per unit. Clause 16.10.4 prescribes the formula for determination of

'other operational surcharge'. It may be mentioned here itself that the

provision regarding 'other operational surcharge' has been held to be

arbitrary and struck down. Clause 16.10.5 provides that the operational

surcharge for a financial year shall be calculated by the Board after the

expiry of the financial year. Till actual calculation of the operational

 4
surcharge for a financial year is made, operational surcharge during the

financial year may be levied at a rate provisionally calculated on monthly or

quarterly or half-yearly basis as the Board may decide. In case of short or

excess realisation the amount is to be adjusted in the next bill be served on

the consumers. Clause 17 lays down that the existing rate of fuel surcharge

notified in letter no.A/CS/Costing-44/92-93/397 dated 29.3.1993 amounting

to 32 paise per unit has been merged in the tariff. Any increase in the

operational surcharge thereafter only shall be levied.

8. In order to appreciate the facts to be stated hereinafter it would be

appropriate to notice the formula for computation of the fuel surcharge laid

down in clause 16.10.3 as under:

S1 = A1xA3+B1xB3+C1xC3+D1xD3+E1xE3xF1xF3+G1xG3+H1xH3

 (A2+B2+C2+D2+E2+F2+G2+H2)....

Whereas,

 S1 = Average Fuel Surcharge per unit in

 paise applicable during the

 financial year.

 5
 A1 , B1 ,C1 =. Unit generated from PTPS, BTPS &

 MTPS respectively.

D1,E1,F1,G1,H1 = Unit purchased from DVC,

 UPSEB,OSEB,NTPS,PGCL and any other

 source respectively.

 A2,B2,C2 = Unit sold out of sent out from

 PTPS, BTPS & MTPS on which fuel

 surcharge is leviable.

 D2,E2,F2,G2,H2 = Unit sold, out of purchased from

 DVC, UPSEB, OSEB, NTPC, PGCL

 and any other source respectively

 during the year on which Fuel

 Surcharge is leviable.

 A3,B3,C3 = Increase in average cost of Fuel

 Surcharge in paise per unit

 computed for Board's Generation at

 PTPS, BTPS and MTPS

 D3, E3,F3,G3,H3 = Increase in average unit rate of

 purchase of energy from DVC,

 UPSEB, OSEB, NTPC, PGCL & any

 6
 other source respectively during the

 year for which the surcharge is to

 be calculated.

 The said increase to be calculated

 with respect to the year 1992-93

 (after amendment, read 1991-92)

(In the above, PTPS stands for Patratu Thermal Power Station, BTPS for

Barauni Thermal Power Station, MTPS for Muzaffarpur Thermal Power

Station. They are Board's own generating stations. Likewise, DVC stands

for Damodar Valley Corporation, UPSEB for Uttar Pradesh State Electricity

Board, OSEB for Orissa State Electricity Board, NTPC for National

Thermal Power Station and PGCL for Power Grid Corporation of India

Limited. They are external sources of supply of electricity to the Board.)

9. The manner of calculation of increase in average cost of fuel in

Board's own generating stations i.e. A3, B3 and C3, and increase in average

unit rate of purchase from outside sources i.e. D3; E3 etc. is laid down in

clause 16.10.3.1. As regards the former, the calculation is to be made in the

following manner:

 7
"(a) Patratu Thermal Power Station:- The rate in paise
per unit shall be based on the average cost of 9270.08
paise per 10,00,000 K.Cal. of fuel delivered at the
bunkers of the Board's generating station at Patratu. In
the event of rise or fall in the aforesaid cost, at any time,
the rate per unit will be increased or decreased as the
case may be, by 0.3537 paise for each one per cent
variation in the cost of fuel per 10,00,000 K.Cal. In the
cost of fuel per 10,00,000 K.Cal. In calculating the above
variation, percentage variation of 0.5 and above will be
treated as next higher percentage and percentage
variation, below 0.5 will be ignored.

(b) Barauni Thermal Power Station:- The rate in paise
per unit shall be based on an average cost of 17407.97
paise per 10,00,000 K.Cal. of fuel delivered at the
bunkers of the 'Board's generating station at Barauni. In
the event of rise or fall in the aforesaid cost, at any time,
the rate per unit will be increased or decreased, as the
case may be by 0.8539 paise for each one per cent
variation in the cost of fuel per 10,00,000 K.Cal. In
calculating the above variation, percentage variation of
0.5 and above will be treated as next higher percentage
and percentage variation below 0.5 will be ignored.

(c) Muzaffarpur Thermal Power Station:- The rate in
paise per unit shall be based on an average cost of
18166.04 paise per 10,00,000 K.Cal. of fuel delivered at:
the bunkers of the Board's generating station at
Muzaffarpur. In the event of rise or fall in the aforesaid
cost , at airy time, the rate per unit will be increased or
decreased, as the case may be by 0.7368 paise for each
one percent variation in the cost of fuel per 10,00,000
K.Cal. In calculating the above variation, percentage
variation of 0.5 and above, will be treated as next higher
percentage and percentage variation below
0.5 will be ignored."

 8
As, regards the latter :i.e. electricity purchased from external sources the

clause says that the actual increase in the average unit rate of purchase will

apply, that is to say, will be the basis.

10. On 4.4.1994 the Board issued circular stating that on final calculation

the fuel surcharge for the period 1992-1993 had been determined as 26.14

paise per Kwh. On 5.1.95 the Board issued another circular calculating the

fuel surcharge for the period July 1993 ( i.e. after coming into force of the

new tariff) to March 1994 to be 25.98 paise per Kwh. I am not referring to the

rate of other operational surcharge under clause 16.10.4 which was also

notified by the same circular because that has already been struck down.

The consumers were billed accordingly. Writ Petitions were filed challenging

the rates in CWJC No.2771 of 1995(R) and analogous cases. During the

pendency of the said writ petitions the Board proposed certain amendments in

clauses 16.10.3, 16.10.3.1 and 17, vide letter no.135 dated

28.12.1995. I shall refer to the salient features of the proposed amendment

later. The implementation of the circular dated 5.1.1995 was kept pending

vide circular dated 8.2.1995 in the meantime. On 8.3.1995 and 17.4.1995

circulars were issued directing payment @ 15 paise/Kwh from 1.7.1993 to

31.3.1995 instead of 25.98 paise per Kwh as fuel surcharge as stipulated in

 9
circular dated 5.1.1995. However, by circular dated 20.9.1995 the said

circulars dated 8.3.1995 and 17.4.1995 were withdrawn and the earlier

circular dated 5.1.1995 by which fuel surcharge @ 25.98 paise/Kwh had

been fixed was restored.

11. The writ petitions, CWJC No.2771 of 1995(R) and analogous came

up for hearing in October 1996. With the consent of the Board, on

17.10.1996 the High Court constituted a High Level Committee consisting

of two nominees each of the consumers and the Board and two independent

members. The Committee was directed to calculate the fuel surcharge in

terms of 1993 tariff, particularly taking into account clause 17, and submit

report by 31.1.1997 to the Chairman of the Board, The writ petitions, were

thus disposed of. The High Court made it clear that after submission of such

report, anybody feeling aggrieved may move the appropriate forum or court

of law. From the records of the case it appears that an interlocutory

application was made by the concerned petitioners of the case making a

grievance that certain vital documents had not been made available by the

Board to the Committee vide order dated 29.1.1997 the High Court recorded

the submission of the counsel for the Board that the documents required

shall be furnished within two weeks. Time for submission of the report was

 10
accordingly extended to 31.3.1997 and the earlier order dated 17.10.1997

was modified to this extent.

12. At this stage the Board issued circular dated 5.2.1997 notifying the

provisional rates of fuel surcharge as 43.89 paise/Kwh for 1994-95, 72.12

paise/Kwh for 1995-96 and 102 paise/Kwh from 1.4.1996 onwards. This led

to fresh writ petitions being CWJC Nos.1632 of 1997 and analogous cases.

On 12.3.1997 when the cases came up for preliminary hearing dispute again

arose as to circumstances in which the aforesaid Committee had not

finalised the report. After hearing counsel for the parties, however, a

consent order was passed to the effect that the Committee shall finalise its

report on 14.3.1997 when it was scheduled to meet next, on the basis of

documents already on record and submit the report to the High Court on

17.3.1997. On 16.3.1997 the Committee submitted its report. On 21.3.1997

when the matter came up for further hearing the High Court noted that the

findings reached by the members of the committee were not unanimous.

While four members of the Committee had worked out the fuel surcharge @

12.38 paise/Kwh for the period from July 1993 to March 1994, 21.33

Paise/Kwh for the period 1994-95 and 44.00 paise/Kwh (provisional) for the

period 1995-96, the other two members who were Board's nominees, had

 11
worked out the same @ 25.98 paise, 43.98 paise and 72.12 (provisional)

paise per Kwh for the aforesaid periods respectively. As an interim measure

the High Court directed the petitioners to pay fuel surcharge for the periods

July 1993 to March 1994 and 1994-95 at the rates worked out by four

members of the committee, which were in their favour, and for the periods-

1995-96 and 1996-97 @ 46.37 paise/Kwh and 56.37 paise/kwh offered by

them. CWJC Nos. 1632 of 1997 and analogous cases were finally heard and

decided by judgment dated 30.6.1998.

13. At this stage it may be relevant to advert to the Board's letter dated

28.12.95, referred to above, suggesting certain amendments in clauses

16.10.3, 16.10.3.1 and 17. The substance of the proposed amendment was

that instead of calculating the increase in the average unit rate of purchase

of energy from DVC, UPSEB, OSEB, NTPC, PGCL and any other source

with respect to the year 1992-93, as prescribed in clause 16.10.3 the same

should be calculated with respect to the year 1991-92, and similarly with

respect to the year 1991-92, and similarly in clause 16.10.3.1 the average

cost of fuel in respect of energy generated at Board's own generating

stations be computed on the base rate of 1991-92 and not 1992-93. In other

words, the base year with respect to these two sets of components was

 12
sought to be changed from 1992-93 to 1991-92. Clause 17 was also

proposed to be amended by that in accordance with the instructions issued

by the Government of Bihar to the Board, the increase in the rate of fuel

surcharge between January 1992 and June 1993 which came to 20 paise (12

paise as in January 1992 and 32 paise as in June 1993) had been merged in

the tariff and thus any increase in the fuel surcharge thereafter only shall be

levied after accounting for the increase already merged in the tariff.

14. From the judgment dated 30.6.1998 disposing of CWJC Nos.1632 of

1997 and analogous case, it appears that the validity of the rates of fuel

surcharge was challenged mainly on two grounds:- (a) the cost of:

generation at the Board's own generating stations, namely, Patratu, Barauni

and Muzaffarpur Thermal Power Stations had been worked out treating

1991-92 as the base year but the cost of the unit purchased from DVC,

NTPC etc. had been calculated on the basis of 1992-93 rates. According to

the writ petitioners in working out the rate the values to be taken into

account must correspond to the same year lest determination could become

irrational and arbitrary: (b) the merger of fuel surcharge as on 1.7.93 in

terms of c1ause 17 of the tariff was not correct. The High Court noted that

the objections of the petitioners were in consonance with the Board's own

 13
decision vide letter dated 28.12.1995 (supra) by which the Board had

suggested certain amendments in the relevant clauses of the tariff to the

State Government. The High Court, however, took the view that in terms of

the order dated 17.10.1996 passed in CWJC No.2771 of 1995(R) the

Committee was required to submit its report to the Chairman of the Board

and not to the High Court. Observing that the report of the committee would

assist the Board in coming to fair and just decision, and if the Board was

satisfied that the tariff modification requires any modification it was open to

it to modify the tariff in accordance with law, the High Court instead of

finally deciding the issues itself directed the Board to consider the report of

the committee submitted before the High Court on 16.3.1997, and in

consultation with the State Government, take a final decision, by reasoned

order, on the points:-

(i) Whether any modification of clause 16.10.3 of the tariff
notification published on 23.6.93 is required so that the increase in
the average unit rate of purchase of energy from DVC, NTPC etc.
should be calculated with respect to the year 1991-92 instead of the
year 1992-93.

 (ii) Whether in terms of clause 17 of the aforesaid tariff
 notification, 20 paise per Kwh the increase in fuel
 surcharge which has been merged in the basis
 tariff should be considered for adjustment, instead
 of 32 paise, in terms of clause 17 of the aforesaid
 notification. If so, whether the impugned circular
 dated 5.2.97 be not withdrawn and the consumers

 14
 be given the benefit of discredit to the period July
 1993 to March 1994 and thereafter, and clause 17
 of the tariff notification under section 93 be
 amended appropriately.

15. The High Court directed that till the Board takes a final decision in

the matter, the interim order passed by the Court on 21.3.1997, referred to

above, shall operate. Thereafter, the petitioners shall be liable to pay fuel

surcharge in accordance with the decision that may be taken by the Board.

Any person aggrieved by the decision of the Board will be at liberty to

challenge the same in accordance with law.

16. The submission of the writ petitioners that the Board has not passed a

'reasoned order' or otherwise failed to implement the direction of the High

Court was rejected. It was observed that the High Court had directed the

Board to decide whether any modification in clause 16.10.3 of the tariff

notification was required so as to make the base year with respect to average

unit rate of purchase of energy from DVC, NTPC etc. at par with the

increase in cost of generation at Board's own generating stations and to

adjust the merger of the existing fuel surcharge of 20 paise/Kwh, by a

reasoned order. A favourable decision having been taken and the aforesaid

clauses suitably amended, the High Court felt that there is no scope for

 15
further argument in this regard. As far as the requirement of passing a

"reasoned order" is concerned, the facts and figures contained in the agenda

notes dated 26.11.1998 and 6.1.1999 which were the basis of the proposed

amendments and revision in the rates, can be treated as reasons for the same.

The direction of the High Court to pass a reasoned order cannot be

interpreted as a direction to set out reasons for fixing the particular rates of

fuel surcharge which is merely an arithmetical exercise to be worked out in

accordance with the prescribed formula. The Board is a body corporate and

it takes its decision on the basis of the facts and figures furnished to it in the

agenda notes supported by materials. It is apparent that after the decision of

the High Court the matter was examined at different levels and finally the

said agenda notes dated 26.11.1998 and 6.1.1999 were put up for

consideration which were approved respectively on 14.12.1998 and

21.1.1999. High Court did not find any substance whatsoever in the

contention that the Board failed to implement the direction of the High

Court, by not passing a reasoned order or otherwise.

17. The submission that the dispute should be referred to a Committee of

experts was rejected by the High Court considering the nature of the

dispute. It was of the view that such a course should be taken only when the

 16
Court cannot decide the dispute. There may be justification to constitute a

committee and refer the dispute to it when the relevant data have to be

gathered or facts have to be ascertained without which the dispute cannot be

resolved. This normally is done in public interest litigation. In adversary

litigation it is for the parties to produce materials in support of their

respective claim. The Court is not supposed to make a roving enquiry for

allowing or disallowing the claim of one or the other party. It is true that on

the previous occasion in CWJC No.2771 of 1995 ., the High Court did

constitute a Committee but that was with the consent of the Board. Counsel

for the Board pointed out in course of his submission that the Board wanted

to be assured itself that the stand taken by it in letter dated 28.12.95 to the

State Government suggesting amendments in clauses 16.10.3 and 17 was

correct.

18. As the aforesaid pleas were taken for the first time in course of

argument, the Board was allowed opportunity to file written submission. In

its written submission the Board took the stand that T & D losses do not

form part of calculation of fuel surcharge and the reason for the difference

of 8655.78 MU is the existence of large number of defective meters and

meterless supply of electricity to consumers belonging to different

 17
categories, particularly, agriculture and domestic categories. The statement

in paragraph 3.7 of Chapter III of the CAG report actually represents the

T&D losses based on units actually metered and does not include power

sold to the consumers having unmetered supply or the consumers having

defective or burnt meters. That is why in the accounts, the units sold were

worked out by dividing the assessed revenue by the tariff rates including

fuel surcharge. It has been stated that in the case of defective meters and

meterless consumers, though bills are raised, the corresponding quantum of

power sold cannot be determined. Hence the assessed revenue (in

accordance with the Board's tariff) is treated as the basis for computation of

power sold. The CAG, it has been stated, has approved this procedure and

granted its statutory certificate to the effect that the accounts of the Board

give a "true and fair view of the state of affairs of the Board".

19. The Board further took the stand that if the rates of fuel surcharge

were to be determined only on the basis of metered sales the rates would be

considerably higher than already determined by the Board. This would be

evident from the following chart:

 18
Sl. Particulars July 93 1994-95 1995-96

 1996-97

 March 94

1. Amount recove-
 rable as fuel 9536.09 16328.20 28431.10 53385.22
 surcharge
 (Rs.in lakhs)

1. Units on which
 Fuel surcharge 2645.76 3437.95 3822.96 3834.04
 is leviable
 (in MKwh)

3. Rate of fuel 36.04 47.49 74.37 139.24
 surcharge
 (in P/Kwh)

4. Less (20 P/Kwh)
 As per the
 Hon'ble High Court's
 Order dated 30.6.98
 Passed in CWJC
 No.1632 of 99 20.00 20.00 20.00 20.00

4. Net rate (P/Kwh)
 If T&D losses as
 Per serial No.6
 Of table at para 3.7
 Of CAG report at page
 80 is taken into account
 (3-4) 16.04 27.49 54.37 119.24

4. Present rates of fuel

 19
 Surcharge as per the
 Impugned notification
 Dated 31.5.1999 23.38 21.33 48.54 99.34

20. The above calculation has been explained by pointing out that while

A1, B1, C1 etc. and A3, B3, C3 etc. components of the Formula indicating

the power pumped into the Board's system for transmission or distribution

to different points in the State and the incremental rise in the average cost of

fuel at the Board's Thermal Power Stations or power purchased from NTPC,

DVC etc. are not affected by the T&D losses, A2, B2, C2 etc. component of

the Formula representing the quantum of power sold to categories from

whom fuel surcharge is leviable would be reduced if power supplied to the

consumers having defective meters etc. is excluded from the total quantum

of power sold. Thus, while the numerators would remain unchanged, the

denominators would get reduced resulting in higher rates of fuel surcharge.

In the above view of the matter, it was stated that keeping in view the

meterless and defective meter supply of the electricity the Board has made

its own realistic calculation of T&D losses as reflected in the table in para

3.7 of the CAG report which has been accepted by the CAG. The Board has

accordingly asserted that the table shown in para 3.7 of the report regarding

 20
"percentage of actual loss of energy available for sale" has no nexus with

the computation of rates of fuel surcharge under the formula in clause

16.10.3.

21. The significance of the question as to whether fixing the rate of fuel

surcharge is a legislative function or a non-legislative function is that if the

function is held to be legislative, in the absence of any provision in that

regard the principles of natural justice would not be applicable and the

scope of judicial review would also be limited to plea of discrimination i.e.

violation of Article 14 of the Constitution of India, 1950 (in short the

`Constitution'). As a general proposition, the law on the point is settled. In

Prag Ice and Oil Mills v. Union of India (AIR 1978 SC 1296), a Seven-

Judge Bench of this Court by majority observed:

 "In the ultimate analysis the mechanics of price
 fixation has necessarily to be left to the Judgment of the
 executive and unless it is patent that there is hostile
 discrimination against a class of persons, the processural
 basis of price fixation has to be accepted in the
 generality of cases as valid."

22. The legal position was reiterated in Rohtas Industries v. Bihar State

Electricity Board, (AIR 1984 SC 657) and Kerala State Electricity Board v.

 21
M/s S.N.Govind Prabhu & Brothers (AIR 1986 Supreme Court 1999),

wherein it was observed, "Price fixation is neither the forte nor the function

of the Court".

23. As regards the nature of the function, in Saraswati Industrial

Syndicate Limited v. Union of India (AIR 1975 SC 460), the Court had

observed that the price fixation is more in the nature of a legislative measure

even though it may be based upon objective criteria found in a report or

other material. It should not, therefore, give rise to a complaint that rule of

natural justice has not been followed in fixing the price. In Prag Ice and Oil

Mills v. Union of India (supra) the Court observed:

 "We think that unless by the terms of particular
 statute or order, price fixation is made a quasi judicial
 function for specified purposes or cases it is really
 legislative in character .....the legislative measure does
 not concern itself to the facts of an individual case. It is
 meant to lay down a general rule applicable to all
 persons or objects or transactions of a particular kind of
 class."

24. In Union of India v. Cynamide India Ltd. (AIR 1987 SC 1802) this

Court held that except in cases where it becomes necessary to fix the price

separately in relation to individuals, price fixation is generally a legislative

 22
act, the performance of which does not require giving opportunity of

hearing. Following passage from the judgment may usefully be noticed:

 "Legislative action, plenary or subordinate, is not
 subject to rules of natural justice. In the case of
 Parliamentary legislation the proposition is self-evident.
 In the case of subordinate legislation, it may happen that
 Parliament may itself provide for a notice and for a
 hearing - there are several instance of the legislature
 requiring the subordinate legislating authority to give
 public notice and a public hearing before say, for
 example, levying a municipal rate - in which case the
 substantial non-observance of the statutorily prescribed
 mode of observing natural justice may have the effect of
 invalidating the subordinate legislation, but where the
 legislature has chosen not to provide for any notice or
 hearing, no one can insist on it and it will not permissible
 to read natural justice into such legislative activity."

25. Reference may also be made to a Constitution Bench decision in Shri

Sitaram Sugar Company Ltd. v. Union of India (1990 (3) SCC 223).

26. In a sense, fixing rate of fuel surcharge under clause 16.10 of the

Tariff notification is different from fixing the tariff under Section 49 of the

Act. Fuel surcharge is undoubtedly a part of tariff. But fixing rates of

consumption charges or the guaranteed charges or the fixed charges or the

delayed payment surcharge etc. and fixing rates of fuel surcharge do not

 23
stand on par. Though rates of consumption charges etc. are based on

objective materials, there is enough scope for flexibility in fixing the rates.

It also involves policy to fix different fates for different categories of

consumers. Such is not the position with the fuel surcharge. Clause 16.10.1

specifies the categories coning in the net of the levy and clause 16.10.3

provides the formula. In simple words, the formula envisages addition of

units generated or purchased and increased average cost of fuel and average

unit rate of purchase rates and division of the total by the quotient is the

average fuel surcharge per unit (expressed in terms of paise) described by

denominator S1 in the formula. The whole exercise, it would appear,

involves arithmetical accounting. There is no scope for exercise of any

discretion or flexibility. This distinction, however, does not help the

petitioners. It rather goes against them because if fixing rate of fuel

surcharge is just an arithmetical exercise, giving opportunity of hearing

would hardly serve any useful purpose. How mathematical in nature is the

process of computation is clearly illustrated in a chart which is part of

Annexure E series at page 290 of the Paper Book as under:

CALCULATION OF FUEL SURCHARGE RATE FOR THE YEAR

1996-97

 24
FUEL SURCHARGE =

(A1xA3)+(B1xB3)+(C1xC3)+(D1xD3)+(E1xE3)+(F1xF3)+(G1xG3)
----------------------------------------------------------------------------
 (A2+B2+C2+D2+E2+F2+G2)

1. A1 = Generation of PTPS (MKWH) = 1116.54

 A3 = Increase in Average cost of PTPS

 (Paise/Kwh) = 17.33 = 1934.96

 A1 x A3 (Rs. in lakhs)

2. B1 = Generation of BTPS (MKWH) = 387.37

 B3 = Increase in Average cost of

 BTPS (Paise/kwh) = 69.17

 B1xB3 (Rs. In lakhs) =

2679.44

3. C1 = Generation of MTPS (MKWH) = 213.52

 C3 = Increase in Average cost of

 MTPS (Paise/Kwh) = 53.05

 C1xC3 = 1132.72

 25
4. D1 = Power purchase from DVC

 (MKWH) = 2153.00

 D3 = Increase in Average rate of DVC

 (Paise/Kwh) = 57.87

 D1xD3 = 12459.41

5. E1 = Power purchase from NTPC(MKwh) = 4047.70

 E3 = Increase in Average rate of NTPC

 (paise/kwh) = 69.50

 E1xE3 (Rs. In lakhs) =28131.52

6. F1 = Power purchase from PGCIL(MKwh) = 507.22

 F3 = Increase in Average rate of PGCIL

 (Paise/kwh) = 18.12

 F1xF3 (Rs.in lakhs) = 919.08

7. G1 = Power purchase from others(MKwh) = 737.82

 G3 = Increase in Average rate of others

 (Paise/kwh) = 60.57

 G1xG3 (Rs. In lakhs)

=4468.98

 26
 Excluding prior period expenditure

8. Admissible prior period expenditure

 (Rs. In lakhs) =1659.11

 (This is on the basis of recommendation made by the Committee

 constituted by the Hon'ble High Court)

 (I) Incremental cost of the year

 (A1xA3)+(B1xB3)+......(G1xG3)(Rs.in Lakhs) = 53 385.22

9. Mer.

 A2=B2+..................G2(MKwh) = 4473.47

 Hence,

 Rate of fuel surcharge for the year (paise/Kwh) = 119.34

 Less 20.00

 ___________

 Net rate of fuel surcharge for the year (Paise/Kwh) = 99.34

27. Where the fixation of rate or determination of the amount is made

individually, depending on the context in which this is to be done, there may

be justification or necessity to give opportunity of hearing to the person or

 27
persons concerned. But where the rate is fixed for persons at large the only

way by which such opportunity can be given is to notify the rates and then

invite objections. There is no such provision. In the absence of any

mechanism provided in the Tariff notification, it would not be feasible at

all. Whenever the statute contemplates giving such an opportunity a

mechanism, such as, for fixing rates of municipal Taxes, while it is not so in

the case of Income tax or other taxes.

28. On behalf of the writ petitioners endeavour was made to question the

very basis of fixation of fuel surcharge. It was submitted that though it is

open to the Board to levy fuel surcharge on certain specified categories of

consumers alone or even supply electricity free to certain categories of

consumers the unit rate should be worked out taking into account the entire

units sold as is being done by the U.P. State Electricity Board, Damodar

Valley Corporation or even in Delhi. Fixing the rates of fuel surcharge on

the basis of units sold to only specified categories of consumers, it was

submitted, is arbitrary and discriminatory. The High Court noted that the

submission was in the teeth of formula contained in Clause 16.10. Relevant

part of the formula was re-stated:

 28
 A2,B2,C2- Units sold, out of sent out from
 PTPS, BTPS and MTPS on
 which fuel surcharge is
 leviable.

 D2 to H2- Units sold, out of purchased
 from DVC, UPSEB, OSEB,
 NTPC, PGCL and any other
 source during the year on
 which fuel surcharge is
 leviable.

29. The High Court that A2,B2,C2,D2 etc. component of the Formula

represents the extent of units generated i.e. sent out from the three

generating stations or purchased from the external sources. Counsel for the

writ petitioners referred to 'comma' occurring prior to the words "out of".

Though sometimes presence or absence of comma has been taken aid of in

interpreting the particular provision, the ordinary rule is that punctuation

mark is a minor element in the interpretation of Statute (See Aswini Kumar

Ghose v. Arbinda Bose, AIR 1952 Supreme Court 369). More so, in the

case of subordinate legislation. The words "out of" according to the High

Court have to be understood in the sense of "to the extent of", and so read;

the formula postulates that so much of units out of, the units generated or

purchased on which fuel surcharge is leviable only is to be taken into

 29
account for determining the value of A2 to C2 or D2 to H2. Omitting the

part "out of...." the formula would read as follows, "units sold .... on which

fuel surcharge is leviable". In terms of clause 16.10.1, fuel surcharge is

leviable only on consumers in CS II and III, L.T. Industrial Service, High

Tension Service, Extra High Tension (EHT) arid Railways Traction Service

categories, the units sold to other categories, of consumers cannot,

therefore, be taken into account for determining the value of either A2 to C2

or D2 to H2. The validity of the formula had been upheld earlier. High

Court noted that though by the impugned circular dated 31.5.1999 the rates

of fuel surcharge have been fixed for the years 1993-94 (July 1993 to March

1994) to 1997-98, the correctness of the rates fixed for the years 1993-94

(July 1994 to March 1994) to 1995-96 were not challenged. The correctness

of the rates for the subsequent years only was under challenge.

30. In Maharashtra State Electricity Board v. Kalyan Borough

Municipality, (AIR 1968 SC 991), this Court upheld the constitutional

validity of Section 49(3) of the Act. In M/s Robtas Industries Limited v.

Chairman, Bihar State Electricity Board, (AIR 1984.SC 657), this Court

held that Section 49(3) expressly authorises the Board to fix different tariffs

for the supply of electricity classifying the consumers into different

 30
categories and fixing different tariffs. Thus, the Electricity Board is entitled

to levy fuel surcharge on the consumers receiving high tension supply

leaving out the consumers coming in other categories. While considering

the validity of similar provisions of the 1979 Tariff of the Bihar State

Electricity Board relating to Fuel surcharge, the Court observed,

 "Though the nomenclature given to the surcharge is "fuel
 surcharge" it is really a surcharge levied to meet the
 increased cost of generation and purchase of
 electricity.... We see no force in the contention that the
 words "increase in the average unit rate of purchase of
 energy" used in C1 below paragraph 16.7.2 should be
 interpreted as taking their colour from the contents of
 paragraph 16.7.3. From a reading of these provisions it is
 abundantly clear that the entire increase in cost incurred
 in the purchase of energy from DVC and UPSEB has to
 go into the .compensation of the surcharge leviable under
 paragraph 16.7"

31. In Kerala State Electricity Board v. S.N.Govind Prabhu & Brothers,

(AIR 1986 SC 1999), the Court noticed the amendments in section 59 of the

Act and held that a plain reading of section 59, as amended, plainly

indicates that it is the mandate of Parliament that the Board should adjust its

tariff so that after meeting the various expenses properly required to be met,

a surplus is left. It will not be out of place to mention here that in terms of

 31
section 59, as it stood prior to 1978, the Board was supposed to adjust its

tariff in such a way as not to incur loss. By amendment made in 1978, the

Board was supposed to adjust its tariff so as to ensure that the total revenues

in any year of account should after meeting expenses "leave such surplus as

State Government may, from time to time, specify". The section was

amended again in 1983 and as per the 1983 amendment the Board is

supposed to adjust its tariff in a manner so as to ensure that the total

revenues in any year of account after meeting all expenses shall leave such

surplus as is "not less than three per cent or such higher percentage as State

Government may by notification specify". After noticing the said

amendments this Court observed:

 "The original negative approach of functioning so as not
 to suffer a loss is replaced by the positive approach of
 requiring a surplus to be created. The quantum of surplus
 is to be specified by the State Government. What the
 State Government is to specify is the minimum surplus.
 This is made clear by the 1983 amendment which
 stipulates a minimum of 3 per cent surplus in the absence
 of specification by the State Government which has the
 liberty "to specify a higher percentage than three. The
 failure of the government to specify the surplus which
 may be generated by the Board cannot prevent the Board
 from generating a surplus after meeting the expenses
 required to be met. Perhaps, the quantum of surplus may
 not exceed what a prudent public service undertaking
 may be expected to generate without sacrificing the
 interests it is expected to serve and without being
 obsessed by the pure profit motive of the private

 32
 entrepreneur. When that happens the court may strike
 down the revision of tariffs as plainly arbitrary. But not
 until then. Not merely because surplus has been
 generated, a supply which can by no means to be said to
 be extravagant."

32. High Court noted that the purchase of electricity from Tenughat Vidyut

Nigam Limited (TVNL) has been treated as a component of H3 i.e. "any

other source", but as the TVNL came into existence only in the year 1996-

97 it could. not be treated as a relevant factor having regard to the fact that

in computing the fuel surcharge, increase in the average unit rate of

purchase of electricity has to be calculated treating 1991-92 as the base

year. Secondly, it was contended that the Board has treated the supply of

electricity by the DVC to the TISCO as "deemed supply" by the Board to

TISCO at a different rate which is not in accordance with the formula. As

noted above the High Court found the objections to be well founded.

33. It is not in dispute that TVNL came into existence in 1996-97

whereas while calculating the electricity 1991-92 is to be treated as the

base year. As a matter of fact, as seen above, it was on that ground,

namely, that a different base year i.e. 1992-93 was provided for computing

the increase in the average unit rate of purchase of electricity from external

 33
sources, that the High Court directed the Board to consider amending

clause 16.10.3 so as to provide for the same base year i.e. 1991-92 with

respect to both the increase in the average cost of generation and increase

in the rates of purchase, and accepting the verdict of the High Court the

Board amended the last part of clause 16.10.3. Purchase of electricity from

TVNL which admittedly came into existence in the year 1996-97,

therefore, cannot be treated as component of H3 i.e. increase in the average

unit rate of purchase of electricity from "any other source". As a matter of

fact, the case of writ petitioners was that the TVNL is nothing but a unit of

the Board in disguise of a subsidiary company and, therefore, could not be

treated as a component of 113. It may not be necessary to go behind the

veil of the separate legal character of the TVNL. The fact that TVNL did

not exist in the year 1991-92 and came into existence only in the year

1996-97 is sufficient to justify its deletion as component of H3. Counsel

for the Board accepted that if TVNL is to be treated as a source, some

mechanism has to be worked out, and the Court has then to see whether it

is rational. The Board submitted that if the High Court comes to the

conclusion that the supply from TVNL, cannot be included, the

consequence will be that the units purchased from TVNL would have to be

kept out, which is not the intention underlying levy of fuel surcharge. It is

 34
like `escalation' clause, and the additional cost has to be reimbursed. The

High Court did not accept the same submissions as it will result in creating

a different base year. The relevant clause of the formula, after amendment,

reads, "the said increase to be calculated with respect to the year 1991-92"

(vide last para of clause 16.10.3). The amendment has been made in the

light of the decision of the High Court. In the rejoinder affidavit the Board

had taken the stand that the incremental rise in 1996-97 over the 1991-92

base year from other sources including TVNL was less compared to DVC

or NTPC. High Court did not appreciate this logic. Increase in the unit

rate has been similarly worked out in the case of TVNL, but the relevant

Base year column has been shown as blank though in the counter affidavit,

para 37, it had been stated that the same base year i.e. 1991-92 has been

applied, even when TVNL admittedly did not exist prior to 1996-97. High

Court held that it is not possible to allow the Board to include purchase of

electricity as a component of H3 without suitably" amending the formula

in accordance with law.

34. As regards "deemed supply" by the Board to TISCO High Court

noticed that under a tripartite agreement between the Board, the DVC and

the TISCO, with the consent of the State Government, the electricity is

 35
being supplied directly by the DVC to the TISCO but such supply is treated

as made-by the Board to the TISCO. It seems to be an admitted position that

the tariff rates of the Board are higher than the tariff rates of the DVC. But

since legally the TISCO cannot directly but electricity from the DVC it has

entered into agreement with the Board to buy electricity directly from DVC

but pay the amount at the Board's rates. Though the amount is paid to DVC,

such payment is adjusted against the amount due from the Board to it i.e.

DVC. As seen above, DVC is one of the external sources, represented by

D1. The Board buys the electricity from DVC, amongst others, and pays to

it for the same. The increase in the average unit rate of purchase from it is

reflected by D3. However, so far as the supply made by DVC to TISCO is

concerned, it is treated as a "deemed supply" by the Board. While it may be

permissible to charge the TISCO at the rates prescribed by the Board, i.e, at

rates higher than the DVC rates, and it may also be permissible to treat sale

of such electricity sold by DVC to TISCO as deemed supply/sale by the

Board to TISCO. High Court held that two rates of supply/sale cannot be

permitted for the purpose of computing D3 in the ordinary course, in the

absence of any tripartite agreement referred to above, the Board would have

supplied/sold electricity to TISCO and charged at its rates. Such supply

would have been made from the electricity either generated by it at its own

 36
generating station or purchased from external sources including DVC.

Clause 16.10.3.1 provides for computation of the cost of generation at the

Board's own generating station; as regards purchase of energy from other

sources, the said clause lays down that the actual increase in average unit

rate of purchase will apply. If the Board is purchasing electricity from

different sources for the purpose of D3, E3, F3 etc. the actual increase in the

average unit rate of purchase so far as the particular source is concerned, is

to be taken into consideration. DVC has thus to be treated as one source.

The source being one there cannot be two rates of purchase or increase in

the average unit rate of purchase. It may be mentioned here that NTPC

sells electricity generated different power stations, namely, Farakka,

Kahalgaon Talchar or Anta and though the increase in the average unit rate

is not the same, it charges the Board at a uniform rate. It is an admitted

position that though the DVC has revised its tariff from year to year the

Board so far has not recognised the revision and has been paying it at the

rates applicable in the year 1991-92. In the agenda note dated 26.11.98 it

has been clearly mentioned "that during the 1996-97 the DVC rates for the

purchase remained unchanged but the rates applicable to deemed supply to

TISCO rose upto 13P/kwh. High Court held that the Board cannot treat the

sale of electricity by the DVC to the TISCO as a separate class or category

 37
for the purpose of computing D3. The computation of D3 to this extent, was

held to be not correct.

35. The computation of the rates of fuel surcharge by the impugned

circular for the years 1996-97 and onwards so far as it relates to the

purchase of electricity from TVNL and "deemed supply" by the Board to

TISCO thus does not appear to be in accordance with the formula. Fuel

surcharge has to be calculated strictly within the framework of the formula.

If any extraneous element has crept in the computation to that extent must

be held to be not in accordance with law and accordingly modified.

36. The computation of fuel surcharge was also assailed before the High

Court on the ground of non-disclosure of details to A2, B2 etc. It was

submitted that as the incremental rise in the cost of generation at the Board's

own generating stations and the average unit rate of purchase of electricity

from external sources represented by different denominators in the formula

is not the same, the Board ought to have given the details of the quantum of

units sold respectively out of the units generated and purchased from the

external sources. The High Court considered the plea to be of academic

value. It is true that in the matter of calculation of Fuel surcharge the units

 38
sold from out of units generated at the Board's power stations and units

purchased from external sources are shown by separate denominators i.e.

A2, B2, C2 and D2, E2, F2 etc. respectively, but it would appear that after

the electricity generated at the Board's stations or purchased from external

sources are fed into transmission lines, they lose their separate identity as

electricity generated at the Board's own power stations or purchased from

other sources. It is difficult thereafter to find out as to how much of

electricity fed in the transmission lines came from the Board's own power

stations and how much of it from external sources.

37. Board's stand was that it pays large amounts as delayed payment

surcharge (DPS) to the DVC, NTPC etc. contributing to further increase in

the average unit rate of purchase of electricity resulting in higher fuel

surcharge and causing thus additional burden on the consumers. The fact

that the Board has had to pay large amounts as DPS to the external agencies

from which it has been purchasing electricity is more or less an admitted

position. The case of the Board, however, is that the default in payment was

mainly on account of defaults committed by the consumers themselves. It is

said that as much as 3,200 crores of rupees are due from the consumers as a

result of which the Board is not in a position to pay to the agencies resulting

 39
in additional burden by way of DPS. High Court found substance in the

stand of the Board. The fact that the consumers at large have not been

paying the dues on time and many of them have been making only part

payment on the strength of interim orders of Courts are facts which are not

disputed. If the consumers do not pay the dues to the Board, they cannot be

heard to make any complaint against payment of DPS by the Board to the

external agencies.

38. We have referred in extenso reasonings of the High Court.

39. It is stand of Board that while arriving at the average cost of purchase

where the purchase prices vary weighted average is taken into account. This

can be explained by illustration of electricity purchased from different units

of NTPC. The Board purchases electricity normally from generating units of

NTPC at Farakka, Kahalgaon and Talcher at different rates. During 1996-97

the Board purchased electricity from Farakka unit at the rate of 147.28

paise/Kwh (inclusive of trans. Ch.) from Kahalgaon at the rate of of 179.20

paise/Kwh and Talcher at the rate of 70.33 paise/Kwh. The total power

purchased from NTPC during the said year was 4047.70 Mkwh for

Rs.61,989.32 lacs. For the purposes of calculating per unit rate during the

 40
said year weighted average of the different rates was taken which comes to

153.15 paise/Kwh. The difference in cost of purchase of electricity from

NTPC during 1996-97 with reference to the base year 1991-92 comes to

153.15 minus 83.65 = 69.50 paise/Kwh (the average rate during 1991-92

was 83.65 paise/Kwh). Similarly, in the case of purchase of power from

`other source', there is more than one source for such purchase and the rates

of supply also vary. In such cases average incremental cost is arrived at by

the method of weighted average.

40. There is no dispute with regard to levy of fuel surcharge in respect of

power generated by the generating stations of the Board. The dispute in the

writ petitions was with regard to only the method of calculation of fuel

surcharge in respect of power purchased by the Board, i.e. the rates of fuel

surcharge in respect of the years 1996-97 and 1997-98.

41. The Board by its Circular dated 31.5.1999 fixed the rate of fuel

surcharge by applying formula for the years 1993-94 to 1996-97. During

the year 1996-97 the Board started purchasing electricity from generating

unit of TVNL established in 1996. By treating TVNL as a source falling

 41
under the category of other source, the Board calculated weighted average

cost of power as Rs.60.57 paise/Kwh.

42. Stand of the writ petitioners was that since TVNL came into existence

in the year 1996-97 there cannot be any incremental cost in respect of

electricity purchased from TVNL inasmuch increase in the average unit rate

of purchase of electricity has to be calculated treating 1991-92 as the base

year. The other stand of the writ petitioners was that the Board has treated

the supply of electricity by DVC to TISCO as deemed supply by the Board

to TISCO at a different rate which is not in accordance with the formula.

The stand of the writ petitioners was accepted by the High Court. So far as

TVNL and deemed supply to TISCO are concerned, the High Court held

that there is no infirmity in the fixing of rates of fuel surcharge except on

the aforesaid two grounds. All other stands taken in the writ petition was

rejected.

43. Judgment of the High Court is under challenge in these appeals by the

Board. An appeal has been filed by the private companies so far as the

conclusions of the High Court relating to non accounting of Rupees 100

crores paid by the private companies to the Board. According to the

 42
appellant-Board, the High Court was not right in directing to re-work out

the rates of fuel surcharge for the years 1996-97 onwards after deleting the

purchase of electricity from TVNL as a component of H3 in the formula. It

is also submitted that the direction of the High Court to re-work out the

rates of fuel for the year 1996-97 onwards after treating the deemed supply

i.e. supply of electricity by DVC to TISCO as supplied by DVS to the

Board as an element of D3 in the formula was erroneous.

44. Though learned counsel for the appellant Board questioned

correctness of High Court's conclusions, nothing material could be

highlighted as to how the reasonings suffer from any infirmity. We are in

agreement with the conclusions of the High Court. The appeals filed by the

Board are accordingly dismissed.

45. In the other appeals challenge is to non-accounting of Rs.100 crores

paid by the Coal Companies to the Board. According to the writ petitioners,

if the said amount has been shown in the accounts the rate of fuel surcharge

would have been different. The High Court noticed that this aspect of the

matter has been dealt with by the Board in its rejoinder affidavit wherein it

has been stated that as against the total claim of Rs.356.20 crores on account

 43
of loss due to grade slippage, short supply of coal, supply of stones etc. the

Coal Companies have agreed to pay Rs.100 crores in full and final

settlement of the claim. But though such decision was taken on 30.8.1998

actual payment has not been made till date. High Court observed that

payment of the amount would be relevant consideration while calculating

the rate of fuel surcharge for the year 1998-99 and not 1997-98.

46. We direct that the actuals be worked out within three months from

today. The adjustment of Rs.100 crores be worked out accordingly. The

appeals are accordingly disposed of.

 ................................J.
 (Dr. ARIJIT PASAYAT)

 ................................J.
 (TARUN CHATTERJEE)
New Delhi,
April 15, 2009 44

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