//
you're reading...
legal issues

Jharkhand State Electricity Regulatory commission and Electricity Act 2004 and 2004- Vs- Old statutory agreements between board and consumers before the new Act – power to fix tariff – has gone to separate and independent Board and as such previous tariff fixed earlier under agreements before the commencement of New Act – the statutory agreements entered into earlier were saved, the agreement in question stands replaced by 2004 Tariff Schedule- Apex court held that the High court and DB of High court rightly allowed the writ petitions holding that the Electricity board has no right to issue demand charges basing on old agreements on consumers = Jharkhand State Elect.Board & Ors. ……Appellants Vs. M/s. Laxmi Business & Cement Co.P. Ltd. & Anr. . …Respondents = 2014(Feb.Part) judis.nic.in/supremecourt/filename=41277

Jharkhand State Electricity Regulatory commission and Electricity Act  2004 and 2004- Vs- Old statutory agreements between board and consumers before the new Act –  power to fix tariff – has gone to separate and independent Board and as such previous tariff fixed earlier under agreements before the commencement of New Act  – the  statutory agreements entered into earlier  were  saved,  the  agreement  in  question stands replaced by 2004 Tariff Schedule- Apex court held that the High court and DB of High court rightly allowed the writ petitions holding that the Electricity board has no right to issue demand charges basing on old agreements on consumers =

M/s. Laxmi Business & Cement  Co.  Pvt.  Ltd.  and  M/s.

Laxmi  Ispat  Udyog  (arrayed  as  respondent  No.1  in  each   appeal   and

hereinafter  referred  to  as  the  ‘consumers’).  These   respondents   had

questioned the validity of the bills  raised  by  the  JSEB  in  those  Writ

Petitions, primarily on the ground that the bills were contrary  to  and  in

excess of the tariff fixed by the  Jharkhand  State  Electricity  Regulatory

Commission (hereinafter referred to as the  ‘SERC”).  Their  contention  was

accepted by the learned Single Judge and the order of learned  Single  Judge

is affirmed by the Division Bench as well.=

in  the  year  1994  HT

Agreement  was  entered  into  between   Bihar   State   Electricity   Board

(predecessor in interest of  JSEB)  and  the  consumers  which,  inter-alia,

stipulated the tariff that was to be charged by the JSEB from the  consumers

for supply of electricity to these consumers by the JSEB. In Clause 4(c)  of

the Agreement there was a provision of Minimum  Guarantee  Charges.  

In  the

year 2003, Electricity Act was enacted. Indubitably, power to  frame  tariff

under this Act is given to SERC.  SERC  passed order dated framing  the  new

tariff schedule (‘2004 Tariff Schedule’ for short) under Section 86  of  the

Electricity Act (hereinafter referred to as the  Act).  

The  JSEB,  however,

continued to send the bills as per  the  Clause  4(c)  referred  to  in  the

agreement which were paid by the consumers  under  protest.   

In  May  2010,

Writ Petitions were filed by the consumers for quashing of the energy  bills

on the ground that it had wrongly been raised as  per  Clause  4(c)  of  the

Agreement which had ceased to have any effect on the framing of 2004  Tariff

Schedule by the SERC. 

The JSEB, however, contended  that  the  HT  agreement

entered into with the consumers still survived as the 2004  Tariff  Schedule

saves                            this                             Agreement.

Writ petitions were allowed

 

Apex court conclusion

(i) Whether after the enactment of the  Electricity  Act,  2003  which

came into force on 10.6.2003 and after  passing  of  the  new  tariff  order

dated 27.12.2003 by Jharkhand State  Electricity  Regulatory  Commission  as

per the Act of 2003 can the State Electricity Board still  charge  a  tariff

determined by itself?

 

      (ii) Whether the issue of  demand  charge  to  HTS  –  1  category  of

consumers has been left  non-considered  by  the  State  Commission  in  the

tariff order dated 27.12.2003 so that the  same  may  be  continued  in  the

manner existed in the State or whether the  same  has  been  considered  and

given affect to in the tariff order dated 27.12.2003 which came into  effect

from 1.1.2004?

 

      (iii) What would be the effect  of  Section  185  (Repeal  and  Saving

Clause) of the Electricity Act 2003 upon the  HT  supply  Agreement  entered

upon the Board and the Consumer prior to Electricity Act, 2003?

In PTC India Ltd. V. Central Electricity Regulatory  Commission  (2010)

4 SCC 603 this Court has categorically held that Act, 2003 is an  exhaustive

code  on  all  matters  concerning  electricity  which  also  provides   for

“unbundling”  of  State  Electricity  Boards  into  separate  utilities  for

generation, transmission and distribution.  Further,  Regulatory  regime  is

entrusted to the State Electricity Regulatory Commissions  which  are  given

vide ranging responsibilities. This Act has distanced  the  Government  from

all  forms  of  regulations,  including  tariff  regulation  which  is   now

specifically assigned to SERC.

It is, thus, beyond the pale  of  doubt  that  the  State  Electricity

Boards have  no  power  whatsoever  to  frame  tariff  which  is  under  the

exclusive domain of the Commission. 

This legal position has been  judicially

recognized. [See Gujarat Urja Vikas Nigam Ltd. V. Essar Power  Ltd.,  (2008)

4 SCC 755 and A.P. TRANSCO v. Sai Renewable Power (P)  Ltd.  (2011)  11  SCC

34.

in the case of BSES  v.  Tata  Power

 Co.Ltd. (2004) 1 SCC 195  wherein  following  pertinent  observations  were

made.

    “16. The word “tariff” has not been defined in the Act.  “Tariff”

           is a cartel of commerce and normally it is a book  of  rates.  It

           will mean a schedule of standard prices or  charges  provided  to

           the category or categories of customers specified in the  tariff.

           Sub-section (1) of Section 22 clearly lays down  that  the  State

           Commission shall determine the tariff for electricity (wholesale,

           bulk,  grid  or  retail)  and  also  for  use   of   transmission

           facilities. It has also the power to regulate power  purchase  of

           the distribution utilities including the price at which the power

           shall be procured from the generating companies for transmission,

           sale, distribution and supply in the State.  “Utility”  has  been

           defined in Section 2(1) of the Act and it  means  any  person  or

           entity   engaged   in   the   generation,   transmission,   sale,

           distribution or supply, as the case may be, of energy. Section 29

           lays down that the tariff for  the  intra-State  transmission  of

           electricity and tariff for supply  of  electricity  —  wholesale,

           bulk or retail — in a State shall be subject to the provisions of

           the  Act  and  the  tariff  shall  be  determined  by  the  State

           Commission. Sub-section (2) of Section 29 shows  that  the  terms

           and conditions for fixation of  tariff  shall  be  determined  by

           Regulations and while doing so, the Commission shall be guided by

           the factors  enumerated  in  clauses  (a)  to  (g)  thereof.  The

           Regulations referred to earlier show  that  generating  companies

           and utilities have to first approach the Commission for  approval

           of   their   tariff   whether   for   generation,   transmission,

           distribution or supply and  also  for  terms  and  conditions  of

           supply. They can charge from their  customers  only  such  tariff

           which has been approved by the Commission. Charging of  a  tariff

           which has not been approved by the Commission is an offence which

           is punishable under Section 45 of the Act. The provisions of  the

           Act and Regulations show that the Commission  has  the  exclusive

           power to  determine  the  tariff.  The  tariff  approved  by  the

           Commission is final and binding and it is not permissible for the

           licensee, utility or anyone else to charge a different tariff.”

 

It is also to be borne in mind that the tariff  in  force  during  the

 period was Tariff Order dated 27.12.2003 for the period 2003-04  which  was

 having force of law under the Electricity Act  2003.   Thus,  what  follows

 from the above is that even if we proceed on the basis that  the  statutory

 agreements entered into earlier  were  saved,  the  agreement  in  question

 stands replaced by 2004 Tariff Schedule.

As a result, we find that the appeals are bereft of any merit and  are

 accordingly dismissed. No costs.

 

2014(Feb.Part) judis.nic.in/supremecourt/filename=41277

K.S. RADHAKRISHNAN, A.K. SIKRI

[REPORTABLE]

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2909/2014
(arising out of SLP(Civil) No.22047/2011)

Jharkhand State Elect.Board & Ors. ……Appellants

Vs.

M/s. Laxmi Business & Cement Co.P. Ltd. & Anr. . …Respondents

WITH

CA. No.2910/2014 @ SLP(Civil) No.22049/2011,
C.A.No.2911/2014 @SLP(Civil) No.6350/2014 @ CC 20307/2012 and CA.
No.2913/2014 @ SLP(Civil) No.6351/2014 @ CC 20360/2012

J U D G M E N T

A.K.SIKRI,J.

1. Delay condoned.

2. Leave granted.

3. The appellant in both the cases is Jharkhand State Electricity Board
(JSEB), which is aggrieved by the common judgment dated 5th July 2011
passed by the High Court of Jharkhand in two appeals. These appeals were
preferred by the appellant JSEB against the orders dated 17th February 2010
passed by the learned Single Judge of that court in the two Writ Petitions
which were filed by M/s. Laxmi Business & Cement Co. Pvt. Ltd. and M/s.
Laxmi Ispat Udyog (arrayed as respondent No.1 in each appeal and
hereinafter referred to as the ‘consumers’). These respondents had
questioned the validity of the bills raised by the JSEB in those Writ
Petitions, primarily on the ground that the bills were contrary to and in
excess of the tariff fixed by the Jharkhand State Electricity Regulatory
Commission (hereinafter referred to as the ‘SERC”). Their contention was
accepted by the learned Single Judge and the order of learned Single Judge
is affirmed by the Division Bench as well.

4. To give a glimpse of the controversy involved, in the year 1994 HT
Agreement was entered into between Bihar State Electricity Board
(predecessor in interest of JSEB) and the consumers which, inter-alia,
stipulated the tariff that was to be charged by the JSEB from the consumers
for supply of electricity to these consumers by the JSEB. In Clause 4(c) of
the Agreement there was a provision of Minimum Guarantee Charges. In the
year 2003, Electricity Act was enacted. Indubitably, power to frame tariff
under this Act is given to SERC. SERC passed order dated framing the new
tariff schedule (‘2004 Tariff Schedule’ for short) under Section 86 of the
Electricity Act (hereinafter referred to as the Act). The JSEB, however,
continued to send the bills as per the Clause 4(c) referred to in the
agreement which were paid by the consumers under protest. In May 2010,
Writ Petitions were filed by the consumers for quashing of the energy bills
on the ground that it had wrongly been raised as per Clause 4(c) of the
Agreement which had ceased to have any effect on the framing of 2004 Tariff
Schedule by the SERC. The JSEB, however, contended that the HT agreement
entered into with the consumers still survived as the 2004 Tariff Schedule
saves this Agreement.
5. Since the Writ Petitions of the consumers were allowed and the order
of the learned Single Judge is already upheld by the Division Bench, it is
obvious that pleas raised by the JSEB have not found favour with the High
Court. Before us as well, same very contentions were raised which were
raised by the JSEB in the High Court. Additionally, it was also contended
that even Section 185 (2)(a) of the Act read with Section 6(B) of the
General Clauses Act categorically protects the previous operation of the
earlier enactment, duly done or saved thereunder.

It is, thus, clear that questions which arise for consideration in these
appeals are the following:

(i) Whether after the enactment of the Electricity Act, 2003 which
came into force on 10.6.2003 and after passing of the new tariff order
dated 27.12.2003 by Jharkhand State Electricity Regulatory Commission as
per the Act of 2003 can the State Electricity Board still charge a tariff
determined by itself?

(ii) Whether the issue of demand charge to HTS – 1 category of
consumers has been left non-considered by the State Commission in the
tariff order dated 27.12.2003 so that the same may be continued in the
manner existed in the State or whether the same has been considered and
given affect to in the tariff order dated 27.12.2003 which came into effect
from 1.1.2004?

(iii) What would be the effect of Section 185 (Repeal and Saving
Clause) of the Electricity Act 2003 upon the HT supply Agreement entered
upon the Board and the Consumer prior to Electricity Act, 2003?

6. While dealing with these questions, we will narrate further seminal
facts and the details submissions of the learned counsel for the parties of
either side.

1. Re.: Power of SERC under Electricity Act 2003.

Legal position contained in Act of 2003 is hardly in dispute.
Before this Act was enacted in the year 2003, we had Indian Electricity
Act, 1910 and thereafter Electricity (Supply) Act, 1948 was passed. It is
the Electricity Board in the respective States which were supplying
electricity to the consumers and determining the operation rates at which
the electricity was to be supplied. Section 49 of the Act, 1948 empowered
the Board to supply electricity to any person upon such terms and
conditions as the Board thinks fit and made for the purposes of such supply
from time to time and were empowered to frame uniform tariffs for the
purpose of such supply. This power to frame tariff under Section 49(1) of
the Act 1948 included the power to fix minimum guarantee charges. In State
of Bihar, such rates were fixed in the year 1993 tariff. It, inter-alia,
provided for tariff for HT consumers. Three categories of HT consumers were
mentioned there. HTS-I, II and III. Both the consumers in the instant
appeals were put in HT-I category. HT Agreement dated 26.4.1974 was entered
into between the Board and the consumers. As per Clause 4 of this
Agreement, the consumers were to pay to the Board for the energy so
supplied and registered or taken to have been supplied at the appropriate
rates applicable to the consumers according to the tariff framed by the
Board and in force from time to time. It was subject to the minimum
contract demand applicable for the category of supply category in which the
consumers fell. Clause 4(b) explained that the maximum demand of the
consumer for each month shall be the largest total amount of kilovolt
amperes (KVA) that was delivered to the consumers at the point of supply
during any consecutive 30 minutes in the months. Since the JSEB has worked
out the charges as per Clause 4 (c) which it is demanding, we reproduce the
said clause hereinbelow:

“4(c) Maximum demand charges for supply in any month will be
based on the maximum KVA demand for the month or 75 per cent of
the contract demand whichever is higher, subject to provision of
clause 13. For the first twelve months service the maximum demand
charges for any month, will however, be based on the actual
monthly maximum demand for that month.”

Thus, as per the aforesaid clause, JSEB had been raising energy bills
on the basis of 75% of the contract demand.

7. As mentioned above, after the Electricity Act, 2003 was enacted,
power to frame tariff is given to the SERC. This power is statutorily
conferred upon the SERC under the Act. However, it would be relevant to
mention herein that before the passing of this Act, Electricity Regulatory
Commission Act, 1998 was enacted and under Section 17 of the said Act,
Jharkhand State Electricity Regulatory Commission was constituted by the
Government of Jharkhand vide Notification No.1763 dated August 22, 2002.
Its functions and duties were notified by the Government as per Section 22
of the Electricity Regulatory Commission Act.

8. On the passing of the Electricity Act, 2003, Electricity Act 1910,
Electricity (Supply) Act 1948 and Electricity Regulatory Commission Act,
1998 have been repealed. At the same time, Act 2003 recognizes the SERCs
constituted under the 1998 Act. The object clause of this Act reads as
under:

“An Act to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity and
generally for taking measures conducive to development of
electricity industry, promoting competition therein, protecting
interest of consumers and supply of electricity to all areas,
rationalization of electricity tariff, ensuring transparent
policies regarding subsidies, promotion of efficient and
environmentally benign policies, constitution of Central
Electricity Authority, Regulatory Commissions and establishment
of Appellate Tribunal and for matters connected therewith or
incidental thereto.”

9. It is also not in dispute that 2004 Tariff Schedule framed by the
SERC is in exercise of powers conferred upon it under Section 86 (a) of the
Act. In PTC India Ltd. V. Central Electricity Regulatory Commission (2010)
4 SCC 603 this Court has categorically held that Act, 2003 is an exhaustive
code on all matters concerning electricity which also provides for
“unbundling” of State Electricity Boards into separate utilities for
generation, transmission and distribution. Further, Regulatory regime is
entrusted to the State Electricity Regulatory Commissions which are given
vide ranging responsibilities. This Act has distanced the Government from
all forms of regulations, including tariff regulation which is now
specifically assigned to SERC. Relevant observations, outlining the scheme
of this Act, are reproduced below:

“The 2003 Act is enacted as an exhaustive code on all matters
concerning electricity. It provides for unbundling” of SEBs into
separate utilities for generation, transmission and distribution.
It repeals the Electricity Act, 1910: the Electricity (Supply)
Act, 1948 and the Electricity Regulatory Commissions Act, 1998.
The 2003 Act, in furtherance of the policy envisaged under the
Electricity Regulatory Commissions Act, 1998 (the 1998 Act),
mandated the establishment of an independent and transparent
regulatory mechanism, and has entrusted wide-ranging
responsibilities with the Regulatory Commissions. While the 1998
Act provided for independent regulation in the area of tariff
determination: the 2003 Act has distanced the Government from all
forms of regulation, namely, licensing, tariff regulation,
specifying Grid Code, facilitating competition through open
access, etc.”[Paragraph 17]

The 2003 Act contains separate provisions for the performance of
dual functions by the Commission. Section61 is the enabling
provision for framing of regulations by the Central Commission:
the determination of terms and conditions of tariff has been left
to the domain of the Regulatory Commissions under Section 61 of
the Act whereas actual tariff determination by the Regulatory
Commissions is covered by Section 62 of the Act. This aspect is
very important for deciding the present case. Specifying the
terms and conditions for determination of tariff is an exercise
which is different and distinct from actual tariff determination
in accordance with the provisions of the Act for supply of
electricity by a generating company to a distribution licensee or
for transmission of electricity or for wheeling of electricity or
for retail sale of electricity.

26. The term “tariff” is not defined in the 2003 Act. The term
“tariff” includes within its ambit not only the fixation of rates
but also the rules and regulations relating to it. If one reads
Section 61 with Section 62 of the 2003 Act, it becomes clear that
the appropriate Commission shall determine the actual tariff in
accordance with the provisions of the Act, including the terms
and conditions which may be specified by the appropriate
Commission under Section 61 of the said Act. Under the 2003 Act,
if one reads Section 62 with Section 64, it becomes clear that
although tariff fixation like price fixation is legislative in
character, the same under the Act is made applicable vide Section
111. These provisions, namely, Sections 61, 62 and 64 indicate
the dual nature of functions performed by the Regulatory
Commissions viz. decision-making and specifying terms and
conditions for tariff determination.”[Paragraph 25,26] [Emphasis
supplied]
10. It is, thus, beyond the pale of doubt that the State Electricity
Boards have no power whatsoever to frame tariff which is under the
exclusive domain of the Commission. This legal position has been judicially
recognized. [See Gujarat Urja Vikas Nigam Ltd. V. Essar Power Ltd., (2008)
4 SCC 755 and A.P. TRANSCO v. Sai Renewable Power (P) Ltd. (2011) 11 SCC
34.

11. Notwithstanding the aforesaid legal position, JSEB contends that
agreement entered into with the consumers in the year 1994 is saved and the
JSEB has right to charge the tariff as per Clause 4 (c) thereof. According
to the JSEB this is the position because of the reason that Clause 1.4 of
the 2004 Tariff Schedule framed by the SERC provides for such a position
and further that even Section 186 of the Act 2003 saves this agreement. On
these twin aspects, we have already framed question Nos. 2 and 3 above and
would now proceed to deal with them.

2. Re: Whether the Agreement dated 26.4.1994 is saved by the 2004
Tariff Schedule?

Mr. Sinha, learned senior counsel for the JSEB submitted that in the
2004 Tariff Schedule there was no such provision which is contained in the
agreement dated 26.4.19994 particularly in Clause 4(c) and in the absence
thereof in the tariff schedule energy bills raised on the basis of 75 %
contract demand was saved. It was submitted that the Agreement dated
26.4.1994 is a statutory agreement as it was under the Act of 1948. The
learned senior counsel further submitted that it had never been the case of
consumers that the aforesaid provision was repealed, repudiated or
destroyed. It has not happened either. For this purpose, Mr. Sinha sought
to rely upon averments made in the Writ Petitions filed by the consumers
and on the basis it was contended that even the consumers admitted that the
provision of 75% of contract demand is absent and not provided in the 2004
Tariff Schedule. He also placed strong reliance on Clause 1.4 of 2004
Tariff Schedule of SERC which reads as under:

“All other Terms and Conditions in respect of Meter Rent, Supply
at Lower Voltage, Capacitor Charge, Electricity Duty, Rebate,
Security Deposit, Surcharge for exceeding contract demand etc.,
shall remain the same as existing in the State.”

Further, the tariff order 2003-04, in Clause 5 under the heading
Design of Tariff Structure and Analysis of Tariff, particularly
at Clause 5.4 has dealt with the two part tariff structure and
Minimum Guarantee Charges wherein it was stated that “Ideally,
the fixed/demand charge should be levied in proportion to the
demand placed by an individual consumer on the system. This is
so because it facilitates the utility in designing an
appropriate system to cater to the supply needs of a consumer
and is therefore a just and fair mechanism for recovering fixed
costs of the system.”
Mr. Sinha further argued that Clause 4 (c) of the High Tension
Agreement dated 26.8.2004 which the Respondent Consumer has signed with the
Board much after 1.1.2004, when the Tariff Order 2003-04 came into effect,
clearly specified that after commencement of power supply, the respondent
shall be liable to pay KVA/Maximum Demand Charges on actual consumption
basis in the first 12 months and after that on the basis of 75% of the
contract demand or recorded demand, whichever is higher. This is uniformly
applied to similarly situated all the HTS-1 consumers.

12. In order to appreciate this argument, we will have to construe
relevant provision of 2004 Tariff Schedule as framed by the SERC. It would
be pertinent to observe that the SERC fixed the tariff on the request of
the JSEB itself when it approached the SERC for this purpose. We find that
in the Tariff Petition filed by the JSEB before the SERC, the JSEB did not
propose to continue the manner of 75% of contract demand and the SERC
allowed the demand charge 140-KV-Month. On perusal of the Tariff Order, it
becomes apparent that this is divided in different sections viz., section 1
is the chapter containing ‘introduction’, section 2 is the chapter
containing ‘ARR’ i.e. the Annual Revenue Requirement and tariff proposal
submitted by the Board, section 3 is the chapter containing ‘objections’
received from the stake holders, section 4 is the chapter containing
‘Commission’s analysis on ARR’, Section 5 is the chapter containing ‘design
of tariff structure and analysis of tariff’, section 6 is the chapter
containing ‘Directions to the JSEB’ and finally there is Annexure 5.1
containing the ‘Tariff Schedule’. This Tariff Schedule which is the final
outcome of the tariff process is binding on the State as well. The relevant
portion of the Annexure 5.1 of the tariff order wherein the State
Commission has dealt with the tariff applicability upon the High Tension
Service (HTS) consumers i.e. category applicable to Respondent No.1 is
reproduced below:

“Category: High Tension Service (HTS)

1. Applicability

For consumers having contract demand above 100 kVA

2. Character of service

50 cycles, 3 Phase at 6.6. KV/11 Kv/33 kV or 132 kV.

3. Tariff

Tariff for HTS

|DESCRIPTION |TARIFF* |
|RS./kVA/month |DEMAND CHARGE |
|HTS |140 |
| | |
| |ENERGY CHARGE |
|KWh/month |Rs/KWh |
|All consumption |4.00 |
| | |
| |Monthly minimum |
| |charge |
|For Supply at 11 and 33 kV |Rs.250/kVA |
|For Supply at 132 KV |Rs.400/kVA |

13. However, as stated above, the JSEB itself in its
application/reference to the SERC did not ask for fixing any minimum
guarantee charges. It would be relevant to mention that the JSEB in its
proposal for fixation of tariff for 2003-04, submitted before the
Regulatory Commission, indicated both the existing tariff and the tariff
proposed by it in respect of all consumers, including all categories of HTS
(High Tension Service) consumers. The SERC after undertaking the necessary
exercise, fixed the tariff of all categories. The tariff proposed by the
Board for HTS-I consumers along with existing tariff is reproduced in
Tables 5.28 and 5.29 of the 2004 Tariff Schedule which will clearly reflect
that the aspect of minimum guarantee charges was duly considered by the
SERC. To demonstrate it, we reproduce the said two tables hereunder:

5.28 Tariff for HTS-II Consumers (Existing/Proposed )

| DESCRIPTION | TARIFF |
DEMAND CHARGE

| | Existing | Proposed |
|Rs./KVA/Month | 115 | 200 |
ENERGY CHARGE

|Rs./KWH | Existing | Proposed |
|All Consumption | 1.72 | 4.30 |
FUEL SURCHARGE CHARGE

|Rs./KWH | 2.44 | – |
Annual Minimum Guarantee (AMG) Charge

| |Subject to minimum |The following AMG charge|
| |contract demand for this|shall be realized from |
| |category, monthly |the consumer as per |
| |minimum demand charge as|appropriate tariff. |
| |per appropriate tariff | |
| |based on actual maximum |AMG Charge based on load|
| |demand of that month or |factor of 30% and power |
| |75% of the contract |factor 0.9 on contract |
| |demand whichever is |demand payable at the |
| |higher. |rate of energy charge |
| |Energy charges based on |applicable to HTS-II |
| |load factor of 30% and |category. |
| |power factor 0.85 on | |
| |contracted demand | |
| |payable at the rate of | |
| |Rs.1.72/KWH | |
5.29 Tariff for EHTS Consumers (Existing/Proposed)

| DESCRIPTION | TARIFF |
DEMAND CHARGE

| | Existing | Proposed |
|Rs./KVA/Month | 110 | 200 |
ENERGY CHARGE

|Rs./KWH | Existing | Proposed |
|All Consumption | 4.13 | 4.15 |
FUEL SURCHARGE

|Rs./KWH | 2.44 | – |
Annual Minimum Guarantee (AMG) Charge

| |Subject to minimum |The following AMG charge|
| |contract demand for this|shall be realized from |
| |category, monthly |the consumer as per |
| |minimum demand charge as|appropriate tariff. |
| |per appropriate tariff | |
| |based on actual maximum | |
| |demand of that month or |AMG Charge based on load|
| |75% of the contract |factor of 50% and power |
| |demand whichever is |factor 0.9 on contract |
| |higher |demand payable at the |
| | |rate of energy charge |
| |Energy charges based on |applicable to EHTS |
| |load factor of 50% and |category. |
| |power factor 0.85 on | |
| |contracted demand | |
| |payable at the rate of | |
| |Rs.1.69/KWH | |
14. The tariff order further reveals that the SERC had even compared the
proposal of JSEB with the tariff prevailing in other States in India and
after detailed analysis thereof, it approved the tariff for HTS consumers
which is mentioned in table 5.31 of the 2004 Tariff Schedule. Therefore, it
cannot be said that the SERC was oblivious of the clause relating to
minimum guarantee charges which JSEB was charging from its consumers as per
the earlier agreements entered into with them. The position would become
crystal clear from the following discussion in the 2004 Tariff Schedule
wherein the SCRC gave specific reasons for revising and approving the
tariff for HTS consumers.

The SERC has filed its response to these appeals, wherein the
provision in this behalf is explained in the manner noted below:
“It is evident from the above table that there is no common
approach towards minimum charge. However, if we compare
neighbouring States like Orissa, West Bengal and Madhya Pradesh
(supply at less than 132 KVA), there is no minimum charge. As
mentioned earlier, the Commission would ideally like to scrap this
charge, but for current year it has retained this charge due to
lack of information and data to ascertain the true impact of this
charge. The Commission has already directed the Board to provide
details in this regard in the next petition.

For the current year, the Commission would not like to increase
the burden on the industries on account of minimum charge and has
therefore attempted to keep it at the existing level. The
Commission has assumed a minimum level of supply and a minimum
level of consumption. For this, the Commission has considered 10%
load factor for HTS-I and HTS-II categories considering an average
consumption of two (2) hours in a day. For EHTS and HT Special
load factor of 20% and 30% respectively has been taken by
considering an average consumption of four (4) hours and seven (7)
hours in a day respectively. The Commission observes that if these
categories of industries are not able to maintain this minimum
load factor, than they should reduce their contracted load. The
Commission would like to explicitly mention that if the
consumption exceeds the mentioned load factor, no minimum charge
would be applicable.

For encouraging consumption, the Commission has also introduced
a load factor rebate for all industries consumers. For the entire
consumption in excess of this defined load factor, a rebate is
provided on the energy charges for such excess consumption. The
Commission would have liked to align the tariff structure towards
cost of supply during the current year itself, but it was
constrained due to the huge tariff shock that it would translate
into for other consumes and consequent increase that would have
been required in tariff for other categories. Thus as a principle
the Commission has taken the first step towards reducing this
distortion in the tariff structure. The Commission is conscious of
the fact that HT industry in Jharkhand has borne the brunt of
cross subsidy in the past and the tariff applicable to them is
above the cost of supply. The significance of this step should
not, however, be judged by the quantitative decline but the signal
and intent whereby the Commission intends to further rationalize
the tariff in the future.”
15. We would like to reproduce the following discussion in the impugned
judgment of the High Court, as we are in agreement therewith the
observations made in those paragraphs:

“……10.We are concerned with the Demand Charge only, rather to
say not concerned with the Demand Charge itself but the manner in
which the Demand Charge can be calculated for the purpose of
raising demand against the consumer charging of the Demand Charge
“has been allowed in Tariff Order 2003-04 @ Rs.140/- as mentioned
at page 141 of the Tariff Order. As we have already noticed that
a formula was given in Clause 15.2 in the tariff of 1993 as well
as in the contract on the basis of which the Board was charging
the Demand Charge on the basis of the actual consumed units but
was charging the said amount irrespective of the consumption of
the units of electricity. Now the contention of the respondent-
writ petitioners is that they are liable only according to the
units consumed by them and not according to the formula. We found
from Board’s proposal contained in Table 5.27 that the
Electricity Board consciously (or may inadvertently) submitted
its proposal only to the effect that existing annual Demand
Charge is Rs.125/- per KVA per month. This proposal of the Board
was considered and ultimately the Demand Charge was allowed by
the Tariff Order of 2003-04 which is mentioned at page 141by
which only it has been approved that the Electricity Board shall
be entitled to charge Rs.140/- per KVA per month as proposed by
the Board, the Tariff Order of 2003-04 increased it to Rs.140/-
only.

11. In view of the above reasons, we cannot hold that the
Electricity Regulatory Commission has not considered the proposal
of the Electricity Board with respect to their claim for Demand
Charge and the manner in which it will be charged……”

12.In view of the above facts, we are of the considered
opinion that the appellant-Board cannot take help of Clause 5.1.
wherein Electricity Regulatory Commission wherein it has been
observed that some of the matters have not been dealt with and
they shall continue to be the same as they were in existence in
the State because of the reason that there is a specific proposal
made by the Electricity Board for the Demand Charge as well as
the manner in which it will be charged and this proposal was
considered by the Electricity Regulatory Commission and
thereafter Tariff Order has been issued…”
16. To put the matter beyond the pale of controversy, we would like to
highlight another fact, namely the JSEB had even filed clarification
applications before the SERC contending that having regard to the Clause
4(c) of the Agreement with the HT-I consumers, the maximum demand charges
would be those prescribed under Clause 4(c) of the Agreement. These
applications were specifically rejected by the Commission. No appeal was
preferred by the JSEB challenging those orders. It is, therefore, too late
in the day for the JSEB to now argue that this aspect of minimum guarantee
charge has not been dealt with by the SERC in the 2004 Tariff Schedule.

3. Re.: Effect of Section 185 of the Electricity Act 2003.

Submission of Mr. Sinha, learned senior counsel, predicated on
Section 185 (2)(a) of the Electricity Act and Section 6 (B) of the General
Clauses Act, was that by virtue of the aforesaid provision the earlier
Agreement of 1994, including Clause 4(c) thereof entered into between the
Electricity Board and the consumers was saved. Section 185(2)(a) of the Act
reads as under:

“anything done or any action taken or purported to have been
done or taken including any rule, notification, inspection, order
or notice made or issued or any appointment, confirmation or
declaration made or any license, permission, authorization or
exemption granted or any document or instrument executed or any
direction given under the repealed laws shall, in so far as it is
not inconsistent with the provisions of this Act, be deemed to
have been done or taken under the corresponding provisions of
this Act.”
We also reproduce Section 6(B) of the General Clauses Act
hereinbelow:

“affect the previous operation of any enactment so repealed or
anything duly done or suffered thereunder; or”
17. It was the submission that since all the actions deemed to have been
done or taken under the corresponding provision of the earlier Act are
saved, the Agreement in question which was entered into by the Electricity
Board in exercise of statutory power and was having legal force, had been
saved under the aforesaid provisions. To prop this submission, Mr. Sinha
also referred to the judgment of this Court in the case of Himachal Pradesh
State Electricity Regulatory Commission & Anr. v. Himachal Pradesh State
Electricity Board (2013) 12 SCALE 397 with the plea that this very aspect
had been specifically dealt with in the aforesaid judgment and therefore
the issue was no longer res-integra. Mr. Sinha pointed out that in that
case the courts specifically dealt with the effect of repealed provision
contained in Section 185 of the Act, 2003 read with Section 6(B) of the
General Clauses Act and held that the previous agreements were saved unless
it could be pointed out that there was a manifest intention to destroy
them. He referred to the following passage from the earlier judgment in
the case of State of Punjab vs. Mohar Singh 1955 (1) SCR 893 which is
quoted in the aforesaid judgment and reads as under:

“Whenever there is a repeal of an enactment, the
consequences laid down in Section 6 of the General Clauses Act
will follow unless, as the section itself says, a different
intention appears. In the case of a simple repeal there is
scarcely any room for expression of a contrary opinion. But when
the repeal is followed by fresh legislation on the same subject we
would undoubtedly have to look to the provisions of the new Act,
but only for the purpose of determining whether they indicate a
different intention. The line of enquiry would be, not whether the
new Act expressly keeps alive old rights and liabilities but
whether it manifests an intention to destroy them. We cannot
therefore subscribe to the broad proposition that section 6 of the
General Clauses Act is ruled out when there is repeal of an
enactment followed by a fresh legislation. Section 6 would be
applicable in such cases also unless the new legislation manifests
an intention incompatible with or contrary to the provisions of
the section. Such incompatibility would have to be ascertained
from a consideration of all the relevant provisions of the new law
and the mere absence of a saving clause is by itself not material.
It is in the light of these principles that we now proceed to
examine the facts of the present case.”

(underlining is ours)

He also banked upon the following discussion in the said judgment:

“We have referred to the aforesaid paragraphs as Mr.Gupta has
contended that when there is repeal of an enactment and
substitution of new law, ordinarily the vested right of a forum
has to perish. On reading of Section 185 of the 2003 Act in
entirety, it is difficult to accept the submission that even if
Section 6 of the General Clauses Act would apply, then also the
same does not save the forum of appeal. We do not perceive any
contrary intention that 6 of the General Clauses Act would not be
applicable. It is also to be kept in mind that the distinction
between what is and what is not a right by the provisions of the
Section 6 of the General Clauses Act is often one of great
fitness. What is unaffected by the repeal of a statute is a right
acquired or accrued under it and not a mere hope, or expectation
of, or liberty to apply for, acquiring right (See M.S.Shivanand
v.Karnataka State Road Transport Corporation and Ors.
MANU/SC/0371/1979: (1980) 1 SCC 149).”

18. In order to appreciate this argument, we will have to traverse
through some salient provision of the agreement of 1994 entered into with
the consumers. These are paras 4(c) and 11 of the HT agreement:

“4..(c) Maximum demand charge for supply in any month will
be based on the maximum KVA demand for the month of 75% of the
contract demand whichever is higher, subject to provision of
clause 13……..

11. This agreement shall be read and construed as subject
to the provisions of the Indian Electricity Act, 1910, rules
framed thereunder, the Electricity (Supply) Act 1948 together
with rules, regulations (if any) tariffs and terms and conditions
for supply of electricity framed and issued thereunder and for
the time being in force as far as the same may respectively be
applicable and all such provisions shall prevail in case of any
conflict or inconsistency between them and the terms and
conditions of this agreement.”

19. It is also to be borne in mind that the tariff in force during the
period was Tariff Order dated 27.12.2003 for the period 2003-04 which was
having force of law under the Electricity Act 2003. Thus, what follows
from the above is that even if we proceed on the basis that the statutory
agreements entered into earlier were saved, the agreement in question
stands replaced by 2004 Tariff Schedule. At this juncture, we would like
to refer to the judgment of this Court in the case of BSES v. Tata Power
Co.Ltd. (2004) 1 SCC 195 wherein following pertinent observations were
made.

“16. The word “tariff” has not been defined in the Act. “Tariff”
is a cartel of commerce and normally it is a book of rates. It
will mean a schedule of standard prices or charges provided to
the category or categories of customers specified in the tariff.
Sub-section (1) of Section 22 clearly lays down that the State
Commission shall determine the tariff for electricity (wholesale,
bulk, grid or retail) and also for use of transmission
facilities. It has also the power to regulate power purchase of
the distribution utilities including the price at which the power
shall be procured from the generating companies for transmission,
sale, distribution and supply in the State. “Utility” has been
defined in Section 2(1) of the Act and it means any person or
entity engaged in the generation, transmission, sale,
distribution or supply, as the case may be, of energy. Section 29
lays down that the tariff for the intra-State transmission of
electricity and tariff for supply of electricity — wholesale,
bulk or retail — in a State shall be subject to the provisions of
the Act and the tariff shall be determined by the State
Commission. Sub-section (2) of Section 29 shows that the terms
and conditions for fixation of tariff shall be determined by
Regulations and while doing so, the Commission shall be guided by
the factors enumerated in clauses (a) to (g) thereof. The
Regulations referred to earlier show that generating companies
and utilities have to first approach the Commission for approval
of their tariff whether for generation, transmission,
distribution or supply and also for terms and conditions of
supply. They can charge from their customers only such tariff
which has been approved by the Commission. Charging of a tariff
which has not been approved by the Commission is an offence which
is punishable under Section 45 of the Act. The provisions of the
Act and Regulations show that the Commission has the exclusive
power to determine the tariff. The tariff approved by the
Commission is final and binding and it is not permissible for the
licensee, utility or anyone else to charge a different tariff.”
20. In view of the above, we are of the opinion that even the argument
based on Section 185 of the Electricity Act, 2003 would not bring any
change to the results of this case. We, thus, do not fault with the
judgment of the High Court appealed against.

21. Before we part with, it is necessary to deal with one more argument of
the appellant. It was submitted that there was delay in filing the Writ
Petitions inasmuch as bills raised by the JSEB on the basis of Clause 4(c)
of the 1994 Agreement, even after the formulation of 2004 Tariff Schedule
were being paid by the consumers and they approached the Court by filing
Writ Petitions only in the year 2010. Thus, there was a delay and latches
of 5 years. It is further argued that in such scenario, the High Court at
least should not have directed the appellants to refund the excess amount
charged under the bills raised for earlier period. Other related submission
was that it would be unjust enrichment to the consumers who would have
recovered the amount from the user of the electricity.

22. In so far as delay in filing the Writ Petition is concerned, it
appears from the chronology of events that the same has been duly
explained. It is not in doubt that the consumers had paid the amount of
bills raised by JSEB under protest because of the threat of disconnection.
While doing so, they had raised specific plea with the JSEB that it was now
supposed to raise the bills in accordance with the 2004 Tariff Schedule.
The matter remained under consideration at the level of JSEB which kept
approaching the Court as well as SERC seeking clarification of 2004 Tariff
Schedule. As already pointed out above, clarification applications were
filed which were dismissed by the Commission. However, as the JSEB did not
judge from its stand even after the dismissal of these applications, the
consumers approached the Court and filed the Writ Petitions. The Writ
Petitioners have thus furnished satisfactory explanation for approach the
Court.

23. The plea of unjust and enrichment will not be available to the
appellants. In the first place, no such plea was raised before the High
Court either before the learned Single Judge or the Division Bench. In the
Special Leave Petition, this submission was made for the first time at the
time of hearing of the present appeals. Moreover, it is not a case of
payment of tax which is a burden passed on the consumers. It is only in
such cases that was held in Mafatlal Industries Ltd. vs. Union of India
(1997) 5 SCC 536 that the question of unjust enrichment would arise for
consideration. As far as issue like the present is concerned, such a
question was left open in para 107 of the aforesaid judgment. The Court had
made it clear the concept of unjust enrichment had no application for
refunds other than taxes, as is clear from the reading thereof.

“107. A Clarification: The situation in the case of captive
consumption has not been dealt with by us in this opinion. We
leave that question open.”

24. As a result, we find that the appeals are bereft of any merit and are
accordingly dismissed. No costs.
…………………………..J.
(K.S.Radhakrishnan)
…………………………..J.
(A.K.Sikri)
New Delhi,
Dt. February 28, 2014.

Advertisements

About advocatemmmohan

ADVOCATE

Discussion

Comments are closed.

Blog Stats

  • 1,904,235 hits

ADVOCATE MMMOHAN

archieves

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,870 other followers

Follow advocatemmmohan on WordPress.com