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JK PHARMACHEM LIMITED versus TAMIL NADU ELECTRICITY REGULATORY

High Court of Madras

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JK Pharmachem Limited v. Tamil Nadu Electricity Regulatory - Civil Miscellaneous Appeal No. 2298 of 2002 [2002] RD-TN 926 (28 November 2002)



IN THE HIGH COURT OF JUDICATURE AT MADRAS



Dated: 28/11/2002

Coram

The Hon'ble Mr. Justice P. SATHASIVAM

and

The Hon'ble Mr. Justice K. GNANAPRAKASAM

Civil Miscellaneous Appeal No. 2298 of 2002

and C.M.A.Nos. 2320, 2331 to 2334 of 2002

and C.M.P.Nos. 16556, 16729, 16782 to 16788 of 2002 JK Pharmachem Limited,

SIPCOT Industrial Complex,

Cuddalore-607005,

represented by its Vice President (Works)

N. Nammalvar. ..Appellants in C.M.A. No.2298/2002. -Vs-

1. Tamil Nadu Electricity Regulatory

Commission, 17, III Main Road,

Seethammal Colony,

Alwarpet, Chennai-18.

2. The State of Tamil Nadu,

represented by its Secretary to Government,

Energy Department, Fort St. George, Chennai. 3. The Tamil Nadu Electricity Board,

800, Anna Salai, Chennai-2,

represented by its Chairman. ..Respondents in C.M.A.No.2298/2002. M/s. Krishna Alloys,

Akkammapet P.O., Sankari Taluk,

Salem District, represented by N. Anbalagan,

Director.

..Appellant in C.M. A.No.2320/2002.

Vs.

1. The State of Tamil Nadu,

represented by its Secretary to Government,

Energy Department,

Fort St. George, Chennai.

2. The Tamil Nadu Electricity Board,

800, Anna Salai, Chennai-2,

represented by its Chairman.

..Respondents in C.M.A. No.2320/2002.

Yogalakshmi Spinning Mills (P) Limited,

Nallor village, Punjai Puliampatti,

Erode District, represented by Executive

Director N. Murugesan.

..Appellant in C.M.A. No.2331/2002

Ennar Spinning Mills (P) Limited,

S.F.No.807, Kadathur Piruvu, Ganesapuram Post,

Coimbatore-641 107, represented by its

Managing Director K. Narayanasamy.

..Appellant in C.M.A.No.2332/2002 Kalappatti Spinning Mills (P) Ltd.,

S.F.No.198, Kalapatti Main Road,

Kalapatti, Coimbaotore-641 035,

represented by its Managing Director

K. Narayanasamy.

..Appellant in C.M.A.No.2333/2002 Annur K.P.K. Spinning Mills (P) Limited,

3/159, Kovai Main Road, Annur,

Coimbatore-641 653, represented by its

Managing Director K.P. Krishnasamy.

..Appellant in C.M.A.No. 2334/2002 Vs. 1. The State of Tamil Nadu,

represented by its Secretary,

Energy Department, Fort St. George,

Chennai-600 009.

2. The Chairman,

Tamil Nadu Electricity Board,

800, Anna Salai, Chennai-600 002.

.. Respondents in C.M.A. Nos.2331 to

2334/2002. Appeals under Section 27 of the Electricity Regulatory Commissions Act, 1998, against the Order of the Tamil Nadu Electricity Regulatory Commission, Madras, made in R.P.No.11/2002; R. P.No. 1/2002 dated; R.P.No. 52/2002; R.P.No. 54/2002; R.P.No. 55/2002 ; and R.P.No. 57/2002 respectively dated 31-10-2002.

For appellant in C.M.A.No. 2298/2002 ... Mr. R. Thiagarajan, Senior counsel for Mr. R.S. Pandiaraj For appellant in C.M.A.No. 2298/2002. .... Mr. A.L. Somayaji, Senior counsel for Mr. C.S. Krishnamoorthy For appellant in C.M.A.Nos 2331 to 2334/2002 .... Mr. Palani Selvaraj For Respondents in all C.M.As. ..... Mr. R. Muthukumarasamy, Addl. Advocate General, assisted by Mr. G. Vasudevan :COMMON JUDGMENT



(Judgment of the Court was made by P. Sathasivam, J.,) Since these appeals arise against the common Order passed by Tamil Nadu Electricity Regulatory Commission, Chennai-18, first respondent herein, they are being disposed of by the following common Judgment. Aggrieved by the common Order of the Tamil Nadu Electricity Regulatory Commission-first respondent herein dated 3 1-10-2002, rejecting the individual petitions filed by various persons, questioning the tariff fixed by the Government of Tamil Nadu in G.O.Ms.No. 95, Energy (A2) Department dated 28-11-2001, the appellants have filed the above appeals under Section 27 of the Electricity Regulatory Commissions Act, 1998 (Central Act 14 of 1998). For convenience, we shall refer the case of the appellant in C.M.A.No. 2298 of 2 002. According to them, the appellant Industry is engaged in the manufacture of life saving drugs. It has its factory in the SIPCOT Industrial Complex, Cuddalore. For the purpose of manufacturing, the appellant company is having a HT service connection bearing No. 84. The Government of Tamil Nadu has been extending various concessions for HT consumers from 1985 onwards in the interest of industrial growth. During 1992, the State Government, with a view to improve industrial growth in Tamil Nadu, extended various electricity tariff concessions for the industries who wanted to expand their activities. During February, 1997, the entire tariff concession was withdrawn and this has considerably affected the new units and also expanded units. The ERC Act came to be passed with a view to regulate the fixation of tariff on an uniform basis throughout the country and also to avoid cross subsidization. The Tamil Nadu Electricity Regulatory Commission was also constituted by G.O.Ms.No. 58 Energy dated 17-03-99. Under the Act referred to above, this is the body competent to fix the tariff, regulate, revise and modify the same as per the provisions of the Act. On 17-3-99, the Chairman and Members of the Commission were appointed by the State Government. However, shortly thereafter, the Chairman and one member of the Commission had resigned. The other member continued in office. On 28-11-2001, the State Government passed G.O.Ms.No. 95, Energy Department revising the tariff which resulted in the Demand Charges being doubled from Rs.150/- to Rs.300/- per KVA. The energy charge on the other hand was reduced by 20 paise per unit. This Government Order has seriously affected the interest of the industries like the petitioners as it has considerably increased the cost of production which is very high when compared to the cost and tariff rates prevailing in the neighbouring States. In those circumstances, the appellant filed Writ Petition No. 32438 of 2002 challenging the validity of the said Government Order. In the case of domestic consumers, the said Government Order had increased the tariff considerably and some of the domestic consumers also have challenged the validity of G.O.Ms.No. 95 dated 28-11-2001 before this Court. The writ petitions filed on behalf of the domestic consumers came to be disposed of by judgment of this Court dated 14-6-2002 reported in 2002 (3) CTC Page 1. This Court found in the said judgment that the Tamil Nadu Electricity Regulatory Commission, Chennai was non-functional and hence upheld the validity of G.O.Ms.No. 95 dated 28-11-2001. When the writ petitions filed by the HT industrial consumers like the appellant came up for hearing before the same Division Bench, the Tamil Nadu Electricity Regulatory Commission had fully become functional and hence the writ petitions were dismissed as withdrawn to enable the persons like the appellant to seek their remedy before the alternative forum, viz., Tamil Nadu Electricity Regulatory Commission. Thereafter, the appellant filed R.P.No. 11 of 2002 before the Tamil Nadu Electricity Regulatory Commission, Chennai for fixing the tariff under Sections 22 and 29 of Act 14/1998. It was contended before the first respondent that in the light of the provisions of the Act and in view of the judgment of the Supreme Court dated 03-10-2002 in Civil Appeal No. 4037 of 2002 in West Bengal Electricity Regulatory Commission Vs. C.E.S.C. Ltd., etc., which has elaborately dealt with the powers of the Regulatory Commission and the factors to be taken into account in fixing the tariff and also the rights of the consumers to be heard before fixation of tariff. The non absenti clause in Section 29 of the Act was also taken into account for excluding the power under the other enactment other than the Act 14 of 1998. However, it was contended on behalf of the State Government and the Electricity Board before the Commission that the source of power for issue of G.O.Ms.No. 95 dated 28-11-2001 is Act 1 of 1979 and hence the Government Order is valid. Accepting the stand of the State of Tamil Nadu and Electricity Board, the first respondent Commission rejected all the contentions of the appellant and other similarly placed persons and by the impugned order dated 31-10-2002 dismissed the application of the appellant as well as other applications, hence the present appeal. 2. Considering the challenge relating to G.O.Ms.No. 95 dated 28-11-2001, the decision of this Court in VOICE CONSUMER CARE COUNCIL v. STATE OF TAMIL NADU (DB), reported in 2002 (3) CTC page 1 and the relief prayed for in the petitions filed before the Commission, we inclined to hear the matter at the admission stage; accordingly we issued notice to the Additional Advocate General who appeared for the State of Tamil Nadu and Electricity Board before the Commission. Pursuant to the notice, these appeals were posted for hearing on 19-11-2002.

3. We heard Messrs. R. Thiagarajan and A.L. Somayaji, learned Senior counsel, Mr. Palani Selvaraj, for the appellants and Mr. R. Muthukumarasamy, learned Additional Advocate General for State of Tamil Nadu and Tamil Nadu Electricity Board.

4. Messrs. R. Thiagarajan and A.L. Somayaji, learned senior counsel appearing for the appellants, after taking us through the Statement of Objects and Reasons and relevant provisions from the Electricity Regulatory Commissions Act, 1998 (Act 14/1998), G.O. Ms.No. 58 Energy dated 17-03-99, in and by which the Government of Tamil Nadu appointed Chairperson and Members to the Tamil Nadu State Electricity Regulatory Commission, and G.O.Ms.No. 95 dated 28-11-2001 in which the Government revised the tariff for High Tension, as well as the earlier decision of this Court reported in 2002 (3) CTC 1 ( cited supra), have raised the following contentions: (i) The conclusion of the first respondent Commission is vitiated by its failure to consider the material question as to whether it is competent for the State Government to pass G.O.Ms.No. 95 dated 28-11-2001 fixing the tariff after coming into force of the Central Act 14/98, more particularly in the light of Section 29 of the Act in its proper perspective; (ii) The Commission failed to note that the State Government did not have power to fix the tariff after coming into force of Central Act 14/98, hence G.O.Ms.No. 95 dated 28-11-2001 is clearly without jurisdiction and has no force. The Commission should have found that the powers of the State Government under Tamil Nadu Act 1/1979 have been completely eclipsed by the provisions of the Central Act 14 of 1998; hence the said Government Order is bad in law and not enforceable;

(iii) In the light of the fact that the Commission alone is the competent authority, it ought to have considered the petitions filed by the appellants in accordance with the provisions of the Act, more particularly Section 29 and disposed of the same on merits.

On the other hand, learned Additional Advocate General would contend that even after the constitution of the Commission, in view of the fact that the same was not functional, the State has every power to fix tariff by virtue of provisions contained in Tamil Nadu Act 1/79. He also contended that while considering the same, the State Government has followed Section 4 of State Act 1/79. He also contended that in view of the peculiar circumstance, since the State Government revised the tariff under the provisions of State Act 1/79, there is no question of complying the provi sions of Electricity Regulatory Commission Act, 1998, more particularly Section 29. He also contended that all these contentions were raised before a Division Bench of this Court, including the vires of G.O.Ms.No.95 dated 28-11-20 01 and ultimately the Division Bench in VOICE CONSUMER CARE COUNCIL v. STATE OF TAMIL NADU (DB) reported in 2002 (3) CTC 1, rejected all the contentions of the petitioners, upheld the very same Government Order (G.O.Ms.No.95 dated 28-11-2001) and dismissed those writ petitions. According to him, the said Division Bench decision is binding on every one and the appellants cannot be permitted to raise the very same contentions by way of review in these appeals. He also pointed out that in spite of the order of the Division Bench referred to above, the Commission had gone into all aspects including compliance of Section 29 of the Central Act 14/1998 and rejected all the petitions with an observation that it would be open to them to raise their objections before the Commission to the proposed tariff revision petition filed by Tamil Nadu Electricity Board; accordingly there is no merit in these appeals. 5. We have carefully considered the rival submissions. 6. Since all the contentions raised by both parties are inter-connected, we give our answers in the following paragraphs:

There is no dispute that the Electricity Regulatory Commissions Act, 1998 (Act No.14 of 1998) (hereinafter referred to as Central Act 14 of 1998) was passed by the Parliament with a view to regulate the fixation of tariff on a uniform basis throughout the country and also to avoid cross subsidization. Pursuant to the mandate of the Central Act 14/98, the Tamil Nadu Electricity Regulatory Commission was constituted by the Government of Tamil Nadu in G.O.Ms.No. 58 Energy Department dated 17-3-99. It is also not disputed that under the Act, the Regulatory Commission is the body competent to fix the tariff, regulate, revise and modify the same as per the provisions of the Act. Though the Commission was constituted on 17-3-99 and Chairman and Members of the Commission were also appointed by the State Government on the same day, it is not disputed that shortly thereafter, the Chairman and one Member of the Commission had resigned. Only one Member continued in office. In such a circumstance, in view of the fact that the Commission was not functional, the State Government passed G.O.Ms.No. 95 Energy Department dated 28-11-2001, revising the tariff which resulted in the demand charges being doubled from Rs.150/- to Rs.300/- per KVA. However, the energy charge on the other hand was reduced by 20 paise per unit. It is the grievance of the appellants that the said G.O.Ms.No. 95 has made it very difficult for industries like them to survive. It is also not disputed that in those circumstances, they filed Writ Petition No. 32438 of 2002 challenging the validity of the said Government Order. At this juncture, it is relevant to note that in the case of domestic consumers, the said Government Order had increased the tariff considerably and some of the domestic consumers have also challenged the validity of G.O.Ms.No. 95 dated 28-11-2001 before this court. Messrs. R. Thiagarajan and A.L. Somayaji, learned senior counsel for the appellants, would contend that since the writ petitions filed on behalf of the domestic consumers came to be disposed of by a Division Bench of this Court on 14-6-2002 [2002 (3) CTC 1] [cited supra] only on the basis that the Tamil Nadu Electricity Regulatory Commission was non-functional and upheld the validity of G.O.Ms.No. 95 dated 28-11-2001, the Commission ought to have considered the Government Order (G.O.Ms.No.95 dated 28-11-2001) and accepted the case of the appellants/petitioners therein. They also argued that instead of transferring the writ petitions which questioned the revision of HT tariff, to the Commission, the Division Bench committed an error by going into the vires of G.O.Ms.No.95 dated 28-11 -2001 and found against them, accordingly they prayed for a decision from this court holding that the earlier view of the Division Bench is not acceptable and that it is for the Regulatory Commission to consider G.O.Ms.No.95 dated 28-11-2001 in the light of the provisions of the Central Act 14/98, more particularly Section 29. Since the main contention centres round G.O.Ms.No.95 dated 28-11-2001 as well as the earlier Division Bench decision of this Court reported in 2002 (3) CTC 1 (cited supra), let us consider the facts found in the writ petitions, questions raised, and argument advanced therein and the ultimate decision rendered by the Division Bench. It is true that VOICE Consumer care Council and others filed Writ Petition Nos. 23807/2001 etc., against the State of Tamil Nadu questioning the power of the State Government to revise power tariff and also the quantum of escalation as being arbitrary and unreasonable. The reading of para 3 of the said Division Bench Order shows that though two contentions were raised, both the senior counsel who argued before the Bench, gave up the issue relating to the quantum of escalation of power tariff and confined their arguments on the power and jurisdiction of the State Government in revising power tariff. The contention as seen from para 3 is that after the enactment of Electricity Regulatory Commissions Act, 1998 by the Parliament, the State Government ceased to have any role in the matter of revision of tariff for the user of electrical energy and that the said power is vested only with State Electricity Regulatory Commission and as such, the impugned Government Orders are non est in law and the power tariff revision ordered therein, is unenforceable. Before going further, it is relevant to note that in view of vast gap between receipts and expenditure of the Tamil Nadu Electricity Board, at their request, the Government had issued G.O.Ms.No. 95 dated 28-11-2001 revising the power tariff, but on representation being made, the escalation in power tariff was lightly reduced by the later G.O.Ms.No. 96 dated 5-12-2001 making the said modification applicable only to domestic consumers. Both the said Government Orders were questioned by way of writ petitions before the Division Bench. With reference to the role of the State Government, after the enactment of Central Act 14/1998, Mr. R. Muthukumaraswamy, learned Additional Advocate General, submitted before the Division Bench that though Parliament had enacted Central Act 14/1998, providing for the constitution of both Central and State Electricity Regulatory Commissions, the State Electricity Regulatory Commission did not come into force and had been non-functional and as there was huge revenue deposit, it was imperative on the part of the State Government to effect the revision without further loss of time, as making the Commission functional would entail in further delay and that the State Government was of the considered view that any further delay would affect the public interest because of the depletion of essential revenue source. He also contended before the Bench that there is no repugnancy in the action of the State Government as the repugnancy arises only when the State Electricity Regulatory Commission starts discharging its functions effectively as provided by the Central Act 14 of 1998, and what is to be seen is the repugnancy "in fact" and not by mere enactment of Central Act on the same legislative field. 7. Now we shall consider the answers given by the Bench with reference to various contentions made before them. After referring to the provisions of Tamil Nadu Revision of Tariff of Supply of Electricity Energy Act, 1978 (Act 1 of 1979) ( hereinafter referred to as State Act 1 of 1979), they found that exercising the power under Section 4 of the State Act 1/79, the State Government had been revising the tariff from time to time depending upon the exigencies to do so. They also concluded that the impugned Government Orders in G.O.Ms.No. 95 and 96 dated 28-11-2001 and 5-12-2001 respectively had been issued in exercise of Section 4 of the State Act 1/79 making upward revision of power tariff.

8. The next question posed and considered by the Division Bench is whether the impugned Government Orders are repugnant to Section 20 of the Central Act 14/1998 (vide para 7)? After referring to various decisions of the Supreme Court, relevant Articles from the Constitution and the Central Act 14/98, the Bench observed that the words, 'the state Government may, if it deems fit', do not impose any obligation on the state Government to constitute a State Commission and it is only an enabling provision. There cannot be any enforcement of an enabling provision. But the State of Tamil Nadu has opted to constitute the State Commission and Tamil Nadu Electricity Regulatory Commission has been constituted by a notification issued vide-G.O.Ms.No. 58, Energy Department, dated 17-3-1999.

9. The next question considered by the Division Bench is whether Commission became functional in terms of the Central Act 14/1998 so as to oust the power and jurisdiction of the State Government to exercise the power under Section 4 of the State Act (vide para 10). With reference to the said question, after referring to G.O.Ms.No. 58 dated 17-03-99, appointing Thiru K. Venkatesan, I. A.S. (Retired) as Chairman and Thiru E.C. Arunachalam, Chief Engineer (Retired) Tamil Nadu Electricity Board as Member and Thiru M.G. Devasahayam, I.A.S. (Retired) as Member, the Bench noted that the Chairman and Mr. M.G. Devasahayam refused to accept the assignment, and only Mr. Arunahcalam assumed charge as a Member in July, 1999. The Bench, after referring to the fact that in the absence of Chairman and in view of the fact that the Commission had been non-functional and particularly in the context of revision of power tariff, after noting the opinion of the Law Department and decision taken by the Government to effect revision of tariff rate after considering various aspects in accordance with Section 4 of the Tamil Nadu Act 1/1979, issued G.O. Ms.No. 95 Energy Department dated 28-11-2001, after going through the relevant file produced by the learned Additional Advocate General and after taking note of the fact that except one Member, the Commission was not functional and even the Member who assumed charge has not subscribed oath of office, justified the action of the Government in considering the revision of tariff and passing the Government Order No.95 dated 28-11-2001. After considering all the aspects, the Bench has ultimately upheld G.O.Ms. Nos. 95 and 96, dated 28-11-2001 and 5-12 -2001 respectively and dismissed W.P.Nos. 23807 and 25219 of 2001. In the same order, the Division Bench allowed Writ Petition No. 25220 of 2001, and issued Mandamus to the State Government to make T.N.E.R.C. (Tamil Nadu Electricity Regulatory Commission) fully functional to act in consonance with the Central Act-(vide para 14 of its order). We have already referred to the prayer in both the writ petitions, the arguments advanced before the Division Bench and the ultimate conclusion, namely, upholding both the Government Orders as valid. It is also relevant to note that in para 15 the Bench has made it clear that "future power revision tariff shall be done only by T.N.E.R.C. The first respondent shall frame the Rules under section 57 of the Central Act within a period of 15 days from today?.." It is clear from the above decision that the Bench has not only upheld the very same Government Order No.95 dated 28-11-2001 as valid and also made it clear that future power revision tariff shall be done only by T.N.E.R.C. After noting the elaborate discussion and definite conclusion of the Division Bench, the Commission i.e., T.N.E.R.C. considered the similar argument of the petitioners therein.

10. The Commission has framed the following points for consideration: "(a) Whether the Commission is competent to review G.O.Ms.No. 95 Energy Department, dated 28-11-2001 in so far as it relates to quantum of tariff, and whether the judgement of the Hon' ble Supreme Court in West Bengal Electricity Regulatory Commission's case is applicable to the instant case and under what authority of law the Commission is empowered to review the tariff already reviewed by the Hon'ble High Court;

(b) Whether the tariff fixed in G.O.Ms.No. 95 can be said to be in consonance with sections 22 and 29 of ERC Act so as to be valid in law, and whether the tariff rates in G.O.Ms.No. 95 can be said to be arbitrary and unreasonable; (c) Whether the tariff fixed in G.O.Ms.No. 95 without hearing the consumers is in consonance with the principles of natural justice and in particular the principle of Audi Alterem Partem;

(d) Whether there is any need for constitution of Rating Committee as required under section 57-A of the Electricity Supply Act 1948 for fixing the tariff." After considering the rival contentions and in the light of the decision of the Division Bench, reported in 2002 (3) CTC 1 (cited supra), the Commission has concluded that the expression "future power tariff revision" occurring in para 15 of the judgment will indicate that this Commission can exercise only future power tariff revision under the ERC Act and that this Commission has nothing to interfere with the past power tariff revision already made in G.O.Ms.No. 95 by the State Government in terms of Section 4 of the Tamil Nadu Act 1 of 1979. " Again it held that "In this connection, it may be stated that the contention of the learned Addl. A.G., that the order of the Hon'ble High Court which has already reviewed the impugned G.O.Ms.No.95, cannot be reviewed again by this Commission has got force and the Commission is in agreement with this view. "

Inasmuch as on the date when the Government passed G.O.Ms.No.95 dated 28-11-2001, though the State Government has appointed Chairman and two Members, in view of the fact that the Chairman and one Member declined to accept the assignment and even the other Member has not subscribed the oath of office and in the light of the said contingency and inasmuch as the State Government has power to revise the tariff by invoking Section 4 of the Tamil Nadu Act1 of 1979, it passed G.O.Ms. No. 95 dated 28-11-2001. As stated earlier, all these facts were considered and rejected by the earlier Division Bench and in the light of the said position, we are in agreement with the Commission that it could not review the order passed by this Court. 11. Now we shall consider whether the State Government is competent to pass G.O.Ms.No.95 dated 28-11-2001. Here again, as stated earlier, the Division Bench considered this question and negatived the similar contentions. There is no dispute that after coming into force of the Electricity Regulatory Commissions Act ( Act 14 of 1998) which came into effect from 25-4-98, it is only the Regulatory Commission to revise the tariff and the State Government has no power or authority to do so. However, in view of what is stated above, though the Government have appointed the Chairman and two Members, the Commission was not functional in the absence of Chairman and one Member. In the light of the request made by the Tamil Nadu Electricity Board, the Government considered their request and by virtue of the provisions of Tamil Nadu Act 1 of 1979, more particularly after complying with Section 4 of the Act, passed G.O.Ms.No.95 dated 28-11-2001. In this regard, learned Additional Advocate General by pointing out Section 4 of the Tamil Nadu Act 1/79 and the Division Bench decision of this Court in SHANMUGARAJA SPINNING MILLS (P) LIMITED v. THE SUPERINTENDING ENGINEER (I/C) PERIYAR ELECTRICITY SYSTEM, EROCE, reported in (2002) 1 M.L.J. 285, would contend that the State Government is well within its power to revise the tariff in all matters including High Tension power. In the said decision, the Bench consisting of P. Sathasivam, J. and A. Subbulakshmy, J., after referring to Section 4 of the Act, which gives power to the State Government to amend the Schedule, has concluded thus: (para 22)

" We have already extracted Sec.4 of the Act which gives powers to the state Government to amend the Schedule. The Schedule provides tariff rates under various categories. The State Government, considering the cost of production of energy and for other matters, by way of notification, may amend the provisions of the Schedule to the Act. In other words, on the basis of the materials relating to cost of production and for other matters, it would be open to the State Government to vary, modify or withdraw the tariff provided in the Schedule by issuing notification in the Gazette. In the course of the argument, it was demonstrated that concessional tariff was provided to new industries, which would be facing problems at the initial stages. If even when at the initial stages, such new industries start making profits they would be comparable to established units and hence would not form part of this class, who are to be offered any concessional benefits. Having regard to the fact that no persons has got any right to claim concessions and also taking note of the fact that there are several categories of consumers who are required to pay at the rates fixed by the Government, it is unequitable to extend the concession to such of those new industries, who are making profit. It is in his context that the notification refers to the consumers making profits. There is no dispute that if a tariff is fixed under the Act and exemption is conferred on the delegate whether to grant full exemption or partial exemption from the tariff rate it may involve such an exercise of conditional legislative function wherein the exercise has to be made by the delegate on his own subjective satisfaction. As observed by the Supreme Court, when once that exercise is made whatever exemption is granted or partially granted or partially withdrawn from time to time would be binding on the entire class of persons similarly situated and who will be covered by the sweep of such exemptions, partial or while, and whether granted or withdrawn, wholly or partially. In the light of the law laid down by the Apex Court in STATE OF TAMIL NADU v. K. SABANAYAGAM, AIR 1998 SC 344, we hold that Sec.4 of the Act is a piece of conditional legislation and after satisfying the conditions prescribed therein as well as for the other matters as may be prescribed later by way of notification, the State Government can modify the tariff or even withdraw the concession either wholly or partially." After going through the relevant provisions, particularly Section 4, we are in agreement with the view expressed by the Division Bench and we also satisfy that by fulfilling the conditions prescribed in Section 4 as well as other matters prescribed and by issuance of notification in the gazette, the State Government is competent to modify the tariff or even withdraw the concession either wholly or partially. Accordingly, we hold that in the light of the peculiar position, namely, that the Commission was not functional and in view of the provisions of the State Act 1/1979 , the State Government is well within its powers to issue the impugned Government Order No. 95 dated 28-11-2001 .

12. Now we shall consider whether State Government is bound to follow Section 29 of the Central Act 14/1998. There is no dispute that under the said Act, it is the Commission to determine the tariff and not the State Government. However, we have already extensively considered the circumstances under which the State Government passed the impugned Government Order as well as the decision of the Division Bench of this Court in 2002 (3) CTC page 1 (cited supra) in upholding the action of the State Government. It is also not disputed that if the State Government applies Act 1/1979, it has to follow certain procedures, including Section 4 of the State Act 1/1 979. We have already referred to the definite stand of the State Government that they fulfilled the conditions laid down in those provisions and revised the tariff for High Tension consumers. Inasmuch as the State Government passed the impugned order, revised the tariff by exercising its power under Tamil Nadu Act 1/1979, undoubtedly, they cannot be expected to follow the provisions of the Central Act 14/1998 , more particularly Section 29. Inasmuch as the State Government, after following certain procedures, revised the tariff for High Tension consumers, by passing the impugned Government Order, their action cannot be faulted with. It is also relevant to note that as per Section 3 of the Central Act 14 of 1998, it is incumbent on the part of the Central Government, within 3 months from the date of commencement of the Central Act, to establish a body called Central Electricity Regulatory Commission to exercise the powers conferred on, and the functions assigned to it, under that Act. Likewise, Section 17 of the Central Act 14/1998 enables the State Government to establish a Commission called Electricity Regulatory Commission for the State. It is relevant to note that as per sub-section (1) of Section 3 of Central Act 14/1998, the Central Government has no other option except to constitute such a Commission under the Act. On the other hand, the language used in sub-section (1) of Section 17 of Central Act 14/1998 shows that there is no compulsion on the part of the State Government to establish a Commission. Though in the present cases the State Government has constituted the State Electricity Regulatory Commission even on 17-3-99, the fact remains that it (Commission) was not functional which necessitated this Court to issue Mandamus to the State Government which we have already referred to. It is also brought to our notice that States like Bihar has not so far established State Electricity Regulatory Commission. In such a circumstance, it cannot be construed that Bihar State has no power to revise or modify the tariff. In the light of the language used in sub-section (1) of Section 3 and sub-section (1) of Section 17 of the Central Act 14/1998 and of the fact that though the State Government had established a Commission, due to the fact that the same was not functional, in view of the reasons stated coupled with the provisions of Tamil Nadu Act 1/1979, we are of the view that during the interregnum period, in the interests of all the parties, including the Electricity Board and the consumers, the Government is well within their powers to pass G.O.Ms.No.95 dated 28-11-2001. We are also satisfied that the State Government had complied with the provisions of the Act 1/1979 before passing the said order. Accordingly, we reject the contra argument of the learned senior counsel for the appellants.

13. Now we shall consider the decision of the Supreme Court in WEST BENGAL ELECTRICITY REGULATORY COMMISSION v. C.E.S.C. LIMITED, ETC., [Civil Appeal No. 4037/2002 etc., dated 07-08-2002]. By pointing out the above decision, counsel appearing for the appellants vehemently contended that the order of the Division Bench of this Court in 2002 (3) CTC page 1 (cited supra)is virtually overruled and the State Commission ought to have considered their contentions. For convenience we shall refer the case of the Supreme Court in Civil Appeal No. 4037/2002 etc., as Calcutta case. In the Calcutta case the facts are that the West Bengal Electricity Regulatory Commission (the Commission) by an order dated 7-11-2001 determined the tariff for the sale of electricity by the Calcutta Electricity Supply Company Ltd., (the Company) for the years 2000-2001 and 2001-2002. Aggrieved by the said determination of tariff, the Company preferred an appeal before the high Court of Calcutta under Section 27 of the Electricity Regulatory Commissions Act, 1998. The High Court by the impugned judgment has allowed the appeal of the Company by itself re-determining the tariff and enhancing the same. It is against the said judgment of the Calcutta High Court, 4 Civil Appeals have been preferred before the Supreme Court. After referring to the constitution of Central Act, various provisions therein, constitution of the Central Electricity Regulatory Commission and the State Electricity Regulatory Commission, Rules/Regulations framed by the West Bengal Government, order of the High Court, Calcutta, re-fixing the tariff, Their Lordships have held that, "Having carefully considered the provisions of the Act (Central Act) as also the arguments advanced in this regard, we are of the opinion that under the 1998 Act, it is the Commission concerned and in the instant case the State Commission of West Bengal, which is the sole authority to determine the tariff, of course as per the procedure in the said Act?.." Regarding the procedure, after noting that it is the Commission which is an expert body to determine the tariff on the basis of various factors, after setting aside the order of the High Court, Calcutta, remanded the matter back to the Commission to fix the tariff for the relevant years in accordance with the directions/observations made in their judgment. We have also carefully studied the entire judgment of the Supreme Court as well as the relevant provisions from the Central Act 14/1998. It is clear that after the enactment of the Central Act 14 of 1998 and after establishment of the State Regulatory Commission, it is the Commission to determine the tariff by considering the grievances of the parties concerned. However, in view of the peculiar position which we have already referred to in the earlier part of our Judgement as well as in the Division Bench decision in 2002 (3) CTC 1 (cited supra) and of the fact that only on the peculiar circumstance, namely, that the Commission was not functional, the State Government varied the tariff by passing G.O.Ms.No.95 dated 28-11-2001, accordingly we hold that the impugned order of the State Government has to be treated as a special case and even after the judgment of the Supreme Court in Calcutta Case, the decision taken by the Government in G.O.Ms.No.95 dated 28-11-2001 cannot be faulted with. Accordingly, we reject the argument of the learned counsel appearing for the appellants.

14. Finally, let us consider whether the quantum or rate as determined by the State Government is reasonable or not? Here again, learned Additional Advocate General has brought to our notice that while very same contention was raised before the Commission stating that the tariff rates fixed in G.O.Ms.No. 95 by the State Government is arbitrary and unreasonable, it was pointed out before the Commission the increase of tariff made in the impugned G.O.Ms.No.95 is only 7.22 per cent for HT consumers, whereas it is 36 per cent for domestic consumers. In other words, it was contended before the Commission that the burden of increase is shifted not only to HT consumers, but also to other categories of consumers. It is further seen that before the Commission, learned Additional Advocate General has placed comparative statement showing that the tariff rate fixed in G.O.Ms.No.95 are less than the tariff fixed by the Commission in the State of Andhra Pradesh, Gujarat and Maharashtra. It is also seen that those details have been furnished to all the counsel appearing before the Commission. After furnishing those details, the Commission has observed that "none of the counsel for petitioners have challenged the information furnished in the comparative statement referred to by the learned Additional Advocate General." After holding so, the Commission has concluded that "the objections to the quantum of tariff that it is arbitrary and unreasonable are not substantiated by the learned counsel for the petitioners." Apart from the above factual findings of the Commission, learned Additional Advocate General has also brought to our notice some more details relating to additional revenue due to tariff revision for a full year and overall cost of power, which are extracted hereunder: "ADDITIONAL REVENUE DUE TO TARIFF REVISION FOR A FULL YEAR"

High Tension Percentage Increased in Crores.

HT industries 7.22 238.59

Railway Traction 18.56 30.24

Recognised Educational

Institution .. 24.24 3 6.23

Commercial 17.39 80.2 5

Supply to Pondy 60.43 21.08

REC Society 105.00 21.0 0

-------- 427.39 Crores

LOW TENSION

Domestic 36.00 431 .16

St.lights &water supply .. 105.36 159.95

Recognised Educational

Institution. .. 26.67 24.27

Tiny Industries .. 12.36 7 .88

Commercial 19.58 159.7 5

Industries not covered .. 12.36 89.60

under LT/TF III(a) -------- 872.61

-----------

1,300.00

-----------

The above statistics show the percentage of increase in so far as HT industries is concerned is only 7.22.

OVERALL COST OF POWER

1999-2000 259 Ps/ Unit

2000-2001 266 Ps/ Unit

2001-2002 305 Ps/ Unit

2002-2003 328 Ps/ Unit

It is clear that the State Commission has considered the quantum of increase and found that there is no valid ground for interference. From the said discussion and the materials placed before us by the learned Additional Advocate General, though this Court is exercising appellate power, we are of the view that in the absence of irregularity or perversity in the finding or violation of any of the statutory provisions, we cannot interfere lightly with the conclusion arrived at by the Commission. In this regard, it is relevant to refer the observation of the Hon'ble Supreme Court in the Calcutta case. After laying down the law and the procedure to be followed, Their Lordships have held that,

"?Therefore, we recommend that the appellate power against an order of the State Commission under the 1998 Act should be conferred either on the Central Electricity Regulatory Commission or on a similar body?.." Though we are conscious of the fact that it is only a recommendation to the Government, in the light of the said view, in the absence of any other acceptable material, we are of the view that there is no valid ground for interference by this Court. We also make it clear that in view of the fact that the Tamil Nadu Electricity Regulatory Commission is functional as on date and, as rightly observed by the Commission in the impugned order, the petitioners have every right to present their views and raise objections before the Commission to the proposed tariff revision with reference to the claim made by the Tamil Nadu Electricity Board. In such a circumstance, it is incumbent on the part of the State Electricity Regulatory Commission to comply with the procedure prescribed under Section 29 of the Central Act 14/1998 as well as the Rules/Regulations framed by the Government. 15. Net result, we dismiss all the Civil Miscellaneous Appeal with the above observation. No costs. Consequently, connected Civil Misc., Petitions are also dismissed.

Learned counsel for the appellants seeks permission to pay the arrears upto the month of November, 2002 in 10 equal monthly instalments. Learned Additional Advocate General has not raised serious objection for the above request. We are also satisfied that the appellants may be given reasonable time to pay the arrears, which according to them running into several lakhs. Taking note of all the above aspects, the appellants are permitted to pay the arrears upto the month of November, 2002 in 10 equal monthly instalments along with the respective demand from December, 2002 onwards. R.B.

Index:- Yes.

Internet:- Yes.

To:-

1. Tamil Nadu Electricity Regulatory

Commission, 17, III Main Road,

Seethammal Colony,

Alwarpet, Chennai-18.

2. The State of Tamil Nadu,

represented by its Secretary to Government,

Energy Department, Fort St. George, Chennai.

3. The Tamil Nadu Electricity Board,

800, Anna Salai, Chennai-2,

represented by its Chairman.




Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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