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Akhila Bharatiya Grahak Panchayat Vs. Andhra Pradesh State Electricity Board and anr. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. Nos. 5879 and 6437 of 1980 and 4606 of 1981
Judge
Reported inAIR1983AP283
ActsConstitution of India - Articles 14, 19(1), 226 and 245; Electricity (Supply) Act, 1948 - Sections 2(6), 16, 16(5), 18, 26, 27, 49, 49(2), 57, 57A, 57B and 59;
AppellantAkhila Bharatiya Grahak Panchayat
RespondentAndhra Pradesh State Electricity Board and anr.
Appellant AdvocateY. Vasudeva Rao and ;A. Krishna Murty, Advs.
Respondent AdvocateT. Ananta Babu, Standing Counsel for M. & H. and ;Subrahmanya Reddy, Standing Counsel for Central Government
Excerpt:
electricity - enhancement of tariff - sections 2, 16, 18, 26, 27, 49, 57 and 59 of electricity (supply) act, 1948 - petition filed against enhancement of electricity tariff - petitioner contended enhancement illegal on ground that state electricity consultative council as required under section 16 has not been consulted before enhancement - court observed that there is nothing in section 16 which suggest that consultation with council is condition precedent for enhancement of tariff - so even if enhancement of tariff is major policy decision consultation with council regarding same is not essential to validate it - other contentions of petitioners also rejected by court - petition dismissed and enhancement held valid. - - the transmission losses of the board are running very high and.....jagannadha rao, j.1. w.p. nos. 5879 of 1980 4606 of 1981 and 6437 of 1980 raise common questions and are therefore being dealt together.2. w.p. no. 5879 of 1980 is filed by akhil bharatiya gradhak panchayat (all india consumer council) represented by its gneral secretary for a declaration tha the tariff dated 26-9-1980 announced in b.p. m.s. 807 issued by the andhra pradesh state electricity board increasing the power tariff is null and void. to declare certain provisions of section 2(6) and the first and second proviso of section 26 of the electriicty (supply) act 1948 as ultra vires and obligations of a licensee and that the provisions of section 57-a relating to the electricity board and to declare sections 26, 57, 57-a read with schedule vi and section 49 read with sections 59 and 18.....
Judgment:

Jagannadha Rao, J.

1. W.P. Nos. 5879 of 1980 4606 of 1981 and 6437 of 1980 raise common questions and are therefore being dealt together.

2. W.P. NO. 5879 of 1980 is filed by Akhil Bharatiya Gradhak Panchayat (All India consumer council) represented by its Gneral secretary for a declaration tha the tariff dated 26-9-1980 announced in B.P. M.S. 807 issued by the Andhra pradesh state electricity Board increasing the power tariff is null and void. To declare certain provisions of section 2(6) and the first and second proviso of section 26 of the electriicty (supply) Act 1948 as ultra vires and obligations of a licensee and that the provisions of section 57-A relating to the electricity Board and to declare sections 26, 57, 57-A read with schedule VI and section 49 read with sections 59 and 18 as unconstitutional etc.

3. The affidavit filed in support of the writ petition contains the following allegations:-

The petitioner is a body corporate registered under the societies Registration Act, 1960 (punjab Amendment Act 1957) Delhi and having its branch for the state of Andhra pradesh at Hyderabad. The petitioner has been established for the purpose of educating consumers about their rights to ensure quality and quality and the correct price in the matter of supply of various goods and also to make representations to the Government etc. The society commenced work in 1978 with branches all over the country and is committed to public justice and pro bono publico service. In this writ petition it is questioning the excessive electricity tariffs and unsatisfactory service and the failing standards in the quality and continuity in the supply of electricity. The first repondent is Andhra pradesh state Electricity Board, the 2nd respondent is the state of Andhra pradesh and the 3rd respondent is the secretary, Government of India, energy Department. New delhi the Board enjoys a monopoly in respect of generation. Supply and distribution of electricity. Section 18 of the electricity (supply ) Act 1948 (hereinafter called the Act ) imposes a duty on the Board for promoting the co-ordinated development of the generation, supply and distribution of electricity within the state in the most efficient and economic manner. Section 49 of the Act stipulates that while fixing electricity tariffs the Board shall have regard to the factors mentioned therein. It is not open to the board to fix the tariff arbitrarily on the basis of its wasteful and uneconomic operations and the Board cannot fix the rates or enhance the same without giving an opportunity to the consumers to present their case. The Board issued the proceedings in BPMS 807 (commercial) dated 26-9-1980 purporting to alter the rates for various types of supply which in effect amounts to enhancement or increase in the tariff with effect from 1-11-1980. In the month of october 1970 the Board had previously enhanced the tariff by 30% The present increase ranges between 10 to 47 per cent. In respect of industries there were enhancements on 17-9-1975, 2-5-1978 and 19-9-1979. The previous enhancements themselves worked out at an increase of 127% and now the present enahcnement is over and above that. The Board has attributed the enhancement due to the increase in the cost of fuel labour interest charges and wages to its employees and on the ground that the revenues derived by the existing tariffs are not sufficinet to meet the growing expenses of the Board for generation and supply of power. The proposed increase in tariff is illegal and arbitrary and in excess of jurisdiction. This increase will affect the consumers and the industries adversely by affecting the cost of production and increasing the price of the finished product. Under section 16 of the Act it is necessary that the state Government constitutes an electricity consultative council for the state with a duty to meet once at least inevery three months to advice the board on major questions of policy and major schemes and the annual financial statement of the Board is also to be placed befor the consultative council. Though such a council has been constituted in the state of Andhra pradesh, the increase in tariff under the impugned BPMS 807 dated 26-9-1980 was not placed before the consultative council and hence the said increase is violative of section 16 of the Act and therefore void. Secondly section 57-a of the Act provides that the state Government or the Board may constitute a Rating committee which will examine the licensee's charges for supply of electricity and to make recommendations in the behalf to the state Government such a Rating committee has not been constituted in respect of the electricity Board and therefore there is no machinery for redressal of the grievance of the consumers who are affected by the increase in th tariff. The electricity Board is a licensee for which a Rating committee has to be constituted. If the provisions of the Act are to be constued as not providing for a Rating committee in the case of Electricity Board the provisions will be violative of art 14 of hte Constitution of India as the board and other licensees are similarly situated and cannot be treated differently in so far as their tariffs being controlled by a Rating committee. The consumers have a right to ask the Government to constitute a Rating committee under section 57-a of the Act even in respect of the Electricity Board for enforcing the provisions of the sixth Schedule. The provisions of the sixth schedule. The provisions of sections 26, 57-A and the 6th schedule are to be struck down as discriminatory in so far as they deny the protection of a Rating committee and in so far as the activites of the electricity Board are concerned. The provisions of section 2(6) of the Act excluding the Board from the definition of a licensee and the first and the 2nd proviso of section 26 of the Act exempting the Board from the provisions in schedule VI are ultra vires of art 14 of the Constitution of India. Thirdly the tariffs are being fixed by the Board in a wasteful uneconomical and inefficient manner and without bearing the factors mentioned in section 49 and section 59 of the Act and therefore contrary to arts. 14 and 19(1)(g) of the Constitution of India. The transmission losses of the Board are running very high and the performance of the Board is an example of total failure and the tariff is the highest in the country and the rate of generation of electricity is scandalously low. In spite of having several generation of electricity is scandalously low. In spite of having several generating stations there is a fall in generation which would demonstrate inefficient and uneconomic manner in which the Board is functioning. It is therefore prayed that BPMS 807 dated 26-9-1980 increasing the power tariff should be declared as null and void and the provisions of section 2(6) excluding the Board from the definition of licensee and the first and second proviso of section 26 which exclude the Board from the obligations of a licensee read with schedule VI be declared as unconstitutional and the provisions of section 57-A are ultra vires of art 14 of the Constitution of India as they do not provide for a Rating committee in respect of the tariffs fixed by the Board, and the provisions of sections 26. 57, 57-A read with schedule VI and section 49 read with section 59 and section 18 of the Act are illegal and void as they do not provide any criteria for the fixation of tariff by the Board or the machinery to review the rates etc.

4. On behalf of the secretary Ministry of Energy New Delhi (3rd respondent) a counter-affidavit has been filed by the Director, Ministry of Energy, New Delhi contending as follows:

Under section 59 of the Act the Board is required to carry on its operations so as to earn a surplus over its expenses and for this purpose the Board can revise its tariff from time to time. The said provision does not impose an obligation on the Board to hear the consumer before enhancing the tariffs. The fixation of the tariff rates is a legislative measure and for such a fixation no opportunity need be given to the consumer. The petitioner's allegations regarding the illegality of the enhancement is vague and section 59 confers adequate powers on the Board to increase the rates. So far as the nonconsultation with the Electricity consultative council is concerned it is stated, that it is not obligatory on the Board to to place the matters before the council. The board is not acting arbitrarily. The Board has not been given arbitrarily powers under the Act. Ss. 59 and 49 of the Act give full power to the Board to revise its tariff from time to time and the Board does not normally increase the tariff without consulting the state Government. The state Government controls the policies of the board in view of sec 78-A and therefore the Act cannot be construed as conferring arbitrary powers on the Board Regarding the appointmetn of a Rating committee it is stated that the Board is not in the position of a licensee under the Act and the absence of a rating committee is not violative of Article 14 of the ocnstitution of India. The area of operation of the Board extends to the entire state whereas a licensee operates in a compact area with a profit motive and has no obligation to extend lines to unremunerative areas. Hence the provisions of sec. 2(6). Section 26 and sec. 57-A of the Act are not ultra vires. A rating committee cannot be appointed at the request of consumers. The absence of a Rating committee does not offend arts. 14 and 19(1)(f) of the Constitution of India. The Traiff for power supply is decided on the basis of cost of genration. Transmission and distribution which in turn is dependant on the Hydro stations. The distance involved in transportation of fuel, the length of the transmission and distribution system. The Board has also to keep in view the policy of the state Government in extending cheaper power to certain sectors of economy and the overall increase in the cost of inputs including wages. The writ petition is therefore liable to be dismissed.

5. A separate counter-affidavit has been filed on behalf of Andhra pradesh state electricity Board by its secretary. In the counter affidavit it is contended as follows:-

The petitioner is not a consumer and has no locus standi to file the writ petition in a representative capacity. The revision of the tariffs has been made periodically in a just and reasonable manner and by having regard to the provisions of the Act including sec. 49 of the Act. The board has got power to increase the tariff unilaterally but subject to the factors mentioned in the Act and there is no question of giving any opportunity to the consumers in fixing the rates. Even with the present enhancement it is expected to yield on additional revenue of six crors of rupees in the financial year up to 31-3-1981. The Board will not be able to meet the additional expenditure due to the escalation of costs of input which alone is estimated, at 11.5 crores of rupees. The Board is reluctant to enhance the tariff but is constrained to do so by forces of circumstances. The Electricity consultative committee constituted under S. 16 of the Act has purely advisory functions which are set out in sub-sec. (5) thereof and those functions do not include the settlement of the tariff or advise in regard thereto. Fixation of a tariff does not involve any questions of policy. The rates depend upon the prevailing factual position. The rates, components and structure are based on well settled principles commonly practised by all surveyors of electricity all over the world. The present revision follows the established pattern. There are no deviations from pre-existing practices or policies there is no requirement in sec. 16 of the Act. Or any other provision that the question of enhancement of tariff should be placed before the consultative council and that its advice should be taken. The exercise of statutory power under S. 49 of the Act is not subject to sec 16 of the Act. Section 49 of the Act commences with the phrase 'subject to the provisions of this Act and of regulations if any made in this behalf'. This phrase has been pointed out by the Supreme Court that there are no such provisions in the Act. The Andhra pradesh state Electricity Board has not framed any regulations relevant to the exercise of power under section 49 of the Act which it could only make under section 79-J of the Act. It has not been the practice all these 20 years to place maters relating to increase in tariff before the consultative council. It is always open to the consumers to make representations to the Board. There is no legal requirement that before exercising power under sec 49 of the Act the Board should consult the consultative council. Secs. 2(6), 26, 57, 57-A, 57-B are valid. There is no need to have a Rating committee for examining the tariffs fixed by the Board the position of the Board and other licensees under the Act is not identical and the absence of a Rating committee in respect of the Board does not offend art. 14 of the Constitution of India the validity of sec 49 of the Act has already been upheld by the Supreme Court page 10 of the counter-affidavit gives a list of the activities of the electricity Board in establishment of generating sections and the method of transmission and distribution and the reasons for the line losses. In Andhra pradesh where rural electrification has been undertaken on a large scale there are line losses due to long distances. There are losses due to stepping down high voltage. The Board has complied with the directive in section 18-A of the Act. The andhra pradesh electricity Board is making concerted efforts to bring down the losses to a optimum level and has set up a central Monitary cell to review the performance for each circle and division. The rate of loss has come down from 25.4 in 1973-74 to 19.1 in April 1979 Andhra pradesh is the state having the third largest number of agricultural electricity connections. The Rural Electrification corporation of India has also taken up several schemes in Andhra Pradesh The allegation that the tariff of the Board is the highest in India is not correct. States with more Hydel power than Thermal power can afford lower rates. States which have completed their generation projects much earlier have spent much less money than states like Andhra pradesh which are now putting up generating stations involving more capital cost. The Board is therefore condicting its affairs in an efficient and economic manner. The position in Andhra pradesh is far superior to that obtaining in other parts of India.

6. Wrti petition No. 4606 of 1981 is also filed by the same petitioner in W.P. No. 5879 of 1980 viz. The Akhil Bharatiya Grahak panchayat questioning the Board proceedings in BPMS 418 dated 2-6-1981 by which the power tariffs were further increased the allegations in this writ petition and the reliefs claimed are substantially the same as in W.P. No 5879/80 and it is not necessary to set them out once again. The defences of the respondents also being the same it is not necessary to summarise them once again.

7. Writ petition No. 6437 of 1980 is filed by different petitioners viz. M/s, Telangana spinning & weaving Mills Balanagar, Hyderabad for the issue of a writ of mandamus restraining the respondents from collecting any tariff or additional amounts in pursuance of BPMS 807 dated 26-9-1980 by declaring the same to be null and void and for declaring sec 49 of the Act as ultra vires. The contentions raised in this writ petition are also the same as those in W.P. No. 5879/80. As the defence raised by the respondents therein are also the same as those iN W.P. No. 5879/80 it is not necessary to repeat them one again.

8. The learned counsel for the petitioners sri Y. Vasudeva Rao and Sri A. Krishna Murthy firstly contended that the Board is bound to consult the state the Board is bound to consult the state Electricity consultative council constituted under section 16 of the Act whenever the tariffs are increased as it is a major question of policy and secondly that the Board like any other licenses should be subject to the check of a Rating committee which could examine the validity of the tariffs fixed by the Board and that if it is to be considered that parliament wanted to exempt the Board in the respect the provisions of subclause (6) of sec. 2 in so far as they excluded the Board from the definition of a 'licensee' and the provisions of the first and second proviso to sec. 26 sections 57 and 57-A should be declared as violative of art. 14 and art. 19(1)(g) of the Constitution of India and thirdly that the powers conferred on the Board under sec. 49 read with secs. 18 and 59 of the Act are violative of Articles 14, 19(1)(g) of the Constitution of India as also basic principles of natural Justice and that the Board cannot Act arbitrarily in enhancing the tariffs and consequently the relevant B. Ps. I.e. B.P. No. 807 dated 26-9-1980 and B.P. No. 418 dated 2-6-1981 are illegal.

9. On the other hand Sri K. Subrahmanya Reddy, the learned standing counsel for the central Government has contended that the fixation of tariffs is a matter of policy for which no opportunity need be given to the consumers, that there are inbuilt restrictions in the Act which give sufficient guidance to the board and keep its powers under check and that none of the statutory provisions of the Act can be said to confer any arbitrary power upon the Board it is also contended that the Board acting as the highest authority under the Act cannot be assumed to Act unreasonably or arbitrarily and that the Board on the one hand and the other licensees on the other hand belong to distinct classes and the absence of a Rating committee in so far as the Board is concerned does not make any of the provisions of the Act ultra vires of either art, 14 or 19(1)(g) of the Constitution of India.

10. The learned standing counsel for the Board. Sri T. Ananta Babu contended that the fixation of tariff cannot be taken to be a matter of 'major policy that even otherwise the consultation of the consultative council is not mandatory and the non-consultation did not render the Board's proceedings illegal, He also contended that in the instant case, the tariffs have been fixed on the basis of sec. 49 is not subject to the provisions of sec. 16 of the Act. He also contended that he Board cannot be placed in the position of other licensees and there was no need for a Rating committee in so far as the Board is concerned and that ehile fixing the tariffs there is no question of giving the tariffs there is no question of giving any opportunity to each of the consumers. He submitted that in any event the major policies were previously settled and the mere change in the rates does not amount to a change in the major policy and that the Board is functioning in an efficient and economic manner and the writ petitions are liable to be dismissed.

11. Before dealing with the points raised by the petitioners we shall dispose of the preliminary objection raised by the respondents that the petitioners have no locus standi to file these writ petitions the petitioner in W.P. Nos. 5879/80 and 4606/81 is the same viz., The Akhil Bharatiya Gradhak panchayat (All India consumer council). It is a society registered under the societies Registration Act with its head office at Delhi and with a branch at Hyderabad it is established for the purpose of educating the consumers about their rights and to ensure the quality and quantity an correct price in the matter of supply of various goods and also to make representations to the Government It is stated that the petitioner is committed to public justice and pro bono publico service and to consumer protection in various fields. It is stated that the protection of interest of the consumers of electricity against increasing electricity tariff and unsatisfactory service and falling standards of quality and continuity of supply of electricity falls within the purview of the activities of the petitioner we are of the opinion that in view of the recent pronouncements of their lordships of the Supreme Court in Fertilizer corporation. Kamagar Union v. Union of India AiR 1981 Supreme Court 344 and Ratlam Municipality v. Vardhichand, : 1980CriLJ1075 the petitioner in these two writ petitions has locus standi to champion the cause of consumers of electricity it is pointed out in the above rulings that it has become necessary in the changing awareness of the legal rights and social obligations to take a broader view of the question of locus to initiate a proceeding be it under art. 226 or under art. 32 of the Constitution and that public interest litigation is a part of the process of participate justice and standing in civil litigation is a part of the process of participate justice and standing in civil litigation of that pattern must have broad reception at the judical door steps in any event the petitioner in W.P. No. 6437 of 1980 which is M/s Telengana spinning and weaving Mills Hyderabad is itself a consumer and has raised the same questions have to be gone into in one or other of these three writ petitions. In that view of the matter the question of locus standi of the petitioner in the first two writ petitions loses importance. This preliminary objection is therefore overruled and we now proceed to discuss the main points urged on behalf of the petitioners.

12. We shall now deal with the first contention of the petitioners viz that the impugned B. Ps. Enhancing the tariffs are illegal on the ground that the state electricity consultative council has not been consulted before the enhancement and that sec. 49 is subject to the provisions of section 16 of the Act.

13. The relevant provisions of the Act may first be noticed the board is constituted under sec. 5 of the Act. It shall consist of not less than three and not more than seven members appointed by the state Government sub-clause (4) of section 5 provides that one members shall be a person who has experience of and has shown capacity in commercial matters and administration another member shall be an electrical engineer with wide experience and yet another shall be a person who has experience of accounting and financial matters in a public utility undertaking preferably an electricity supply undertaking section 16 of the Act provides for the Constitution of the state electricity consultative council. Sub-clause (2) of section 16 provides that the consultative council shall consist of the members of the Board and if there are any Generating company ore generating companies operating in the state one representative of the Generating company to be nominated by the generating company of such other persons being not less thatn eight and not more than fifteen as the state Government or the state Government concerned may appoint. After consultation with such representatives or bodies representative of the following interests as the state Government of the state Government concerned thinks or think fit that is to say.

(1) Local self-govt.

(2) electricity supply Industry,

(3) commerce,

(4) industry.

(5) transport.

(6) agriculture

(7) labour employed in the electricity supply industry and

(8) consumers of lectricity. Sub-clause (3) thereof states that the chairman of the Board shall be the exofficio chairman of the consultative council. Sub-clause (4) provides that the consultative council shall meet at least once in every three months. Sbu-clauses (5) and (6) of sec. 16 read as follows:-

'(5) The functions of the state Electricity consultative council shall be as follows:-

(i) To advise the Board and the Generating company or Generating companies. If any operating in the state on major questions of bolicy and major schemes;-

(ii) To review the progress and the work of the Board and the Generating company or generating companies if any operating in the state from time to time.

(iii) To consider such other matters as the Board or the Generating company or generating companies, if any, operating in the state may place before it and

(iv) To consider such matters as the state Government may by rules prescribe.

(6) The Board shall place before the state Electricity consultative council the annual financial statement and suplementary statement if any and shall take into consideration any comments made on such statemetn in the said council before submitting the same to the state Government under sec. 61'. Sub-clauses (1) and (2) of sec. 49 read as follows:-

(1) subject to the provisions of this Act and of regulations if any made in this behalf the borad may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.

(2) In fixing the uniform tariffs the Board shall have regard to all or any of the following factors, namely:-

(a) the nature of the supply and the purposes for which it is required:-

(b) the co-ordinated development of the supply and distribution of electricity within the state in the most efficient and economical manner with particular reference to such development in areas not for the time being served or adequately served by the licensee:-

(c) the simplification and standardisation of methods and rates of charges for such supplies:

(d) the extension and cheapening of supplies of electricity to sparsely developed areas'.

14. It is common ground that no sales have been prescribed by the state under sub-clause (iv) of sec. 16(5) in relation to fixation of tariffs. It is also common ground that sub-clause (I) of sec, 16(5) of the Act.

15. Now the general power power of the Board to fix the tariffs is not in dispute the question is whether there is anything in the Act which makes it obligatory on the Board to consult the consultative council before the tariffs are enhanced

16. It is for the petitioners to establish that the consultation with the council is a condition precedent for the enhancement of the tariffs by the Board. On a plain reading of the provisions of sec 16 of the Act it is clear that there is nothing in the said section which prescribes that the consultation with the council is a condition precedent. On the other hand there appears to be a clear sub-clause (5) of sec 16 Whereas subclause (6) imposes a statutory obligation on the board to place the 'annual financial statement' and the supplementary statement' and the supplementary statement'before the consultative council and further obligation on the board to consider the comments of the council in respect of the said statements, there is no such provision in sub-Cl. (5) of sec 16 of the Act imposing a similar obligation on the Board to place the question of enhancemetn of tariffs before the consultative council as a condition precedent for brining into force the enhanced tariffs. Indeed if parliament intended to impose any such obligationon the Board to consult the consultative council in regard to enhancement of tariffs nothing prevented parliament to provide for it expressly as in the case of hte 'annual financial statement' and the 'supplementary statement ' mentioned in sub-cl. (6) of sec. 16 It may also be noticed that all that sub-clause (5) of sec. 16 says is that the council is to advise the Board. Therefore even assuming that the question of enhancement of tariffs is a major question of policy, the non-consultation with the council in regard to the enhancement of tariffs cannot have the effect of invalidating the B, Ps. Under which the tariffs have been enhanced.

17. The learned counsel for the petitioners has cited the rulings in Delhi Municipality v. B. G. S. & W. Mills : [1968]3SCR251 and Institute of chartered. Accounts v. P.K. Mukherjee : [1968]3SCR330 for the principle that the courts have to ascertain the intention of the legislature in construing the statutory provisions the learned counsel has also referred to director of R & D. V. Corporation of calcutta : 1960CriLJ1684 for the principle that even the state is bound by the law. He has also relied upon Ramji Missar v. State of Bihar : AIR1963SC1088 to say that in certain circumstances the word may can be construed as shall for the reasons already mentioned we are unable to see how these rulings can held the petitioners.18. Sri. Y. Vasudeva rao, the learned counsel for the petitioners has relied upon an unreported judgment in Laxmi steel corporation v. State of Punjab (civil writ No. 2605/78 dt. 18-9-1979) which is a division Bench judgmetn of the High Court of Punjab and Haryana. In that case the learned judges were considering the effect of the non-constitution of the state electricity council during the period from 15-3-1975 to 16-2-1978 during which the electricity tariff was increased B. S. Dhillon and J.V. Gupta JJ. Observed as follows:-

'Before parting with the judgment we may emphasize that the state Government may be well advised to Constitution the consultative council as provided under sec, 16 of the supply Act. The important functions which the consultative council hs to perform have been enumerated in the section itself. The advice of the constultative council on policy matter tendered to the board has a very healthy check on the policy decisions of the Board because the consulative council is representative in character representing many representativebodies including the consumers whose view point should also be before the Board before formulating policies and other basic schemes. It is on the record that there was no state electricity council during the period from 15-3-1975 to 16-2-1978 during which period the impugned tariff was enhanced:We hope that the state Government will not allow a situation o t his type to develop in further. We may also emphasize that the board will be well advised to bring all policy matters before the consultative committee and hold its meetings after every three months as provided under the Act. The revision of tariff rates and surchase is agin of vital matter which. We hope the board in its wisdom. Will be well advised to have the advice of the consultative council in further before revision so as to rationalise the tariff and surcharge'.

19. We are unable to see how the above judgmetn of the punjab and harayana High Court can be said to support the Non-consultation with the consultative counse. Renders the tariffs invalid the above passage from the said judgment does not lay down any such proposition as contended for by the pettitioner ON the other hand the JUdgment has emphasised the advisability'. Of the Board consulting the consultative council and did not lay down that the non-consultation will make the tariffs invalid. In that case though the tariffs in question were formulated during a period when the council was not even contituted. Their Lordships have not laid down that the tariffs became ineffective for want of consultation with the council. The said decision therefore cannot help the petitioners.

20. The learned counsel for the petitioners has also relied on a decision of Their Lordships of the Supreme Court in narayana sankaran Mooss v. State of kerala : [1974]2SCR60 in support of their contentions that case arises under sec. 4 of the Electricity Act of 1910 and turned upon the construction to be placed on the amended provisions of sec 4 whereof which read as folows:-

'Section 4(1) the state Government may if in its opinion the public interest so required and after consulting the state Electricity Board revoke a licence in any of the following cases'.

21. In view of the specific language of the said provision viz, After consulting the state electricity Board' It was held by their lordships of the Supreme Court that the consultation with the state electricity Board was mandatory. We are unable to accede to the contention of the petitioners that a similar construction has to be placed upon sub-clause (b) of sec. 16. In the absence of similar language in subclause (5) of section 16 of the electricity (supply) Act, 1948 we are of the opinion that the above ruling cannot apply in our case.

22. It is then contended by the learned counsel for the petitioner that in the absence of an appeal or revision against the tariffs fixed by the Board which could be available to the consumers. We have to construe subclause (5) of sec 16 itself as implying an obligation on the Board to consult the consultative council before enahncing the tariffs. We are unable to understand how the absence of a provision for appeal or revision would lead to the conclusion contended for we are of the opinion that such a condition cannot be read by implication In this context we wish to point out that there are several provisions in the Act which impose a suficient check on the Board in the matter of revision of tariffs viz sections 49, 61, 78-A apart from sub-clause (6) of section 16. The absence of a provision for appeal or revision cannot therefore compel us to imply any further conditions in sub-clause (5) of section 16. Therefore this contention of the petitioners is liable to be rejected.

23. The learned counsel for the petitioners laid emphasis on the opening words of sub-clause (1) of section 49 of the Act which reads. 'Subject to the provisions of this Act and of regulations'. It is contended that these words emphasise that section 49 is subject to the provisions of sub-clause (5) of section 16 and therefore unless the consultative council is consulted by the Board before fixation or enhancement of tariffs the tariffs cannot be effective.

24. We are of the view that the provitions of sec. 49 of the Act cannot be contrued in the above manner for the reasons stated below.

25. Section 49(1) of the Act reads:'subject to the provisions of this Act and of regulations if any made in this behlaf. The Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs'.

26. While it is true that sub-clause (1) of sec. 49 opens with the words 'subject to the provisions of this Act and of regulations'. We have to find out the significance of the further words if any made in this behalf this latter clause would lead us to an enquiry into the other provisions, if any either in the Act or regulations regarding the subject matter of the said section. The learned counsel for the state Electricity Board has rightly invited our attention to the decision in Mysore state Electricity Board has rightly invited our attention to the decision in Mysore state Electricity Board v. Bangalore W. C. & s. Mills : AIR1963SC1128 where Their Lordships stated as follows in para 18 at page 1136:

'The expression 'Subject to the provisions of this Act' merely means that if there are any provisions regulating the Board in the matter of supplying electricity to any person not being a licensee then the supply by the Board will be subject to those provisions No provision has been brought to out notice which regulates the Board in the matter of the charges which it may fix for the supply of electricity'.

In view of the above decision of their Lordships of the Supreme Court we are of the opinion that there are no provisions either in the Act or in the regulations made in this behalf viz., in the matter of charges relating tothe supply of electricity apart from this we have already held on a construction of section 16 of the Act. That there is no mandatory obligation on the Board to consult the ocnsultative council before enforcing the enhanced tariffs. In view of the said construction placed by us on hte provisions of section 16 even assuming that section 49 is subject to section 16 it will not help the petitioners in any manner.

27. At the same time while rejecting the first contention, we hasten to add the following:

The state consultative council consists of members of the electricity Board representatives of the Generating company local self Government electricity supply industry commerce industry transport agriculture labour employed in the electricity supply industry and the electricity supply industry and the electricity consumers. In view of the ocnstitution of the council the importance of hte council should be kept in view by the Board. The council contains experienced persons drawn from important segments of society and it should certainly be highly desirable that in the matter of fixation or enhancemetn or modification of the electricity tariffs or the policies pertaining thereto the views of the consultative council are ascertained, section 16 of the Act directs that a council must be constituted and its meetings should be held once in three months the council has important functions under sub-clause (6) of section 16 which It is conceded are mandatory. It is likely that questions relating to tariff may also arise in the annual finacial statement' and 'supplementary statements' and the council may make its comments thereupon these aspects certainly have to be borne in mind and we also emphasize in the same manner as did the High Court of Punjab and Haryana that it would be desirable that the state Electricity council is consulted in the matter of fixation enhancemetn or modification of the electricity tariffs or the policies relating thereto. But as already stated, we are of the firm view that the contention of the petitioners that the impugned B.ps are null and void on account of nonconsultation with the Electricity council is liable to be rejected.

28. Now we shall take up the second contention raised by the learned counsel for the prtitioners. It is their contention that no distinction can be made between the state Electricity Board and other Licensees' and that there should be a Rating committee constituted to review and check the tariffs imposed by the Electricity Board also as in the case of licences. In that context they contend that the provisions of sections 2(6), 26, 57, 57-a and 57-B in so far as they create a distinction between other licensees and the Electricity Board are violative of Article 14 of the Constitution of India. Article 19(1)(g) of the Constitution was aldo referred to faintly during the course of arguments.

29. We do not propose to extract the provisions of the various sections above referred to but we shall summarise their provisions to the extent that they are relevant for our purpose.

30. The provisions of sub-clause (6) of section 2 provide specifically that 'a licensee' means a person licenced under part 2 of the Indian electricity Act 1910 (9 of 1910) to supply energy or a person who has obtained that the definition of a licensee' shall not include a Board or a generating company notwithstanding the provisions of sections 26 or 26-A.

31. Section 26 of the Act provides that the Board will be a licensee in respect of the whole state having the powers and obligations of a licensee under Act. 9 of 1910 and that the Act itself shall be deemed to be a licence for the Board for the purpose of the Act It is specifically provided in section 26 that nothing in section 3 to 11, sub-sections (2) abd (3) of section 21 and section 22 sub-section (2) of section 22-A and sections 23 and 27 of the Act or clauses I to V clause VII and clauses IX to XII of the schedule of that Act relating to duties and obligations of a licensee shall apply to the Board. The second proviso to section 26, however provides that the provisions of clause (6) of the sehedule would apply to the Board only in respect of that area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. We need not refer to the provisions of section 26-A which deal with generating companies.

32. A combined reading of the above provisions would make it clear that notwithstanding the fact that sec 26 treats the Boards as a licencee the Board does not fall within the definition of a licensee under Sub-cl. (6) of S. 2 and that is the effect of the non-obstante clause used in sub-cl (6) of S. 2.

33. Section 57 of Act provides that the provisions of schedule VI shall be deemed to be incorporated in the licence of every licensee (not being a local authority) and that the licensee shall comply with the provision of the said schedule and accordingly of Act 9 of 1910 and that the licence shall be void if it is contrary to the provisions of section 57-A to that extent.

34. In view of the specific provisions of the definition sectio viz., sub-Cl (6) of sec. 2 the Electricity Board is outside the purview of section 57 which is applicable to all other licensees.

35. Sub-clause (2) of section 57-a provides that in the case of the licensees abovementioned the state Government shall when so requested by the licensee in writing constitute a Rating committee' to examine the licensees' charges for the supply of electricity and to make recommendations in that behalf to the state Government. The other provisions of section 57-A and section 57-B provide for the functions of the Rating committee and the procedure to be adopted by it.

36. In view of the specific exclusion of the Electricity Board from the definition of a licensee' by virtue of subclause (6) to section 2, the Electricity Board is outside the purivew of sections 57-A and 57-b also.

37. The petitioners contend that the exclusion of the Electricity Board from the definition of a licensee under subclause (6) of section 2 is the main case for the Electricity Board acting arbitratily without being subject to the various provisions of the Act and the schedules enumerated in the first proviso to section 26 and that this is opposed to articles 14 and 19(1)(g) of the Constitution of India. The petitioners also contend that it is the definition section i.e. sub-clause (6) of section 2 that is responsible for taking the electricity Board out of the purview of section 57 and consequently of the 6th Schedule It is also their contention that the definition section is again responsible for taking the Electricity Board out of the purview of a Rating Committee provided in section 57-a Thus they contend that sub-clause (6) of section 2 and the above provisions which give a different treatment to the Electricity Board as constrasted with the other licensees are ultra vires of Article 14 and that they also infringe Article 19(1)(g) of the Constitution of India.

38. The distinction between the Electricity Board and other licensees is very clear. The Electricity Board has its area of operation in the whole state is provided in section 26 while the area of operation of a licensee is limited to the area mentioned in the licence. Section 18 of the Act imposes the duty on the Board to supply electricity in the state as a whole in the most efficient and economic manner with particular reference to.

'Those areas which are not for the time being supplied or adequately supplied with electricity'.

But sub-clause (c) of section 57-A(1) provides for a reasonable return to the licensee while section 59 makes elaborate and special provisions regarding the finances of the Electricity Board. The Board can grant loasn to licensees under section 23 of the Act. The provisions of section 35 enable the Board to supply electricity to the licensees owing generating stations. Section 49 provides specially for the sale of electricity by the Board to persons other than lecensees under section 55, the licensees are subject to the directions which may be issued by the Electricity Board chapter 6 of the Act deals specially with the Board's finance, accounts and audit. Under section 78-A the Board is subject to the directions of the state Government the Board has got power to make regulations under section 79. There are the other provisions of the Electricity (supply) Act 1948 in relation to the Constitution functions and duties of the Board which provide for several distinctions between the Board and the other licensees. A reading of the Indian Electricity Act 1910 would also show that the distinction between the electricity Board and the other licensees is maintained section 3 of the Act provides that while granting licences to other licensees the state Government should consult the state Electricity Board. Under sec. 4 of the Act revocation or amendment of licences are also to be made after consulting the Electricity Board sec. 21 of the Act provides for the imposition of restrictions on the licensees controlling or interfering with the use of energy to be made in consultation with the state Electricity Board.

39. A comparative reading of the above provisions shows that the Constitution powers functions duties financial provisions and area of operation of the Board on the one hand and of the licensees on the other are totally different and there is no comparison between the Board and any other licensee it is well know that the state Electricity Board has to cater to the needs of the consumers in the entire state and in its remotest villages for the purpose of agriculture or industry. It is therefore not permissible to compare other licensees with the Electricity Board. Parliament was fully conscious of the magnitude of the activities finances and problems of the state electricity Boards and rightly placed the Boards outside the definition of a licensee' but at the same time taking care to make special statutory provisions with regard to the Board's activities and finances. We are satisfied that the Electricity Boards belong to a definite class by themselves while the other licensees are a different an distinct class and that the distinction is based on a rational basis having regard to the consultation powers and duties area of operation finances and other related matters of the respective classes. Therefore there is no merit in the contention that the exclusion of the Electricity Board from the definition of licensee under sub-clause (6) of sec. 2 is violative of Article 14 of the Constitution the contention that these provisions violate Article 19(1)(g) of the Constitution has been faintly mentioned but it has not been substantiated. In any event sub-clause (6) of Article 19 provides that nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to or prevent the state from making any law relating to the carrying on by the state or by a corporation owned or controlled by the state of any trade business industry of service whether to the exclusion complete or partial of citizens or otherwise. In view of sub-clause (6) of Article 19 this contention has to be rejected consequently sub-clause (6) of sec. 2 sections 26, 57, 57-A and 57-B of the Act have to be declared to be valid and not opposed to Article 14 and Article 19(1)(g) of the Constitution of India. Therefore the contention that there should be a Rating committee' for the Electricity Board as in the case of licensees is liable to be rejected.

40. The next contention raised by the petitioners is that the powers conferred on the Electricity Board under sections 18 and 59 of the Act are arbitrary and ultra vires of Article 14 and Article 19(1)(g) of the Constitution of India and also violative of the basic principles of natural justice.

41. The contention that the Board has unguided discretion in fixing tariffs and that it is acting arbitrarily cannot be accepted. As pointed out by the learned standing counsel for the central Government sri K. Subrahmanaya Reddy, there are inbuilt restrictions on the activities of the Board which can be culled out from the Act itself. The Board is bound to place before the state Electricity consultative council the annual financial statements and the supplementary statements and a duty is cast upon the Board to take into consideration any comments made on such statement in view of sub-clause (6) of section 16 of the Act. This annual financial statement will then have to be submitted to the state Government under section 61. Under that section in February of each year the Board has to submit to the state Government an annual financial statement in the prescribed form of the estimated capital and revenue receipts on expenditure for the ensuing year. That statement under sub-section (3) has to be placed before the state legislature and it is open to discussion subclause (4) of section 61 casts a duty on the Board to take into consideration any comments made on the said statement by the state legislature . the provisions of section 75 provide for the Board submitting to the state Government a report giving an account of its activities during the previous financial years as also an account of its activities which are likely to be undertaken by it in the next financial year. The state Government is to place the said report before the state Legislature. Under section 79(I) the Board has also to make regulations laying down the principles governing the supply of electricity by it to persons other than licensees under section 49. Sub-clause 92) of section 49 provides that the Board shall have regard to all or any of the following factors viz (a) the nature of the supply. And the purpose for which it is required. (B) the co-ordinated development of the supply and distribution of electricity within the state in the most efficient and economic manner with particular reference to such development in areas not for the the time being served or adequately served by the licensee. (C) the simplification and standardisation of methods and rates of charges for such supplies and (d) the extention and cheapening of supplies of electricity to sparsely developed area. These provisions provide sufficinet guidance.

42. Therefore the contention that the Board is having unguided power and can Act arbitrarily has to be rejected. The validity of this provision namely section 49 came up for consideration in the case of maharashtra state Electricity Board v. Kalyan Municipality : [1968]3SCR137 where it was contended that it was ultra vires of Article 14 of the consitution. The question has been said judgment After considering the relevant provisions of the Act emtnioned above viz. Sections 16(6), 61, 75 and 49(2) Their Lordships of Supreme Court concluded as follows:

'In our opinion all these provisions have the effect of property guiding the activities of the Board in its dealings with the consumers including the levy of tariffs. Section 49 itself is hedged in by various restrictions and directions. The Board will have to comply in the matter of framing uniform tariffs and different tariffs. Therefore, in particular it may be noted that the extension and cheapening of supplies of electricity to sparsely developed areas under clause (d) of S. 49(2) of the Act can only be complied with by keeping the uniform rates at a minimum consistently with the requirement, under section 59, of not running at a loss. Therefore. We are satisfied that section 49 is not in any way bad on the ground that it gives an unguided and arbitrary power to the Board to fix its tariffs as it likes'.

In Karthik Enterprise v. O. S.E. Board, : AIR1980Ori3 Division Bench of the Orissa High Court has also upheld the validity of section 49. In para 8 the learned Judges ultimately summed up as follows.

'The statute has an inbuilt scheme of supervision the states and the legislature have been conferred powers of control and the according aspect is subject to the thorough checking by the comptroller and auditor general of India'.

43. Once the validity of the section is upheld by their Lordships of the Supreme Court it is not permissible for this Court to discover fresh grounds to hold that the same section is ultra vires of Articles 14 of the Constitution of India vide Delhi cloth and gneral Mills v. Shabhunath, : (1978)ILLJ1SC . Following the Judgment of Their Lordships of the Supreme Court we hold that section 49 read with sections 18 and 59 does not violate Article 14 of the Constitution so far as Article 19(1)(g) is concerned we once again state that it was argued faintly and that in any event it has not been established why sub-clause (6) of art 19 of the Constitution should not be applied.

44. It is also conteded incidentally that the Impugned B. Ps shows that the cost factor has also been taken into consideration in enhancing the tariffs and that it is not permissible to take the cost factor into consideration oas it si not one of the factors mentioned in subclause (2) of section 49, It is contended that the tariffs cannot be enahnced on the ground that the cost of poduction or ground that the cost of production or distribution of electricity has gone up.

45. This point is also covered by the Judgment of Their Lordships of the Supreme Court in Maharastra state Electricity Board v. Kalyan Municipality : [1968]3SCR137 . It is stated by Their Lordships as follows at page 998:-

'Section 59 lays down that the Board, after taking subventions from the state Government shall not as far as practicable carry on its operations under the Act a t a loss and that the Board is to adjoust its charge according from time to time . That means that costs has to be taken into account. Though that is not the sole or only criterion for fixing the tariff'.

Therefore the contention that the cost of production and supply cannot be taken into consideration has to be rejected.

46. The ppower entrusted to the Board are to be exercised by the Board itself so far as the Act is concerned It has been pointed out that where the power is to be exercised by one of the highest officer the fact that no appeal has been provided for is a matter of no moment vide c. Lingam v. Government of India : [1971]2SCR871 .

47. The question whether the fixation or alteration of the tariffs is a ,major matter of policy was not decided by us while considering the first point relating to sub-clause (5) of section 16 of the Act as we proceeded on the assumption that even if it is a major matter relating to policy still the counsil did not make the B.P.s invalid. Whether it is a major matter of policy or not there can be no dispute that fixation of tariffs is a matter of policy which is of a legislative or sub-legislative character In s. Narayan v. Union of India : AIR1976SC1986 it was observed by their lordships in relation to fixation of telephone tariffs as follows (at pp. 1987-88):-

'Telephone tariff is subordinate legislation and a legislative process. Under Telegraph Act, sec. 7 empowers the central Government to make rules inter alia for rates. These rules are laid before each House of parliament. The rules take effect when they are passed by the parliament ............ the rates therefore become a legislative policy as well as a legislative process ........... These rates are decided as policy matter in fiscal planning there is legislative prescription of rates Rates are a matter for legislative judgment and not for judicial determination'.

48. To the same effect is the judgment in .S. I. Syndicate Limited v. Union of India : [1975]1SCR956

49. Once it is a matter of legislative or sub-legislative policy the question of violation of principles of natural justice does not arise. In the latter ruling in S. I syndicate Limited v. Union of India (supra) Their Lordships of the Supreme Court observed as follows in relation to fixation of sugar prices (at p. 464):-.

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 could not therefore give rise to a complaint that a rule of natural justice has not been afollowed in fixing the price'.

To the same effect is also the decision of their Lordships in R.K. Porwal v. State of maharashtra : [1981]2SCR866 .

50. Therefore the contention that whenever the rate are brought into force or modified the principles of natural justice have to be followed is liable to be rejected. Thus the third contention raised by the learned counsel for the petitioners also fails.

51. The petitioners have also sought to rely upon several reports of committees as well as associations anf from the pressto show that the Electricity Board has been wasting money and that it is not functioning in an economic and efficient manner. Several statistics have been referred to during the course of arguments by the learned counsel for the petitioners. On the other hand the state Electricity Board has given several technical details in the counter affidavit and in the annexures thereto.

52. We have to say that these are matters to be gone into by a technical body or by a commissionof enquiry consisting of Experts and that it is not possible for us to accept or reject the statistical details given by other side we, therefore refrain from going side. We, therefore refrain from going into these technical details which according to us will be beyond the scope of our jurisdiction under art. 226 of the Constitution of India.

53. For all the reasons given above these writ petitions fail and are dismissed but in the circumstances without costs advocate's fee Rs. 250 in each W.P.

54. Petitions dismissed.


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