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Subhash Oil Industries and ors. Vs. State of Uttar Pradesh and anr. - Court Judgment

LegalCrystal Citation
SubjectElectricity;Civil
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ Petn. Nos. 16 and 1140 of 1973
Judge
Reported inAIR1975All19
ActsElectricity Supply Act, 1948 - Sections 57 and 57A; Uttar Pradesh Electricity (Temporary Powers of Control) Act, 1947 - Sections 3(2); Constitution of India - Article 226
AppellantSubhash Oil Industries and ors.
RespondentState of Uttar Pradesh and anr.
Appellant AdvocateA. Kumar, Adv.
Respondent AdvocateB.D. Agrawal, Standing Counsel
DispositionPetitions dismissed
Excerpt:
.....act shall apply to all private schools in the state whether receiving any grant-in-aid from the state government or not. private school is defined in section 2(2) of the act as a recognised school established or administered by a management other than the government or a local authority. recognised means recognised by director, the divisional board or state board. thus as far as the first part of the definition of being recognised is concerned, it includes, as stated above, four directors, the divisional boards and four state boards. the second part of this definition which comes after the comma refers to any officer authorised by director or by any of such boards. the question to be examined is whether school run by the cantonment board could be said to be one run by any such boards...........the enhancement in rates of electric energy charges has been made under a notification of the state government dated 24th may, 1972 issued under section 3 (2) (aa) of the u. p. act no. 6 of 1947 published on 3rd june, 1972, and by a notice of respondent no. 2 dated 9. june 1972 published in the 'amar ujala' dated 11th june, 1972. notification dated 24th may, 1972 is annexure a-2 to the petition. the notification is sought to be quashed by a writ of certiorari but no prayer has been made for the quashing of the notice published in the 'amar ujala' dated 11th june, 1972.2. respondent no. 2 is a licensee under the indian electricity act 1910 for the supply of electric energy within the municipal board and cantonment board, bareilly. it purchases electric energy from the u p. state.....
Judgment:
ORDER

Gopi Nath, J.

1. These petitions under Article 226 of the Constitution raise common questions and can be disposed of by a common judgment. They challenge an increase in the rate of electric energy supplied by respondent No. 2 to the petitioners. Petitioners include associations and individual consumers. The enhancement in rates of electric energy charges has been made under a notification of the State Government dated 24th May, 1972 issued under Section 3 (2) (aa) of the U. P. Act No. 6 of 1947 published on 3rd June, 1972, and by a notice of respondent No. 2 dated 9. June 1972 published in the 'Amar Ujala' dated 11th June, 1972. Notification dated 24th May, 1972 is Annexure A-2 to the petition. The notification is sought to be quashed by a writ of certiorari but no prayer has been made for the quashing of the notice published in the 'Amar Ujala' dated 11th June, 1972.

2. Respondent No. 2 is a licensee under the Indian Electricity Act 1910 for the supply of electric energy within the Municipal Board and Cantonment Board, Bareilly. It purchases electric energy from the U P. State Electricity Board. In the year 1947 U. P. Act No. 6 of 1947 was passed regulating the production, supply and distribution of electric energy by a licensee under the Indian Electricity Act 1910. In the year 1948, the Central legislature passed the Electricity Supply Act 1948 being Act. No. 54 of 1948 (hereinafter referred to as the Supply Act). This Act provides for rationalisation of production and supply of electric energy and for taking measures conducive to electrical developments. By Section 57 of the Supply Act provision has been made for enhancement of rates of electric energy supplied by the licensee to the consumer. That provision states that VIth and VIIth Schedules of the Act shall be deemed to be incorporated in the lincence of every licensee. VIth Schedule deals with the rates of electric energy. It allows an enhancement in the charges and provides for a reasonable return on the outlay of the licensee. 'Reasonable return' has been explained in paragraph xvii (9) of the Schedule as follows:

'Reasonable return' means- In respect of any year of account the sum of the following:--(a) the amount found by applying the standard rate to the capital base at the end of that year;

(b) the income derived from investments other than those included in the capital base under the provisions of Clause (d) of sub-para (1);

(c) an amount equal to one-half of one per centum on any loans advanced by the Board;

(c-1) an amount equal to one-half of one per centum on the amounts borrowed from organisations or institutions approved by the State Government;

(c-2) an amount equal to one-half of one per centum on the amounts realised by the issue of debentures;

(d) an amount equal to one-half of one per centum on the accumulations in the Development Reserve created under para V-A of this Schedule;

(e) such other amount as may be allowed by the Central Government having regard to the prevailing tax structure on the country.

A licensee intending to increase the rates of electricity has to follow the procedure provided under the sixth Schedule which requires the giving of a notice in writing of not less than sixty clear days to the State Government and to the Board for such an intention. The third proviso to para 1 of the Schedule provides for such a notice. The notice has to be accompanied by such financial and technical data in support of the proposed enhancement as the State Government may, by general or special order specify. The furnishing of the data is required by paragraph (1-A) of the sixth Schedule. If the State Government or the Board do not agree with the proposal, the matter has to be referred to a rating committee constituted under Section 57-A of the Supply Act. The rating committee is a high powered body of three members. It examines the proposal after giving the licensee a reasonable opportunity of hearing. After taking into consideration the efficiency of operation and management and the potentialities of the undertaking, it submits a report to the State Government within three months of the date of its constitution, making recommendations regarding charges of electricity. The State Government then publishes the report in the official gazette and makes an order fixing the licensee's charges for the supply of electricity. The provisions of Sections 57 and 57-A and the sixth Schedule thus lay down an exhaustive procedure regarding the fixation of charges of electricity supplied by the licensee to the consumer.

3. On 29th December, 1971 the U. P. State Electricity Board revised its grid tarrif in respect of sales of electri-city to the licensees with effect from January 1, 1972. A copy of the letter of the Secretary of the Board is appended as Annexure 'D' to the counter-affidavit of Sri N. L. Bhuwania, respondent No. 2, was required under it to pay higher charges for the purchase of electricity from the Board. The State Government by a notification dated 12th February. 1972 notified that all private Electric Supply Undertakings could enhance their rates after following the procedure provided in the sixth Schedule of the Supply Act. Respondent No. 2 thereafter on the 1st March, 1972 gave the required notice under the third proviso to paragraph 1 of the sixth Schedule. It gave the financial and technical data in support of the proposed enhancement as required by paragraph (1-A) of the Schedule. The notice stated that as the tarrif of the Board had been enhanced with effect from 1st January, 1972, the licensee intended to raise the rates as proposed in Appendix VI (a) and VI (b) of the letter from that date. It was clearly stated that this was a notice under the third proviso to paragraph 1 of the sixth Schedule.

4. It would be clear from a reading of this letter that the enhancement was proposed in accordance with the terms of the Schedule, under instructions from the State Government. The State Government after a close scrutiny of the financial and technical data furnished, approved of the enhancement in the rates. The statements made in respect of the reasonable return in the counter-affidavit of Sri N. L. Bhuwania have not been falsified by the rejoinder-affidavit. No counter figures have been given in it. The counter-affidavit of Sri G. R. Sonkar, on behalf of respondent No. 1. in paragraph 40, states that so far as the State Government was concerned they were satisfied that the licensee was not earning a reasonable return and was entitled to enhance the rates from 1st January, 1972. It is, therefore, clear that the State Government was satisfied that the enhancement proposed was in accordance with the provisions of the VIth Schedule of the Supply Act. Sanction accordingly was accorded and the State Government published the impugned notification dated 24th of May, 1972 (Annexure A-2). The licensee Company thereafter gave a public notice dated 9th of June 1972 in respect of its revised rates by publication in Amar Ujala on 11-6-72. The petitioners continued to pay the enhanced charges from June, 1972 to December, 1972. On the 3rd of January. 1973, these petitions were filed challenging the enhancement.

5. Two main points were raised by the learned counsel for the petitioners: --

(i) that the rates were enhanced under a notification of the State Government dated 24th of May, 1972 issued under Section 3 (2) (aa) of U. P. Act VI of 1947 which provision having been struck down by this Court; the notification was ineffective and the enhancement unenforceable;

(ii) that the petitioners were entitled to be heard both by the licensee and the State Government before enhancement of the charges.

6. As regards the first point the right of the licensee to increase the rates of electricity is a unilateral right under the Supply Act, See Amalgamated Electricity Co. v. N. S. Bathena, AIR 1964 SC 1598. Their Lordships in that case observed as follows :

'But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz. the rate charged does not yield a profit exceeding the amount of reasonable return.'

See also Jindas Oil Mill v. Godhra Electricity Co. Ltd., AIR 1969 SC 1225. In exercise of this unilateral right respondent No. 2 issued the notice dated 1-3-1972 under the 3rd proviso to paragraph 1 of the VIth Schedule of the Supply Act and the rates were revised. This revision was independent of the notification issued by the State Government on the 24th of May, 1972. As regards the notification under Section 3 (2) (aa) the position is as follows: Section 3 (2) (aa) of the State Act only acted as a fetter on the power of the lincensee to revise the rates. Thatprovision having been struck down, the fetter has been removed and the unilateral right of the lincensee under the VIth Schedule becomes fully effective. The pro-, ceedings for enhancement having been taken under the VIth Schedule they were effective under that Schedule. Section 3 (2) (aa) of the State Act having been declared ultra vires by this Court, notification dated 24th of May, 1972 was not effective but the increase in the rates was effective on the basis of the proceedings under the VIth Schedule. The notice given by the licensee by publication in the Amar Ujala dated the 11th June, 1972, would, accordingly, be valid and effective on its own notwithstanding the notification of the State Government dated 24th of May, 1972 being invalid.

7. It was then urged by the learned counsel that the general notice for the increase of rates in the 'Amar Ujala' dated llth of August, 1972 should be deemed to have been issued in pursuance of the notification of the State Government under Section 3 (2) (aa) otherwise it would have been published much earlier. There is sufficient explanation for the delay in the issuance of the public notice by the licensee. By a letter of the Joint Secretary, Uttar Pradesh, dated 4th of April, 1972 (Annexure G to the coun-ter-affidavit of Sri N. L. Bhuwania) the licensee was restrained by the Government from increasing the rates until permission was accorded by the Government. This w.as done in exercise of the powers under Section 3 (2) (aa) of the State Act. This provision was struck down by a decision of this Court dated 18th of May, 1972. It was after this that the notice was issued on 9th of June, 1972. The decision of the learned Single Judge was upheld by a Division Bench on 8th of August, 1972, There was thus no delay in the pub-lication of the general notice which was made in exercise of the powers given to the licensee under the sixth schedule of the Supply Act.

8. The matter can be looked at from another angle. The petitioners have only challenged the notification but not the public notice issued by the respondent No. 2. The notification, even if quashed, will not affect the public notice as it was not issued in pursuance of the notification dated 24th May, 1972 and there is no prayer for quashing the same. No grievance has been made in the petition about the proceedings under the Supply Act. These proceedings were conducted according to the provisions of that Act. That being so the notice of enhancement remains unaffected by anything being done by the State Government under the State Act No. VI of 1947. It is settled law that an action taken is referable to aprocedure valid in Law rather than to provisions which invalidate it. In L. Bazari Mal v. I.-T. Officer, AIR 1961 SC 200, Hidayatullah, J. at page 202 observed that the exercise of a power will be referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it will be nugatory. See also Hukumchand Mills Ltd. v. The State of Madhya Pradesh, AIR 1964 SC 1329, where Wanchoo J. observed as follows :

'It is well settled that merely a wrong reference to the power under which certain actions are taken by Government would not per Be vitiate the action done if they can be justified under some other power under which the Government could Lawfully do these acts.'

The enhancement can thus not be invalidated on the ground that the State Government has also increased the rates by a notification which was bad in Law. In view of the above no futile writ can issue for quashing the impugned notification (Annexure A-2) to the petition.

9. The second point relates to the application of the principles of natural justice to the case. The petitioners claim that they ought to have been heard by the licensee before the enhancement was proposed to the State Government under para (1) of the VIth Schedule. They further claim that the State Government was also under a duty to give them an opportunity before approving the rates. Sections 57 and 57-A and the sixth Schedule provide a complete machinery for the adjustment of rates of electricity between the licensee and the consumer. Under para 1 of the Schedule the licensee is entitled to earn a reasonable return on its investments. It has a unilateral right to increase the rates under the Supply Act. The increase has to be made under a notice to the State Government or the Board. The State Government or the Board are required to investigate the financial and technical data furnished by the licensee in support of the proposed enhancement. In case of satisfaction the proposal is accepted. In case of doubt the matter is referred to the rating committee and the proceedings are conducted according to the provisions of Section 57-A of the Supply Act. The Committee acts in a quasi-judicial manner and investigates the claim. The purpose behind the provisions of Sections 57 and 57-A are to enable the licensees to so adjust the charges as to enable them to earn a reasonable return. The interest of the consumers has been amply safeguarded by providing for a close scrutiny into various data for the fixation of rates, regard being had to the efficiency, potentiality and management of the undertaking. A complete machinery has been set up for thepurpose of watching the interest of the consumers and the State Government and the rating committee act as the custodians of their interest. The notice required by the consumer is only with a view to raise objections to the statements furnished by the licensee in respect of the proposed enhancement. The purpose is only to check the financial and technical data furnished. If an authority under the Act has to look ino the proposed enhancement and investigate and check the data furnished by the licensee it must in law be presumed to be acting for the benefit of the consumers and to protect their interest. The interest is thus sufficiently protected under the Act. In such a situation a notice to the consumer has not been provided for under the Act When the Statute does not provide for such a notice expressly, a question arises whether it does so by implication. As seen earlier when an exhuastive procedure has been laid down toy the Act for the enhancement of rates, and the consumers' interest has been amply safeguarded, the Statute by implication also does not seem to provide for any notice to the ' consumer in the matter of enhancement of rates. A notice to the consumer is thus excluded under the Act. The question then is whether the opportunity claimed, on the principles of natural justice, can be enforced as a requirement of the common law, when not enjoined by the Statute. It seems to me that such a right cannot be claimed. In Furnell v. Whangarei High School Board, (1973) 1 All ER 400 it has been held that justice of the common law will not supply the omission of the legislature. Their Lordships approved of the observations of Lord Hailsham in Pearlberg v. Varty (Inspector of Taxes), (1972) 2 All ER 6:

'..... that the courts will lean heavily against any construction of a statute which would be manifestly unfair. But they have no power to amend or supplement the language of a statute merely because on one view of the matter a subject feels himself entitled to a larger degree of say in the making of decision than the statute accords him.....'

It was further held that a statute is supposed to be carefully drafted and omission in respect of hearing to a party would be presumed to be deliberate. The omission cannot be supplied by invoking the common law principle of natural justice. In (1972) 2 All ER 6 (supra) an application for leave to raise certain assessments was made and it was held on a construction of Section 6 of the Income-tax Management Act, 1964 that the application for leave was intended to be ex parte and natural justice did not require that the tax prayer should have the right to be heard. It was observed that the omission to provide for a hearing to a tax payer in Section 6 of the Income-tax Management Act, 1964 could not be regarded as anything other than deliberate and, if deliberate it should be assumed the Parliament did not think that the requirements of fairness made it advisable to provide any such right to the person affected. If this was the view of the Parliament it would require a very strong case to justify the addition to the statute of requirements to meet one's own opinion of fairness.

10. In Union of India v. J. N. Sinha, AIR 1971 SC 40 it was held that the 'rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. Their aim is to secure justice or to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made'. See also the New Prakash Transport Co. Ltd. v. The New Suwarna Transport Co. Ltd., AIR 1957 SC 232. Thus where the legislature prescribes a procedure the principles of natural justice cannot be superimposed over it Proviso 3 to paragraph 1 of the 6th Schedule specifically provides for a notice to the State Government and the Board and to no other. It can be assumed that the omission to pro-vide for a notice to the consumers was deliberate and they have to rest contented because the law makers did not provide for it.

11. Further the right to enhance a I rate is a unilateral right of the licensee under the sixth Schedule. It is an inherent right of a seller. See Civil Misc. Writ No. 19 of 1970 connected with Civil Misc. Writ No. 786 of 1969 decided on 15-4-1971 (All.). In that case it was held that the consumers had no right to obiect to the proposed enhancement and if it was done without an opportunity to them the en-hancement could not be challenged on the ground that it was in violation of the principles of natural justice. I respectfully agree with the view expressed.

12. The sixth Schedule deals elaborately with the fixation of reasonable return. Excess profit is controlled by proviso 2 to paragraph (1) and provision is made for the refund of excess profit by proviso 4. The schedule puts a ceiling on the income of the licensee. The consumer may approach the State Government or the Board for the appointment of a rat-ing committee in certain circumstances as was observed by the Supreme Court in Amalgamated Electricity Co. Ltd., AIR 1984 SC 1598 (supra).

13. The demand for hearing in the instant case has not to be decided on the basis of ultimate burden but on vestedrights. The licensee has a unilateral right to increase rates. The consumer has only an option to refuse to buy the energy at higher rates. The Government's appreciation of the assessment of reasonable return has to be accepted, unless there is something palpably wrong with it. The legislature has left the judgment to a statutory authority and it is not to be disturbed except for compelling reasons. A notice to the consumers may involve practical difficulties as well. In paragraph 4 of the counter-affidavit of Sri N. L. Bhuwania it is stated that there are over 20,000 consumers where such a large body is involved it is neither practicable nor possible to give notice to each one of them. This may be another reason why the legislature excluded a provision for notice to them in the Act. In Narendra Nath Tripathy v. State of West Bengal, (1974) 78 Cal WN 397 while dealing with a case of requisition their Lordships observed as follows:

'If a contemplated requisition in public interest is on a vast scale affecting innumerable persons it may not be possible nor practicable to afford any opportunity for hearing before requisition except at the cost of frustrating the scheme which is the basis of requisition. In such cases there will be no scope for affording any opportunity of hearing before requisition which by reason of attending circumstances will rule out the application of the principles of natural justice.'

14. The giving of notice can thus be dispensed with where it is neither practicable nor possible to do so. If the argument of notice is accepted revision of income-tax rates, sales tax rates and the fixation of fair prices for essential commodities will always require notice to parties affected. This has rarely been done. The omission to provide for a notice to the consumer appears deliberate in the statute.

15. Learned counsel relied on Board of Revenue, U. P. Allahabad v. Sardarni Vidyawati, AIR 1962 SC 1217. State of Assam v Bharat Kala Bhandar, AIR 1967 SC 176,6 and the Purtabpur Co. Ltd. v. Cane Commr. of Bihar, AIR 1970 S? 1896 for the contention that notice to the consumer is necessary before the revision of rates. All the three cases are distinguishable. AIR 1962 SC 1217 was a case under the Stamp Act. The power of the Chief Controlling Revenue Authority under Section 56(2) was considered by the Supreme Court. It was held that the Chief Controlling Revenue Authority acts judicially in disposing of a reference made to him by the Collector, which involves payment of large amounts by the executant of instruments. The decision of the Board of Revenue accordingly has to be given after a hearing as the executants point of view needs to be considered by the Board. The reference is provided by Section 56 of the Stamp Act in case of a doubt by the Collector as to the Stamp Duty chargeable on an instrument. He hears the parties concerned and then makes a reference to the Board of Revenue. The reference is only a continuation of a judicial proceeding started before the Collector. The Board of Revenue has, therefore, to give a notice to the party affected. The proceeding under the Supply Act does not partake of the nature of a reference under Section 56 of the Stamp Act, AIR 1967 SC 1766 was a case under the Defence of India Rules, 1962, Rule 126-AA (1) empowered the Industrial Tribunal to decide disputes between employers and employees involving variation of contractual relations and alteration of conditions of service. This could not be done on a subjective satisfaction by the Government without consulting the employers. The Supreme Court held that it was to be done on an objective basis by calling for a data from the parties concerned and after investigating the materials furnished. The case only lays down that when an authority is acting in a quasi-judicial manner it should act objectively and not subjectively and reach a conclusion on the basis of the material furnished. The provisions of the Supply Act in the sixth Schedule themselves provide for the furnishing of data for the fixation of reasonable return. Provisos 2 and 4 of para 1 of the sixth Schedule which control excess profits and provide for a refund, enable the licensee only to earn a reasonable profit on the outlay. The procedure thus protects the interest of the consumer, the Government exer-cising a sufficient check on the licensee. The case cited above does not advance the contention raised. AIR 1970 SC 1896 was a case under the Sugar cane Control Order. In that case reservations of cane areas were altered by the Cane Commissioner and a question arose whether the parties affected were adequately heard before the passing of the impugned order. Representations in that case had already been made by the parties concerned for allocation of cane areas, the complaint was that the impugned orders had been passed without giving them a proper opportunity of putting their case. The Supreme Court held that the proceeding under Clause 6 (1) of the Sugarcane (Control) Order (1966) regarding reservation of sugarcane areas was of quasi judicial nature and while acting in a quasi-judicial manner authorities had to follow the principles of natural justice. No adverse order could accordingly be passed against a party without giving him an opportunity of effective representation. This again was a case where representations had already been made by parties whose direct interest was involved in the reservation of cane area. An adverse order could in the circumstances not be passed without affording them an opportunity. The case is clearly distinguishable. It can lend no support to the petitioner's contention that in a matter of fixation of electricity charges under the Supply Act a consumer who has no direct interest in the matter of fixation of rates and who had made no representation in that regard should also be given an opportunity of hearing before enhancement of rates by the licensee who has a unilateral right to do so under the Supply Act.

16. Learned counsel for the respondents has invited my attention to the fact that the writ petition No. 16 of 1973 is not a properly sworn petition. The assertion seems to be well founded. The swearing has been done by Sri Vijai Bahadur Sinhe as the Secy. of Bareilly Laghu Tel Udyog Sangh, petitioner No. 1. This is an association. No petition is maintainable on behalf of an association. The petition is not a properly sworn petition.

17. The writ petitions fail and are dismissed with costs.


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