Full Judgment Text
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PETITIONER:
KANORIA CHEMICALS AND INDUSTRIES LTD. AND ANR.
Vs.
RESPONDENT:
STATE OF U.P. AND ORS. AND VICE VERSA
DATE OF JUDGMENT16/01/1992
BENCH:
RANGNATHAN, S.
BENCH:
RANGNATHAN, S.
FATHIMA BEEVI, M. (J)
OJHA, N.D. (J)
REDDY, K. JAYACHANDRA (J)
AGRAWAL, S.C. (J)
SAHAI, R.M. (J)
SAHAI, R.M. (J)
CITATION:
1992 SCR (1) 151 1992 SCC (2) 124
JT 1992 (1) 199 1992 SCALE (1)107
ACT:
: Electricity (Supply) Act, 1948: Section 60 (As
introduced by section 7 of Electricity Laws (U.P. Amendment)
Act, 1983.
: Company-Electricity Board-Contract for supply
of electricity at concessional rates on special
considerations-Power of Electricity Board to revise rates-
U.P. Gazette Notification dated 29.10.82-Schedule-Levy of
HV-2 rates i.e. uniform tariff applicable to "bulk power"
consumers in substitution of contracted rates-Validity of-
Held fixation of rates was not vitiated-Revision of rates
can be given retrospective effect-Failure to specify the
precise manner in which the rates were arrived at does not
vitiate the rates fixed-Power or revise tariff can be
exercised more than once-Electricity Board can fix rates
higher than HV-2 rates-But levy of rates higher than HV-2
rates on the Company held not justified under the
circumstances.
Section 49-Electricity Board-Revision of rates-Factors
to be taken into account-Distinction between section 49 and
60 explained.
Electricity Laws (U.P. Amendment) Act, 1983 (Act 12 of
1982) : Section 7-Difference in English and Hindi version of
Act, Absence of words "for this first time" in Hindi version
of Act-Effect of.
HEADNOTE:
The appellant-company set up a caustic soda industry at
Renukoot involving the use of electricity as the main raw
material. On 30.9.63 it entered into a contract with the
State of Uttar Pradesh for supply of electricity for the
period of 25 years from 1.4.64, to the extent of 6.5 NW from
the Rihand Hydel station at a fixed rate of 2.5 paise per
unit and an additional supply of 1.5 NW from an inter-
connection at the rate of 5 NP per unit. The terms of the
contract provided that the transmission and distribution
losses were to be borne by the company and that the rates
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could be raised after sixteen years but any enhancement in
rates was not to exceed 10 per cent of the rates agreed
upon.
Subsequently, the UP Government enacted the Electricity
Laws (Uttar Pradesh Amendment) Act, 1983 which came into
force from
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20.5.1983. Section 7 of the said Act amended section 60 of
the Electricity Supply Act, 1948 by inserting sub-section
(3) to (5) with retrospective effect from April 1, 1965.
The Amended Act enabled the State and the Board to modify
the rates of supply of Electricity to appellant under the
contract of 30.9.63. Simultaneously the Parliament also
amended Section 59 of the Electricity Supply Act by the Act
18 of 1983 enabling the Electricity Board to fix the tariff
in such a way so as to build up a statutory surplus fixed by
the State Government.
On the passing of the Amendment Act, the Electricity
Board informed the appellant-company that the rates were
proposed to be revised and later it informed the appellant-
company that on 28.9.83 the State Government, by its Gazette
Notification dated 29th October, 1982, had approved the levy
of HV-2 rates (i.e. uniform tariff applicable to ‘Bulk
power’ consumers) in substitution of the rates mentioned in
the agreement of 30th September, 1963. The effect of the
revision was to oblige the appellant-company to pay 57.71
paise per unit for 1983-84 and 61.60 paise per unit for
1984-85. Accordingly, supplementary bills were raised
demanding Rs. 3.07 crores from the appellant-company. The
appellant filed a writ petition in the High Court of
Allahabad assailing the Validity of section 7 of the
amending Act and the right of the Board to enhance the
rates.
By its order dated 2.4.87 the High Court allowed the
writ petition and quashed the approval dated 28.9.83 given
by the State Government to the new rates and the
consequential demands of the Electricity Board but left it
to the Board and State to fix revised rates afresh by
directing the respondents (1) not to charge the uniform
tariff rate for the period beginning from 20th May, 1983
till the rates were fixed in accordance with section 60(5)
(a); and (ii) that the rates applicable to the appellants
should be determined having regard to the individual
circumstances of the appellant.
The Electricity Board and the State Government
preferred an appeal to this Court. Aggrieved by the fact
that in applying the HV-2 rates the Board and the State had
not taken into account the special factors relevant to the
supplies made to it, the appellant also filed an appeal in
this Court.
In the meantime, pursuant to the directions of the High
Court the Board fixed the revised rates on 28.3.88 for the
supply from 20th May, 1983 which were much higher than the
HV-2 rates fixed earlier and
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quashed by the High Court.
The appeals came to be heard by this Court on April 10,
1991 when this Court directed that the appellant should make
a representation to the State Electricity Board setting out
the individual factors which should be taken into account in
fixing the rates applicable to them within the meaning of
section 60(5) (a) of the 1948 Act and that the State
Government should reconsider the fixation after considering
the recommendations made by the Board as well as the
representations of the appellant.
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Accordingly the State reconsidered the matter and by
its order dated 31.8.92 approved the rates fixed by the
State Government on 28.3.88.
The appellant challenged the validity of the rates
fixed contending that (i) the fixation of rates as on
31.8.1992 was not valid because (a) the respondents have not
complied with this court’s directions dated 10.4.1991 as
they have neither disclosed the factors based on which the
rates were revised in March 1988 nor indicated the monetary
incidence or impact of the factors taken into account; (b)
in the process of refixation of the rates there was no
genuine exercise to consider relevant factors in determining
the rate under section 60 (5) (a); (c) that the Board had
not set out anywhere the precise manner in which the rates
recommended by them were arrived at; (ii) Section 60 cannot
be interpreted so as to give power to the Board to fix rates
retrospectively because (a) such an interpretation precludes
the Board and the State from revising the rates
prospectively; (b) if the power is held exercisable more
than once, it will permit successive revisions each
superseding the earlier one, a position that could lead to
harassment; (c) that the Hindi version of the Amendment Act
is differently worded and does not contain the words "for
the first time" found in the English version and in case of
a conflicting version between Hindi and English version the
Hindi text should be the key to find out the true intention
of the Legislature; and (iii) in view of a facts (a) that
the company established its industry in a backward area at
the request of the State and in public interest; (b) the
transmission and distribution losses are borne by the
appellant and (c) electricity is one of the raw materials
needed for its industry the appellant should be charged less
than the HV-2 rates.
On behalf of the Electricity Board it was contended
that the
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demand of rates higher than HV-2 rates was justified because
(a) the Company has been getting substantial supplies of
electricity at nominal rates from 1963 to 1983; (b) The
Board has incurred heavy losses over the years by supplying
electricity at concessional rates; and (c) there was a
necessity to build up a statutory surplus prescribed by
section 59.
Allowing the Company’s appeal in part and dismissing
the Electricity Board’s appeal, this Court,
HELD: 1.The fixation of revised rates is not vitiated.
[173-E]
2. Section 60 does not require the Board or the State
Government to explain each and every step in its
calculation. All that the Electricity Board has to do is to
take into consideration the factors relevant under section
60(5) and propose rates for fixation to the State
Government. It is in order to ensure that these
recommendations take into account all relevant factors that
an opportunity has been provided to the consumer to satisfy
the Board as well as the State Government that the fixation
has taken into account certain relevant factors. Therefore,
the rate revision proceedings were not vitiated for the
reason that the Board has not set out the precise manner in
which the rates recommended by them were arrived at. [172 D-
E, 172-C]
2.1 Apart from the general factors which have been
taken into account in fixing the general tariff rates, the
Board has, in making its recommendations, taken into account
the purpose for which supply was required by the appellant
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along with the factor of recurring losses incurred by the
Board year after year and its statutory requirements to
maintain a minimum surplus of 3 per cent as required under
section 59 of the Supply Act, 1948. [173-D]
2.2 The rates recommended by the State Electricity
Board and approved by the State Government were within the
knowledge of the appellant-company. The appellant-company
filed its representation. After considering the
representation, the Board made its recommendations to the
State Government and a copy of the recommendations were also
available to the appellant. The appellant had full
opportunity to meet the various points set out in the
recommendations of the Board. The comments of both the
Board and the Appellant were taken into account by the State
Government before finally approving of the rates proposed by
the Board. Therefore, the appellant-company had full
opportunity to place all its special feature before the
Board and the
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State Government. [171H, 172A,B, 173E]
2.3 If one compares the two provisions viz. sections 49
and 60 one will find that most of the elements are common to
the two provisions. Both under section 49 and section 60 the
authorities have to take into account the geographical
position of any area, the nature of supply and purpose for
which supply is required and any other relevant factor. The
only difference between the two provisions is that since
section 49 deals with a general fixation while section 60(5)
deals with a fixation for a particular individual case,
there may be some special factors to be taken into account
which may or may not be germane while fixing the general
tariff under section 49. [172H, 173-A]
Indian Aluminium Company Ltd. v. Kerala State
Electricity Board, [1976] 1 S.C.R. 70; cited.
3. A retrospective effect to the revision of rates is
clearly envisaged by section 60. One can easily conceive a
weighty reason for saying so. If the section were
interpreted as conferring a power of revision only
prospectively, a consumer affected can easily frustrate the
effect of the provision by initiating proceedings seeking an
injunction restraining the Board and thus getting the
revision deferred indefinitely. Or, again, the revision of
rates, even if effected promptly by the Board and State, may
prove infructuous for one reason or another. Therefore, it
would be a very impractical interpretation of the section to
say that the revision of rates can only be prospective.
[174E-G]
3.1 The mandate of section 60 is only that the rates to
be charged on supplies for which payment becomes due after
20.8.83 shall be as fixed by the Board. The powers of the
Board in fixing the rates-including the dates from which
they will be operative are not restricted in any manner.
The Board is at complete liberty to fix different rates from
different dates and that scheme of fixation will be read
with the contract. Only the Board cannot revise the rates
in respect of supplies for which payment under the contract
fell due before the Amendment Act came into force. [175-B-C]
3.2 The power under section 60 is exercisable more than
once. However, while making a subsequent revision, the
authorities will not normally tamper with an earlier
revision or alter the dates of effectiveness fixed for the
earlier revision without a valid reason to do so. If this
is done, it will be open to a court to examine the basis
thereof and
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sustain it only where the earlier fixation was based on an
error or misconception or the like and called for
modification. [175D-E]
3.3 Although the Hindi version of the Amendment Act is
differently worded and does not contain the words "for the
first time" found in the English version, the Hindi version
does not really alter the position; actually it is the
presence of the words "for the first time" in the English
version that create ambiguity. Without these words, the
clause clearly provides that all supply of electricity, for
which payment is to be made after 20.5.83, i.e. coming into
force of the Amendment Act, will be charged at the rates to
be fixed by the Board. Therefore, the fixation by the Board
of rates from 20.5.83, and, at different rates for different
period of time, is unexceptionable. [175F-H, 176-A]
Mata Badal Pandey v. Board of Revenue, (1974) U.P.T.C.
570; referred to.
4. There are no obstacles, statutory or theoretical,
standing in the way of the Board fixing rates for the
company which will be higher than the rates applicable to
bulk consumers. The provision in s. 60(5)(a) is intended to
enable the Board and State to cut off the shackles cast by
an ancient contract entered into at a time when conditions
were totally different. It confers an absolute and
unrestricted enabling power to revise the rates in an
appropriate manner. [174-A]
While revising rates, the only limitation which the
statute requires the authorities to keep in mind are the
factors mentioned in the section. Whether the revised rates
for the consumer governed earlier by the contract should be
higher or lower than, or equal to, the tariff rates would
depend on a large number of considerations, in particular,
the basis on which, and the point of time at which, those
general rates were fixed. In principle, it is quite
conceivable that, in an appropriate case, a consideration of
the relevant factors may justify even a rate higher than the
general tariff rates intended for the particular category of
consumers. [174B-D]
4.1 However, there is no material to justify any
departure from the HV-2 rates in the case of the appellant.
The special circumstances pleaded by the appellant-company
have lost their importance with the passage of time. The
conditions that prevailed in 1963 are not valid and the
appellant has had the benefit of concessional rates for
twenty years. The consideration that electricity is a "raw
material" in the assesee’s
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business is, again irrelevant for it can mean nothing more
than that the appellant needs substantial quantities of the
energy and there is no reason why it should not pay for it
at the normal market rates. Therefore, the appellant has no
valid justification for staking a claim to less than the HV-
2 rates. [177B-D]
4.2 Equally, the authorities have no case to raise the
rates beyond the HV-2 rates. The huge losses that the Board
has been incurring and the statutory justification for
escalation in the rates keeping in view the necessity to
build up a surplus is an aspect of working which should
affect all the consumers equally. May be the Board can, in
appropriate circumstances, seek to make up for a part of the
losses by hiking up the rates to one particular category of
consumers but that would not be justified here as the
transmission and distribution losses in respect of the
supply to the appellant are borne by it and, in the absence
of some special vital reason, it would not be equitable to
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fix the rates of supply to the appellant above the rates
applicable to other HV-2 consumers. Therefore, there is no
justification to charge more than HV-2 rates from the
appellant. [177EG, 178-B]
4.3 The determination of 1988 and 1991 are quashed.
The State Electricity Board is directed to charge the
appellant-Company from 20.5.83 to 31.3.89 at the HV-2 rates
applicable to other consumers. [178-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1306 of
1988.
From the Judgment and Order dated 2.4.1987 of the
Allahabad High Court in Writ Petition No. 1818 of 1984.
H.N. Salve, P.P.Tripathi, Manoj Swarup and K.J. Johan
for the Appellants.
B.Sen, Gopal Subramaniam, Prashant Kumar and Mrs. S.
Dikshit for the Respondents.
The Judgment of the Court was delivered by
RANGANATHAN, J. There was a time when, in almost every
State in India, people were invited to avail of the supply
of the electric energy produced in the State and offered
special concessions when they agreed to
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do so in bulk under long-term contracts. A situation,
however, has since developed when the demand for the energy
increased so rapidly that, despite the quantity of available
electric energy also having gone up tremendously the rates
of supply agreed upon became uneconomical. The State and
its instrumentalities, who were supplying the energy, found
themselves without power to revise the rates to meet the
altered situation until the legislature came to the rescue.
It is this situation in the case of Kanoria Chemicals and
Industries Ltd. (hereinafter referred to a ‘the appellant’)
which has given rise to these appeals.
The Electricity (Supply) Act, 1948, (hereinafter
referred to as ‘the 1948 Act’) entrusted the control over
the generation and distribution of electric energy to
Electricity Boards constituted under the Act. In the State
of Uttar Pradesh, the U.P. State Electricity Board
(hereinafter referred to as ‘the Board,) was constituted on
1.4.1959. At that time, the State Government (hereinafter
referred to as ‘the State’) was in the process of
establishing the Rihand Hydro-Electric Generating Plant,
which become operational w.e.f. 1.2.62, and attained an
ultimate installed capacity of 300 M.W. The control of this
remained with the State till 31.3.1965. Since the supply of
electrical energy was then available in abundance and only
the eastern area of the State was served by the plant, the
State considered it expedient to enter into contracts with
bulk purchasers both with a view to ensure maximum
utilisation of the electricity available and with a view to
the industrialisation of the eastern areas of the State. In
particular the State was keen on the industrial development
of the district of Mirzapur, which was considered to be an
extremely backward area. The State was keen that power
intensive units be set up in close proximity of Rihand so
that electricity could be supplied to these units from the
Rihand power plant. One feature of the supply of
electricity from Rihand was that the metering was done at
the point of generation so that transmission and
distribution losses and costs could be borne by the
consumers of electricity.
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The appellant set up an industry for manufacture of
caustic soda at Renukoot sometime in 1964. According to the
appellant, this industry involved the use of electricity as
the main raw material, the other raw material needed being
salt. It is said that there were considerable disadvantages
in setting up the proposed caustic soda unit in the district
of Mirzapur, principally due to its distant location from
areas from which salt had to be transported. The appellant,
it is said, could easily have set up its factory in some
other State with greater facilities and advantages but it
was induced to set up the caustic soda plant at Pipri in the
district of Mirzapur on account of the assurance given by
the State that it will supply hydro electric
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power to the assessee from the Rihand power plant on a long
term basis at a cheap rate. It is claimed that, but for
this promise, the appellant would never have chosen Pipri or
the district of Mirzapur for the location of this plant.
After elaborate discussions between the State
Government and the promoters of the appellant company, the
plant was set up at Pipri and a contract was entered into
between the State Government and the appellant on 30.9.1963
ensuring the supply of electricity from the point of
generation to the appellant for a period of 25 years from
1.4.64. The supply, to the extent of 6.5 MW. was to be from
Rihand hydel station at a fixed rates of 2.5 paise per unit.
An additional supply of 1.5 MW was also promised from an
inter-connection at the rate of 5 N.P. per unit. The rates
could be revised after the first sixteen years but any
enhancement in rates was not to exceed 10 per cent of the
rates agreed upon.
The State agreed further to supply 4.5 MW to the
appellant from the Obra Hydro-Electric Project on such rates
as would be fixed subsequently. It may be mentioned that
this clause gave rise to disputes which were referred to
arbitration. An award was made by justice D.P. Madan, a
retired judge of this Court, which was made a decree of this
Court by an order dated 1.4.1987. Under the award, the rate
of supply was fixed at 8.69 paise per unit. The State’s
grievance is that it incurred a loss of Rs. 10.55 crores by
supplying electricity from Rihand between 1.4.64 and 19.5.83
at concessional rates instead of applying the uniform tariff
applicable to other "bulk power" consumers, briefly referred
to as "HV-2 rates." It says also that it likewise suffered
a loss of 12.4 crores due to the supply at 8.69 paise
instead of normal rates, from Obra between 1.4.71 and
31.3.89, when the agreement, came to an end by efflux of
time.
Obviously, it was not economical to continue supplying
energy at the preposterously low rates to which the State
had committed itself in 1963 on account of the conditions
that prevailed at the time of the agreement. The powers of
the State or the Boards to revise contractual rates
unilaterally were examined by this Court in Indian Aluminium
Company Ltd. v. Kerala State Electricity Board [1976] 1 SCR
70. It is sufficient to say that, after considering the
provisions of section 49 and 59 of the Supply Act, the Court
held that the Electricity Board were not entitled to enhance
charges in derogation of stipulations contained in agreement
entered into between parties. This decision led to the
provisions of the Supply Act being amended by various
States. The State of Karnataka, Orissa and Rajasthan
brought in amendments enabling the Electricity Board to
supersede contracts and
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revise the rates contained in earlier agreements. The U.P.
Government, also enacted the Electricity Laws (Uttar Pradesh
Amendment), Act, 1983, to vest the State’s agreement with
the Board and to enable the Board to revise the contractual
rates. The Act came into force from 20.5.1983. Section 7 of
the said Act amended Section 60 of the Supply Act, 1948 by
inserting the following sub-sections (3) to (5) with
retrospective effect from April 1, 1965 :
(3) All expenditure which the State Government may,
not later than two months from the commencement of
the Electricity Laws (Uttar Pradesh Amendment) Act,
1983, declare to have been incurred by it on
capital account in connection with the purposes of
this Act in respect of the Rihand Hydro Power
System shall also be deemed to be a loan advanced
to the Board under section 64 on the date of
commencement of this sub-section and all assets
acquired by such expenditure shall vest in the
Board with effect from such commencement.
(4) The provisions of the sub-sections (1) and (1-
A) shall, subject to the provisions of sub-section
(5) apply in relation to the debts and obligations
incurred, contracts entered into and matters and
things obliged to be done by, with or for the State
Government in respect of the Rihand Hydro Power
system after the first constitution of the Board
and before the commencement of this sub-section as
they apply in relation to debts and obligations
incurred, contracts entered into, matters and
things engaged to be done by, with or for the State
Government for any of the purposes of this Act
before the first constitution of the Board.
(5) All such contracts entered into by the State
Government for supply of electrical energy based on
or connected with the generation of electricity
from the Rihand Hydro Electric Generating Station
to any consumer and any contract entered into by
the Board on or after April 1, 1965 for the supply
of electrical energy to such consumer shall operate
subject to the modifications specified in the
following clauses, which shall have effect from the
date of the commencement of the Electricity Laws
(Uttar Pradesh Amendment) Act, 1983 (hereinafter
referred to as the said date):-
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(a) the rates to be charged by the Board for the
energy supplied by it to any consumer under any
contract for which the payment will be due for the
first time on or after the said date shall be such
as may with the previous approval of the State
Government be fixed by the Board, having due regard
to the geographical position of the area of supply,
the nature of the supply and purpose for which
supply is required and any other relevant factor.
(b) If the State Government directs the Board
under Section 22-B of Indian Electricity Act, 1910
or under any other law for the time being in force
to reduce the supply of energy to a consumer and
thereupon the Board reduces the supply of energy to
such consumer accordingly, the consumer concerned
shall not be entitled to any compensation for such
reduction, and if the consumer consumes energy in
excess of the reduced limit fixed under the said
section 22-B or any other law for the time being in
force as the case may be, then the Board shall have
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the right to discountinue the supply to the
consumers without notice ,and without prejudice to
the said right of the Board, the consumer shall be
liable to pay for such excess consumption at double
the normal rate fixed under clause (a);
(c) Any arbitration agreement contained in such
contract shall be subjects to the provisions of
this sub-section.
Parliament also, at about the same time, amended s. 59
of the Act by Act 18 of 1983. The amended s. 59(1), which
is sufficient for our purpose reads thus :
59. General principles for Board’s finance - (1)
The Board shall, after taking credit for any
subvention from the State Government under Section
63, carry on its operation under this Act and
adjust its tariffs so as to ensure that the total
revenues in any year of account shall, after
meeting all expenses properly chargeable to
revenues, including operating, maintenance and
management expenses, taxes (if any) on income and
profits depreciation and interest payable on all
debentures, bonds and loan, leave such surplus as
is not less than three per cent, or such higher
percentage, as the State Government may, by
notification in the official Gazette, specify in
this behalf, of the value of the fixed assets of
the Board in service at the
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beginning of such year.
Explanation - For the purposes of this sub-section.
"value of the fixed assets of the Board in service
at the beginning of the year" means the original
cost of such fixed assets as reduced by the
aggregate of the cumulative depreciation in respect
of such assets calculated in accordance with the
provisions of this Act and consumer’s contributions
for service lines.
It has been pointed out to us that the U.P. State
amendment is somewhat different from those of the other
States. The Karnataka legislature amended s. 49 of the
1948 Act and the Orissa and Rajasthan legislatures inserted
s. 49A in the said Act. These provisions enabled the Boards’
to prescribe tariffs and these rates were to prevail over
those specified in the agreement. The latter two amendments
actually declare the relevant clauses in the agreement void
from inception. The U.P. amendment. however, retains the
effectiveness of the earlier contracts and only reads into
them the rates that may be prescribed by the Board. This is
the first difference. The second is that while the other
legislations affect all agreements entered into before a
specified date, the U.P. amendment is restricted to
contracts for supply of electricity from the Rihand Hydro-
Electric Generating Station. We are informed that, when the
above amendment was sought to be effected, the only
outstanding contract of the State for the supply of
electricity from the Rihand Hydro-Electric Generating
Station was the contract with the appellant on the 30th of
September, 1963. There had been two agreements entered into
for supply of electricity from this power station but the
other one with Hindustan Aluminium Company had become
ineffective since that company gave up its claim to supply
from the above power plant in 1975-76 having been successful
in putting up a power plant for its captive use. Thus,
though the Act purports to be one of general application, it
was really intended to enable the State and the Board to
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modify the rates of supply of electricity to appellant under
the contract of 30.9.1963.
At this stage it may be useful to refer also to the
terms of s. 49 of the Act. It reads thus :
(1) Subject to the provisions of this Act and or
regulations, if any, made in this behalf, 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.
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(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.
(3) Nothing in the foregoing provisions of this
section shall derogate from the power of the
Board, if it considers it necessary or expedient to
fix different tariffs for the supply of electricity
to any person not being a licensee, having regard
to the geographical position of any area, the
nature of the supply and purpose for which supply
is required and any other relevant factors.
(4) In fixing the tariff and conditions for the
supply of electricity, the Board shall not show
undue preference to any person.
After the statute was thus amended, the Additional
Chief Engineer of the Board wrote to the appellant on
6.2.1984 stating that, though the bills were being drawn on
the basis of the agreement, the rates were subject to
revision with effect from May 20, 1983 with the approval of
the State Government and that a supplementary bill would be
sent for the arrears as and when the rates were revised in
pursuance of section 60(5) (a). On 5th April, 1984, the
appellant filed Writ Petition No. 1818 of 1984 in the High
Court of Allahabad assailing the validity of section 7 of
the amending Act and the right of the Board to enhance the
rates. While admitting the writ petition, the High Court
passed an interim order to the effect that the State
Government should provide an opportunity of hearing to the
appellant before bringing about any change in the terms and
conditions of the Agreement or tariff rates and that no
revised rates shall be charged from the
164
appellant till it is heard, and the matter decided, by the
State Government. On June 11, 1984, the Law Officer of the
Board wrote to the appellant requesting it to give in
writing the points which they wanted to urge before the
rates were approved by the State Government. According to
the appellant, this was not sufficient compliance with the
court’s order and it moved the High Court for amending its
petition and made further applications to the Court. It may
be mentioned that the stand taken up by the Board in the
writ petition was that the writ petition was premature as
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the State’s approval had not been obtained and no injury had
been caused to the appellant. But, suddenly, on 31.1.85,
the Board wrote to the appellant informing it that the
State Government had approved the levy of rates as per
Schedule HV-2 (as defined in the U.P. Gazette Notification
dated 29th October, 1982) applicable to heavy power
consumers in substitution of the rates mentioned in the
agreement of 20th September, 1963. It was stated-curiously
enough-that the approval of the State Government had been
given on 28.9.1983. The effect of the revision was to
oblige the petitioner to pay 57.71 paise per unit for 1983-
84 and 61.60 paise per unit for 1984-85. An idea of the
magnitude of the revision can be had by pointing out that
supplementary bills raised on the basis of the revision for
the period 20.5.83 to 31.12.1984 were to the tune of Rs.
3.07 crores. The appellant’s allegation is that no such
approval had been given and it is asserted that the internal
correspondence between Board and State would show that the
legal Department of the Board had raised certain objections
to the levy of HV-2 rates on the appellant, and that
consequently Board had sent a fresh proposal in December
1983 seeking approval of the State Government for imposing a
flat rate in respect of supplies to the appellant in place
of earlier proposal. It is also stated no proposal was
made, or approval sought, for imposing the revised rates
w.e.f. 20.5.1983.
The Board, however, proceeded to make demands against
the appellant on the basis of the revised rates. According
to the Board, reference was made to a resolution dated
30.1.85 to the withdrawal on that date of the proposal for a
flat rate in place of HV-2 rates. Thus, demands on the
basis of HV-2 rates were sought to be sustained. The
demands amounted to several crores of rupees and
disconnection was threatened in case of nonpayment. The
appellant obtained certain interim orders from High Court
(which have been subsequently considered and modified from
time to time by this court during the pendency of these
appeals). It is, however, not necessary to refer to these
interim orders as the final liability of the appellant will
have to be decided on the basis of the orders of this Court
on the appeals.
165
The writ petition was heard by a Bench of two judges.
Both judges repelled the challenge to the validity of the
Amendment Act but differed on some of the points which came
up for their consideration. Srivastava, J. was of the
opinion that the intention and purpose of the Amendment Act
was to revise the existing contractual rate of energy
charges and charge higher rates upto the extent of uniform
tariff rates for the supply of electricity to the consumers
whose contract stood modified by the said statute. The
rates so fixed had to be dependent upon the factors
enumerated in section 60(5). According to him, the material
on record showed that the factors enumerated in section
60(5) had not been taken into account by the Board before
fixing the rates or by the State Government in according its
approval to the same. The Board and the Government appeared
to have acted upon a consideration of the factors mentioned
in section 49(2) of the Act of 1948 while framing a uniform
tariff but this was not sufficient compliance with the
provisions of section 60(5). On the other hand, Mathur. J.
was of the opinion that the move for amendment of the Act
and enforcement of HV-2 tariff was initiated by the Board
and that the notings contained a detailed justification for
enforcing the said tariff. It also appeared from the
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statement of objects and reasons of the amending bill that
the supply of electricity at concessional rates despite
losses and the desirability of replacing the said rate by
uniform tariff came up for discussion in the State
Legislature and that the Board did not act wrongly or
illegally if it felt that it had no option but to apply
uniform rates in view of the statement contained in the
objects and reasons of the bill and the discussion in the
State Legislature. He was also of the opinion that the
factors contemplated by section 60(5) (a) were similar to
those envisaged by section 49(2), and since consideration
had been given to the latter factors while farming the
uniform tariff, no consideration of factors relevant to
individual consumers was called for. The two learned judges
thus differed on the following two points :
(a) Whether the language of section 60 (5) (a) of
U.P. Act No. 12 of 1983 required consideration of
factors prescribed in section 60 (5) (a) viz.,
geographical position of the area of supply, the
nature of supply and purpose for which supply is
required and other relevant factors with reference
to petitioner company for revising the existing
contractual rate of H.C. tariff?
(b) Whether the factors mentioned in section 49(2)
of Electricity (Supply) Act, 1948, having already
been considered at the time of farming uniform
tariff no fresh consideration of any factors
mentioned in section 60(5)(a) of U.P. Act No. 12 of
1983 was required when the uniform tariff itself
was being fixed while
166
revising the rate ?
The difference of opinion was, therefore, referred to a
third Judge, Mehrotra, J. This learned Judge answered that
question referred to him as follows :
(a) The language of section 60(5)(a) of U.P. Act
12 of 1983 requires consideration of factors
prescribed in it with reference to the petitioner
company for revising the existing contractual rate;
and
(b) Fresh consideration of the factors mentioned
in section 60(5)(a) was required irrespective of
the fact that factors mentioned in section 49(2) of
the Electricity (Supply) Act, 1948 had already been
considered at the time of framing of the uniform
tariff which was being fixed for the petitioner
company while revising the rates.
Consequent on the opinion of this learned Judge the
writ petition was allowed and a writ of certiorari was
issued quashing the approval dated 28.9.1983 given by the
State Government to the new rates and the consequent
resolutions, sanctions, bills and demands of the Board and
the State Government. A writ of mandamus was also issued
commanding the respondents not to charge the uniform tariff
rate for the period beginning from 20th May, 1983 till the
rates were fixed in accordance with section 60(5) (a) of
U.P. Act no. 12 of 1983. The Order disposing of the Writ
petition finally is dated 2.4.1987.
Immediately the judgement was pronounced the State
Electricity Board and the State Government sought a
certificate of fitness for preferring an appeal to this
Court and the High Court granted the certificate, as prayed
for. This appeal has not been numbered on account of delay.
Though the High Court had quashed the revision of the rates,
it had left it to the board and State to fix revised rates
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afresh. That apart, the appellant had also a grievance
that, in applying the HV-2 rates which were applicable to
other consumers, the Board and the State had not taken into
account the special factors relevant to the supplies made to
it. The appellant also, therefore, filed S.L.P. No. 13967
of 1987 for leave to appeal from the judgement dated
2.4.1987. Leave has been granted by this Court on 8.4.1988
and the appeal of the company had been registered as C.A.
1306 of 1988.
In the meantime the Board and State were, apparently
carrying on an
167
exercise for the revision of the rates afresh as directed
by the High Court and, on 28.3.1988, the Board purported to
fix the following revised rates for the supply from 20th
May, 1983.
Period Rate (Paise per unit)
20.5.1983 to 31.3.1984 70.21
1.4.1984 to 31.3.1985 74.93
1.4.1985 to 31.3.1986 85.14
1.4.1986 to 31.3.1987 88.60
It will be observed that rates thus fixed, and said to
have been approved by the State Government, were much higher
than the HV-2 rates fixed earlier, objected to by the
appellant and quashed by the High Court. Having done this,
this Board sought leave to withdraw the appeal preferred by
it. So far the appellant’s appeal was concerned, it was
contended that the appellant’s remedy was to challenge the
revision of 28.3.1988, if so advised, in fresh proceedings.
This was the position when these appeals came to be heard by
us on April 10, 1991.
We heard the appeals at length and reserved orders. In
doing so we passed the following order :
"The appeals pertain to the fixation of tariff
rates for supply of electricity to the appellants
caustic soda plant at Renukoot. The appellants
originally came to court challenging the levy of
the electricity charges on the basis of HV-II
rates applicable generally to consumers drawing
supply from the U.P. State Electricity Board.
However, the High Court held that the rates
applicable to the appellants should be determined
having regard to the individual circumstances of
the appellants. This was by a majority judgement
in the High Court. Subsequently, the Electricity
Board had proposed, and the State Government has
approved, certain rates for the period from
20.5.1983 to 31.3.1987 which are somewhat higher
than the HV-II rates originally approved. This is
the bone of controversy between the parties.
We find that the State Government and Board have
filed no counter affidavits in regard to the
challenge by the appellants to the revision of
rates effected subsequent to the High Court
168
judgment. In the circumstances, before we
pronounce our judgment we think that, in the
interests of justice, it would be proper to direct
the State Board and the State Government to
reconsider the fixation effected by them on the
basis of the following directions :
1. Within a period of three weeks from today, the
appellants will file before the State Electricity
Board (with a copy to the State Government) a
representation setting out what, according to them,
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are the individual factors which should be taken
into account in fixing the rates applicable to
them within the meaning of section 60(5)(a), 1948
as amended in 1983.
2. The State Electricity Board will consider this
representation and make appropriate recommendations
to the State Government. However, before doing so,
and particularly if the Board intends to take into
account any factors other than those mentioned in
the appellants’ representation, they should
indicate the factors which they so wish to take
into account, in their recommendations to the State
Government. A copy of the recommendations should
be forwarded to the appellants within seven weeks
from today.
3. On receipt of the recommendations made by the
Board, the appellants may submit to the State
Government, if they so desire, any representation
which they wish to make regarding the
recommendations within a period of three weeks
thereafter.
4. The State Government will consider the
recommendations of the State Board as well as the
representations made by the appellants to the Board
as well as to themselves and approve of the rates
which they consider proper in the circumstances of
the case by a reasoned order, giving a board
indication of the factors which they have taken
into account in fixing the rates. This decision
should be arrived at within a period of four weeks
from the date of the receipt of the representation
of the appellants.
5. As indicated above, since the High Court has
decided that in fixing the rates the individual
circumstances of the appellants should be taken
into account, the State Board as well as the State
Government should take into consideration the
special
169
circumstances of the appellants in fixing the
rates.
6. The Government’s order may also, in case
different rates for different periods are fixed,
indicate the respective dates from which the
several rates will come into operation. The rates
and dates so fixed by the Government, will
naturally be subject to the decision on these
appeals."
Subsequent to our order, the appellant made a
representation to the Board on 29.4.91. The Board made its
recommendations thereon to the State Government on 26.6.91.
Thereafter the appellant made its representation to the
State Government on 22.7.91. The State Government has
subsequently passed an order on 31.8.91 and submitted the
same to us. It is perhaps sufficient to extract the
concluding paragraphs of the order.
"After analysing the contentions of Kanoria
Chemicals and the State Electricity Board, the
State Govt. comes to the conclusion that M/s.
Kanoria Chemicals and Industries Ltd. has taken
benefit of establishing this unit in a backward
area for the last 19 years and there is no
justification in giving this benefit in
continuously future also because this area has been
developed in comparison to earlier years. The
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request of M/s. Kanoria Chemicals and Industries
Ltd. that the factors shown by State Electricity
Board should be limited to Rihand Hydel Power
Station, is without justification since at present,
they are getting supply from U.P. Grid and not from
Rihand Power Station. Hence, the point of view of
the State Electricity Board is justifiable.
8. After due consideration of representation dated
24.2.91 and 22.7.91 of M/s. Kanoria Chemicals and
Industries Ltd. and the recommendations of the
State Electricity Board dated 26.6.91, the State
Govt. comes to the conclusion that M/s. Kanoria
Chemicals and Industries Ltd. has failed to
indicate any fact which comes under the provisions
of Sec. 60(5)(a) of the Electricity (Supply) Act,
1948 and which has not been considered by the State
Electricity Board while fixing the rates in March
88 has kept in mind the decision of Hon. High
Court of Allahabad and
170
complied with the provisions of sec. 60(5)(a) of
the Electricity (Supply) Act, 1948. Since keeping
in view the factors enumerated in sec. 60(5)(a) of
the Electricity (Supply) Act, 1948, the Rules were
revised in March, 1988 in the following manner,
hence there appears no necessity to change these
rates :-
S.No. Period Rate
1. 20.5.83 to 31.3.84 70.21 paise/unit
2. 1.4.84 to 31.3.85 74.93 paise/unit
3. 1.4.85 to 31.3.86 85.14 paise/unit
4. 1.4.86 to 31.3.87 88.60 paise/unit
In other words, the State and Board adhere to the rates
fixed on 28.3.88.
It may be interesting to set out a comparative table of
the revisions effected by the Board originally (which was
quashed by the High Court) and the rates now approved :
Period HV-2 rate Revised rate
Paise/unit paise/unit
20.5.83 to 31.3.84 55.71 70.21
1984-85 59.86 74.93
1985-86 63.89 85.14
1986-87 80.88 88.60
*1987-88 84.64 88.60
*1988-89 93.39 88.60
* The revised rates for 1987-88 and 1988-89 are
stated to be provisional but so far till today no
fresh rates have been fixed in respect of these
periods.
171
The resultant position is that the appellant is now
facing huge demands in respect of the period since 20.5.1983
and till 31.3.1989 when the agreement expires, at rates
which will be higher than the HV-2 rates which had been
sought to be applied in the first instance. The appellant
vehemently challenges the fixation of rates on 28.3.88 and
31.8.91.
A good part of the argument before us in these appeals,
in the first instance, was addressed on the question whether
the State Government was obliged to give a hearing to the
consumer before revising the rates under section 60(5) and
whether the factors relevant under s.60(5) can be said to
have been taken into account on the ground that they had
already been taken into account while fixing uniform rates
under s.49. In this context, reference was made to several
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decisions and contentions where canvassed in regard to the
nature of the process of fixation of rates of charges for
supply of electricity. It is, however, unnecessary to go
into all these aspects because, in pursuance of the
directions of this Court dated 10.4.1991, the matter has
been re-considered by the Board and the State Government and
fresh rates have been fixed along with the respective dates
of operation after hearing the appellant’s representatives.
Broadly two principal submissions have been addressed
before us at this stage on behalf of the appellants. The
first is that the fixation of rates as on 31.8.1991 is not
valid as the respondents have not complied with the
directions given by this Court in the order dated 10.4.1991.
It is argued that the respondents have neither disclosed the
factors based on which the rates were revised in March 1988
nor have they indicated the monetary incidence or impact of
the factors taken into account, though a specific request
was made in this regard by the appellant to the Board and
to the State Government. The appellant, it is said, has
been gravely prejudiced and handicapped, in the absence of
any such disclosure, in making any effective representation.
Further in the final order dated 31.8.91, the State
Government has stated that the fixation of rate by the State
Government was based upon the consideration of facts and
data communicated by the Board to the State Government in
March 1988 but, admittedly, no facts, data or basis had been
placed before this court at the time of the original writ
petition on the basis of which the State Government had
fixed the rates in March, 1988 compelling this Court to
remand the matter for fresh consideration. Suddenly the
Board, while concluding its recommendation to the State
Government on 26.9.91 reminded the State Government that
prior approval of the State Government for the rates had
already been obtained in March 88 and persuaded the State
Government to mechanically uphold the pre-determined rates.
Finally, it is contended that even in this process of re-
fixation of the
172
rates there was no genuine exercise to consider relevant
factors in determining the rate under section 60(5)(a).
We do not think that there is any force in these
contentions. By the time the matter came up before us for
hearing in the first instance the State Government had
already passed its order of revision dated March 28, 1988.
The rates which had been recommended by the State
Electricity Board and approved by the State Government were
within the knowledge of the appellant. It was of course
necessary and equitable that, before giving effect to these
rates (if not even before they were recommended), the
consumer should have had no opportunity of placing before
the Electricity Board and the State Government its side of
the picture. This opportunity has, however, been provided
by to the appellant. The appellant has also filed its
representation. After considering the representation, the
Board made its recommendations to the State Government and a
copy of these recommendations were also available to the
appellant. The appellant also had full opportunity to meet
the various points set out in the recommendations of the
Board. The comments of both the Board and the appellant
have been taken into account by the State Government before
finally approving of the rates proposed by the Board. The
grievance of the appellant seems to be that the Board has
not set out anywhere the precise manner in which the rates
recommended by them were arrived at and that this has
considerably handicapped any effective representation being
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made by it to the Board and to the State Government. We do
not think the proceedings are vitiated for this reason. It
is true that the actual computations of the rates were not
set out by the Board in its recommendations made in 1983 or
1985 or 1988 but the proper approach to the issue is not the
one adopted by the petitioner. The section does not require
the Board or the State Government to explain each and every
step in its calculation. All that the State Government has
to do is to take into consideration the factors relevant
under section 60(5) and propose rates for fixation to the
State Government. It is in order to ensure that these
recommendations take into account all relevant factors that
an opportunity has been provided to the consumer to satisfy
the Board as well as the State Government that the fixation
has not taken into account certain relevant factors. We,
therefore, think the appellant must be held to have been
given a fair opportunity under s. 60(5)(a) so long as it had
an opportunity to explain to the Board and the State
Government the factors individual to its case and also as to
how and why the rates recommended by the Board need
modification. Moreover, the issue here was in a narrow
compass for the following reason. On the passing of the
Amendment Act, the Board decided to substitute the contract
rates by the HV-2 rates. But this was rendered infructuous
because of the terms of section 60(5)(a) which, it was said,
were
173
different from those of s. 49. If the factors under section
49 were alone to be taken into account then the consumers,
one and all, would have been liable to pay for the
electricity at the tariff rates. The claim of the appellant
was that in applying these rates certain factors individual
to it had not been taken into account. If one compares the
two provisions, one will find that most of the elements are
common to the two provisions. Both under section 49 and
section 60 the authorities have to take into account the
geographical position of any area, the nature of supply and
purpose for which supply is required and any other relevant
factor. The only difference between the two provisions is
that since section 49 deals with a general fixation while
section 60(5) deals with a fixation for a particular
individual case, there may be some special factors to be
taken into account which may or may not be germane while
fixing the general tariff under section 49. Hence the only
point which needed to be considered, when the matter was
reexamined pursuant to our directions, was whether, having
regard to the factors prevailing in the case of the
appellant the rates to be fixed should be higher or lower
than the HV-2 rates or whether they should be the same. It
was open to the petitioner to contend, as it in fact did,
that there are special features in its case which make it
legitimate to fix some concessional rates as compared to
other consumers. On the other hand, it is equally open to
the State Electricity Board to contend that having regard to
the prevalence of certain circumstances, the rates to be
fixed should be higher than the tariff rates applicable
generally. This is a short aspect on which both parties
have made their positions clear. Apart from the general
factors which have been taken into account in fixing the
general tariff rates, the Board has, in making its
recommendations, taken into account the purpose for which
supply was required by the petitioner along with the factor
of recurring losses incurred by the Board year after year
and its statutory requirements to maintain a minimum surplus
of 3 per cent as required under section 59 of the Supply
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Act, 1948. We are, therefore, satisfied that the appellant
had full opportunity to place all its special features
before the Board and the State Government and that all
aspects have been fully considered by the authorities. The
fixation of rates on 31.8.1991 is not, therefore, vitiated
for the reasons urged by the appellant.
The only other aspect that requires consideration is
regarding the maintainability of the rates as now fixed by
the Board and the State. Three questions arise in regard to
this :
(i) Can the Board fix rates higher than HV-2
rates in respect of bulk consumers like the
company for whom a concessional rate had been
granted on special considerations ?
174
(ii) Can the Board determine rates in 1991 and make
them retrospective w.e.f. 1983?
(iii)Was there material for the Board to fix rates
which they have eventually fixed?
We find that the answer to the first two questions
posed only be in the affirmative. On the first issue, there
are no obstacles, statutory or theoretical, standing in the
way of the Board fixing rates for the company which will be
higher than the rates applicable to bulk consumers. The
provision in s.60(5)(a) is intended to enable the Board and
State to cut off the shackles cast by an ancient contract
entered into at a time when conditions were totally
different. It confers an absolute and unrestricted enabling
power to revise the rates in an appropriate manner and
contains no restriction of the nature suggested for the
appellant. In doing this, the only limitation which the
statute requires the authorities to keep in mind are the
factors mentioned in the section. Whether the revised rates
for the consumer governed earlier by the contract should be
higher or lower than, or equal to, the tariff rates would
depend on a large number of considerations, in particular,
the basis on which, and the point of time at which, those
general rates were fixed. In principle, it is quite
conceivable that, in an appropriate case, a consideration of
the relevant factors may justify even a rate higher than the
general tariff rates intended for the particular category of
consumers. We shall examine later whether this was
justified in the present case. At the moment, all we are
concerned with is the legality of fixing such higher rates
and we see no difficulty in this either on the language of
the Statute or on other considerations.
A retrospective effect to the revision also seems to be
clearly envisaged by the section. One can easily conceive a
weighty reason for saying so. If the section were
interpreted as conferring a power of revision only
prospectively, a consumer affected can easily frustrate the
effect of the provision by initiating proceedings seeking an
injunction restraining the Board and State from revising the
rates, on one ground or other, and thus getting the revision
deferred indefinitely. Or, again, the revision of rates,
even if effected promptly by the Board and State, may prove
infructuous for one reason or another. Indeed, even in the
present case, the Board and State were fairly prompt in
taking steps. Even in January 1984, they warned the
appellant that they were proposing to revise the rates and
they did this too as early as in 1985. For reasons for
which they cannot be blamed this proved ineffective. They
revised the rates again in March 1988 and August 1991 and,
till today, the validity of their action is under challenge.
In this
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175
state of affairs, it would be a very impractical
interpretation of the section to say that the revision of
rates can only be prospective.
The language of the section also supports this view.
Slightly rearranging the syntax of the clause to facilitate
easier understanding, what it provides is that the revised
rates fixed by the Board shall be the rates to be charged by
the Board for the energy supplied by it to any consumer for
which the payment will be due for the first time on or after
the 20th May, 1983. In other words, the rates eventually
fixed will, by force of statute, apply to all supply of
electricity for which the charges become payable in terms
of the contract, after 20.5.1983. There are three
objections suggested against this interpretation. The first
is that it precludes the Board and State, where they choose
to do so, from revising the rates prospectively or with
effect from such dates, after 20.5.1983, which they may
consider appropriate. We think this consequence does not
flow from the language of the provision. The mandate is
only that the rates to be charged on supplies for which
payment becomes due after 20.8.83 shall be as fixed by the
Board. The powers of the Board in fixing the rates-
including the dates from which they will be operative-are
not restricted in any manner. The Board is at complete
liberty to fix different rates from different dates and that
scheme of fixation will be read with the contract. Only the
Board cannot revise the rates in respect of supplies for
which payment under the contract, fell due before 20.5.83.
The second objection, which is a follow up of the first, is
that if the power u/s 60 is held exercisable more than once,
the interpretation will permit successive revisions, each
superseding the earlier one, a position that could lead to
immense harassment. We have no doubt the power u/s 60 is
exercisable more than once. All the same, the answer to the
appellant’s objection is that, while this could be a basis
of substantial harassment if repeated revisions are
automatically dated back to 20.5.83 (as argued, on the first
point, for the assessee), it loses all force on our
interpretation leaving it open to the Board and State to fix
the dates with effect from which revisions will be
effective. In view of this, one can take in that, while
making a subsequent revision, the authorities will not
normally tamper with an earlier revision (s) or alter the
dates of effectiveness fixed for the earlier revision (s)
without a valid reason to do so. If this is done, it will
be open to a court to examine the basis thereof and sustain
it only where the earlier fixation was based on an error or
misconception or the like and called for modification. The
third objection is that the Hindi version of the Amendment
Act is differently worded and does not contain the words
"for the first time" found in the English version. Reliance
is placed on the decision of a Bench of seven judges of the
Allahabad High Court in Mata Badal Pandey v. Board of
Revenue, (1974) U.P.T.C. 570 to
176
the effect that, where there appears a doubt or ambiguity
on a plain reading of the English words as to the true
intention of the legislature and the Hindi version is
conflicting or different. the Hindi text will be the key for
finding the answer. We do not think the Hindi version
really alters the position; actually it is the presence of
the words "for the first time" in the English version that
create an ambiguity. Without these words, the clause
clearly provides that all supply of electricity, for which
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payment is to be made after 20.5.83, will be charged at the
rates to be fixed by the Board. We, therefore, reject the
appellant’s contention and hold that the fixation by the
Board of rates from 20.5.83 and, at different rates for
different periods of time, is unexceptionable.
This takes us to the real and crucial question in the
case as to whether rates to be fixed in the present case
should, on proper consideration, be less than, equal to or
higher than the general HV-2 rates. The appellant contends
that it should be charged at the cost of generation plus a
reasonable margin of profit or at the rate at which the
supply is made to the Madhya Pradesh State Electricity
Board. At any rate, it is said, the rates charged to the
appellant should be less than HV-2 rates. For this it
relies on: (a) the special circumstance that the appellant,
at great detriment to itself, agreed to set up a caustic
soda plant in a backward area at the request of the State
Government and in public interest only because of a promised
concession in rates of electricity supply; (b) the fact that
the supply to the appellant is metered at the point of
generation with the result that the transmission and
distribution losses, in so far as the appellant is
concerned, are borne by the appellant and not by the Board
as in the case of other consumers and (c) the important fact
that electricity, in the case of the appellant, is one of
the only two raw materials needed for its business. On the
other hand, for the Electricity Board, it is contended that
the appellant should be called upon to pay higher than HV-2
rates for the following reasons :
(i) The appellant has been having substantial
supplies of electricity at nominal rates of 2.5
paise and 2.75 paise per unit between 1963 and
1983.
(ii) The supply to the assessee is being made only
from the State Grid and there is no reason why it
should draw the supply at lower rates than others :
(iii) The Board had been incurring heavy losses
over the years. This is to a considerable extent
due to the spiraling demand for electricity, the
Board’s responsibilities under the statute to co-
177
ordinate development of the supply of energy
throughout the State and the necessity to supply
energy at concessional rates to certain sectors
such as the agricultural sector.
(iv) The Board is also entitled, under s.59 of the
1948 Act, to take into account the necessity of
building up a surplus, statutorily fixed, in the
fixation of rates of supply to all or any of its
consumers.
We have given careful thought to the considerations
urged before us and we are of opinion that there is no
material to justify any departure from the HV-2 rates in the
case of the appellant. We find no force in the contentions
put forward on behalf of the appellant to reduce the rates
applicable to the appellant below HV-2 level. The special
circumstances pleaded have lost their importance with the
passage of time. It is obvious that the conditions that
prevailed in 1963 are not valid and the appellant has had
the benefit of concessional rates for twenty years. No
doubt the benefits would have continued for five more years
but for statutory intervention. But the statute permits a
reconsideration of the situation as in May 1983 and it is
unarguable, it seems to us, that the rate of 2.75 p. should
continue even after 1983 or that the appellant should be
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entitled to any special concession. The consideration that
electricity is a "raw material" in the assessee’s business
is, again, irrelevant for it can mean nothing more than that
the appellant needs substantial quantities of the energy and
there is no reason why it should not pay for it at the
normal market rates. The point regarding take off of supply
at the generating point will no doubt have some relevance on
the question of rates and we shall refer to this aspect
later in the context of the pleas put forward by the Board.
We are, therefore, of the view that the appellant has no
valid justification for staking a claim to less than the HV-
2 rates.
Equally, it seems to us, the authorities have no case
for seeking to raise the rates beyond the HV-2 rates. They
are supplying energy to the appellant from the grid since
1968 and they cannot justifiably seek to demand higher rates
from the appellant than from the HV-2 consumers. This is
sought to be justified on the basis of the huge losses that
the Board has been incurring and the statutory justification
for escalation in the rates keeping in view the necessity to
build up a surplus. This, however, is an aspect of working
which should affect all the consumers equally. May be the
Board can, in appropriate circumstances, seek to make up for
a part of the losses by hiking up the rates to one
particular category of consumers but that would not be
justified here as the transmission and distribution losses
178
in respect of the supply to the appellant are borne by it
and, in the absence of some special vital reason, it would
not be equitable to fix the rates of supply to the appellant
above the rates applicable to other HV-2 consumers. Some
reference was made to the difficulties in completely fitting
the scheme of computations for determining the HV_2 rates
into the scheme under the appellant’s contract. It is,
however, unnecessary to go into that aspect as we are only
on the question of rates and holding that there is no
justification for charging more than HV-2 rates from the
appellant. Moreover, the appellant has been paying for the
Obra supply at HV-2 rates since 1989. We have also been
informed that in 1972 the appellant took a further
additional supply of 8 MW and agreed to pay therefor at HV-
2B rates as applicable to other Bulk Power Consumers in the
State.
In these circumstances, we have reached to the
conclusion that there is no justification to charge more
than HV-2 rates from the appellant. We, therefore, allow
this appeal in part, quash the determinations of 1988 and
1991 and direct that the appellants should be charged from
20.5.83 to 31.3.89 at the HV-2 rates applicable to other
consumers. The appeal of the appellant is partly allowed to
the above extent. The Board’s appeal has not yet been
numbered as it is delayed by a few days. It was, however,
stated that the Board wishes to withdraw its appeal because
of the subsequent developments. For these reasons and also
in view of our above conclusion the Board’s appeal also
stands dismissed. In the circumstances, we direct each
party to bear its own costs.
T.N.A. C.A. 1306/88 Partly allowed.
C.A. 128/92 dismissed.
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