Hindustan Petroleum Corporation Limited vs Karnataka Electricity Regulatory Commission & Anr

Court-2
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO.28 OF 2019

Dated: 06.07.2026
Present: Hon’ble Ms. Seema Gupta, Officiating Chairperson
Hon’ble Mr. Virender Bhat, Judicial Member

In the matter of:


Hindustan Petroleum Corporation Limited
Through its Dy. General Manager
Mangalore Terminal, Village Bala,
Via Katipalla, Mangalore - 575030 … Appellant

Versus

1. Karnataka Electricity Regulatory Commission
Through its Secretary
No. 16, C-1, Millers Tank Bed Area,
Vasanth Nagar, Bengaluru – 560052
Karnataka, India

2. Mangalore Electricity Supply Company Limited
Through its Chairman and Managing Director
MESCOM Bhavana, Kavoor Cross Road,
Bejai, Mangaluru – 575004 … Respondent (s)


Counsel for the Appellant(s) : M. G. Ramachandran, Sr. Adv.
Anand K. Ganesan
Swapna Seshadri
Parichita Chowdhury
for App. 1


Counsel for the Respondent(s) : Darpan K. M.
for Res. 1 & 2
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Appeal No.28 of 2019 Page 1 of 17

J U D G M E N T
PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. Challenge in this appeal is to the tariff order dated 14.05.2018
st
passed by 1 respondent Karnataka Electricity Regulatory Commission
(hereinafter referred to as “the Commission”) on the limited aspect of
categorizing petrol/diesel and oil storage plants in HT-2(b) category i.e.
the commercial category for the purposes of levy of tariff.

nd
2. The 2 respondent Mangalore Electricity Supply Company Limited
(in short “MESCOM”) had filed a petition seeking Annual Performance
Review for FY 2017, revision of Annual Revenue Requirement for FY
2019 and revision of Retail Supply Tariff for FY 2019 in Multi Year Tariff
framework in which the impugned order has been passed by the
Commission.

3. The appellant is a Government of India undertaking under the
administrative control of the Ministry of Petroleum and Natural Gas and
is engaged in the business of refining, processing and supply of
petroleum and natural gas products. It has established a petroleum and
diesel terminal at Mangalore in the State of Karnataka and is a
nd
consumer of 2 respondent for its activities at the terminal.

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Appeal No.28 of 2019 Page 2 of 17

4. Apart from assertion that the Commission, in the impugned order
has erroneously categorized petrol/diesel and oil storage plants under
HT-2(b) category namely commercial category as against HT-2(a)
namely industrial category, it is contended on behalf of the appellant that
the impugned order is a non-speaking order on this aspect and has been
passed without considering the objections as well as written submissions
of the appellant. It is further contended that since the Commission has
not dealt with the objections/submissions of the appellant raised during
the public hearing, the impugned order has been rendered in complete
violation of principles of natural justice and therefore cannot be
sustained.

5. Even though, none had appeared on behalf of the respondents on
06.02.2026 when the appeal had come up for hearing and the learned
senior counsel for the appellant Mr. M G Ramachandran had advanced
arguments on behalf of the appellant, yet in terms of the liberty granted
to the respondents in this regard, written submissions have been filed on
nd
behalf of 2 respondent which have been perused. In the written
nd
submissions, the 2 respondent has justified the categorization of
petrol/diesel and oil storage plants under HT-2(b) category i.e.
commercial category while referring to the activities being carried out in
those plants and placing reliance upon previous judgment of this
Tribunal dated 24.03.2025 in appeal no.149/2018 Hindustan Petroleum
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Appeal No.28 of 2019 Page 3 of 17

Corporation Limited v. Tamil Nadu Electricity Regulatory Commission &
Ors. wherein it has been held that the TNERC has correctly categorized
LPG bottling plant under HT-III i.e. commercial category. It is also
submitted that there has been no re-categorization of petrol/diesel and
oil storage plants by way of the impugned tariff order and these plants
have been classified under commercial category since the year 2003
which classification has merely been continued in the impugned tariff

order.

6. It is true that petrol/diesel and oil storage plants were placed under
commercial category i.e. HT-2(b) since the year 2003. However, it is
important to note that in response to the tariff proposal dated 30.11.2017
nd
filed by 2 respondent MESCOM before the Commission, categorizing
the petrol/diesel and oil storage plants under tariff schedule HT-2(b)
along with commercial complexes, cinemas, hotels, boarding and
lodging, amusement parks etc., the appellant had submitted its
comments/suggestions before the Commission to the said proposal
seeking categorization of these storage plants under HT-2(a) i.e.
st
industrial category. This fact is nowhere disputed either by the 1
nd
respondent Commission or by the 2 respondent MESCOM. Even a
copy of these comments/suggestions dated 02.03.2018 filed by
appellant before the Commission, has been annexed to the
Memorandum of Appeal as Annexure-B. In these
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Appeal No.28 of 2019 Page 4 of 17

comments/suggestions, the appellant has given reasons as well as
justifications as to why the categorization of petrol/diesel and oil storage
plants ought to be under industrial category and not under commercial
category. We also find from the perusal of the impugned tariff order that
a representative of the appellant was present during public hearing held

by the Commission on 02.03.2018.

7. There is no reference at all, not to speak of any discussion, about
these comments/suggestions of the appellant in the entire impugned
tariff order. Annexure-4 to the impugned tariff order which relates to
electricity tariff applicable for the FY 2019 merely mentions the tariff
schedules and the tariff rates applicable to particular tariff schedule. The
relevant portion of the impugned order is extracted hereinbelow: -

“ TARIFF SCHEDULE HT-2(a)
Applicable to Industries, Factories, Workshops, Research
& Development Centres, Industrial Estates, Milk dairies,
Rice Mills, Phova Mills, Roller Flour Mills, News Papers,
Printing Press, Railway Workshops/KSRTC Workshops/
Depots, Crematoriums, Cold Storage, Ice & Ice-cream mfg.
Units, Swimming Pools of local bodies, Water Supply
Installations of KIADB and other industries, all Defence
Establishments. Hatcheries, Poultry Farm, Museum,
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Appeal No.28 of 2019 Page 5 of 17

Floriculture, Green House, Bio Technical Laboratory,
Hybrid Seeds processing Units, Stone Crushers, Stone
cutting, Bakery Product Manufacturing Units, Mysore
Palace illumination, Film Studios, Dubbing Theatres,
Processing, Printing, Developing and Recording Theaters,
Tissue Culture, Aqua Culture, Prawn Culture, Information
Technology Industries engaged in development of
Hardware & Software, Information Technology (IT) enabled
Services / Start-ups ( As defined in GOI notification
dated 17.04.2015) / Animation / Gaming / Computer
Graphics as certified by the IT & BT Department of
GOK/GOI, Drug Mfg. Units, Garment Mfg. Units, Tyre
retreading units, Nuclear Power Projects, Stadiums
maintained by Government and local bodies, Railway
Traction, Effluent treatment plants and Drainage water
treatment plants owned other than by the local bodies
independently serviced outside the premises of
Industries/Buildings for which the HT power supply is
availed, LPG bottling plants, petroleum pipeline projects,
Piggery farms, Analytical Lab for analysis of ore metals,
Saw Mills, Toy/wood industries, Satellite communication
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Appeal No.28 of 2019 Page 6 of 17

centres, Mineral water processing plants / drinking water
bottling plants and Solid Waste Processing Plant.

RATE SECEDULE
HT-2 (a): Applicable to all areas of MESCOM.
Demand charges Rs.200/kVA of billing
demand/month
Energy charges
For the first one
lakh units
675 paise per unit
For the balance
units
700 paise per unit

Tariff applicable to Railway Traction
Demand charges Rs.210/kVA of billing
demand/month
Energy charges 600 paise per unit for all the
units

Note: Special Incentive Scheme & ToD Tariff is not
applicable to Railway traction installations.

Tariff applicable to Effluent Plants independently
serviced outside the premises of any installations
under HT2 a
Demand charges Rs.210/kVA of billing
demand/month
Energy charges 640 paise per unit for all the
units

Note: The ToD tariff is applicable to these installations
if the Special incentive scheme in not opted.


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Appeal No.28 of 2019 Page 7 of 17

TARIFF SCHEDULE HT-2(b)

Applicable to Commercial Complexes, Cinemas, Hotels,
Boarding & Lodging, Amusement Parks, Telephone
Exchanges, Race Course, All Clubs, T.V. Station, All India
Radio, Railway Stations, Air Port, KSRTC bus stations, All
offices, Banks, Commercial Multi-storied buildings.

APMC Yards, Stadiums other than those maintained by
Government and Local Bodies, Construction power for
irrigation, Power Projects and Konkan Railway Project,
Petrol / Diesel and Oil storage plants, I.T. based medical
transcription centres, telecom, call centres, BPO/KPO,
Diagnostic centres, concrete mixture (Ready Mix Concrete)
units and Private Guest Houses / Travellers Bunglows.

RATE SCHEDULE
HT-2 (b): Applicable to all areas of MESCOM
Demand charges Rs.220/kVA of billing
demand/month
Energy charges
For the first two lakh
units
845 paise per unit
For the balance units 855 paise per unit
”

8. No reason at all has been given by the Commission in the
impugned tariff order for non-consideration of the
submissions/comments of the appellant seeking recategorization of
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Appeal No.28 of 2019 Page 8 of 17

petrol/diesel and oil storage plants under commercial category. We find
the order totally non-speaking on this aspect.

9. We may note that while passing tariff orders, the Commission
exercises quasi-judicial functions. Therefore, the Commission is bound
to take note of every suggestion/objection raised before it by any stake-
holder and to give reasons for accepting or rejecting such
suggestions/objections. Reasoned order is the hallmark of judicial
system. A reasoned order provides a clear understanding of the
decision making process and ensures fairness, accountability and
credibility. It reinforces fairness as well as rule of law and enables
effective review/appeal process. It is the fundamental consideration in
decision making process that the party or the parties must know why
and on what grounds the order has been passed again him/them. A
speaking order introduces fairness in the decision making and helps in
minimizing arbitrariness. The purpose of recording reasons is also to
serve wider aspect of principle of justice that justice must not only be
done, it must also seem to be done. Reasons act as a bridge between
the material facts on which conclusion is drawn and the actual order
passed. Reasoning in a judicial order is necessary not only for the
satisfaction of the parties but also for the appellate court/forum which
must know the reasons for arriving at the decision assailed before it.
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Appeal No.28 of 2019 Page 9 of 17

10. The Hon’ble Supreme Court has also emphasized in several
cases, the importance of reasoned orders. The requirement of indicating
reasons has been judicially recognized as imperative. In Raj Kishore Jha
v. State of Bihar (2003) 11 SCC 519, the Apex Court held: -

“8. …. Right to reason is an indispensable part of a
sound judicial system; reasons at least sufficient to
indicate an application of mind to the matter before court.
Another rationale is that the affected party can know why
the decision has gone against him. One of the salutary
requirements of natural justice is spelling out reasons for
the order made;….”

11. Similarly, in Asstt. Commissioner, Commercial Tax Deptt. v.
Shukla & Brother (2010) 4 SCC 785, it has been observed as under: -

“23. We are not venturing to comment upon the
correctness or otherwise of the contentions of law raised
before the High Court in the present petition, but it was
certainly expected of the High Court to record some kind
of reasons for rejecting the revision petition filed by the
Department at the very threshold. A litigant has a
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Appeal No.28 of 2019 Page 10 of 17

legitimate expectation of knowing reasons for rejection of
his claim/prayer. It is then alone, that a party would be in
a position to challenge the order on appropriate grounds.
Besides, this would be for the benefit of the higher or the
appellate court. As arguments bring things hidden and
obscure to the light of reasons, reasoned judgment
where the law and factual matrix of the case is
discussed, provides lucidity and foundation for
conclusions or exercise of judicial discretion by the
courts.

24. Reason is the very life of law. When the reason of a
law once ceases, the law itself generally ceases
(Wharton's Law Lexicon). Such is the significance of
reasoning in any rule of law. Giving reasons furthers the
cause of justice as well as avoids uncertainty. As a
matter of fact it helps in the observance of law of
precedent. Absence of reasons on the contrary
essentially introduces an element of uncertainty,
dissatisfaction and give entirely different dimensions to
the questions of law raised before the higher/appellate
courts. In our view, the court should provide its own
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Appeal No.28 of 2019 Page 11 of 17

grounds and reasons for rejecting claim/prayer of a party
whether at the very threshold i.e. at admission stage or
after regular hearing, howsoever concise they may be.

25. We would reiterate the principle that when reasons
are announced and can be weighed, the public can have
assurance that process of correction is in place and
working. It is the requirement of law that correction
process of judgments should not only appear to be
implemented but also seem to have been properly
implemented. Reasons for an order would ensure and
enhance public confidence and would provide due
satisfaction to the consumer of justice under our justice
dispensation system. It may not be very correct in law to
say, that there is a qualified duty imposed upon the
Courts to record reasons.

26. Our procedural law and the established practice, in
fact, imposes unqualified obligation upon the courts to
record reasons. There is hardly any statutory provision
under the Income Tax Act or under the Constitution itself
requiring recording of reasons in the judgments but it is
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Appeal No.28 of 2019 Page 12 of 17

no more res integra and stands unequivocally settled by
different judgments of this Court holding that the courts
and tribunals are required to pass reasoned
judgments/orders. In fact, Order 14 Rule 2 read with
Order 20 Rule 1 of the Code of Civil Procedure requires
that, the Court should record findings on each issue and
such findings which obviously should be reasoned would
form part of the judgment, which in turn would be the
basis for writing a decree of the Court.

27. By practice adopted in all Courts and by virtue of
judge-made law, the concept of reasoned judgment has
become an indispensable part of basic rule of law and, in
fact, is a mandatory requirement of the procedural law.
Clarity of thoughts leads to clarity of vision and proper
reasoning is the foundation of a just and fair decision. In
Alexander Machinery (Dudley) Ltd. there are apt
observations in this regard to say "failure to give reasons
amounts to denial of justice". Reasons are the real live
links to the administration of justice. With respect we will
contribute to this view. There is a rationale, logic and
purpose behind a reasoned judgment. A reasoned
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Appeal No.28 of 2019 Page 13 of 17

judgment is primarily written to clarify own thoughts;
communicate the reasons for the decision to the
concerned and to provide and ensure that such reasons
can be appropriately considered by the appellate/higher
court. Absence of reasons thus would lead to frustrate
the very object stated hereinabove.”

12. Thus, reason is the heartbeat of every conclusion and without the
same, it becomes lifeless. Giving reason furthers the cause of justice
and avoids arbitrariness as well as uncertainty. A litigant has a legitimate
expectation of knowing the reasons for rejection of his claim/prayer.

13. In the instant case, we note that petrol/diesel and oil storage plants
have been categorized under tariff schedule HT-2(b) i.e. commercial
category along with commercial complexes, cinemas, hotels,
amusement parks, racecourse, railway stations, call centers, diagnostic
centers etc. whereas LPG bottling plants, coal storage, ice and ice
manufacturing units, information technology industries engaged in
development of hardware and software, saw-mills, toys/wood industries,
mineral water processing plants/drinking water bottling plants, solid
waste processing plants, etc. have been categorized under tariff
schedule HT-2(a) i.e. industrial category. It is argued on behalf of the
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Appeal No.28 of 2019 Page 14 of 17

appellant that there exists no reasonable nexus between the activities
grouped under same category in HT-2(b) category where the
petrol/diesel and oil storage plants have been included along with
malls/multiplexes etc. It is argued that the State Commission has failed
to apply the statutory mandate under Section 62(b) and illegally clubbed
the appellant’s storage plant with malls/cinemas/hotels and commercial
complexes. On this aspect, reliance is placed upon the previous
judgment of this Tribunal in appeal no.195/2009 Mumbai International
Airport Pvt. Ltd v. Maharashtra Electricity Regulatory Commission and
Anr. wherein it has been held as under:-

“76. It is settled law that equality before the law does not
mean that things which are different shall be treated as
they were the same. In this case, the Appellant being an
airport, extending services to the public, has been simply
put along with the malls, restaurants, shops etc., merely
because it does not come under other categories
namely, domestic, agriculture and residential, etc. This,
in our view, is a wrong approach.

77. The failure on the part of the State Commission to
properly exercise the discretion vested under Section
62(3) of the Act not only is violative of the said section
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Appeal No.28 of 2019 Page 15 of 17

but also violative of Article 14 of the Constitution. As a
matter of fact, the Appellant being treated equal with the
malls, restaurants and commercial establishments would
amount to treating unequal as equals.”

14. The mere fact that petrol/diesel and oil storage units were being
categorized under HT-2(b) i.e. commercial category since the year 2003
does not mean that there cannot be a relook on such categorization in
view of comments/justifications submitted by the appellant during the
nd
public hearing on the petition filed by 2 respondent. The Commission,
being a quasi-judicial forum was bound to take note of every
suggestion/objection raised by the appellant and to give reasons for
rejecting the same in case those were not found acceptable. The
impugned order of the Commission is absolutely bereft of any reasons
on this aspect and thus, a non-speaking order. We are unable to find
any reason for the Commission to overlook the comments/objections
submitted by the appellant during the hearing of petition. Such a cryptic
and non-speaking order cannot be sustained.

15. Hence, the impugned order of the Commission is set aside on the
limited aspect as noted and discussed hereinabove. Accordingly, the
case is remanded back to the Commission with a direction to pass fresh
speaking/reasoned order with regards to the categorization of
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Appeal No.28 of 2019 Page 16 of 17

petrol/diesel and oil storage plants, after providing an opportunity of
hearing to all the concerned parties. The needful shall be done by the
Commission within two months from the date of receipt of this judgment.

16. The appeal stands allowed in above terms.


th
Pronounced in the open court on this the 06 day of July, 2026.


Virender Bhat
Judicial Member
(Seema Gupta)

Officiating Chairperson

✓
REPORTABLE / NON-REPORATBLE

tp
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Appeal No.28 of 2019 Page 17 of 17