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Judgment
S.B. Sinha, J.—In all these writ applications the vires of the tariff notification dated 26.8.1991 framed by the Bihar State Electricity Board (hereinafter referred to as the Board) which has been published in the Gazette on 20th September, 1991 and which has come into force with effect from 1st August, 1991, is in question.
C.W.J.C. No. 7991 of 1991 has been filed by Council for Protection of Public Rights and Welfare questioning the entire tariff.
In CWJC. No. 8177 of 1991 and CWJC No. 12701 of 1992 that part of the tariff which is applicable to the commercial consumers is in question; whereas CWJC No. 8614 of 1991 is in relation to the domestic tariff.
Before proceeding with the matter further, it may be mentioned that vires of 1991 tariff came up for consideration before this court in Bihar State Electricity Board and Others Vs. State of Bihar and Others, but in that case the Bench hearing the matter considered the tariff as applicable to the High Tension consumers only.
Mr. Indu Shekhar Prasad Sinha, learned counsel appearing on behalf of the Petitioner in CWJC No. 7991 of 1991 raised the following contentions:
(a) The power to frame tariff goes with the efficient and economic management as contemplated u/s 18(a) of the Electricity (Supply) Act, 1948 (hereinafter referred to as the 1948 Act), inasmuch as thereby a statutory duty has been cast on the Board to manage its affairs in a most efficient and economical manner.
(b) The power of the Board to frame tariff in terms of Sections 49 and 59 of the 1948 Act will have to be read in the context of Section 18(a) of the Act.
(c) The learned counsel drew our attention to the statements made in paragraphs 11 to 18 of the writ application and submitted that from a perusal thereof it would appear that even the Controller and Auditor General who is terms of the provisions of 1948 Act itself is authorised to audit the accounts of the Board clearly held that the Board had not been managing its affairs in a most economic and efficient manner, and thus it must be held that the Board is not entitled to frame the tariff by placing heavy burden on the consumers by increasing the charges for consumption of electrical energy and by levying other charges.
(d) The Board cannot be permitted to shift the burden of its inefficiency and uneconomical management on the consumers.
It has been stated that a situation has been created wherein even the statutory safeguards provided for under Sub-Section (4) and (5) of Section 69 of the 1948 Act have been given a complete go-bye and thus it has become absolutely necessary for the court to intervene in the matter.
(e) Although framing of the tariff is a legislative function but the same being violative of the provisions of 1948 Act as also Article 14 of the Constitution of India, the same is a nullity and thus cannot be acted-upon.
(f) It has further been submitted that the statements made by the Petitioner in paragraph 18 of the writ petition have not been traversed and thus the State Government has also failed to exercise its power coupled with its duties as envisaged u/s 16, 17 Sub-Sections (4) and (5) of Section 69 and Section 78A of the 1948 Act.
(g) Even the Controller and Auditor General in its report for the year ending in the 31st March, 1992 being Report No. 5 found that the accounts of the Board for the years 1991-92 were not complete.
Mr. Navniti Prasad Singh, learned counsel appearing for the Petitioner in CWJC. No. 12701 of 1992, has raised the following contentions:
(a) From a perusal of the notification applicable to the commercial consumers it would appear that so far as consumers falling within C.S.II category are concerned they have to pay a fixed charge of Rs. 85/ - and the consumers falling within C.S.III category are required to pay a fixed charge at the rate of Rs. 100/ - besides payment for consumption of electrical charges, it was submitted that fixed charges have to be paid even if there is no supply of electricity.
(b) Levy of fixed charges is discriminatory and thus violative of Article 14 of the Constitution of India as the persons who are not similarly situated also have to pay the same charges inasmuch us at different stations power cuts are resorted to for different periods which may range from two hours or 20 hours per day.
(c) Despite a direction issued by the State Government in exercise of its power u/s 78A of the 1948 Act to obtain its approval before the Board frames the tariff no such approval had been taken.
(d) It was pointed out that although the notification dated 26th August, 1991 purports to contain a stipulation that such approval had been taken, but it would appear from the memorandum prepared by the Energy Department and which was placed before the Cabinet that it was stated therein that only the tariff applicable in the State, of U.P. be adopted.
The learned counsel submitted that from a bare comparison of the 1991 tariff with that of the U.P. Tariff it would be evident that both are not similar in nature and thus the Board had acted contrary to the guidelines issued by the State of Bihar.
(e) The contention of the Board in the counter-affidavit to the effect that it is not bound by the directive of the State Government is not correct inasmuch as the power conferred upon the State u/s 78A of the Act is a wide one.
The learned counsel in this connection has relied upon the following decisions:
(i) Rakesh Ranjan Verma v. State of Bihar reported in 1991 (1) PLJR 398, (ii) A.P. State Electricity Board Vidyut Soudha v. Gowthami Solvent Oils reported in 1991 AP 14 (iii) Nava Bharat Ferra-Allys Ltd. A.P.P.S.E. Board, Hyderabad reported in 1985 AP 299 (iv) M/s. Hindustan Zinc Ltd. etc. Vs. Andhra Pradesh State Electricity Board and others, and Indian Administrative Service (S.C.S.) Association, U.P. and Others Vs. Union of India (UOI) and Others, .
(f) It was also submitted that by reason of such notification issued by the State Government the legislative power of the Board to frame tariff becomes conditional one and unless the approval of the State Government which amounts to its concurrence is taken the entire notification must be held to be invalid.
Reliance in this connection has been placed by the learned counsel in Shibshankar Dokania Oil, Rice and Flour Mills, Barharwa Vs. State of Bihar and Others, and Dist. Collector, Chittoor v. Chittoor Dist. Groundnut Traders Association reported in 1989 S.C. 98.
(g) The U.P. Tariff which is contained in Annexure-6 to the writ application does nont contain any fixed charge but merely contains a minimum charge in relation to the Cinema and theaters situated in town having population of 1 lac and above as per 1991 census only but even the said minimum charges are adjustable against the units of electrical energy consumed.
Mr. Shiv Kirti Singh, the learned counappearing on behalf of the Board however, omitted that the power of the Board to me tariff is absolute in terms of Sections 49 (sic) 59 of the Electricity (Supply) Act.
It was submitted that the Board has not been conferred with any arbitrary or unrealised power inasmuch as inbuilt safeguard have been provided for in the 1948 Act itself,
With regard to the role of the State Government in framing tariff, our attention has been drawn to paragraph 31 of the counter-affidavit, filed in CWJC. No. 8477 of 1991 and it was submitted that even the Gazette notification was published by the Energy Department of the State of Bihar and thus must be held that there has been a substance compliance of the State Government''s effectives.
In the alternative, it has been contended that the question as to whether the State Government''s directive has been complied with or not, it a matter between the State Government and the Board and the consumers cannot have any say in this regard.
With regard to the fixed charges and minimum, it was submitted that the said concepts are not new ones and in this connection our attention has been drawn to the decision of this Court in Bihar State Electricity Board and Others Vs. State of Bihar and Others, .
The learned counsel contended that fixed charge has been levied keeping in view the financial condition of the Board.
In C.W.J.C. No. 3085 of 1993 the only question which arises for consideration was as to whether the multi storeyed residential building can be subjected to the commercial tariff in relation to the use of the electrical energy in the common area without changing the nature of supply.
It was submitted that the word ''multi storeyed building'' is also vague inasmuch as any building having more than one storey may be a multi-storeyed building.
It has further been submitted that the words ''common area'' is also vague inasmuch as the same may apply also in a case where the tenant and the landlord are residing in the same premises.
With regard to the legality and the validity of the tariff applicable to the domestic consumers, it was submitted that from a perusal of the Bill as contained in Annexure-2 to the writ application, it would appear that fixed charge, has been levied at the rate of Rs. 50/ - for the first time in July, 1992 as a result whereof, the consumer has been directed to pay a huge sum at a time.
It was submitted that even if the fixed charges are considered to be in the nature of minimum guarantee charges, no basis has been laid down for the said levy.
According to the learned counsel the minimum guarantee charges are levied with a view to compensate the Board for loss sustained by it so as to keep itself in readiness for supply of electrical energy and thus the said levy is also illegal as the Board is not in a position to supply electrical energy to its consumers.
It has been pointed out that no. provision has been made even for remission of the minimum guarantee charges, for non-supply of electrical energy by the Board. It was pointed out that in a residential house a motor pump is operated only for two hours a day and electricity in the common area are consumed only for a few hours.
It had further been pointed out that there are 6,48,006 domestic consumers in the entire State of Bihar, who consume about 7.18% of electrical energy, whereas there are only 1258 High Tension consumers, who consume 51.102% of total electrical energy supplied by the Board.
It was pointed out that the fixed charge for domestic services had been withdrawn by the Bihar State Electricity Board by a notification dated 3.7.1992 but in its place the charges on the basis of the consumption electrical energy has been enhanced with retrospective effect and Misc. charges at the rate of Rs. 4 per K.V.A. has been levied. It has been pointed out that unit charges have almost been doubled inasmuch as upto 100 units, the same has been raised from 65 paise to 115 paise per unit and above 100 units, the same has been raised from 60 paise to 130 paise per unit.
It was further submitted that minimum charges at the rate of Rs. 25 per K.V.A. has been introduced and for each additional KVA a fixed charge Rs. 12 per month has been levied apart from charges on airconditioner at the rate of Rs. 100/ - per month. It was submitted that increase in tariff with retrospective effect is illegal and bad in law as has been held by this Court in Bihar State Electricity Board and Others Vs. State of Bihar and Others, .
With regard to levy of minimum guaranteed charges it was contended that the same must be held to be arbitrary as:
(i) There is no provisions for adjustment,
(ii) There is no provision for remission of the same owing to non-availability of electricity, and
(iii) the same has been levied by way of a camoflague for less supply of electrical energy.
It was submitted that the charges applicable to commercial supply cannot be levied on the domestic consumer as the nature of the supply itself is different.
Reference in this connection has been made to The Palghat Electric Corporation Ltd. Vs. T.N. Veeraraghava Aiyar, and V. Sasidharan Vs. Peter and Karunakar and Others,
Mr. Shiv Kirti, Singh, the learned counsel appearing on behalf of the Board submitted that the Board has power to frame different tariffs for different consumers and the same by itself can not lead to an inference of arbitrariness and discrimination.
It was submitted that the charge applicable to the domestic consumers are confined only to private domestic use which by one of the ingredients of domestic purpose it has been stated that in a case falling under the commercial services the use of the electrical energy may be domestic in nature but more electrical energy may be consumed by reason of common use by the residents of multi storeyed building. It was pointed out that a domestic consumer requires a pump having capacity of one BHP only whereas in a multi storeyed building for common use a pump of much higher capacity would be required.
It was submitted that even the nomenclature of the tariff is not decisive in nature inasmuch as it was permissible for the Board to levy different tariffs or the basis of connected load.
The learned counsel submitted that different classification in the tariff is permissible and in support of the said propoition has relied upon British India Corporation Ltd. Vs. Collector of Central Excise, and in Khandige Sham Bhat v. I.T. Officer reported in AIR 1963 S.C. 591 (Paras (sic) and 10).
With regard to the increase in the domestic tariff it was stated that the Board has acted justifiably in passing the tariff with retrospective effect inasmuch as the levy of fixed charges had to be withdrawn keeping in view the public outcry and pressure from the State Government.
It was submitted that the modification has been introduced with a view to grant some benefits to the consumers and the same could be given a retrospective effect and retroactive operation.
The learned counsel pointed out that two tier tariff was levied in the 1991 tariff and as the levy of fixed charges has been abolished the unit charges had to be increased.
With regard to the power of the Board to levy minimum guaranteed charges, it was contended that no provisions for proportionate [emission has been made because the guaranteed amount is on the low side and the said charges had to be invoked with a view to ensure minimum return even in a case where there is no consumption of electrical energy.
It was submitted that the concept of levy of the Minimum Guarantee is an old one and the constitutionality thereof has been upheld by the Supreme Court of India as also by various High Courts on a number of occasions.
Reference in this connection has been made to Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, , M/s. Hindustan Zinc Ltd. etc. Vs. Andhra Pradesh State Electricity Board and others, , Eastern U.P. Chamber of Commerce and Industry, Allahabad and others Vs. U.P. State Electricity Board, , General Manager-cum-Chief Engineer, Bihar State Electricity Board and Others Vs. Rajeshwar Singh and Others, and Bihar State Electricity Board v. M/s Green Rubber Industries reported in 1990 (1) PLJR 73 (S.C.).
In view of the rival contentions of the parties as noticed hereinbefore, the following questions arise for consideration in these applications:
(i) Whether the Board had acted illegally and without jurisdiction in framing the 1991 tariff.
(ii) Whether the 1991 tariff is violative of the provisions of 1948 Act and Article 14 of the Constitution of India?
(iii) Whether the 1991 tariff is vitiated as no prior approval and/or the valid approval had been obtained from the State Government by the Board?
(iv) Whether the levy of fixed charges under Low Tension Industrial services/commercial tariff is arbitrary and, discriminatory and thus violative of Article 14 of the Constitution of India?
(v) Whether the notification dated 3.7.1992 whereby the 1991 tariff was modified could have been issued with a retrospective effect?
(vi) Whether levy of Commercial Tariff in the common Area of Multi storeyed Building is valid?
(vii) Whether the levy of minimum guarantee charges so far as the same relate to the domestic consumers is legal and valid?
A Division Bench of this Court has considered the questicn of vires of 1991 tariff in Bihar State Electricity Board and Others Vs. State of Bihar and Others, . However, from a perusal of the aforementioned judgment it appears that the Bench has confined its findings only in respect of consumers of high tension electrical energy and did not advert to other questions raised in these applications. This Court, however, held that the Board had no power to frame any tariff with retrospective effect. The Court further held that the Board is not entitled to charge minimum guarantee charge on monthly basis.
Re: Questions (i) and (ii):
The contention raised to the effect that Board has not been functioning in a most efficient and economical manner as envisaged u/s 18(a) of 1948 Act and thus 1991 tariff is illegal, in our opinion, is not required to be decided in the instant cases as during pendency of this writ application the Board has framed Anr. tariff by notification dated 23.6.1993 which has come into force with effect from 1.7.1993. The question of vires of said 1993 tariff is also pending consideration before this Court.
Before proceeding with the matter further, we may notice that provision of Sections 49 and 59 of 1948 Act have been declared intra vires and constitutional by several decisions of the Supreme Court of India. Reference in this connection may be made to Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, and Ferro Alloys Corpn. Ltd. Vs. A.P. State Electricity Board and another, .
However, there cannot be any doubt or dispute that the Board does not have any arbitrary power to frame a tariff and this Court as also the Supreme Court may in exercise of its power of judicial review interfere therewith if the same is found to be irrational or discriminatory. As noticed hereinbefore in fact even this Court in Bihar State Electricity Board and Others Vs. State of Bihar and Others, held a part of the tariff to be ultra vires.
In Bihar Chambers of Commerce v. Bihar State Electricity Board (Supra) this Court held:
Learned counsel appearing for the Board has lastly submitted that one cannot shut his eyes to the various problems like investment, labour problem etc. with which the Board have to face. According to him, non- fulfilment of obligation by the Board cannot be a ground of challenge of the revision of the tariff, as the action of the Board is accountable to the people in the House of Legislature only and individual consumer cannot raise such pleas and the High Court should not ordinarily interfere with. We are unable to accept this argument. It is well settled that the tariff is open to judicial review if in view of the facts and figures placed before the Court is found to be unreasonably excessive and not based on any intelligible criteria. In our opinion, the Board is under statutory) obligation to increase the production capacity are bring efficiency in the administration.
The Board also being the State within the meaning of Article 12 of the Constitution of India is required to act in a fair and reasonable manner. The Board in terms of its power under Sections 40 and 59 of the 1948 Act is certainly entitled to adjust its tariff in such a manner so as to ensure that total revenue in any year ensures surplus of not less than 3%.
The Board is not only required to frame a tariff keeping in view a coordinated supply of and distribution of electricity in most efficient and economical manner with particular reference to development of such area which is undeveloped but is also required to take steps for extension of supply of electricity to sparsely developed area It is also permissible for the Board to frame tariff so as to enable it to supply electricity at lower rate in relation to a section of consumer. It is also entitled to give concession to a section of consumer like agriculturist or inhabitants of sparsely developed area. Fixation of such different tariffs cannot be held to be discriminatory as the consumers may belong to the different classes.
In this view of the matter, it cannot be said that 1991 tariff per se is ultra-vires the provisions of 1948 Act or Article 14 of the Constitution of India.
27A. It is true as was submitted by learned counsel for the Petitioner that inefficiency on the part of the Board is such a notorious fact that the Court can lake judicial notice thereof.
The Comptroller and Auditor General has also commented upon the functioning of the Board on a number of occasions. However in our opinion, in view of the fact that 1991 tariff has now been superseded by 1993 tariff, it is not necessary to go into said question at this juncture. Any direction which may be issued by the Board to improve its efficiency, generation capacity vis-a-vis in 1991 tariff, in our opinion, would be futile.
It is not and cannot be disputed that the provisions of Sections 49 and 59 of the 1948 Act are constitutional as has repeatedly been held by the Supreme Court.
However, the question of reasonableness of the rates in specific case as urged by the Beamed counsel appearing for the Petitioners shall be dealt with separately.
Re: Question-III
Section 78A of 1948 Act was inserted by Act No. 101 of 1956. Section 78A(1) of the Act postulates that the Board shall be directed by the State of Bihar in relation to questions of policy. Sub-Section(2) of Section 78A of the Act clearly points out that any dispute between the Board and the State Government on the question of policy would be referred to the authority whose decision thereon shall be final. The authority means Central Electricity Authority which is a creature of the Central Government. The Central Electricity Authority, therefore, is a statutory arbitrator if any dispute with regard to such question arises.
Section 78A read thus:
78A. Directions by the State Government -- (1) In the discharge of its functions, the Board shall be guided by such directions on questions, of policy as may be given to it by the State Government.
(2) If any dispute arises between the Board and the State Govt. as to whether a question is or is not a question of policy, it shall be referred to the Authority whose decision thereon shall be final.
The preamble to the Act provides for rationalisation of the production and supply of electricity, and generally for taking measures conducive to electrical development. For this purpose, co-ordination in policy matter at the highest level of Central Electricity Authority would be necessary. Power is therefore, reserved to the State Government to issue directions to the Board on questions of policy and an obligation has been imposed on the Board to be guided by such directions. This section helps to secure supply of electricity on a regional basis enabling a State''s resources of thermal and water-power generation to be utilized to the best advantage of the country.
The first question which, therefore, arises for consideration is as to whether the power of the Board to frame tariff as contemplated under Sections 49 and 59 of 1948 Act would come within the purview of Section 78A of the said Act.
The Board exercises its legislative function while framing tariff but the legislative function conferred upon a statutory Corporation by reason of the provision of the Act cannot be distinguished qua its executive function. The legislative policy of the Board in framing tariff also pertains to a policy matter and in our opinion, the legislative function of the Statutory Board in framing a tariff also comes within the purview of the aforementioned provisions.
The legislative function of the Board in this regard is controlled or regulated by the executive action of the State. Section 78A of the Act is absolutely clear and unambiguous. Section 49 of the Act is subject to the other provisions thereof on and regulation, if any, made in this behalf. A contract entered into by Board with the consumers would be subject to any direction of the State Government as the Board is bound to give effect to the policy decision of the State relating to supply of electrical energy to the consumers.
The State has a distinct say in such matters as extension of supply of electrical energy to undeveloped or sparsely developed area as also fixation of different rates for different classes of consumers would depend upon its own policies. Sections 49 and 59 of the said Act cast an obligation upon Bihar State Electricity Board to frame tariff in the manner laid down thereunder. The Board although in terms of Sections 5 and 12 of the said Act is an autonomous body created thereunder and exercises its statutory power but even in such matter it is subordinate to the State Government. The Board being a statutory Authority is bound to act within the four corners of the statute and in view of the fact, Section 78A empowers the State to provide guidance to the Board, the action of the Board must conform to such direction.
In Poddar Projects Ltd. (Multi Steels) Vs. The A.P.S.E. Board and Others, , a Division Bench held:
The entire argument in these writ petitions is based on the assumption that the Electricity Board is an Authority subordinate to the Government in all matters. This assumption we must hold is not correct. Electricity Board is an Autonomous Body created under a statute. It is subject to the exercise of some statutory power by the State Government under the Act and is not otherwise subordinate. In certain matters as in the fixation of tariff, the Electricity Board may exercise its power as laid down in the Act and u/s 78A of the said Act (the government) can only issue direction on questions of policy. They failure to comply with such directions does not amount to disobedience of lawful order issued by the statutory authority.
The Board while framing tariff has to take into consideration various factors. It is enquired to consult the State Electricity Consultative Council. It is also required to give effect to policy decision of the State for the purpose of giving incentive to a particular class of in dustries or particular class of consumers. A indicated hereinbefore Sections 49 and 59 the Act postulate a co-ordinated development in the field of supply of electrical energy, also postulates extension of the area in while supply of electricity is required to be mad The State has also a major role to play in the matter of granting concession to the against turist or to the consumers of an undevelope or sparsely developed area.
Framing of tariff, therefore, is a major policy decision as was held by the Supreme Court in S. Narayan v. Union of India reported in AIR 1979 SC 1993 Rates are matters of legislative judgment. (sic) cal Planning, therefore, is a matter of police which would come within the purview of Section 78A.
This aspect of the matter has been considered by a Division Bench of Andhra Pradesh High Court in Nava Bharat Ferro Alloys Limited Vs. Andhra Pradesh State Electricity Board, Hyderabad, .
In the State of U.P. v. Hindustan Aluminium Corporation reported in 1979 SC 1459, the Supreme Court upon interpreted of Section 22B of the Indian Electricity Act, inter alia, observed that the direction of the State Government u/s 22B of the said Act was required to be implemented by the Board. The Supreme Court in that case also has laid down the criteria for questioning the subordinate legislation.
In Indian Administrative Service (S.C.S.) Association, U.P. and Others Vs. Union of India (UOI) and Others, it was observed:
In Hindustan Zinc Ltd. v. A.P. State Electricity Board the revision of tariff was effected without consulting the Consultative Council. This Court held thai the revision of tariff was a question of policy u/s 78A of the Indian Electricity Supply Act. The failure of the Board to consult the Consultative Council whether rendered the revision of tariff invalid? It was held that the consequence of non-compliance of Section 16 was not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, it cannot be said that the revision of tariff, without seeking the advice of the Consultative Council, rendered the revision of tariff itself invalid. On the other hand the Board after revision of the tariff has to place the revised tariff on the table of the House or Houses of the State Legislature and such statement is open to discussion therein, the Board is bound to take into consideration such modification, if made, or any comments made on such statement by the State Legislature. Under those circumstances it was held that the non-compliance of Section 16(5) did not render the revision of tariff invalid.
In Rakesh Ranjan Verma v. The state of Bihar reported in 1991 (1) P.L.J.R. 398, N.P. Singh, J. (as His Lordship then was) (sic)tting in the Division Bench, inter-alia, held that the directions of the Stale Government u/s 78A must be related to functioning of the Electricity Board and would be one in which some policy matter is involved.
In Andhra Pradesh State Electricity Board Vidyut Soudha and others Vs. The Gowthami Solvent Oils and another, a Division Bench held as follows:
Section 78A empowers the Government to issue directions to the Board on questions of policy. It further declares that the Board shall be guided by such directions in discharge of its functions. If, however, any dispute arises between the Board and the State Government as to whether a particular direction pertains to a question of policy or not, such dispute has to be referred to and decided by the Authority (created under Section. 3) whose decision shall be final. It is obvious that this power conferred upon the Government is neither absolute, nor unguided. Any direction given shall be consistent with the provision of the Act and the Rules, if any, made thereunder, and must be within the frame work of the Act. (See Laker Airways, 1977 (2) All ER 182 (CA) and Bromley London Borough Council 1982 (1) All ER 129: (1973) 227 EG 659). Indeed the provisions of the Act themselves furnish a guidance to the Government in the matter of issuance of directions. Any direction issued by the State Government contrary to any particular provisions of the Act, or the Rules would be outside the purview of Section 78A. At the same time, however, it must be conceded that the Government is entitled to take into consideration the public interest and the interest of the economy of the State and the nation while giving such directions. Directions actuated by such considerations, cannot be said to be either contrary to the provisions of the Act or outside the frame work of the Act. As emphasized hereinbefore, the Board is not like any other private individual, or corporation; it is a statutory public Corporation with a commitment to social good and to public welfare. Now, food is a basic necessity.
In Grih Kalyan Kendra Workers'' Union Vs. Union of India and others, the Supreme Court, inter alia, held that framing of tariff is the matter of executive policy. The decision as noticed hereinbefore has been considered by the Supreme Court in Indian Administrative Service (S.C.S.) Association, U.P. and Ors. v. Union of India and Ors.''s case (Supra)
There cannot, thus, be any doubt that the State Government in exercise of its jurisdiction u/s 78A of the Act can issue requisite direction to the Bihar State Electricity Board.
In paragraph-31 of the counter-affidavit in C.W.J.C. No. 8477 of 1991, the Board has stated as follows:
That the averments are incorrect and thus denied. The fact remains that the Respondent Board has acted under the statutory mandate of the Electricity Supply Act without altering the basis of the tariff as laid down under the Electricity Supply Act, 1948.
In this case the State Government had not-issued any direction to the Board with regard to the manner in which the tariff was to be done. It also did not give any guideline as to how and in what manner tariff is to be framed for different sections of the consumers. The Board was merely directed to obtain its prior approval. It is not in dispute that the matter was placed before the State Government but according to Mr. Navniti Prasad Singh, the Board gave out that it would be following the U.P. pattern of the tariff and in view of the fact that 1991 tariff is not wholly in consonance with the U.P. tariff, the same was illegal. In our opinion, if the Board could not comply, with the orders of the State of Bihar, it could have issued any fresh directions upon the Board in that regard. The State Government evidently gave its approval to the Board for framing its tariff. Even assuming that the contentions of the Petitioners in this, regard is correct was then the Board required to obtain the approval of the State and if State granted approval without considering the effect and purport thereof, the same would constitute non-application of mind on the part the State and not of the Board.
Thus, the contention of the Petitioner to the effect that as the Bihar Slate Electric Board did not frame tariff upon obtain proper approval of the State Government, thus the entire tariff is void, cannot be accepted.
In Shibshankar Dokania Oil, Rice and Flour Mills, Barharwa Vs. State of Bihar and Others, and in District Collector, Chittoor and Others Vs. Chittoor District Groundnut Traders Association and Others, upon which strong reliance has been placed by Mr. Navniti Prasad Singh, this Court and the Supreme Court was dealing with the matter of delegation of power by the Central Government u/s 5 of the Essential Commodifies Act. In terms of Section 3 of the Essential Commodities Act, the Central Government has the power to make order regulating the supply and distribution of esential commodity. Section 5 of the said however, empower the Central Government delegate its power to the State Government
The State Government in those cases were, therefore, exercising the power of delegatee. Such delegated legislations were subject to the conditions imposed by the delegator. In terms of the delegating notifications, the Central Government restricted exercise of the legislative power by the State to the effect that no order shall be made less its prior concurrence is obtained.
In the cases aforementioned, it therefore, held that any notification issue any order made without obtaining the concurrence of the Central Govt. would be contravention of the delegated power.
However, in this case the Power the Board to frame tariff is in terms of provision of 1948 Act itself. The State Government however can give guidelines in such to the policy decision to be framed by a(sic)
The aforementioned decisions, therefore have no application in the facts and circumstances of the present case.
Further, it has been brought to our notice that in fact the tarilf in question has been sent to the State Government but therein it has merely been stated that the same would be in the line of U.P. tariff. The grievance of the Petitioner appears to be that U.P. tariff does not contain any provision for imposition of fixed charges but contains only a clause for levy of minimum charges on the owners of cinemas and theater.
The Board has made a two tier tariff. Admittedly even the aforementioned U.P. Tariff contained the provision with regard to levy of minimum charges from a category of consumers. As rightly pointed out by Mr. Shiv Kriti Singh, even the tariff nolificalion had been published in the Gazette by the Department of Energy of the State of Bihar. In any view of the matter, in our opinion, as the said 1991 tariff is not in force and has been replaced by 1993 tariff, it would not be proper for us to exercise our discretionary jurisdiction under Articles 226 and 227 of the Constitution of India, to declare the same as wholly invalid.
Re: Question No. IV
The tariff rate for L.T.I.S. consumer are as follows:
(a) For LTIS-I fixed charge: Rs. 70 Per BHP or part thereof per month. Energy Charge: 75 Paise per KWH.
(b) For LTIS II fixed charge: Rs. 79 Per BHP or part thereof per month. Energy chargc-75 paise per KWH
Note: In the case of Arc Welding Set where the name place is missing then the capacity of the Set will be treated as 15 BHP and billed accordingly.
So far as imposition of fixed charges are concerned, there cannot be any doubt that the Board in exercise of its power under Sections 49 and 59 of the Act is entitled to lay down two tier tariff.
The contention of the Petitioner to the effect that no fixed charge can be levied at all cannot be accepted. It is true as has been contended by the learned counsel for the Petitioners that the Board may not be in a position to supply the electrical energy constantly or continuously but there cannot be any doubt what-so-over that the Board is entitled to fix two way tariff.
The principles for fixing tariffs according to Naushir Bharucha are: (Vide Electricity (Supply) Act by the aforementioned Author at page-125)
In fixing tariffs certain basic principles have to be borne in mind:
(a) It should be secured that the charges reflect cost of supply. The charges should be related as closely as possible to the cost of supply. No doubt joint costs would involve a certain amount of arbitrary allocation.
(b) The process of determining the cost of supply cannot be carried beyond a point where the expense of determining the cost outweighs the advantages of fine measurements.
(c) The charges should take into consideration the electrical characteristics of the, consumers. The classification should be rational and based upon distinctive electrical characteristics.
(d) The tariff should be simple as far as possible, though the closer the tariff to the cost of generation incurred the greater would be its divergence simply.
(e) There would be no undue preference.
As indicated hereinbefore in framing tariff a two part tariff is permissible. When a two part tariff is framed the charge for supply is divided into two components: one proportional to KWH consumption and other on a quantity supposed to depend upon the maximum demand and second a fixed charge independent of consumption levy. Fixed charge is what is often called Norwitch system of charge.
The submission made on behalf of learned counsel for the Petitioners that fixed charge is ultravires of Sections 49 and 59 of the Act cannot, thus, be accepted.
According to the Respondent levy of fixed charges has been done in a manner which has a real corelation to generation and supply of electricity. As indicated hereinbefore the Board is entitled to make different tariff for different consumer which per se cannot be held to be arbitrary or unreasonable. The consumer of the rural area form a class by themselves and thus the question of violating the provisions of Article 14 of the Constitution of India does not arise. The Respondents in their counter- affidavit have categorically stated that the same had been done with a view to check malpractice. The Respondents have further brought on records the figures to show that if the minimum consumption unit at low level is reached then the burden of fixed charge would be minimised.
Respondents have also staled that keeping in view the fixed charges rates the unit charges have been kept at such a level that even if consumer uses load for 2 to 3 hours per day, the rate would reach the desired level.
By reason of 1991 tariff no annual minimum guarantee charges are sought to be levied.
So far as the submission of Mr. Bajla that L.T consumer has lo pay higher than H.T. consumer is not correct. He is also not correct in contending that the qualily of supply of electricit in both the cases of L.T. and H.T. consumers are same. The H.T. consumers are supplied electrical energy from the power sub station and the transformer is placed at the premises of the consumer; Whereas in the case of L.T. consumer, electricity is supplied from transformer installed by the the Board at different places. The nature of supply to H.T. consumer and L.T. consumer is also different.
It is true that in a given case a consumer may have to pay fixed charge although he may not consume electrical energy at all or there occurs disruption in supply of electrical energy.
However, as noticed hereinbefore, the Board is entitled lo frame double rale tariff in exercise of its power under Sections 49 and 59 of the 1948 Act. In that view of the matter, it cannot he said that levy of fixed charge for supply of electrical energy is not envisaged u/s 49 of the 1948 Act. As noticed hereinbefore the Supreme Court in Knlynn Borough Muncipality''s case (supra) had upheld the validity of such charges.
So far as rate of tariff is concerned, in view of the decisions of the Supreme Court referred lo hereinbefore, in our opinion, this court cannot go into the question in minute details thereof inasmuch as the same is a matter of policy decision. Except for showing that consumers cannot be made to suffer because of the inefficiency of the Board, in our opinion, no argument can be entertained in this regard.
Unless it is shown that the tariff is absolutely unreasonable and arbitrary, no inter ference therewith is permissible. It has to be borne in mind that this court in exercise of its jurisdiction under Article 226 of the Constitution of India has to exercise a limited jurisdiction.
So far as contention of the learned counsel for the Board that no fixed charge can be levied on installation of Air Conditioner has some substance. The Board by reason of the impugned tariff has already levied fixed charges on the connected loads which includes Air Conditioners. The submission of Mr. Shiv Kirti Singh to the effect that Air Conditioners are luxuries and, therefore, the consumers are bound to pay charges for installation of Air Conditioners cannot be accepted lor more than one reasons: firstly, the Board has no jurisdiction to levy tax on luxuries, secondly the Board has also no jurisdiction to levy charges only on installation of some electrical appliances.
We can take judicial notice of the fact that Air Conditioners are not operated throughout the year. A domestic consumer may also use some other luxurious electrical equipments and gadgets like Room Heaters, Air Coolers, Geysers, Electric Ovenes, etc., the use whereof must be held to at par with Air Conditioners.
Re: Question Nov.V
The submission of Sri Navaniti Prasad Singh to the effect that Board cannot give retrospective effect to its notification dt. 3rd July, 1992 has also substance.
In Bihar State Electricity Board and Others Vs. State of Bihar and Others, , a Division Bench of this Court has clearly held that the Board has no jurisdiction to give retrospective effect to any tariff.
The submission of Mr. Shiv Kirti Singh to the effect that the Board had given retrospective effect to its aforementioned notification, as it had withdrawn the fixed charges levied on the domestic consumers, cannot be acccpted. A subordinate legislation cannot be construed to have any restrospective effect only because it confers some benefit to the consumers of electrical energy thereby.
The question as to whether any fixed charges can be levied on a domestic consumer or not was also the subject matter of these writ applications. The Board itself has purported to withraw the fixed charges so far as the same related to the domestic consumers.
It, therefore, in our opinion, had no jurisdiction to issue any notification whereby and wherenunder a higher rate of tariff can be fixed upon the consumers with retrospective effect and retroactive operation. The Board, in our opinion, has no jurisdiction to issue any notification with retrospective effect as it has no power to do so under the provisions of the Act and the question of this court''s holding that the notification has a retrospective effect only because some benefit, if any, is said to have been conferred upon the consumer, cannot be accepted.
Re: Question No. VI
So far as the application of commercial tariff in respect of multi-storeyed residential building which is subject matter of CWJC No. 3085 of 1993 is concerned, the same, in our opinion, is also illegal.
The relevant provision in the tariff reads thus:
Applicability. -- for use for Lights, Fans and Power loads non-domestic purpose like Shops, Hospital (Private or Government) Clinic, Nursing home, Restaurants, Clubs, Workshops, Show-room, Office (private or Central/State Government and their Undertaking) Commercial Establishments, Cinemas, X-rays Plants, Schools (Private or Government) College (Private or Government), Boarding Lodging houses, Libraries (Private or Government), Defence Installations, Recognised Research Institutions, Hotels, Railway Stations, Fuel-Oil Stations (including Vehicle Service Station), All India Radio/T.V. installation, Printing Presses, Housing Co-operative Societies for availing power, common services Multi storeved building and such other installations not covered under any Tariff Schedule.
Tariff Rates:
(a) For CS-I-Flat rate of Rs. 47 per KW per connection per month for a connected load of 1KW or part thereof. If the connected load exceeds 1KW then for each add. 1KW or part thereof a sum of Rs. 25 per month will be charged.
(b) For CS-II-Fixed charge-Rs. 85 per KW or part thereof per month for connected loads upto 2 KW.
Energy charge: (i) For first 100 units 85 paise per unit.
(ii) All in excess of 100 units 80 paise per unit.
(c) For CS-III: Fixed charge: Rs. 100 per KW or part thereof per month.
Energy charge: (i) For first 100 units 85 paise per unit.
(ii) All in excess of 100 units 80 paise per unit.
The word ''Multi storeyed Building'' has not been defined. In common parlance, however, it may mean any building having more than one storey.
Multi-storied building may be shared either by the owners of different flats or by the landlord and his tenants. The Board supplies power to a consumer. So far as multistoreyed building is concerned, the consumers enter into different contracts with the Board.
In Bihar State Electricity Board and Another Vs. Dhanawat Rice and Oil Mills, , it has clearly been held by the Apex Court that the matter of supply of electrical energy by the Board is more in the nature of a contract although the same is regulated by the provisions of the tariff and other Statutes like Indian Electricity Act; Electricity supply Act 1948 or the Indian Electricity Rules.
The residents of the premises in a multi-storeyed building whether they are on ownership basis or on the basis of lease, may, thus jointly or separately enter into separate agreements with the Board. The nature of supply to such common areas does not change only because a particular area is used or pumps are operated for joint benefit of all the residents of the multi-storeyed building.
In the The Palghat Electric Corporation Ltd. Vs. T.N. Veeraraghava Aiyar, , Patnajali Sastri, J. as his Lordship then was, observed as follows:
Learned counsel for the Petitioner argued that the term commercial premises must be understood in the light of the well marked distinction between the terms commerce and trade. ''Commerce'' it was said denotes large scale import and export dealings with foreign countries while ''trade'' signified mercantile operations on a smaller scale within the countrry itself. Counsel referred in support of this contention to Wharton''s Law Lexicon and Oxford English Dictionary. I am unable to accept this contention. Whatever, may be the distinction in meaning between the terms ''Commerce'' and ''trade'', I cannot agree that the terms ''Commercial premises'' used in classifying tenements for purposes of fixing rates for supply of electric energy was intended to be understood in contradistinction to ''trade premises''. I am of opinion that the classification in the rule is clearly intended to include premises where business such a that of the Respondent is carried on. It would indeed be odd if the provision of the cheaper rate of charge were intended for by export and import house of which there may be few or none in the place which the Petitioner''s undertaking was intended to serve and not for the benefit of the numerous shops and other business premises which are to be found in the locality. The adjective ''commercial'' is commonly used in a wide sense, without any exClusive reference to large scale international operations of export or import. I think therefore, that commercial premises means in the context of the classification rules nothing more than premises used for purpose of business.
In V. Sasidharan Vs. Peter and Karunakar and Others, , the Supreme Court while considering the provisions of Kerala Shops and Commercial Establishments Act interalia held that the office of a lawyer or a firm of lawyers is not a commercial establishment.
The submission of Mr. Shiv Kirti Singh to the effect that the charges applicable to the domestic consumers are only confined to private domestic use cannot be appreciated. It is not the case of the board that the common area of multi-storeyed building would not be used for domestic purposes. A part of the multi-storeyed building may either be utilised for domestic purpose or for commercial purpose. That part of the building which is used for commercial purpose can be charged on the basis of commercial tariff.
There cannot be any doubt whatsoever that classification under different tariff is permissible.
In British India Corporation case (Supra) upon which strong reliance has been placed by Mr. Singh, a classification was made under the Central Excise and Salt Act. In that premises it was held that manufacturers who employ 50 or more workers can be said to form a well defined class.
In Khandige Sham Bhat v. Agricultural Income Tax Officer reported in 1963 SC 591, the Supreme Court again was considering the provision of a taxation statute, namely, Kerala Agricultural Income Tax Act.
It was held:
At the outset it would be convenient to notice briefly the law on the doctrine of classification. The law on the subject-is well settled and it does not require restatement in extenso. It would suffice if we notice the principles relevant to the enquiry. The law has been nearly and succinctly summarised in Ram Krishna Dalmia Vs. Shri Justice S.R. Tendolkar and Others, thus:
It is now well established that while Article 14 forbids Class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguished persons or thing that are grouped together from Ors. left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well established that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.
Though a law ex facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated it may be said that the law offends the equality clause. It will then be the duty of the Court to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situate differently but on investigation they may be found not to be similarly situate. To state it differently it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group the law will not be condemned as discriminative though due to some fortuitous circumstances arising out of a peculiar situation some included in a class get an advantage over Ors. so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine vide Purshottam Govindji Halai Vs. Shree B.M. Desai, Additional Collector of Bombay and Others, and. Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, . But in the application of the principles, the courts in view of the inherent complexity of fiscal adjustment of diverse elements permit a large discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of ''wide range and flexibility'' so that it can adjust its system of taxation in all proper and reasonable ways.
However, in our opinion, supply of electricity to the consumer stands absolutely on a different footing.
Under Section 49 of the Act, the Board has to fix uniform tariff having regard to the factors enumerated under Sub-section (2) thereof. One of the factors as noticed hereinbefore is the naturte of supply and purpose for which it is required. The Board, therefore, cannot contend that although nature of supply and purpose for which it is required is the same, viz domestic, use by the domestic consumer by the nature and purpose of supply would be changed only because the electricity is being consumed by a group of domestic consumers and thus different rates can not be charged.
It has not been and could not have been disputed that the nature and the purpose of supply to the domestic consumers or private residential premises or a multi-storeyed building is same. Classification sought to be made for levy of higher charges in respect of common area'', in our opinion, is not based on reasonable differentia. Therefore, it must be held that the rates applicable to domestic tariff shall also apply for consumption of electrical energy in common area of a multi storeyed building.
Re: Question No. 7
It has not been disputed that there are about 6,50,000/ - domestic consumers in State of Bihar who consume only 7.18% of electrical energy; whereas 1258 H.T. consumers who consumed about 51.102 of total electrical energy supplied by the Board. It has not been disputed before us and in fact we can take judicial notice of the fact that the supply of electrical energy to the domestic consumers by the Board is so erratic that in many parts of the State electrical energy is not supplied even for a few hours in every day. Further, no provision exists even for grant of proportionate reduction in charges to the domestic consumers in case of failure on the part of the Bihar State Electricity Board to supply electrical energy.
As has been noticed hereinbefore one of the principles of framing tariff is made the same simple in nature. The Board however appears to have been adopting a tariff which is complicated in nature.
We do not find any justification whatsoever in levy of minimum guarantee charge upon the domestic consumers particularly when no provisions exist for grant of proportionate reduction to them and also keeping in view the total amount of electrical energy consumed by the domestic consumers v�s-a-vis the Consumers of H.T., L.T. electrical energy.
We are, therefore, of the view that the levy of minimum guarantee charges on the domestic consumers is arbitrary.
For the reasons aforementioned these applications are allowed in part and to the extent mentioned hereinbefore but in the facts and circumstances of the case there will be no order as to costs.
Shashank Kumar Singh, J.
I agree.