Summary
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 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 15220.5.1983. 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 theHV-2 rates fixed earlier and 153quashed 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.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 154demand 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 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 155State 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 156sustain 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 157business 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 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. 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Extract
Kanoria Chemicals And Industries Ltd. And Anr. VS. State Of U.P. And Ors. And Vice Versa
PETITIONER: KANORIA CHEMICALS AND INDUSTRIES LTD. AND ANR.Vs.RESPONDENT: STATE OF U.P. AND ORS. AND VICE VERSADATE OF JUDGMENT16/01/1992BENCH: 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) 124JT 1992 (1) 199 1992 SCALE (1)107ACT: : 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 ofHV-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.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 byRANGANATHAN, 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 158do 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 L...
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