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PETITIONER: S.NARAYAN IYER

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT30/04/1976

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH SHINGAL, P.N. SINGH, JASWANT

CITATION:  1976 AIR 1986            1976 SCR  486  1976 SCC  (3) 428

ACT:      Jurisdiction  of   courts  under   Art.  226   of   the Constitution  in   matters  of  fiscal  planning-Legislative judgments are  outside the  scope of judicial determination- Reasonableness  of   telephone  rates   is  a   matter   for legislative judgment.-lndian Telegraph Act-Section 7(2) read with Indian Telegraph Amendment Rules,1966.

HEADNOTE:      The   appellant   challenged   under   Art.   226   the reasonableness of  the increase  in the telephone rental and call charges brought about by the Indian Telegraph Amendment Rules. 1966 on the ground that (1) The telephone system is a public utility  service and  the charges  can be only in the nature of  a fee which must be commensurate with the cost of rendering the  service; and  (2) The  loss incurred  by  the Government  in   another  establishment  service  is  not  a legitimate ground for raising the rates.      The writ  petition  was  accepted  and  on  appeal  the judgment was  reversed holding that (1) the High Court could not interfere  with the  tariff. and (2 ) the principle upon which the  public utility  rates regulation  as developed in the United States is not applicable in our country.      Dismissing the appeal by certificate, the Court, ^      HELD: (I) The courts have no jurisdiction under Article 226 to  go into the reasonableness of rates. These rates are decided as  policy matters  in  fiscal  planning.  There  is legislative prescription  of rates.  Rates are  a matter for legislative judgment  and not  for  judicial  determination. [488A]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 325 of 1970.      From the  Judgment and  order dated  28th March 1969 of the Madras High Court in Writ Appeal No. 490/68.

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    K. S.  Ramamurthy, K. Jayaram and R. Chandrashekhar for the Appellant.      L. N.  Sinha, Solicitor  General of India, S. N. Prasad and Girish Chandra for the Respondents.      The Judgment of the Court was delivered by      RAY J.  This appeal is by certificate from the judgment dated 28  March 1469  of  the  High  Court  of  Madras.  The question in  this appeal  is whether the appellant in a writ petition can  challenge the  telephone rates and charges and obtain any relief in that behalf.      The   appellant   is   a   retired   District   Manager (Telephones), Madras.  He filed  a writ petition in the High Court for  a writ  of  prohibition,  directing  the  General Manager (Telephones), Madras to forbear from preferred to  the Appellate  Tribunal but  that  too  proved abortive. The  Tribunal,  however,  referred  the  following question of law for the opinion of the High Court:- ----------------------- (1).[1966] 60 I.T.R. 293. 487 enforcing the  revised Telephone  Tariff as  per the  Indian Telegraph Amendment Rules, 1966. Under the rules, the rental and call  charges were  increased by  50 per  cent and Trunk call charges  by about  30 to  35 per  cent. The  petitioner alleged that  the  telephone  system  is  a  public  utility service and  not a  Revenue earning  establishment  and  the charges can  be only  in the  nature of  a fee which must be commensurate with  the cost  of rendering  the service.  The petitioner further  alleged that  the loss  incurred by  the Government  in   another  establishment  service  is  not  a legitimate ground for raising telephone rates.      The Trial  Court held  that Telephone Tariff was unjust and unreasonable. The Trial Court allowed the writ petition.      The High Court on appeal held that the High Court could not interfere  with the Tariff. The High Court said that the principal upon  which public utility rates regulation as has developed in the United States is not applicable here in our country.      It should  be said  at the  outset that  there was some discussion in the judgment on Article 19 but counsel for the appellant properly  abandoned any  reference to  Article 19. The  appellant’s   contentions   are   three.   First,   the expression. "rates"  in section 7(2) of the Indian Telegraph Act means  rates which  are to be determined should be fair, just and  reasonable from  the point  of view  of  both  the consumer  and   the  producer.   Second,   the   Court   has jurisdiction to  determine whether  the rates  filed by  the Government are  reasonable. Third,  the rates  are increased expressly for the purpose of off-setting the E losses in the Post and Telegraph Services. If a proper allocation. is made according to  proper commercial  accounting it will be found that there  is a  wrongful deduction  of crores of rupees as revenue expense  and unlawful  debit. These  errors  in  the accounting have  resulted in  reducing the profits earned by the Telephones.      There are three principal reasons why the writ petition is incompetent  and not  maintainable and  the appeal should fail. First,  when any subscriber to a telephone enters into a contract  with the State, the subscriber has the option to enter into  a contract  or not. If he does so, he has to pay the rates which are charged by the State for installation. A subscriber cannot say that the rates are not fair. No one is compelling one  to subscribe.  Second. Telephone  Tariff  is subordinate legislation  and a  legislative  process.  Under Indian  Telegraph   Act,  section  7  empowers  the  Central

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Government to  make rules  inter alia for rates. These rules are laid  before each  House of  Parliament. The  rules take effect when  they are  passed by  the Parliament. Third, the question of  rates is  first gone into by the Tariff Enquiry Committee. The  Committee is  headed by  non officials.  The Tariff rates  are placed  before the  House in  the shape of Budget proposals.  The Parliament  goes into  all the Budget proposals. The  rates are  sanctioned by the Parliament. The rates. therefore,  become a  legislative policy as well as a legislative process. 488      The Courts have no jurisdiction under Article 226 to go into reasonableness  of rates.  These rates  are decided  as policy matter  in  fiscal  planning.  There  is  legislative prescription of  rates. Rates  are a  matter for legislative judgment and not for judicial determination.      The appeal  is dismissed.  There will be no order as to costs. S.R.                                       Appeal dismissed. 489