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PETITIONER: U.P. STATE ELECTRICITY BOARD. LUCKNOW & ORS.

       Vs.

RESPONDENT: CITY BOARD, MUSSOORIE & ORS. ETC. (AND VICE VERSA)

DATE OF JUDGMENT08/02/1985

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) REDDY, O. CHINNAPPA (J) MUKHARJI, SABYASACHI (J)

CITATION:  1985 AIR  883            1985 SCR  (2) 815  1985 SCC  (2)  16        1985 SCALE  (1)196  CITATOR INFO :  RF         1986 SC2166  (6)  RF         1990 SC 313  (16)  RF         1991 SC1676  (65)

ACT:       Electricity  (Supply) Act 1948 sections 46 and 56 Grid tariff-Fixation  of-Framing  of  Regulations  under  section 79(h)-Whether condition  precedent- A common tariff for  all licenses in an area served by the grid-Whether permissible.

HEADNOTE:      Section  46   of  the  Electricity  (Supply)  act  1948 provides that a tariff to be known as the Grid Tariff shall, in accordance  with any regulations made, be fixed from time to time by the Electricity Board. Section 58 enables a local authority  to   implement  the   directions  issued  by  the Electricity  Board   or  the   Government  with   regard  to amortisation and tariffs policies.       The  U.P. Electricity Board under a notification dated 24 April  1962, fixed  the tariff  payable by  licensees who used to  get bulk  supply of  electric energy. The tariff so fixed was  enhanced by  another notification dated September 30, 1967  by 20%  which came into force on December, 1,1967. The City  Board, a  licensee, moved  the State Government on September 13,1966  for permission  to enhance  the rates for supply, but no such sanction was given till March 23, 1968.       The  City Board  questioned the validity of the tariff fixed and  its subsequent  enhancement under Art. 226 on the grounds: (1)  that the notification dated April 24, 1962 was not in  conformity with  s. 46, and (2) that it had not been Permitted to enhance correspondingly the rates chargeable by it. The petition was, however, dismissed.       On  appeal  the  Division  Bench  partly  allowed  the appeal, holding: (i) that ample guidance is available in the Act, and  that the rates fixed are subject to the control of the State  Government: (ii)  that the  levy of an additional 7.112 %  as an  additional charge and subsequent enhancement under the  two notifications  was illegal; (iii) that it was open to  the Electricity  Board to make an additional charge to  the   extent  of  the  actual  expenditure  incurred  by supplying  energy   at  6600   volts,  and   (iv)  that  the

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Electricity Board  should consider  afresh  rates  at  which electric energy could be supplied.       Both  the City  Board and  the Electricity Board filed appeals to  this Court.  It was  contended on  behalf of the City Board  that in  the absence  of any  regulations laying down the principles for fixing the tariff under s, 79, the 816 two Notifications issued under s. 46 of the Act were void as they  had   been  issued  without  any  guidance  and  were, therefore, arbitrary.       On the question whether the grid tariff fixed suffered from vice of arbitrariness, ^           HELD: (1) While s. 79(h) of the Act authorises the Electricity Board   to  make  regulations  laying  down  the principles governing the fixing of Grid Tariffs, s. 46(1) of the Act  does not say that no Grid Tariff can be fixed until such regulations  are made.  It only  provides that the Grid Tariffs shall  be fixed  in accordance  with any regulations made in  this behalf.  The framing  of regulation  under  s. 79(h) of the Act cannot, therefore, be a condition precedent for fixing  the Grid  Tariff. In  the instant case, the Grid Tariff fixed  did not suffer from the vice of arbitrariness. [821E-G; 822E]       Mysore  State Road  Transport Corporation  v. Gopinath Gundachar Char [1968] 1 S.C.R. 767, followed.              (2)  The Electricity (Supply) Act 1948 had been enacted to provide for the rationalisation of the production of supply  of electricity  and generally for taking measures conducive  to  electrical  development.  It  is,  therefore, permissible for  the Electricity  Board to fix a common Grid Tariff for an area so that there may be a reasonably uniform development of  the area by the supply of electric energy to all licensees  or consumers  in the  area at  a uniform rate with such reasonable variations as may be permissible in law subject to  the condition  that no undue preference is shown to any  of them.  The  Act  also  furnishes  ample  guidance regarding the  determination of  tariffs by  an  Electricity Board. [823A-C]       Maharashtra  State Electricity Board v. Kalyan Borough Municipality and Anr. [1968] 3 S.C.R. 137, followed.           (3) The validity of the levy of additional charges could not  be questioned by the City Board under Article 226 of the  Constitution in  respect of  the period prior to the filing of the writ petition. The additional charge of 7.1/2% was levied  in 1962  and the  City Board did not question it before the  Court till March 23, 1968 when it filed the Writ Petition. Moreover,  the City  Board had  not stated that it had not  collected charges  from the  consumers of  electric energy supplied  by it  at the  rates which  would cover the additional 7.1/2%  and had not recouped itself by collecting the charges  from the  consumers. The  presumption  in  this situation would  be that the City Board had not suffered any loss by  the levy  of 7.1/2%  by way  of additional charges. [823 G-H 824 A-B]       In  the instant  case, the  City Board  has been given directions from time to time by the Government regarding the charges it  may collect  from the  consumers in the light of the charges  it has  to pay to the Electricity Board and its own investment  expenditure on  the  undertaking.  The  City Board cannot  question the  Grid Tariff  only without at the same time  questioning the  directions pursuant to which- it has  been   collecting  charges  from  its  consumers.    No satisfactory material  has  been  placed  before  the  Court showing that  the charges  which were being collected by the

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City Board  from the consumers were uneconomical and did not satisfy the reasonable standards which should 817 govern the directions issued by the Electricity Board or the Government  from  A  time  to  time  regarding  the  tariffs policies of  the City  Board. Therefore,  it  would  not  be proper to  reopen the  claims of the City Board in regard to the period  prior to the filing of the writ petition arising on the  basis of  the alleged invalidity of the notification dated April  24,1962. The  decision of the High Court on the above point is allowed to remain only for the period between March  23,  1968  and  July  1,  1968.  No  opinion  on  its correctness is expressed because the period is small one and the Electricity  Board has  not insisted  upon a decision on this question.  The relief  granted by  the High  Court with regard to  the levy  of additional charge of 20% with effect from December  1,  1967  till  July  1,  1968  is  also  not disturbed for the same reasons [824D-H; 825A]       The  matter may  be reconsidered  by  the  Electricity Board as  directed by  the High Court on the other points in regard to the above specified periods

JUDGMENT:       CIVIL  APPELLATE JURISDICTION:  Civil Appeal  Nos. 814 and 815 of 1974-       From  the Judgment  and Order dated 13. 8. 1970 of the High Court of Allahabad in Special Appeal No. 34 of 1969 D       S.  N.  Kackar,  Gopal  Subramaniam  and  Mrs.  Shobha Dikshit for  the Appellant  in CA. No. 814 and respondent in CA No. 815.       U.  R. Lalit  and B.  S. Chauhan for the Respondent in CA. No. 814 and Appellant in CA. No. 815. E       The Judgment of the Court was delivered by              VENKATARAMIAH,  J. These two appeals by special leave are  filed against  the judgment dated August 13, 1970 of the  High Court  of Allahabad in Special Appeal No. 34 of 1964 (City  Board, Mussoorie  v State  Electricity  Board  & Ors.)(1) by the Uttar Pradesh Electricity Board (hereinafter referred to as the Electricity Board’) Constituted under the Electricity (Supply)  Act, 1948  (hereinafter referred to as ’the Act’)  and the City Board, Mussoorie, a local authority (hereinafter referred to as ’the City Board’) respectively.        The  City  Board  as  a  licensee  under  the  Indian Electricity Act,  1910 used  to get  bulk supply of electric energy from  the Electricity Board from the Ganga-Sarda Grid and in  its turn was distributing it to the consumers within its jurisdiction. In the year 1962, under a       (1) A.l.R. 1971 Allahabad 219. 818 notification dated April 24, 1962 issued under section 46 of the Act,  the tariff  payable by  the City  Board and  other licensees  in   the  Ganga  Sarda  Grid  was  fixed  by  the Electricity Board. The relevant portion of the Tariff was as follows:       "1.  Applicability-This rate schedule is applicable to all licensees  situated in  Ganga Sarda Grid area and taking supply in bulk from the Board.       2.  Character of  service-A. C.,  3, Phase, 50 cycles, 11,000 volts,  Alternatively, the  supply can  be given at a voltage lower  than 11 KV in which case an additional charge at 7.  1/2 per  cent on the total amount of the bill will be levied.       If  the consumer  takes supply  at a  standard voltage

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above 11  KV, a  rebate of  5% will be allowed to him by the Board on  the total  amount of  the bill  calculated at  the rates prescribed for supply at KV.       3. Rate;-              (a) Demand Charges-      First 500  KVA of Chargeable demand during the month at      the rate of................ ... Rs. 12.75 per KVA      Neat 1500 KVA of the charge- demand during the month at      the rate of .................. ... Rs. 10.00 per KVa      All above  2000 KVA of the chargeable demand during the      month at the rate of...... ... Rs. 8.50 per KVA                             PLUS            (b) Energy Charges-      First 170  Kwh, per  KVA of  Chargeable demand consumed      during the    month at the rate of.. "..... 5P. per Kwh 819      Next 170  Kwh. per  KVA of  chargeable demand  consumed      during the  month at  the rate  of... -.. - .. .4P. per      Kwh.      Remaining  Kwh.   per  KVA  of  the  chargeable  demand      consumed    during    the    month    at    the    rate      of................ 3P. per KWh                4. (i)Chargeable Demand-The chargeable demand      for the  month shall  be defined  as the  actual demand      during the  month or  60 per  cent  of  the  contracted      demand or  75 per  cent of  the  highest  demand  which      occurred during  the preceding  11 months, whichever is      the highest.            (ii) Coal-Clause-The above rates shall be subject      to a  coal price  adjustment at  the rate  of 0.001 per      Kwh. increase or decrease for every one P. Of variation      above or  below Rs.  40 per  tonne of coal delivered at      the bunkers in the Harduaganj Generating Station            5.  Determination of  Demand:-Demand  measurement      shall be  made by  suitable instruments at the point of      deli very. The demand for any month shall be defined at      the highest  average load  measured in Kilovolt-amperes      during any 30 consecutive minutes period of the month."        The   tariff  so   fixed  was   enhanced  by  another notification dated September 30, 1967 by twenty per cent and the enhanced rate come into force on December 1, 1967. Under section 58  of the  Act, the  Electricity Board  or where no such Board  was constituted,  the State  Government had  the power to direct the amortisation and tariffs policies of any licensee, being  a local  authority,  with  respect  to  its licensed undertaking in such manner as the Electricity Board or the  State Government,  as the  case may be, after giving the local authority a reasonable opportunity of being heard, considered expedient  for  the  purposes  of  the  Act.  The licensee, being  a local  authority, the  provisions of  any other  law   or  of  any  rules  made  or  directions  given thereunder notwithstanding,  was bound to give effect to any such directions  of the  Electricity  Board,  or  the  State Government, as  the  case  may  be.  The  Electricity  Board however, could  not issue any directions under section 58 of the Act  except after  obtaining the  prior approval  of the State Government. The City Board had H 820 moved  the  State  Government  on  September  13,  1966  for permission to  enhance the  rates  for  supply  of  electric energy to  Consumers. No  such sanction was given till March 23, 1968.  The City Board, therefore, filed a petition under Article 226  of the Constitution questioning the validity of the tariff  fixed under  the notification  dated   April 24, 1962 and  the enhancement  made under the notification dated

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September 30,  1967- It  may, however,  be stated  here that subsequently on April 20, 1968, the City Board was permitted to raise the charges for light and fan by two paise per unit which came  to 6% or 7% of the original rates and by 10% for electric energy supplied for other purposes.       The  City Board  challenged the notification issued on April 24,  1962 on  the ground that it was not in conformity with section  46 of  the Act.  It questioned the enhancement made on  September 30,  1967 on  the ground  that it had not been  permitted   to  enhance   correspondingly  the   rates chargeable by  it  to  the  consumers  even  though  in  its vicinity the Electricity Board itself was supplying electric energy to  consumers at a much higher rate. The petition was contested by  the Electricity  Board. The  Writ Petition was heard by  a Single Judge of the High Court. He dismissed the petition. The  City Board, thereafter filed an appeal before the Division  Bench of  the High  Court. The  Division Bench allowed the appeal in part. Aggrieved by the judgment of the Division Bench,  the City  Board and  the Electricity  Board have filed the above appeals by special leave.       The material part of section 46 of the Act reads thus:            "46.  (1) A tariff to be known as the Grid Tariff      shall in  accordance with  any regulations made in this      behalf, be  fixed from  time to  time by  the Board  in      respect of  each area  for which  a scheme is in force,      and tariffs  fixed under this section may, if the Board      thinks fit, differ for different areas.             (2)  Without  prejudice  to  the  provisions  of      section 47,  the Grid  Tariff shall  apply to  sales of      electricity by the Board to licensees where so required      under any of the First, Second and Third Schedules, and      shall, subject as herein- 821 after provided,  also be  applicable to sales of electricity by the Board to licensees in other cases:           Provided that if in any such other case it appears to the Board that, having regard to the extent of the supply required, the  transmission expenses  involved in  affording the supply  are higher than those allowed in fixing the Grid Tariff, the  Board may  make such  additional charges  as it considers appropriate,............. "       The first contention urged before us by the City Board is that  in the  absence of  any regulations  framed by  the Electricity Board   under  section 79  of the Act regarding the principles  governing the fixing of Grid Tariffs, it was not open  to the  Electricity Board  to issue  the  impugned notifications. This contention is based on subsection (1) of section 46  of the  Act which  provides that  a tariff to be known as  the Grid  Tariff  shall  in  accordance  with  any regulations made  in this behalf, be fixed from time to time by the Electricity Board. It is urged that in the absence of any regulations  laying down  the principles  for fixing the tariff, the  impugned notifications  were void  as they  had been issued  without any  guidelines and  were,.  therefore, arbitrary. It  is admitted that no such regulations had been made by  the Electricity  Board by  the  time  the  impugned notifications were  issued. The Division Bench has negatived the above plea and according to us, rightly. It is true that section 79  (h) of  the Act authorises the Electricity Board to make regulations laying down the principles governing the fixing of  Grid Tariffs.  But section 46 (1) of the Act does not say  that  no  Grid  Tariff  can  be  fixed  until  such regulations are  made. It only provides that the Grid Tariff shall be  in accordance  with any  regulations, made in this behalf. That means that if there were any regulations    the

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Grid  Tariff   should  be  fixed  in  accordance  with  such regulations and  nothing more.  We are  of the view that the framing of  regulations under  section 79  (h)  of  the  Act cannot be  a condition precedent for fixing the Grid Tariff. A similar  contention was  rejected by  this Court in Mysore State  Road  Transport  Corporation  v.  Gopinath  Gundachar Char(l) which  was a  case arising  under the Road Transport Corporation Act,  1950. Under  section 14 of that Act a Road Transport Corporation  was entitled  to appoint officers and servants  as  it  considered  necessary  for  the  efficient performance of  its sanctions.  Under section  34 (1) of the Road Transport Corporation Act, 1950          (1) [19681 1 S.C.R. 767, 822 the State  Government had been empowered inter alia to issue directions  to  the  Road  Transport  Corporation  regarding recruitment, conditions  of  service  and  training  of  its employees. Under  section 45  (2) (c)  of that Act, the Road Transport Corporation  was  empowered  to  make  regulations regarding the  conditions of appointment and service and the scales of  pay of  officers and  servants of the Corporation other than  the Chief  Executive  Officer,  General  manager and the  Chief Accounts  Officer. Admittedly  no regulations had been framed under section 45 (2) (c) of that Act. It was contended that  the Corporation  could not  appoint officers and servants  referred to  therein  or  make  any  provision regarding their conditions of service until such regulations were made.  This Court  rejected  the  said  plea  with  the following observation at page 770:              "The conjoint effect. Of ss. 14 (3) (b), 34 and      45 (2)  (c) is  that the  appointment of  officers  and      servants and  their conditions  of service must conform      to the directions, if any given by the State Government      under s.  34 and  the regulations, if any, framed under      s. 45 (2) (c). But until such regulations are framed or      directions are  given, the Corporation may appoint such      officers or  servants  as  may  be  necessary  for  the      efficient performance  of its  duties on such terms and      conditions as it thinks fit."       We  do not  also find any merit in the submission that the Grid Tariff fixed in this case suffered from the vice of arbitrariness.              As  observed by  the Division Bench of the High Court, there  is ample  guidance available  in  the  various provisions of  the Act  and that the rates fixed are subject to the  control of  the State  Government. We do not find it necessary to  repeat what  is stated  by the  Division Bench except observing that we respectfully agree with the reasons given by  it for  rejecting the  said plea.  In  Maharashtra State Electricity  Board v.  Kalyan Borough  Municipality  & Anr.,(l) this Court has discussed the relevant provisions of the Act  while dealing  with section  49 thereof  which show that the  Act furnishes  ample guidance  generally regarding the  determination   of  tariffs  by  an  Electricity  Board functioning under  the Act.  There is  also no  merit in the submission that  there cannot  be a  common tariff  for  all licensees in  an area served by a Grid and that there should be a separate rate       (1) [1968] 3 S.C.R, 137. 823 of  charge   for  each   licensee.  While   it  may  not  be objectionable to  have a reasonable tariff fixed in the case of a  particular licensee without offending the rule of non- discrimination, fixation  of a  common  Grid  Tariff  is  in consonance with  the spirit  of the Act. The preamble to the

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Act says  that it  had  been  enacted  to  provide  for  the rationalisation of  the production and supply of electricity and generally  for taking  measures conducive  to electrical development.  Looked  at  against  this  background,  it  is permissible for  the ElectriCity  Board to fix a common Grid Tariff for an area so that there may be a reasonably uniform development of  the area by the supply of electric energy to all licensees  or consumers  in the  area at  a uniform rate with such reasonable variations as may be permissible in law subject to  the condition  that no undue preference is shown to any of them.       The  Division Bench, however, held that the levy of an additional 7.1/2%  as  an  additional  charge  made  by  the Electricity Board  under the first para of clause (2) of the impugned notifications  dated April  24, 1962  and September 30, ]967  was illegal  and therefore  liable to  be  quashed because according  to it  the additional  charge  of  7.1/2% could be  imposed under the proviso to section 46 (2) of the Act to  cover extra  expenses only  and  not  for  supplying electric ENERGY  at a  lower voltage  of 6600 volts when the Grid Tariff had fixed rates for supplying electric energy at 11000 volts.  It however,  held that  it  was  open  to  the Electricity Board  to make  an additional charge only to the extent of  the  actual  expenditure  incurred  by  supplying electric  energy   at  6600   volts.  It  also  quashed  the Government order  dated April  20, 1968  by which  the  City Board was  permitted to  increase the charges payable by the consumers in  some respects  and the subsequent action taken on  the   above  basis.  The  Division  Bench  directed  the respondents to  consider afresh the question of the rates at which electric  energy could  be supplied. We do not propose to go  into the  correctness of this part of the decision of the Division Bench because we are of the view that this case can be  dispensed of  in a  different  way.  The  contention relating to  the validity  of the levy of additional charges could not  be raised  by the City Board under Article 226 of the Constitution  in respect  of the  period  prior  to  the filing of  the writ petition. The above additional charge of 7.1/2% was  levied in  1962  and  the  City  Board  did  not question it  before the  Court till  March 23,  1968 when it filed the  writ petition. It is further seen that it has not stated that  it had not collected charges from the consumers of electric energy supplied by it at the 824 rates which  would cover  the additional 7.112%. The learned counsel for  the City  Board was  not able to state that the City Board had not recouped itself by collecting the charges from the  consumers. In  this situation  we have  to presume that the City Board had not suffered any loss by the levy of 7.1/2 %  by way  of additional  charges. We  are of the view that in  cases of  this nature  where there  is little or no possibility of  refunding the  excess amount  collected from the ultimate  consumer to him and the granting of the relief to the petitioner would result in his unjust enrichment, the Court should not ordinarily direct any refund in exercise of its  discretion   under  Article  226  of  the  Constitution Moreover in  this case the City Board woke up nearly 6 years after the  issue of the first notification and that too only after an  enhancement by  20%  was  made  under  the  second notification. In  the case  of the  City Board,  which is  a local  authority,  there  is  an  additional  reason.  Under section 58  of the  Act which is already referred to above a local authority  is bound to implement the directions issued by the  Electricity Board or the Government, as the case may be, with  regard to  the amortisation  and tariffs policies.

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The City  Board has  been given directions from time to time by the  Government regarding the charges it may collect from the consumers  in the  light of the charges it has to pay to the Electricity Board and its own investment and expenditure on the  undertaking. The City Board cannot question the Grid Tariff  only  without  at  the  same  time  questioning  the directions pursuant  to which it has been collecting charges from its  consumers.  No  satisfactory  material  is  placed before the  Court showing  that the charges which were being collected  by   the  City  Board  from  the  consumers  were uneconomical and  did not  satisfy the  reasonable standards which should govern the directions issued by the Electricity Board or  the Government  from time  to time  regarding  the tariffs policies  of the  City Board.  In this situation, we feel that it would not be proper to reopen the claims of the City Board  in regard  to the  period prior to the filing of the writ  petition arising  on  the  basis  of  the  alleged invalidity of  the notification  dated April 24, 1962. Hence we refuse  to grant  any relief  in this  regard to the City Board for  the period  up to  the date of the writ petition, that is, till March 23, 1968. The Grid Tariff was revised in this case on July 1, 1968. The decision of the High Court on the above  point is,  however, allowed to re[remain only for the period  between March  23, 1968 and July 1, 1968 without expressing any opinion on its correctness because the period is a  small one  and the  Electricity Board  does not insist upon a  decision on this question in this case. The question is left open by 825 us. Similarly,  the relief  granted by  the High  Court with regard to A the levy of additional charge of 2 % with effect from December  1, 1967 till July 1, 1968 is not disturbed by us for the same reason without expressing any opinion on its correctness.  This   judgment  shall  not  be  construed  as affirming the  decision of  the High  Court in so far as the above points  are concerned.  The matter may be reconsidered by the  Electricity Board  as directed by the Division Bench of the  High Court  but with regard to the periods specified above.       The  appeals are  accordingly disposed of. There shall be no order as to costs. A.P.J. 826