REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7220-7239  OF 2000

               Bihar State Electricity Board  ...Appellant

Versus

M/s Pulak Enterprises and Ors. ...Respondents

WITH  

Civil Appeal No. 7219 of 2000

Civil Appeal Nos.  2555-2559                 of 2009 (Arising out of SLP (C) Nos.456-460/2001)

Civil Appeal        2560            of 2009 (Arising out of SLP (C) No.12624/2001)

Civil Appeal        2561          of 2009 (Arising out of SLP (C) No.12625/2001)

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted in Special Leave Petitions.

2. These appeals are directed against the common judgment of the Patna

High Court allowing the batch of writ petitions. The dispute relates to fuel

surcharge. The validity of levy has been upheld by this Court in Bihar State

Electricity Board and Anr. v.  Bihar 440 Volt Vidyut Upbhokta Sangh and

Ors. (1997 (11)  SCC 380).  Therefore,  the  dispute  before the  High Court

related to method of calculation and in substance the rate of fuel surcharge.

3. The  Board  has  its  own  power  generation  units  namely,  Patratu

Thermal Power Station, Barauni  Thermal Power Station and Muzaffarpur

Thermal  Power  Station.  The  power  generating  from  these  units  is  not

sufficient and, therefore the Board purchased from other sources in order to

meet the requirements of power supply to its consumers.  The sources from

which  the  Board  purchases  power  are  Damodar  Valley  Corporation,

National Thermal Power Corporation, Tenughat Vidyut Nigam Ltd., Uttar

Pradesh  Electricity  Board,  Orissa  State  Electricity  Board,  Power  Grid

Corporation of India Ltd.   According to the Board, the power purchased

from outside  sources  forms the  bulk  of  the  total  power  supplied  by the

Board. In other words, power generated by the generating units of the Board

is much less in comparison to the purchased power from outside sources.  

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4. The Tariff framed by the Board in exercise of its powers conferred

upon it under the provisions of Section 49 of the Electricity (Supply) Act,

1948 (in short the ‘Act’) vide Tariff Notification dated 21.6.1993 published

in the Bihar Gazette on 23.6.1993 which came into effect  from 1.7.1993

prescribes rates for supply of power to the consumers of the Board. Because

of infrequent revision of tariffs and in order to neutralize increase in the cost

of generation and purchase of power, the 1993 Tariff provides for levy and

collection of fuel surcharge from the consumers of the Board.  

5. It is submitted that fuel surcharge is a part of tariff and, in reality, a

surcharge levied to meet the increased cost of generation and purchase of

electricity.  This  Court  in  a  number  of  decisions  has  upheld  levy of  fuel

surcharge.  

6. The 1993 Tariff provides for a formula for levy and collection of fuel

surcharge from the consumers of the Board from time to time. The validity

of the formula for levy of fuel surcharge has been upheld by this Court in

Bihar State Electricity Board’s case (supra).  

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7. Section 49 of the Act empowers the Electricity Board to frame tariff

and lay down the terms and conditions of supply of electricity as it thinks

fit.  In  exercise  of  the  said  power  the  Bihar  State  Electricity  Board

(hereinafter referred to as the ‘Board’) framed tariff vide notification dated

21.6.1993,  published  in  the  Bihar  Gazette  on  23.6.1993  superseding  the

earlier  tariff  notifications  dated  26.8.1991  and  3.7.1992.  The  tariff

notification  dated  21.6.1993  is  effective  from  1.7.1993.  Under  clause

16.10.1 of the said tariff the consumers of the categories specified therein

are required to pay operational surcharge at a rate to be determined every

year in accordance with the formula prescribed, in addition to other charges

as  laid  down  in  the  tariff  schedule.  In  terms  of  clause  16.10.2  the

operational  surcharge consists  of two elements  (i) fuel  surcharge and (ii)

other  operational  surcharge.  Clause  16.10.3  lays  down  the  formula  for

determining fuel surcharge applicable during the financial year in terms of

paise per unit. Clause 16.10.4 prescribes the formula for determination of

'other  operational  surcharge'.  It  may  be  mentioned  here  itself  that  the

provision  regarding  'other  operational  surcharge'  has  been  held  to  be

arbitrary  and  struck  down.  Clause  16.10.5  provides  that  the  operational

surcharge  for  a  financial  year  shall  be calculated  by the Board  after  the

expiry  of  the  financial  year.  Till  actual  calculation  of  the  operational

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surcharge  for  a  financial  year  is  made,  operational  surcharge  during  the

financial year may be levied at a rate provisionally calculated on monthly or

quarterly or half-yearly basis as the Board may decide. In case of short or

excess realisation the amount is to be adjusted in the next bill be served on

the consumers. Clause 17 lays down that the existing rate of fuel surcharge

notified in letter no.A/CS/Costing-44/92-93/397 dated 29.3.1993 amounting

to  32  paise  per  unit  has  been  merged  in  the  tariff.  Any increase  in  the

operational surcharge thereafter only shall be levied.

8. In order to appreciate the facts to be stated hereinafter it  would be

appropriate to notice the formula for computation of the fuel surcharge laid

down in clause 16.10.3 as under:

S1 = A1xA3+B1xB3+C1xC3+D1xD3+E1xE3xF1xF3+G1xG3+H1xH3

(A2+B2+C2+D2+E2+F2+G2+H2)....

Whereas,

S1 = Average Fuel Surcharge per unit in

paise applicable during the

financial year.

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A1 , B1 ,C1 =. Unit generated from PTPS, BTPS &

MTPS respectively.

D1,E1,F1,G1,H1 = Unit  purchased  from  DVC,

UPSEB,OSEB,NTPS,PGCL  and   any  other

source respectively.

A2,B2,C2 = Unit sold out of sent out from

PTPS, BTPS & MTPS on which fuel

surcharge is leviable.

D2,E2,F2,G2,H2 = Unit sold, out of purchased from

DVC, UPSEB, OSEB, NTPC, PGCL

and any other source respectively

during the year on which Fuel

Surcharge is leviable.

A3,B3,C3 = Increase in average cost of Fuel

Surcharge in paise per unit

computed for Board's Generation at

PTPS, BTPS and MTPS

D3, E3,F3,G3,H3 = Increase in average unit rate of

purchase of energy from DVC,

UPSEB, OSEB, NTPC, PGCL & any

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other source respectively during the

year for which the surcharge is to

be calculated.

The said increase to be calculated

with respect to the year 1992-93

(after amendment, read 1991-92)

(In the above, PTPS stands for Patratu Thermal Power Station, BTPS for

Barauni  Thermal  Power  Station,  MTPS for  Muzaffarpur  Thermal  Power

Station. They are Board's own generating stations. Likewise, DVC stands

for Damodar Valley Corporation, UPSEB for Uttar Pradesh State Electricity

Board,  OSEB  for  Orissa  State  Electricity  Board,  NTPC  for  National

Thermal  Power  Station  and  PGCL for  Power  Grid  Corporation  of  India

Limited. They are external sources of supply of electricity to the Board.)

9. The  manner  of  calculation  of  increase  in  average  cost  of  fuel  in

Board's own generating stations i.e. A3, B3 and C3, and increase in average

unit rate of purchase from outside sources i.e. D3; E3 etc. is laid down in

clause 16.10.3.1. As regards the former, the calculation is to be made in the

following manner:

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"(a)  Patratu Thermal Power Station:-  The rate in  paise per unit  shall  be based on the average cost of 9270.08 paise  per  10,00,000  K.Cal.  of  fuel  delivered  at  the bunkers of the Board's generating station at Patratu. In the event of rise or fall in the aforesaid cost, at any time, the rate  per  unit  will  be increased  or  decreased as  the case  may  be,  by  0.3537  paise  for  each  one  per  cent variation in the cost of fuel per 10,00,000 K.Cal. In the cost of fuel per 10,00,000 K.Cal. In calculating the above variation, percentage variation of 0.5 and above will be treated  as  next  higher  percentage  and  percentage variation, below 0.5 will be ignored.

(b)  Barauni  Thermal Power  Station:-  The rate  in  paise per unit shall be based on an average cost of 17407.97 paise  per  10,00,000  K.Cal.  of  fuel  delivered  at  the bunkers of the 'Board's generating station at Barauni. In the event of rise or fall in the aforesaid cost, at any time, the rate per  unit  will  be increased or decreased,  as the case  may  be  by  0.8539  paise  for  each  one  per  cent variation  in  the  cost  of  fuel  per  10,00,000  K.Cal.  In calculating the above variation,  percentage variation of 0.5 and above will be treated as next higher percentage and percentage variation below 0.5 will be ignored.

(c)  Muzaffarpur  Thermal  Power  Station:-  The  rate  in paise  per  unit  shall  be  based  on  an  average  cost  of 18166.04 paise per 10,00,000 K.Cal. of fuel delivered at: the  bunkers  of  the  Board's  generating  station  at Muzaffarpur. In the event of rise or fall in the aforesaid cost , at airy time, the rate per unit will be increased or decreased, as the case may be by 0.7368 paise for each one percent  variation in the cost  of fuel  per 10,00,000 K.Cal.  In  calculating  the  above  variation,  percentage variation of 0.5 and above, will be treated as next higher percentage and percentage variation below 0.5 will be ignored."

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As, regards  the latter :i.e. electricity purchased from external sources the

clause says that the actual increase in the average unit rate of purchase will

apply, that is to say, will be the basis.

10. On 4.4.1994 the Board issued circular stating that on final calculation

the fuel surcharge for the period 1992-1993 had been determined as 26.14

paise per Kwh. On 5.1.95 the Board issued another circular calculating the

fuel surcharge for the period July 1993 ( i.e. after coming into force of the

new tariff) to March 1994 to be 25.98 paise per Kwh. I am not referring to the

rate  of  other  operational  surcharge  under  clause  16.10.4  which  was  also

notified  by the same circular because  that  has  already been  struck  down.

The consumers were billed accordingly. Writ Petitions were filed challenging

the  rates  in  CWJC No.2771  of  1995(R)  and  analogous  cases.  During  the

pendency of the said writ petitions the Board proposed certain amendments in

clauses 16.10.3, 16.10.3.1 and 17, vide letter no.135 dated

28.12.1995. I shall refer to the salient features of the proposed amendment

later.  The implementation of the circular  dated 5.1.1995 was kept pending

vide  circular  dated  8.2.1995 in  the  meantime.  On  8.3.1995  and  17.4.1995

circulars were issued directing payment @ 15 paise/Kwh from 1.7.1993 to

31.3.1995 instead of 25.98 paise per Kwh as fuel surcharge as stipulated in

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circular  dated  5.1.1995.  However,  by  circular  dated  20.9.1995  the  said

circulars  dated  8.3.1995  and  17.4.1995  were  withdrawn  and  the  earlier

circular   dated  5.1.1995  by which  fuel  surcharge  @ 25.98 paise/Kwh had

been fixed was restored.

11. The writ petitions, CWJC No.2771 of 1995(R) and analogous came

up  for  hearing  in  October  1996.  With  the  consent  of  the  Board,  on

17.10.1996 the High Court constituted a High Level Committee consisting

of two nominees each of the consumers and the Board and two independent

members.  The Committee  was directed  to  calculate  the  fuel  surcharge  in

terms of 1993 tariff, particularly taking into account clause 17, and submit

report by 31.1.1997 to the Chairman of the Board, The writ petitions, were

thus disposed of. The High Court made it clear that after submission of such

report, anybody feeling aggrieved may move the appropriate forum or court

of  law.  From  the  records  of  the  case  it  appears  that  an  interlocutory

application was  made by the concerned petitioners  of  the case  making a

grievance that certain vital documents had not been made available by the

Board to the Committee vide order dated 29.1.1997 the High Court recorded

the submission of the counsel  for the Board that  the documents  required

shall be furnished within two weeks.  Time for submission of the report was

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accordingly extended to 31.3.1997 and the earlier order dated 17.10.1997

was modified to this extent.

12. At this stage the Board issued circular dated 5.2.1997 notifying the

provisional rates of fuel surcharge as 43.89 paise/Kwh for 1994-95, 72.12

paise/Kwh for 1995-96 and 102 paise/Kwh from 1.4.1996 onwards. This led

to fresh writ petitions being CWJC Nos.1632 of 1997 and analogous cases.

On 12.3.1997 when the cases came up for preliminary hearing dispute again

arose  as  to  circumstances  in  which  the  aforesaid  Committee  had  not

finalised  the  report.  After  hearing  counsel  for  the  parties,  however,  a

consent order was passed to the effect that the Committee shall finalise its

report  on 14.3.1997 when it  was scheduled to meet next,  on the basis of

documents already on record and submit the report  to the High Court on

17.3.1997. On 16.3.1997 the Committee submitted its report. On 21.3.1997

when the matter came up for further hearing the High Court noted that the

findings  reached by the  members of  the committee  were not  unanimous.

While four members of the Committee had worked out the fuel surcharge @

12.38  paise/Kwh  for  the  period  from July  1993  to  March  1994,  21.33

Paise/Kwh for the period 1994-95 and 44.00 paise/Kwh (provisional) for the

period 1995-96, the other two members who were Board's nominees, had

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worked out the same @ 25.98 paise, 43.98 paise and 72.12 (provisional)

paise per Kwh for the aforesaid periods respectively. As an interim measure

the High Court directed the petitioners to pay fuel surcharge for the periods

July 1993  to  March 1994 and 1994-95 at  the  rates  worked out  by four

members of the committee, which were in their favour, and for the periods-

1995-96 and 1996-97 @ 46.37 paise/Kwh and  56.37 paise/kwh offered by

them. CWJC Nos. 1632 of 1997 and analogous cases were finally heard and

decided by judgment dated 30.6.1998.  

13. At this stage it may be relevant to advert to the Board’s letter dated

28.12.95,  referred  to  above,  suggesting  certain  amendments  in  clauses

16.10.3, 16.10.3.1 and 17. The substance of the proposed amendment was

that instead of calculating the increase in the average unit rate of purchase

of energy from DVC, UPSEB, OSEB, NTPC, PGCL and any other source

with respect to the year 1992-93, as prescribed in clause 16.10.3 the same

should be calculated with respect to the year 1991-92, and similarly with

respect to the year 1991-92, and similarly in clause 16.10.3.1 the average

cost  of  fuel  in  respect  of  energy  generated  at  Board’s  own  generating

stations be computed on the base rate of 1991-92 and not 1992-93. In other

words,  the  base  year  with  respect  to  these  two  sets  of  components  was

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sought  to  be  changed  from  1992-93  to  1991-92.  Clause  17  was  also

proposed to be amended by that in accordance with the instructions issued

by the Government of Bihar to the Board, the increase in the rate of fuel

surcharge between January 1992 and June 1993 which came to 20 paise (12

paise as in January 1992 and 32 paise as in June 1993) had been merged in

the tariff and thus any increase in the fuel surcharge thereafter only shall be

levied after accounting for the increase already merged in the tariff.   

14. From the judgment dated 30.6.1998 disposing of CWJC Nos.1632 of

1997 and analogous case, it  appears that  the validity of  the rates of fuel

surcharge  was  challenged  mainly  on  two  grounds:-  (a)  the  cost  of:

generation at the Board's own generating stations, namely, Patratu, Barauni

and  Muzaffarpur  Thermal  Power  Stations  had  been  worked  out  treating

1991-92 as  the  base year  but  the  cost  of  the unit  purchased from DVC,

NTPC etc. had been calculated on the basis of 1992-93 rates. According to

the  writ  petitioners  in  working  out  the  rate  the  values  to  be  taken  into

account must correspond to the same year lest determination could become

irrational  and arbitrary:  (b)  the merger  of  fuel  surcharge  as  on 1.7.93  in

terms of c1ause 17 of the tariff was not correct. The High Court noted that

the objections of the petitioners were in consonance with the Board's own

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decision  vide  letter  dated  28.12.1995  (supra)  by  which  the  Board  had

suggested  certain  amendments  in  the relevant  clauses  of  the tariff  to  the

State Government. The High Court, however, took the view that in terms of

the  order  dated  17.10.1996  passed  in  CWJC  No.2771  of  1995(R)  the

Committee was required to submit its report to the Chairman of the Board

and not to the High Court. Observing that the report of the committee would

assist the Board in coming to fair and just decision, and if the Board was

satisfied that the tariff modification requires any modification it was open to

it  to modify the tariff  in accordance with law, the High Court  instead of

finally deciding the issues itself directed the Board to consider the report of

the  committee  submitted  before  the  High   Court  on  16.3.1997,  and  in

consultation with the State Government, take a final decision, by reasoned

order, on the points:-

(i) Whether  any  modification  of  clause  16.10.3  of  the  tariff notification published on 23.6.93 is required so that the increase in the average unit  rate of purchase of energy from DVC, NTPC etc. should be calculated with respect to the year 1991-92 instead of the year 1992-93.

(ii) Whether in terms of clause 17 of the aforesaid tariff notification, 20 paise per Kwh the increase in fuel surcharge  which  has  been  merged  in  the  basis tariff should be considered for adjustment, instead of 32 paise, in terms of clause 17 of the aforesaid notification. If so, whether the impugned circular dated 5.2.97 be not withdrawn and the consumers

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be given the benefit of discredit to the period July 1993 to March 1994 and thereafter, and clause 17 of  the  tariff  notification  under  section  93  be amended appropriately.  

15. The High Court directed that till the Board takes a final decision in

the matter, the interim order passed by the Court on 21.3.1997, referred to

above, shall operate. Thereafter, the petitioners shall be liable to pay fuel

surcharge in accordance with the decision that may be taken by the Board.

Any person aggrieved by the decision  of  the  Board  will  be  at  liberty to

challenge the same in accordance with law.

16. The submission of the writ petitioners that the Board has not passed a

'reasoned order' or otherwise failed to implement the direction of the High

Court was rejected.  It was observed that the High Court had directed the

Board to  decide  whether  any modification  in  clause 16.10.3  of the  tariff

notification was required so as to make the base year with respect to average

unit  rate  of  purchase  of  energy  from DVC,  NTPC etc.  at  par  with  the

increase  in  cost  of  generation  at  Board's  own generating  stations  and  to

adjust  the  merger  of  the  existing  fuel  surcharge  of  20  paise/Kwh,  by  a

reasoned order. A favourable decision having been taken and the aforesaid

clauses  suitably amended,  the High Court  felt  that  there  is  no  scope  for

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further  argument  in  this  regard.  As  far  as  the  requirement  of  passing  a

"reasoned order" is concerned, the facts and figures contained in the agenda

notes dated 26.11.1998 and 6.1.1999 which were the basis of the proposed

amendments and revision in the rates, can be treated as reasons for the same.

The  direction  of  the  High  Court  to  pass  a  reasoned  order  cannot  be

interpreted as a direction to set out reasons for fixing the particular rates of

fuel surcharge which is merely an arithmetical exercise to be worked out in

accordance with the prescribed formula. The Board is a body corporate and

it takes its decision on the basis of the facts and figures furnished to it in the

agenda notes supported by materials. It is apparent that after the decision of

the High Court the matter was examined at different levels and finally the

said  agenda  notes  dated  26.11.1998  and  6.1.1999  were  put  up  for

consideration  which  were  approved  respectively  on  14.12.1998  and

21.1.1999.   High  Court  did  not  find  any  substance  whatsoever  in  the

contention  that  the  Board  failed  to  implement  the  direction  of  the  High

Court, by not passing a reasoned order or otherwise.

17. The submission that the dispute should be referred to a Committee of

experts  was  rejected  by  the  High  Court  considering  the  nature  of  the

dispute. It was of the view that such a course should be taken only when the

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Court cannot decide the dispute. There may be justification to constitute a

committee  and refer  the  dispute  to  it  when the  relevant  data  have  to  be

gathered or facts have to be ascertained without which the dispute cannot be

resolved.  This  normally is  done in public interest  litigation.  In adversary

litigation  it  is  for  the  parties  to  produce  materials  in  support  of  their

respective claim. The Court is not supposed to make a roving enquiry for

allowing or disallowing the claim of one or the other party. It is true that on

the previous occasion in CWJC No.2771 of 1995 ®, the High Court  did

constitute a Committee but that was with the consent of the Board. Counsel

for the Board pointed out in course of his submission that the Board wanted

to be assured itself that the stand taken by it in letter dated 28.12.95 to the

State Government suggesting amendments in clauses 16.10.3 and 17 was

correct.  

18. As  the  aforesaid  pleas  were  taken  for  the  first  time  in  course  of

argument, the Board was allowed opportunity to file written submission. In

its written submission the Board took the stand that T & D losses do not

form part of calculation of fuel surcharge and the reason for the difference

of 8655.78 MU is the existence of large number of defective meters and

meterless  supply  of  electricity  to  consumers  belonging  to  different

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categories, particularly, agriculture and domestic categories. The statement

in paragraph 3.7 of Chapter III of the CAG report actually represents the

T&D losses based on units  actually metered and does not  include power

sold to the consumers having unmetered supply or the consumers having

defective or burnt meters. That is why in the accounts, the units sold were

worked out by dividing the assessed revenue by the tariff  rates including

fuel surcharge. It has been stated that in the case of defective meters and

meterless consumers, though bills are raised, the corresponding quantum of

power  sold  cannot  be  determined.  Hence  the  assessed  revenue  (in

accordance with the Board's tariff) is treated as the basis for computation of

power sold. The CAG, it has been stated, has approved this procedure and

granted its statutory certificate to the effect that the accounts of the Board

give a "true and fair view of the state of affairs of the Board".  

19. The Board further took the stand that if the rates of fuel surcharge

were to be determined only on the basis of metered sales the rates would be

considerably higher than already determined by the Board. This would be

evident from the following chart:   

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Sl. Particulars July 93 1994-95 1995-96

1996-97

March 94

1. Amount recove- rable as fuel 9536.09 16328.20 28431.10  53385.22 surcharge (Rs.in lakhs)

1. Units on which  Fuel surcharge  2645.76 3437.95 3822.96 3834.04

is leviable (in MKwh)

3. Rate of fuel 36.04 47.49 74.37 139.24 surcharge (in P/Kwh)

4. Less (20 P/Kwh) As per the  Hon’ble High Court’s Order dated 30.6.98 Passed in CWJC No.1632 of 99  20.00 20.00 20.00 20.00

4. Net rate (P/Kwh) If T&D losses as  Per serial No.6 Of table at para 3.7 Of CAG report at page 80 is taken into account (3-4) 16.04 27.49 54.37 119.24

4. Present rates of fuel

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Surcharge as per the Impugned notification Dated 31.5.1999 23.38 21.33 48.54  99.34

20. The above calculation has been explained by pointing out that while

A1, B1, C1 etc. and A3, B3, C3 etc. components of the Formula indicating

the power pumped into the Board’s system for transmission or distribution

to different points in the State and the incremental rise in the average cost of

fuel at the Board’s Thermal Power Stations or power purchased from NTPC,

DVC etc. are not affected by the T&D losses, A2, B2, C2 etc. component of

the  Formula  representing  the  quantum of  power  sold  to  categories  from

whom fuel surcharge is leviable would be reduced if power supplied to the

consumers having defective meters etc. is excluded from the total quantum

of power sold.  Thus, while the numerators would remain unchanged, the

denominators would get reduced resulting in higher rates of fuel surcharge.

In the  above  view of  the  matter,  it  was  stated  that  keeping  in  view the

meterless and defective meter supply of the electricity the Board has made

its own realistic calculation of T&D losses as reflected in the table in para

3.7 of the CAG report which has been accepted by the CAG.  The Board has

accordingly asserted that the table shown in para 3.7 of the report regarding

20

“percentage of actual loss of energy available for sale” has no nexus with

the  computation  of  rates  of  fuel  surcharge  under  the  formula  in  clause

16.10.3.

21. The significance of the question as to whether fixing the rate of fuel

surcharge is a legislative function or a non-legislative function is that if the

function is  held  to be legislative, in the absence of any provision in that

regard  the  principles  of  natural  justice  would  not  be  applicable  and  the

scope of judicial review would also be limited to plea of discrimination i.e.

violation  of  Article  14  of  the  Constitution  of  India,  1950  (in  short  the

‘Constitution’). As a general proposition, the law on the point is settled. In

Prag Ice and Oil Mills v.  Union of India (AIR 1978 SC 1296),  a Seven-

Judge Bench of this Court by majority observed:

"In the  ultimate  analysis  the  mechanics  of  price fixation has necessarily to be left to the Judgment of the executive  and  unless  it  is  patent  that  there  is  hostile discrimination against a class of persons, the processural basis  of  price  fixation  has  to  be  accepted  in  the generality of cases as valid.”

22. The legal position was reiterated in  Rohtas Industries v.  Bihar State

Electricity Board, (AIR 1984 SC 657) and Kerala State Electricity Board v.

21

M/s  S.N.Govind  Prabhu  &  Brothers (AIR  1986  Supreme  Court  1999),

wherein it was observed, "Price fixation is neither the forte nor the function

of the Court".

23. As  regards  the  nature  of  the  function,  in  Saraswati  Industrial

Syndicate  Limited v.  Union of India (AIR 1975 SC 460),  the Court  had

observed that the price fixation is more in the nature of a legislative measure

even though it  may be based upon objective criteria found in a report  or

other material. It should not, therefore, give rise to a complaint that rule of

natural justice has not been followed in fixing the price. In Prag Ice and Oil

Mills v. Union of India (supra) the Court observed:

"We think  that  unless  by the terms of  particular statute or order,  price fixation is made a quasi  judicial function  for  specified  purposes  or  cases  it  is  really legislative in character …..the legislative measure does not concern itself to the facts of an individual case.  It is meant  to  lay  down  a  general  rule  applicable  to  all persons or objects or transactions of a particular kind of class.”  

24. In Union of India v.  Cynamide India Ltd. (AIR 1987 SC 1802) this

Court held that except in cases where it becomes necessary to fix the price

separately in relation to individuals, price fixation is generally a legislative

22

act,  the  performance  of  which  does  not  require  giving  opportunity  of

hearing. Following passage from the judgment may usefully be noticed:

“Legislative action, plenary or subordinate, is not subject  to  rules   of  natural  justice.  In  the  case  of Parliamentary legislation  the proposition is self-evident. In the case of subordinate legislation, it may happen that Parliament  may  itself  provide  for  a  notice  and  for  a hearing  –  there  are  several  instance  of  the  legislature requiring  the  subordinate  legislating  authority  to  give public  notice  and  a  public  hearing  before  say,  for example, levying  a municipal rate – in which case the substantial  non-observance of  the statutorily prescribed mode of observing natural justice may have the effect of invalidating  the  subordinate  legislation,  but  where  the legislature has chosen not  to provide for any notice or hearing, no one can insist on it and it will not permissible to read natural justice into such legislative activity.”

25. Reference may also be made to a Constitution Bench decision in Shri

Sitaram Sugar Company Ltd. v. Union of India (1990 (3) SCC 223).  

26. In a sense,  fixing  rate of  fuel  surcharge under clause  16.10  of  the

Tariff notification is different from fixing the tariff under Section 49 of the

Act.  Fuel  surcharge  is  undoubtedly  a  part  of  tariff.  But  fixing  rates  of

consumption charges or the guaranteed charges or the fixed charges or the

delayed payment surcharge etc.  and fixing rates of fuel  surcharge do not

23

stand  on  par.  Though  rates  of  consumption  charges  etc.  are  based  on

objective materials, there is enough scope for flexibility in fixing the rates.

It  also  involves  policy  to  fix  different  fates  for  different  categories  of

consumers. Such is not the position with the fuel surcharge. Clause 16.10.1

specifies  the categories  coning in  the net  of  the levy and clause 16.10.3

provides the formula. In simple words,  the formula envisages addition of

units generated or purchased and increased average cost of fuel and average

unit rate of purchase rates and division of the total by the quotient is the

average fuel surcharge per unit (expressed in terms of paise) described by

denominator  S1  in  the  formula.  The  whole  exercise,  it  would  appear,

involves  arithmetical  accounting.  There  is  no  scope  for  exercise  of  any

discretion or flexibility. This distinction, however, does not help the

petitioners.  It  rather  goes  against  them  because  if  fixing  rate  of  fuel

surcharge  is  just  an  arithmetical  exercise,  giving  opportunity  of  hearing

would hardly serve any useful purpose. How mathematical in nature is the

process  of  computation  is  clearly  illustrated  in  a  chart  which  is  part  of

Annexure E series at page 290 of the Paper Book as under:

CALCULATION OF FUEL SURCHARGE RATE FOR THE YEAR

1996-97

24

FUEL SURCHARGE =

(A1xA3)+(B1xB3)+(C1xC3)+(D1xD3)+(E1xE3)+(F1xF3)+(G1xG3) ----------------------------------------------------------------------------

(A2+B2+C2+D2+E2+F2+G2)

1. A1 = Generation of PTPS (MKWH) = 1116.54

A3 = Increase in Average cost of PTPS

(Paise/Kwh) = 17.33 = 1934.96

A1 x A3 (Rs. in lakhs)

2. B1 = Generation of BTPS (MKWH) = 387.37

B3 = Increase in Average cost of  

BTPS (Paise/kwh) = 69.17

B1xB3 (Rs. In lakhs) =

2679.44

3. C1 = Generation of MTPS (MKWH) =   213.52

C3 = Increase in Average cost of  

MTPS (Paise/Kwh) = 53.05

C1xC3 =  1132.72

25

4. D1  = Power purchase from DVC

(MKWH) = 2153.00

D3 =  Increase in Average rate of DVC

(Paise/Kwh) = 57.87

D1xD3 =  12459.41

5. E1 = Power purchase from NTPC(MKwh) = 4047.70

E3 = Increase in Average rate of NTPC  

(paise/kwh) = 69.50

E1xE3 (Rs. In lakhs) =28131.52

6. F1 = Power purchase from PGCIL(MKwh)   = 507.22

F3 = Increase in Average rate of PGCIL

(Paise/kwh) =  18.12

F1xF3 (Rs.in lakhs) = 919.08

7. G1 = Power purchase from others(MKwh)  = 737.82

G3 = Increase in Average rate of others

(Paise/kwh) = 60.57

G1xG3 (Rs. In lakhs)

=4468.98

26

Excluding prior period expenditure

8. Admissible prior period expenditure

(Rs. In lakhs) =1659.11

(This is on the basis of recommendation made by the Committee

constituted by the Hon’ble High Court)

(I) Incremental cost of the year

(A1xA3)+(B1xB3)+……(G1xG3)(Rs.in Lakhs) = 53 385.22

9. Mer.

A2=B2+………………G2(MKwh) =   4473.47

Hence,  

Rate of fuel surcharge for the year (paise/Kwh) =   119.34

Less 20.00

___________

Net rate of fuel surcharge for the year (Paise/Kwh) =      99.34

27. Where the fixation of rate or determination of the amount is  made

individually, depending on the context in which this is to be done, there may

be justification or necessity to give opportunity of hearing to the person or

27

persons concerned.  But where the rate is fixed for persons at large the only

way by which such opportunity can be given is to notify the rates and then

invite  objections.   There  is  no  such  provision.   In  the  absence  of  any

mechanism provided in the Tariff notification, it  would not be feasible at

all.   Whenever  the  statute  contemplates  giving  such  an  opportunity  a

mechanism, such as, for fixing rates of municipal Taxes, while it is not so in

the case of Income tax or other taxes.

28. On behalf of the writ petitioners endeavour was made to question the

very basis of fixation of fuel surcharge. It was submitted that though it is

open to the Board to levy fuel surcharge on certain specified categories of

consumers  alone  or  even  supply  electricity  free  to  certain  categories  of

consumers the unit rate should be worked out taking into account the entire

units  sold as is being done by the U.P. State Electricity Board, Damodar

Valley Corporation or even in Delhi. Fixing the rates of fuel surcharge on

the basis  of  units  sold  to  only specified  categories  of  consumers,  it  was

submitted,  is  arbitrary and discriminatory. The High Court  noted that  the

submission was in the teeth of formula contained in Clause 16.10. Relevant

part of the formula was re-stated:  

28

A2,B2,C2- Units sold, out of sent out from PTPS,  BTPS  and  MTPS  on which  fuel  surcharge  is leviable.

D2 to H2- Units  sold,  out  of  purchased from  DVC,  UPSEB,  OSEB, NTPC,  PGCL  and  any  other source  during  the  year  on which  fuel  surcharge  is leviable.

29. The  High Court  that  A2,B2,C2,D2 etc.  component  of  the  Formula

represents  the  extent  of  units  generated  i.e.  sent  out  from  the  three

generating stations or purchased from the external sources. Counsel for the

writ petitioners referred to 'comma' occurring prior to the words "out of".

Though sometimes presence or absence of comma has been taken aid of in

interpreting the particular  provision,  the  ordinary rule is  that  punctuation

mark is a minor element in the interpretation of Statute (See Aswini Kumar

Ghose v. Arbinda Bose, AIR 1952 Supreme Court 369).  More so,  in the

case of subordinate legislation. The words "out of" according to the High

Court have to be understood in the sense of "to the extent of", and so read;

the formula postulates that so much of units out of, the units generated or

purchased  on  which  fuel  surcharge  is  leviable  only  is  to  be  taken  into

29

account for determining the value of A2 to C2 or D2 to H2. Omitting the

part "out of...." the formula would read as follows, "units sold .... on which

fuel  surcharge  is  leviable".  In  terms of  clause  16.10.1,  fuel  surcharge  is

leviable only on consumers in CS II and III, L.T. Industrial Service, High

Tension Service, Extra High Tension (EHT) arid Railways Traction Service

categories,  the  units  sold  to  other  categories,  of  consumers  cannot,

therefore, be taken into account for determining the value of either A2 to C2

or D2 to H2.  The validity of the formula had been upheld earlier.  High

Court noted that though by the impugned circular dated 31.5.1999 the rates

of fuel surcharge have been fixed for the years 1993-94 (July 1993 to March

1994) to 1997-98, the correctness of the rates fixed for the years 1993-94

(July 1994 to March 1994) to 1995-96 were not challenged. The correctness

of the rates for the subsequent years only was under challenge.   

30. In  Maharashtra  State  Electricity  Board v.  Kalyan  Borough

Municipality, (AIR  1968  SC  991),  this  Court  upheld  the  constitutional

validity of Section 49(3) of the Act. In M/s Robtas Industries Limited v.

Chairman,  Bihar  State  Electricity  Board,  (AIR 1984.SC 657),  this  Court

held that Section 49(3) expressly authorises the Board to fix different tariffs

for  the  supply  of  electricity  classifying  the  consumers  into  different

30

categories and fixing different tariffs. Thus, the Electricity Board is entitled

to  levy  fuel  surcharge  on  the  consumers  receiving  high  tension  supply

leaving out  the consumers coming in other  categories.  While considering

the  validity  of  similar  provisions  of  the  1979  Tariff  of  the  Bihar  State

Electricity Board relating to Fuel surcharge, the Court observed,

"Though the nomenclature given to the surcharge is "fuel surcharge"  it  is  really  a  surcharge  levied  to  meet  the increased  cost  of  generation  and  purchase  of electricity.... We see no force in the contention that the words "increase in the average unit rate of purchase of energy" used in  C1 below paragraph  16.7.2 should  be interpreted  as  taking  their  colour  from the  contents  of paragraph 16.7.3. From a reading of these provisions it is abundantly clear that the entire increase in cost incurred in the purchase of energy from DVC and UPSEB has to go into the .compensation of the surcharge leviable under paragraph 16.7"

31. In Kerala State Electricity Board v.  S.N.Govind Prabhu & Brothers,

(AIR 1986 SC 1999), the Court noticed the amendments in section 59 of the

Act  and  held  that  a  plain  reading  of  section  59,  as  amended,  plainly

indicates that it is the mandate of Parliament that the Board should adjust its

tariff so that after meeting the various expenses properly required to be met,

a surplus is left. It will not be out of place to mention here that in terms of

31

section 59, as it stood prior to 1978, the Board was supposed to adjust its

tariff in such a way as not to incur loss. By amendment made in 1978, the

Board was supposed to adjust its tariff so as to ensure that the total revenues

in any year of account should after meeting expenses "leave such surplus as

State  Government  may,  from  time  to  time,  specify".  The  section  was

amended  again  in  1983  and  as  per  the  1983  amendment  the  Board  is

supposed  to  adjust  its  tariff  in  a  manner  so  as  to  ensure  that  the  total

revenues in any year of account after meeting all expenses shall leave such

surplus as is “not less than three per cent or such higher percentage as State

Government  may  by  notification  specify”.   After  noticing  the  said

amendments this Court observed:  

"The original negative approach of functioning so as not to suffer a loss is replaced by the positive approach of requiring a surplus to be created. The quantum of surplus is  to  be  specified  by  the  State  Government.  What  the State Government is to specify is the minimum surplus. This  is  made  clear  by  the  1983  amendment  which stipulates a minimum of 3 per cent surplus in the absence of specification by the State Government which has the liberty "to  specify  a  higher  percentage  than  three.  The failure of the government to specify the surplus  which may be generated by the Board cannot prevent the Board from  generating  a  surplus  after  meeting  the  expenses required to be met. Perhaps, the quantum of surplus may not  exceed  what  a  prudent  public  service  undertaking may  be  expected  to  generate  without  sacrificing  the interests  it  is  expected  to  serve  and  without  being obsessed  by  the  pure  profit  motive  of  the  private

32

entrepreneur.  When  that  happens  the  court  may strike down the revision of tariffs as plainly arbitrary. But not until  then.  Not  merely  because  surplus  has  been generated, a supply which can by no means to be said to be extravagant."

32. High Court noted that the purchase of electricity from Tenughat Vidyut

Nigam Limited (TVNL) has been treated as a component of H3 i.e. "any

other source", but as the TVNL came into existence only in the year 1996-

97 it could. not be treated as a relevant factor having regard to the fact that

in  computing  the  fuel  surcharge,  increase  in  the  average  unit  rate  of

purchase  of  electricity  has  to  be  calculated  treating  1991-92 as  the  base

year. Secondly, it  was contended that the Board has treated the supply of

electricity by the DVC to the TISCO as “deemed supply” by the Board to

TISCO at a different rate which is not in accordance with the formula. As

noted above the High Court found the objections to be well founded.

33. It  is  not  in  dispute  that  TVNL  came  into  existence  in  1996-97

whereas while calculating the electricity 1991-92 is  to be treated as the

base  year.  As  a  matter  of  fact,  as  seen  above,  it  was  on  that  ground,

namely, that a different base year i.e. 1992-93 was provided for computing

the increase in the average unit rate of purchase of electricity from external

33

sources,  that  the  High  Court  directed  the  Board  to  consider  amending

clause 16.10.3 so as to provide for the same base year i.e. 1991-92 with

respect to both the increase in the average cost of generation and increase

in the rates of purchase, and accepting the verdict of the High Court the

Board amended the last part of clause 16.10.3. Purchase of electricity from

TVNL  which  admittedly  came  into  existence  in  the  year  1996-97,

therefore, cannot be treated as component of H3 i.e. increase in the average

unit rate of purchase of electricity from "any other source". As a matter of

fact, the case of writ petitioners was that the TVNL is nothing but a unit of

the Board in disguise of a subsidiary company and, therefore, could not be

treated as a component of 113. It may not be necessary to go behind the

veil of the separate legal character of the TVNL. The fact that TVNL did

not  exist  in  the year 1991-92 and came into existence only in  the year

1996-97 is sufficient to justify its deletion as component of H3.  Counsel

for the Board accepted that  if  TVNL is to be treated as a source, some

mechanism has to be worked out, and the Court has then to see whether it

is  rational.  The  Board  submitted  that  if  the  High  Court  comes  to  the

conclusion  that  the  supply  from  TVNL,  cannot  be  included,  the

consequence will be that the units purchased from TVNL would have to be

kept out, which is not the intention underlying levy of fuel surcharge.  It is

34

like ‘escalation’ clause, and the additional cost has to be reimbursed. The

High Court did not accept the same submissions as it will result in creating

a different base year. The relevant clause of the formula, after amendment,

reads, “the said increase to be calculated with respect to the year 1991-92”

(vide last para of clause 16.10.3). The amendment has been made in the

light of the decision of the High Court. In the rejoinder affidavit the Board

had taken the stand that the incremental rise in 1996-97 over the 1991-92

base year from other sources including TVNL was less compared to DVC

or NTPC.  High Court did not appreciate this logic.  Increase in the unit

rate has been similarly worked out in the case of TVNL, but the relevant

Base year column has been shown as blank though in the counter affidavit,

para 37, it had been stated that the same base year i.e. 1991-92 has been

applied, even when TVNL admittedly did not exist prior to 1996-97.  High

Court held that it is not possible to allow the Board to include purchase of

electricity as a component of H3 without suitably" amending the formula

in accordance with law.  

34. As  regards  "deemed  supply"  by  the  Board  to  TISCO High  Court

noticed that under a tripartite agreement between the Board, the DVC and

the  TISCO,  with  the  consent  of  the  State  Government,  the  electricity  is

35

being supplied directly by the DVC to the TISCO but such supply is treated

as made-by the Board to the TISCO. It seems to be an admitted position that

the tariff rates of the Board are higher than the tariff rates of the DVC. But

since legally the TISCO cannot directly but electricity from the DVC it has

entered into agreement with the Board to buy electricity directly from DVC

but pay the amount at the Board's rates. Though the amount is paid to DVC,

such payment is adjusted against the amount due from the Board to it i.e.

DVC. As seen above, DVC is one of the external sources, represented by

D1. The Board buys the electricity from DVC, amongst others, and pays to

it for the same. The increase in the average unit rate of purchase from it is

reflected by D3. However, so far as the supply made by DVC to TISCO is

concerned, it is treated as a "deemed supply" by the Board. While it may be

permissible to charge the TISCO at the rates prescribed by the Board, i.e, at

rates higher than the DVC rates, and it may also be permissible to treat sale

of such electricity sold  by DVC to TISCO as deemed supply/sale by the

Board to TISCO. High Court held that two rates of supply/sale cannot be

permitted for the purpose of computing D3 in the ordinary course, in the

absence of any tripartite agreement referred to above, the Board would have

supplied/sold  electricity  to  TISCO and  charged  at  its  rates.  Such  supply

would have been made from the electricity either generated by it at its own

36

generating  station  or  purchased  from  external  sources  including  DVC.

Clause 16.10.3.1 provides for computation of the cost of generation at the

Board's own generating station; as regards purchase of energy from other

sources, the said clause lays down that the actual increase in average unit

rate  of  purchase  will  apply.  If  the  Board  is  purchasing  electricity  from

different sources for the purpose of D3, E3, F3 etc. the actual increase in the

average unit rate of purchase so far as the particular source is concerned, is

to be taken into consideration. DVC has thus to be treated as one source.

The source being one there cannot be two rates of purchase or increase in

the average unit rate of purchase. It may be mentioned here that NTPC

sells  electricity  generated  different  power  stations,  namely,  Farakka,

Kahalgaon  Talchar or Anta and though the increase in the average unit rate

is  not the same, it  charges the Board at a uniform rate.  It  is  an admitted

position that though the DVC has revised its  tariff from year to year the

Board so far has not recognised the revision and has been paying it at the

rates applicable in the year 1991-92. In the agenda note dated 26.11.98 it

has been clearly mentioned "that during the 1996-97 the DVC rates for the

purchase remained unchanged but the rates applicable to deemed supply to

TISCO rose upto 13P/kwh. High Court held that the Board cannot treat the

sale of electricity by the DVC to the TISCO as a separate class or category

37

for the purpose of computing D3. The computation of D3 to this extent, was

held to be not correct.  

35. The  computation  of  the  rates  of  fuel  surcharge  by  the  impugned

circular  for  the  years  1996-97  and  onwards  so  far  as  it  relates  to  the

purchase of electricity from TVNL and "deemed supply" by the Board to

TISCO thus  does not  appear  to be in  accordance  with  the formula.  Fuel

surcharge has to be calculated strictly within the framework of the formula.

If any extraneous element has crept in the computation to that extent must

be held to be not in accordance with law and accordingly modified.

36. The computation of fuel surcharge was also assailed before the High

Court  on  the  ground  of  non-disclosure  of  details  to  A2,  B2  etc.  It  was

submitted that as the incremental rise in the cost of generation at the Board's

own generating stations and the average unit rate of purchase of electricity

from external sources represented by different denominators in the formula

is not the same, the Board ought to have given the details of the quantum of

units sold respectively out of the units generated and purchased from the

external  sources.  The High Court  considered the plea to  be of  academic

value. It is true that in the matter of calculation of Fuel surcharge the units

38

sold from out  of  units  generated  at  the  Board's  power stations  and units

purchased from external  sources are shown by separate denominators  i.e.

A2, B2, C2 and D2, E2, F2 etc. respectively, but it would appear that after

the electricity generated at the Board’s stations or purchased from external

sources are fed into transmission lines, they lose their separate identity as

electricity generated at the Board's own power stations or purchased from

other  sources.  It  is  difficult  thereafter  to  find  out  as  to  how  much  of

electricity fed in the transmission lines came from the Board's own power

stations and how much of it from external sources.  

37. Board’s  stand  was  that  it  pays  large  amounts  as  delayed  payment

surcharge (DPS) to the DVC, NTPC etc. contributing to further  increase  in

the  average  unit  rate  of  purchase  of  electricity  resulting  in  higher  fuel

surcharge and causing thus additional  burden on the consumers. The fact

that the Board has had to pay large amounts as DPS to the external agencies

from which it has been purchasing electricity is more or less an admitted

position. The case of the Board, however, is that the default in payment was

mainly on account of defaults committed by the consumers themselves. It is

said that as much as 3,200 crores of rupees are due from the consumers as a

result of which the Board is not in a position to pay to the agencies resulting

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in  additional  burden by way of DPS. High Court found substance in the

stand  of  the  Board.  The  fact  that  the  consumers  at  large  have  not  been

paying the  dues  on time and many of them have been making only part

payment on the strength of interim orders of Courts are facts which are not

disputed. If the consumers do not pay the dues to the Board, they cannot be

heard to make any complaint against payment of DPS by the Board to the

external agencies.

38. We have referred in extenso reasonings of the High Court.

39. It is stand of Board that while arriving at the average cost of purchase

where the purchase prices vary weighted average is taken into account. This

can be explained by illustration of electricity purchased from different units

of NTPC. The Board purchases electricity normally from generating units of

NTPC at Farakka, Kahalgaon and Talcher at different rates. During 1996-97

the  Board  purchased  electricity  from Farakka  unit  at  the  rate  of  147.28

paise/Kwh (inclusive of trans. Ch.) from Kahalgaon at the rate of of 179.20

paise/Kwh and  Talcher  at  the  rate  of  70.33  paise/Kwh.  The  total  power

purchased  from  NTPC  during  the  said  year  was  4047.70  Mkwh  for

Rs.61,989.32 lacs. For the purposes of calculating per unit rate during the

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said year weighted average of the different rates was taken which comes to

153.15 paise/Kwh. The difference in cost  of purchase of electricity from

NTPC during 1996-97 with reference to the base  year 1991-92 comes to

153.15 minus 83.65 = 69.50 paise/Kwh (the average rate during 1991-92

was 83.65 paise/Kwh).  Similarly,  in  the case of  purchase of  power  from

‘other source’, there is more than one source for such purchase and the rates

of supply also vary. In such cases average incremental cost is arrived at by

the method of weighted average.

40. There is no dispute with regard to levy of fuel surcharge in respect of

power generated by the generating stations of the Board. The dispute in the

writ  petitions  was with  regard  to  only the method of  calculation  of  fuel

surcharge in respect of power purchased by the Board, i.e. the rates of fuel

surcharge in respect of the years 1996-97 and 1997-98.      

41. The  Board  by  its  Circular  dated  31.5.1999  fixed  the  rate  of  fuel

surcharge by applying formula for the years 1993-94 to 1996-97.  During

the year 1996-97 the Board started purchasing electricity from generating

unit of TVNL established in 1996.  By treating TVNL as a source falling

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under the category of other source, the Board calculated weighted average

cost of power as Rs.60.57 paise/Kwh.  

42. Stand of the writ petitioners was that since TVNL came into existence

in  the  year  1996-97  there  cannot  be  any incremental  cost  in  respect  of

electricity purchased from TVNL inasmuch increase in the average unit rate

of purchase of electricity has to be calculated treating 1991-92 as the base

year. The other stand of the writ petitioners was that the Board has treated

the supply of electricity by DVC to TISCO as deemed supply by the Board

to TISCO  at  a different rate which is not in accordance with the formula.

The stand of the writ petitioners was accepted by the High Court. So far as

TVNL and deemed supply to TISCO are concerned, the High Court held

that there is no infirmity in the fixing of rates of fuel surcharge except on

the aforesaid two grounds. All other stands taken in the writ petition was

rejected.  

43. Judgment of the High Court is under challenge in these appeals by the

Board.  An appeal  has  been filed by the private  companies  so  far  as  the

conclusions  of the High Court  relating to non accounting of Rupees 100

crores  paid  by  the  private  companies  to  the  Board.  According  to  the

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appellant-Board, the High Court was not right in directing to re-work out

the rates of fuel surcharge for the years 1996-97 onwards after deleting the

purchase of electricity from TVNL as a component of H3 in the formula. It

is  also submitted that  the direction of the High Court  to re-work out  the

rates of fuel for the year 1996-97 onwards after treating the deemed supply

i.e.  supply of  electricity by DVC to TISCO as   supplied  by DVS to  the

Board as an element of D3 in the formula was erroneous.  

44. Though  learned  counsel  for  the  appellant  Board  questioned

correctness  of  High  Court’s  conclusions,  nothing  material  could  be

highlighted as to how the reasonings suffer from any infirmity.  We are in

agreement with the conclusions of the High Court.  The appeals filed by the

Board are accordingly dismissed.   

45. In the other appeals challenge is to non-accounting of Rs.100 crores

paid by the Coal Companies to the Board. According to the writ petitioners,

if the said amount has been shown in the accounts the rate of fuel surcharge

would have been different. The High Court noticed that this aspect of the

matter has been dealt with by the Board in its rejoinder affidavit wherein it

has been stated that as against the total claim of Rs.356.20 crores on account

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of loss due to grade slippage, short supply of coal, supply of stones etc. the

Coal  Companies  have  agreed  to  pay  Rs.100  crores  in  full  and  final

settlement of the claim. But though such decision was taken on 30.8.1998

actual  payment  has  not  been  made  till  date.   High  Court  observed  that

payment of the amount would be relevant consideration while calculating

the rate of fuel surcharge for the year 1998-99 and not 1997-98.

46. We direct that the actuals be worked out within three months from

today.  The adjustment of Rs.100 crores be worked out accordingly.  The

appeals are accordingly disposed of.  

…………………………..J. (Dr. ARIJIT PASAYAT)

………….……………….J. (TARUN CHATTERJEE)

New Delhi, April 15, 2009

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