[ REPORTABLE ]

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8350 OF 2009

KERALA STATE ELECTRICITY BOARD REP. BY ITS SECRETARY & ANR.                  …...APPELLANTS

VERSUS

PRINCIPAL SIR SYED INSTITUTE                             FOR TECHNICAL STUDIES & ANR. ...RESPONDENTS

WITH

CIVIL APPEAL NOS. 8552-8573/2009

CIVIL APPEAL NOS. 8574-8592/2009

CIVIL APPEAL NOS. 8593-8605/2009

CIVIL APPEAL NOS. 1027-1046/2010

CIVIL APPEAL NOS. 1048-1067/2010

CIVIL APPEAL NOS. 1068-1080/2010

CIVIL APPEAL NO. 1009 /2010

CIVIL APPEAL NOS. 1025-1026/2010

CIVIL APPEAL NOS. 1021-1023/2010

CIVIL APPEAL NOS. 1003-1007 /2010

CIVIL APPEAL NOS. 1010-1020 /2010

CIVIL APPEAL NOS. 1085/2010

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CIVIL APPEAL NOS. 1081-1082/2010

CIVIL APPEAL NOS. 1083/2010

CIVIL APPEAL NO. 1084/2010

CIVIL APPEAL NO. 1087/2010

CIVIL APPEAL NO.  1086/2010

CIVIL APPEAL NO.  1088/2010

CIVIL APPEAL NO. 3101/2010

CIVIL APPEAL NO.  3091/2010

CIVIL APPEAL NO. 3093/2010

CIVIL APPEAL NO.  3095/2010

CIVIL APPEAL NO.  3110 /2010

CIVIL APPEAL NO. 3102 /2010

CIVIL APPEAL NO. 3103/2010

CIVIL APPEAL NO. 3109/2010

CIVIL APPEAL NO.  3112/2010

CIVIL APPEAL NOS. 3104-3107 /2010

CIVIL APPEAL NO. 3100 /2010

CIVIL APPEAL NO. 3111/2010

CIVIL APPEAL NO. 3113/2010

CIVIL APPEAL NO. 3097/2010

CIVIL APPEAL NOS.  3098-3099 /2010

CIVIL APPEAL NO. 3096/2010

CIVIL APPEAL NO.  3092/2010

CIVIL APPEAL NO. 3108/2010

CIVIL APPEAL NOS. 4533-4572/2010

CIVIL APPEAL NO. 3996/2010

2

CIVIL APPEAL NO. 3993/2010

CIVIL APPEAL NOS.  3998-3999/2010

CIVIL APPEAL NO. 4000/2010

CIVIL APPEAL NO. 3997/2010

CIVIL APPEAL NOS.3990-3992/2010

CIVIL APPEAL NOS. 3994-3995 /2010

CIVIL APPEAL NOS.  4653-4667/2010

CIVIL APPEAL NOS. 4670-4672 /2010

CIVIL APPEAL NO.  4652/2010

CIVIL APPEAL NO.  4674 /2010

CIVIL APPEAL NO.  4673/2010

CIVIL APPEAL NO. 4669 /2010

AND

CIVIL APPEAL NO.  4668/2010

J U D G M E N T

ANIRUDDHA BOSE, J.  

The legality of a part of a tariff notification issued by the Kerala

State Electricity Regulatory Commission (“Commission”) segregating

Self-Financing Educational Institutions (SFEI) from Government run

and  Government  Aided  Private  Educational  Institutions  and

subjecting the former to a higher category of tariff is the only question

involved in this batch of appeals. The notification to that effect was

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issued  by  the  Commission  on 26th November,  2007 bearing  Order

No.TP 23 and TP 30 of 2007. Such tariff was to take effect from 1st

December, 2007.  SFEIs have been categorised under the head Low

Tension VII(A) Commercial in that notification. The Government run

or aided private educational institutions have been placed under Low

Tension  VI  Non-Domestic  tariff  category.  The  Commission  is  the

appellant before us in this set of appeals. Such tariff notification was

published in terms of Kerala State Electricity Regulatory Commission

(Terms and Conditions of determination of tariff for distribution and

retail sale of electricity under MYT Framework) Regulations, 2006.

2. Several  Writ  Petitions  came  to  be  filed  by  different  SFEIs

questioning  legality  of  such  segregation  which  in  effect  created  a

higher tariff regime for them. Altogether 52 writ petitions were taken

up for hearing by a learned Single Judge of the Kerala High Court

(the First Court). The learned Single Judge found the tariff order to be

valid, relying on a decision of a Constitution Bench of this Court in

the case of T.M.A Pai Foundation and Anr. v. State of Karnataka

and Ors. 2002 (8) SCC 481 and a Bench judgment of the High Court

of Kerala in the case of Social SG of Assisi sisters v. KSEB 1988 (1)

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KLT  1727.  The  First  Court  decided  the  issue  in  favour  of  the

Commission, inter-alia, on the following reasoning:-

“But,  I  note  that  there  is  no  pleading whatsoever  for  the  petitioners  about  the Government Order. There is no case in the Writ Petitions based on the Order. Further, the Higher Secondary Schools are attached to  Schools  having  Standards  upto  High School  Section,  where  as  I  have  already noted, there is no restriction as contained in relation to Government and Aided Schools. Also, what has been fixed is the minimum salary of teachers and others. It appears to be low. What is important is the capability to raise revenue and its ramifications, and not  whether  any  particular  Self-Financing Educational Institutions is actually making use  of  its  power  to  raise  revenue,  as ordinarily  a  Self-Financing  Educational Institution may raise.”

3. In appeal by the SFEIs, the Division Bench of the High Court

set aside the judgment of the First Court.  The Division Bench found

that the differentiation was not for any of the grounds specified in

Section 62 (3) of the Electricity Act, 2003. That is the provision under

which the State Commission can determine the tariff. Section 62 of

the 2003 Act specifies:-  

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“62.  Determination  of  tariff:-  (1)  The Appropriate  Commission  shall  determine the tariff in accordance with the provisions of this Act for –  

(a)  supply  of  electricity  by  a  generating company to a distribution licensee:  

Provided that the Appropriate Commission may,  in  case  of  shortage  of  supply  of electricity, fix the minimum and maximum ceiling  of  tariff  for  sale  or  purchase  of electricity  in  pursuance  of  an  agreement, entered into between a generating company and a licensee or between licensees, for a period  not  exceeding  one  year  to  ensure reasonable prices of electricity;

(b) transmission of electricity;  

(c) wheeling of electricity;  

(d) retail sale of electricity:  

Provided  that  in  case  of  distribution  of electricity in the same area by two or more distribution  licensees,  the  Appropriate Commission  may,  for  promoting competition  among  distribution  licensees, fix only maximum ceiling of tariff for retail sale of electricity.  

(2)  The  Appropriate  Commission  may require a licensee or a generating company to  furnish  separate  details,  as  may  be specified  in  respect  of  generation, transmission  and  distribution  for determination of tariff.

(3)  The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of

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electricity  but  may  differentiate  according to the consumer’s load factor, power factor, voltage,  total  consumption  of  electricity during any specified period or the time at which  the  supply  is  required  or  the geographical  position  of  any  area,  the nature of supply and the purpose for which the supply is required.”

(4)  No  tariff  or  part  of  any  tariff  may ordinarily  be  amended,  more  frequently than once in  any financial  year,  except in respect of any changes expressly permitted under  the  terms  of  any  fuel  surcharge formula as may be specified.

(5) The Commission may require a licensee or  a  generating  company  to  comply  with such  procedures  as  may  be  specified  for calculating the expected revenues from the tariff  and  charges  which  he  or  it  is permitted to recover.

(6) If any licensee or a generating company recovers  a  price  or  charge  exceeding  the tariff  determined  under  this  section,  the excess amount shall be recoverable by the person who has paid such price or charge along with interest  equivalent  to  the bank rate without prejudice to any other liability incurred by the licensee.

4. It was, inter-alia held by the Division Bench:-

“When  the  supply  is  to  an  educational institution, irrespective of whether it is self- financing  or  aided  or  governmental purpose,  cannot  be different,  as  education means  to  impart  knowledge.  Education  in

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ancient  times  was  not  connected  with earning. Free education is what was accord in  dharma.  Education  ought  to  be  the resource for tradition, loyalty to culture and ideals of service to society. We cannot,  in the  absence  of  materials  and  evidence, simply accept that educational institutions, though Self  Financing,  are  profiteering  or run as  business.  There are also absolutely no materials  placed on the  question as  to whether electricity is consumed by the Self- Financing Educational  Institutions  for  any other  purpose.  The  vague  statement  that building  is  air  conditioned  without specifying  how  many  institutions  are having  air  conditioned  buildings  or apparatus  having  high  consumption  of electricity  etc.  are  not  matters  on  which specific pleas with reference to details are made  available.  We  may,  at  the  risk  of repetition, say that we are only examining the justifiability of treating Self Financing Educational  Institutions  with  reference  to other  institutions-aided/Governmental-from the point of view of electricity consumption as borne out by the affidavits filed before this  Court  and  we  have  in  that  attempt considered the factors pleaded by them and found to be unsustainable.”   

5. It  is  this  judgment  of  the  Division Bench of  the  High Court

delivered on 17th August 2009 which is under appeal before us. Before

the  First  Court,  apart  from  irrational  or  arbitrary  discrimination,

fixation of tariff was assailed on certain other grounds as well. These

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grounds included breach of the principles of natural justice and lack

of  power  of  the  Commission  to  fix  tariff  suo  motu.   The  writ

petitioners questioned the reasonableness in clubbing the educational

institutions, many of whom were run by not for profit organisations,

with other entities whose object was ex-facie profit oriented.  It was

urged  that  tariff  for  SFEIs  could  not  be  brought  under  the  head

“Commercial”.  The Division Bench rejected the Commission’s plea

for  dismissal  of  the  writ  petitions  on  the  point  of  availability  of

alternative remedy in the form of statutory appeal.  We find from the

judgment under appeal that challenge to the tariff notification on the

ground  of  being  violative  of  the  provisions  of  Article  14  of  the

Constitution  of  India  was  not  pressed  by  the  respondents-writ

petitioners.   The  writ  petitioners  also  did  not  seriously  press  their

challenge to the subject notification on the question of lack of suo

motu  power  of  the  Commission  to  fix  tariff  before  the  Division

Bench.  The  main  point  which  was  urged  and  argued  before  the

Division Bench was as to whether under the provisions of Section

62(3) of the 2003 Act, the differentiation of SFEIs from the other set

of institutions for the purpose of fixing of tariff was legally justifiable

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or not. The Division Bench decided the issue in favour of the SFEIs.

On behalf of the appellant, the argument that the respondents (writ

petitioners)  had  alternative  remedy  in  the  form  of  appeal  under

Section  111  of  the  2003  Act  has  been  reiterated  and  it  has  been

submitted that for this reason alone, the writ petitions ought to have

been dismissed.  This contention was rejected by the First Court and

both the First Court and the Division Bench have addressed the points

raised  in  the  writ  petition  on  merit.  The  objection  based  on

subsistence of alternative remedy having been rejected by the Court of

first  instance  as  also  the  appellate  forum,  we  do  not  think  upon

granting leave under Article 136 of the Constitution of India, it would

be proper on our part to entertain this question on maintainability of

the  writ  petitions  again  and  relegate  the  dispute  to  the  Statutory

Authority  solely on this  ground.  There is  no deep factual  dispute

involved  in  these  proceedings.    These  are  also  not  cases  where

exercise of writ jurisdiction can be held to be fundamentally flawed,

like in  a case involving purely private  dispute.  In this perspective,

entertaining such objection at this stage would result in wastage of

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judicial  time  and  also  lead  to  adding  unnecessary  layers  to  the

decision making process on a particular lis.  

6. Before us, submissions have been made on the basis of Civil

Appeal No. 8350 of 2009 though both the First Court and the Division

Bench  dealt  with  all  the  matters  in  their  respective  common

judgments.  The writ  petitioner in this proceeding was Principal Sir

Syed Institute for Technical Studies in Thiruvananthapuram.  So far as

the  issues  involved  in  all  these  appeals  are  concerned,  the

distinguishing  factual  elements  are  few  and  insignificant.   Such

distinguishing elements of the individual cases would have no impact

on  outcome  of  these  appeals.  We  shall,  accordingly,  address  the

appeals on merit. On behalf of the Commission, it has been argued

before  us  that  the  respondents/writ  petitioners  had  sufficient

opportunity  to  raise  objection  before  the  Commission  itself  as  the

proposed tariff was published on its website, but none of the SFEIs

chose to raise any objection at that stage.  It is also submission of the

Commission  that  the  purpose  of  the  two categories  of  educational

institutions can be gathered from the distinguishing features broadly

under the following six heads:-

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(i) different fee structure

(ii) different wage structure

(iii) employee welfare measures

(iv) larger  social  purpose  the  government  run  and aided institutional seek to achieve

(v) profit motive not present in the former category of institutions.

(vi) Facilities provided by the respective categories of institutions.

7. What has been addressed in the judgment under appeal relates to

all SFEIs. We shall now come straight to sub-section (3) of Section 62

of the 2003 Act, the text of which we have reproduced in earlier part

of this judgment. Main case of the writ petitioners is that the tariff

notification was issued ignoring the statutory mandate contained in

the said provision. There is a negative mandate of the legislature upon

the  Commission  in  this  sub-section.  While  fixing  tariff,  the

Commission  cannot  show  undue  preference  to  any  consumer  of

electricity.  The Commission, however, is vested with the power to

prescribe differential  rates  according to the consumers’ load factor,

power  factor,  voltage,  total  consumption  of  electricity  during  any

specified period of time at which supply is required. So far as fixing

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different rates for these two categories of the educational institutions,

these  factors  did  not  come  into  play.   The  other  permissible

differentiating  factors  are  geographical  position  of  any  area, the

nature of supply and the purpose for which the supply is required.

As regards this set of differentiating factors, the tariff advantage for

government run and aided educational institutions do not appear to be

based on geographical position or nature of supply. The Commission

however has justified the classification of the aforesaid two sets of

tariffs on the basis of purpose for which supply is required by the

consumers.  

8. The writ petitioners’ case on breach of the principles of natural

justice rested on two planks.  First was that adequate opportunity for

raising  objection  was  not  given  to  the  Self-Financing  Educational

Institutions.  The second plank of the writ  petitioners’ case on this

very  principle  was  that  the  tariff  notification  did  not  contain  any

reason.  According to the writ petitioners, fixing of tariff order is a

quasi-judicial  exercise  and  disclosure  of  reason  is  imperative  to

support any decision coming out of such exercise. On nature of tariff-

fixing exercise,  the decisions which have been relied upon are the

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cases  of  PTC  India  Limited  v.  Central  Electricity  Regulatory

Commission [(2010) 4 SCC 603], State of Gujarat v. Utility Users

Welfare Association [(2018) 6 SCC 221] and Shri Sitaram Sugars

Co. Ltd. v. Union of India & Ors. [(1990) 3 SCC 223].   On the

aspect  of  requirement  for  disclosure  of  reasons  in  a  quasi-judicial

proceeding,  The  Siemens  Engineering  & Manufacturing  Co.  of

India Ltd. v. Union of India (1976 2 SCC 981), S.N. Mukherjee v.

Union of India (1990) 4 SCC 594 and Kranti Associates Pvt. Ltd.

v. Sh. Masood Ahmed Khan [SLP(C) No.12766 of 2008],  decided

on 8th September, 2010 have been cited.  

9. As regards the argument of the writ petitioners on the point of

violation of the principles of natural justice, the Division Bench found

uploading  of  tariff  proposal  on  the  website  to  be  broadly  in

compliance  with  the  statutory  requirement.   We  find  from  the

judgment of the First Court that the Commission had issued notice

inviting objections/suggestions from the Public Consumers and other

stake holders.  In the notice only, it was mentioned that the details

were available in the website of the Commission and the same was

available on request.  Such details included the proposed higher tariff

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rate for the SFEIs. We do not find much discussion on the second

plank of the writ petitioners’ argument on breach of the principles of

natural justice in the judgment under appeal. Neither of the two cases

cited on behalf of the writ petitioners on the point of the Commission

being  a  quasi-judicial  body  deal  with  the  aspect  of  necessity  to

disclose reason in a tariff fixing order by a statutory body like the

Commission. In the case of  State of Gujarat (supra), the question

this  Court  dealt  with  was  on  qualification  of  a  Chairman  of  the

Regulatory Commission. While dealing with that question, it was held

that the State Commissions have the trappings of a Court. In the case

of  PTC  India  Ltd.  (supra),  the  dispute  was  on  the  point  as  to

whether a Regulation framed under Section 178 of the 2003 Act was

appealable under Section 111 of the said statute. While exploring that

controversy, a Constitution Bench of this Court examined the scope of

jurisdiction of the Commission and found tariff fixation under Section

62 of the 2003 Act to be quasi-judicial function. One of the reasons

for such finding was that the tariff order was appealable under the

statute.

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10.  Now question arises as to whether the Commission, on being

clothed with quasi-judicial character was required to disclose reasons

for issuing the tariff notification, the legality of which is subject of

dispute in these proceedings. The requirement for disclosure of reason

however  could  originate  in  a  case  of  this  nature  if  there  is  a  lis

between the  consumer  and the  Commission.  Unless  of  course,  the

statutory  provision  prescribe  otherwise.  In  the  present  case,  the

Division Bench observed: -

“True that the manner in which notice could be  issued  being  prescribed  under  the Regulation adherence to  that  provision by publishing in  the website  or  in  the  notice board  may  be  sufficient.  But  all  that  we wish to say is that there is no justification for  the  respondents  to  say  that  the petitioners did not make any objection and they can be non suited on that ground…”

11. Once  the  Division  Bench  observed  that  publication  in  the

website was sufficient, the writ petitioners may not have had forfeited

their right to challenge the tariff notification in the Writ Court or the

appellate forum. But having failed to generate any lis on the tariff

proposal by not raising any kind of objection, it would not be open to

them to demand disclosure of reasons along with publication of the

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tariff  rates.  The  Commission’s  role  as  a  quasi-judicial  body  or  it

having trappings of a Court would emerge only if it was called upon

to adjudicate a dispute. As we have already discussed, no dispute had

been generated by the writ petitioners on the basis of Commission’s

proposal  which would have required it  to  undertake some form of

adjudicatory exercise. In such a situation, the exercise of fixing tariff

has to be undertaken as a quasi-legislative act only, which ordinarily a

tariff-fixing  exercise  is.  Issue  of  the  subject  tariff  notification

unaccompanied by reason thus cannot be faulted for having breached

the principles  of  natural  justice.  The forum of appeal  was open to

them. But mere existence of an appellate forum in the statute would

not require a tariff-fixing body to disclose the reason for stipulating

tariff-rate  in  each  individual  case.   If  any  appeal  is  preferred  in

relation  to  any  specific  case,  the  Commission  would  then  have  to

justify fixing a tariff rate in such a case.  The duty to disclose reason

would crystallise  then only,  in  a  situation where a  particular  tariff

fixing proposal goes without any objection after its draft publication.

Not  having  gone  to  the  appellate  forum,  the  writ  petitioners

approached the Writ Court. Before the Writ Court, such tariff fixation

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was open to challenge in the same way tariffs fixed in exercise of

quasi-legislative  or  administrative  power  is  subjected  to  judicial

review. Thus, in our opinion, in absence of any statutory provision to

the contrary, once tariff proposal is published and goes unobjected to

before the State Commission, the question of disclosure of reason for

such fixation would not arise at the stage of finalisation of tariff. If

such tariff orders are later challenged before the appellate forum or

the Writ Court, the Commission would have to defend its decision the

same way an administrative or quasi-legislative decision on fixing of

tariff is defended. Since we have taken this view, we do not consider

it necessary to deal with the authorities which lay down the dictum of

law that a quasi-judicial authority is required to disclose reasons in

support of its decision.

12. Learned counsel for the SFEIs, being the writ petitioners have

asserted that the purpose of both Government or Government Aided

Institutions  and  Self-financing  Institutions  is  the  same,  which  is

imparting  education  and  discrimination  between  these  two  sets  of

institutions  is  not  permissible  under  Section  62(3)  of  the  Act.

Countering  the  appellants’  submission  that  the  self-financing

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institutions  carry  profit-motive  or  it  is  some  kind  of  commercial

venture, our attention has been drawn to four authorities of this Court

being the cases of T.M.A Pai Foundation (supra), P.A. Inamdar &

Ors. v. State of Maharashtra & Ors. [(2005) 6 SCC 537], Islamic

Academy of Education & Another v. State of Karnataka and Ors.

[(2003) 6 SCC 697] and Modern School v. Union of India [(2004) 5

SCC 583]. All these authorities deal with the fee-structures of private

educational institutions. In the case of T.M.A Pai (supra), it has been

held and observed:

“56. One also cannot lose sight of the fact that we live in a competitive world today, where professional education is in demand. We have  been given  to  understand  that  a large  number  of  professional  and  other institutions  have  been  started  by  private parties who do not seek any governmental aid.  In  a  sense,  a  prospective  student  has various  options  to  him/her,  where, therefore, normally economic forces have a role to play. The decision on the fee to be charged  must  necessarily  be  left  to  the private educational institution that does not seek  or  is  not  dependent  upon  any  funds from the Government.

57.  We,  however,  wish  to  emphasize  one point,  and  that  is  that  in  as  much  as  the occupation  of  education,  is  in  a  sense, regarded as charitable, the Government can

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provide  regulations  that  will  ensure excellence  in  education,  while  forbidding the  charging  of  capitation  fee  and profiteering  by  the  institution.  Since  the object  of  setting  up  an  educational institution is be definition “charitable”, it is clear that an educational institution cannot charge such a fee as is not required for the purpose of  fulfilling that  object.  To put  it differently,  in  the  establishment  of  an educational  institution,  the  object  should not  be  to  make  a  profit,  in  as  much  as education is essentially charitable in nature. There  can,  however,  be  a  reasonable revenue  surplus,  which  may  be  generated by  the  educational  institution  for  the purpose  of  development  of  education  and expansion of the institution.”

13. Referring to the aforesaid passages, it was contended on behalf

of the writ petitioners that there is bar on profiteering even on private

educational institutions though reasonable revenue surplus generation

on their part is permissible. In the case of Modern School v. Union of

India (2004) 5 SCC 583 it has been held:-

“14.  At  the  outset,  before  analysing  the provisions of  the 1973 Act,  we may state that  it  is  now well  settled  by a  catena  of decisions of this Court that in the matter of determination of  the fee  structure  unaided educational  institutions  exercise  a  great autonomy  as  they,  like  any  other  citizen

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carrying on an occupation, are entitled to a reasonable  surplus  for  development  of education and expansion of the institution. Such institutions, it has been held, have to plan their investment and expenditure so as to  generate  profit.  What  is  however, prohibited  is  commercialisation  of education. However, in none of the earlier cases, this court has defined the concept of reasonable  surplus,  profit,  income  and yield,  which  are  the  terms  used  in  the various provisions of the 1973 Act.”

14. What  these authorities  lay down in substance is  that  the Self

Financing  Educational  Institutions  are  not  permitted  to  indulge  in

profiteering but that does not imply they cannot generate reasonable

revenue surplus to enable them to continue with their activities.  In

addition, the writ petitioners have submitted that many of them are

charitable organisations and “not for profit” entities and they cannot

be clubbed together with other commercial organisations.  We find

from the subject-notification that SFEIs have been categorised with

entities like cinema studios, hotels and restaurants, construction works

etc., and heading of LT-VII tariff items is “commercial”.  While an

educational  institution  in  our  ordinary  perception  may  not  be

performing  functions  similar  to  the  other  entities  who  undertake

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business ventures, a tariff fixing body is not required to proceed on

the basis of such common perception.  The duty of such body is to

determine which rate an organisation shall pay, and entities working

in diverse fields can be clubbed together under a common umbrella to

be subjected to a common rate.  In that context, for exercise of this

nature, the heading “commercial” cannot be constructed to restrict the

entities that can come under that head on the basis of the nature of

their activities, i.e. whether such activities have commercial attributes

or not.  Selection of heading is an exercise of convenience in fixing

tariff rates and not necessarily the controlling factor in choosing the

entities included under that heading.  

15. The counsel for the Commission also has argued that the SFEIs

provide various facilities to their students.  But it has been recorded in

the judgment under appeal that such fact was not substantiated before

the Division Bench.  Thus, no material is there before us from which

the Commission could demonstrate that the SFEIs provide luxury or

semi-luxury amenities to their students. In the light of these facts can

it be held that purpose of both Government run and aided institutions

and SFEIs was same and hence no differentiation could be made on

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tariff rate on that basis?  We are not testing here the differentiation on

the  anvil  of  Article  14  of  the  Constitution  of  India  as  the  writ

petitioners  before  the  Division  Bench  do  not  appear  to  have  had

pressed their challenge to the notification on that ground.

16. The question we shall address now is whether preference shown

by the Commission to the State run and aided educational institutions

in fixing tariff was justified having regard to the purpose for which

supply was required.  The expression  “purpose” means,  as  per the

Concise Oxford English Dictionary,  Tenth Edition, published by

Oxford University  Press:-  “1.  the  reason for which something is

done or for which something exists. 2. resolve or determination.”

In the given context, the noun “purpose” would fit into the first

meaning  given  in  the  aforesaid  dictionary,  which  we  have  quoted

above. Contention of the writ petitioners is that the purpose of both of

these  two  sets  of  educational  institutions  remain  the  same  being

imparting education and no discrimination in tariff rate could be made

between them having regard to Section 62 (3) of the 2003 Act.   

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17. The writ petitioners have advanced two-fold submission on this

aspect.  First, they have contended that capacity to pay cannot be the

determinant factor in electricity tariff fixing exercise, relying on the

case  of  Rohtas  industries  Ltd.  vs.  Chairman,  Bihar  State

Electricity Board & Ors.  (1984 (Supp) SCC 161).  This judgment

was delivered construing Section 49(3) of the Electricity Supply Act,

1948.   In  the case  of  M.P.  Electricity  Board  &  Ors.  vs.  Shiv

Narayan & Ors. (2005) 7 SCC 283, this Court found professional

activities of an advocate did not constitute commercial activity so as

to  attract  commercial  rate  of  electricity.   But  ratio  of  these  two

decisions do not aid the writ petitioners.  So far as meaning of the

expression “commercial” is concerned, we have dealt with that issue

earlier in this judgment.  The SFEIs have been specifically included

under  the  heading  “commercial”  and  it  is  not  a  case  where  their

character  is  being  assessed  inferentially,  treating  their  activities  as

commercial in a general sense of the term.

18. The Writ  Petitioners  have argued that  they cannot  indulge  in

fixing excessive fees in respect of their schools and in this regard two

statutory  instruments  have  been  brought  to  our  notice  which

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postulates  restriction  on  collection  of  excessive  fees.   These  are

Kerala  Professional  Colleges  or  Institutions (Prohibition of

Capitation Fee,  Regulation  of  Admission,  Fixation  of  Non-

Exploitative Fee and Other Measures to Ensure Equity and Excellence

in Professional Education) Act, 2006 and Kerala Education Rules, the

latter having been referred to in the judgment under appeal. On the

basis  of  these  statutory  provisions,  the  Writ  Petitioners  seek  to

contend that they cannot indulge in profiteering and have to charge

fees to the students as regulated by the authorities.  But in our opinion

profiteering is not the sole criteria on the basis of which the Tariff

Authorities segregated the two sets of organisations.  In the event the

tariff fixing body, in this case, being the Commission, can distinguish

the purpose of  the respective categories,  they would be entitled to

impose different rates of tariffs for different categories of educational

institutions.  

19. We  have  already  referred  to  the  dictionary  meaning  of  the

expression  “purpose”.  The  writ  petitioners’ contention  is  that  the

reason of their formation or existence is imparting education and this

is  so for  the Government  run and aided institutions also.   On this

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basis, they argue that different tariffs could not be charged to these

two  sets  of  institutions.  We  are,  however,  unable  to  accept  this

argument.   Though the  Commission  has  not  demonstrated  through

factual  evidence  the  facilities  provided  by  these  two  sets  of

institutions are different,  it  is of common knowledge, of which we

take judicial notice, that the student profile of state run and state aided

institutions  is  different  from  those  of  SFEIs.   Students  from

comparatively modest background go to the State run or State funded

institutions.  While  we  construe  the  meaning  of  the  expression

“purpose” under sub-section (3) of Section 62 of the 2003 Act, we are

of the opinion that for the purpose of settling the tariff question, who

is serving the “purpose” and for whom such “purpose” is being served

have to be factored in.  We also have to take into account that  the

nature of service rendered by them cannot be the sole determinant for

the tariff-fixing exercise.  The State run and State aided institutions

are funded by the tax payers, which is also a material factor in making

distinction between the aforesaid categories of the institutions.  The

expression  “purpose”  has  to  be  understood  in  the  context  of  the

character or feature of the entity which is undertaking the activity of

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imparting education.  While funding educational institutions, the State

undertakes  to  discharge  one  of  its  essential  welfare  measures.  On

behalf  of  the  Commission  certain  cases  decided  by  the  Appellate

Tribunal  were  referred  to  but  since  we  are  deciding  primarily  the

scope  of  Section  62(3)  of  the  2003  Act,  we  do  not  consider  it

necessary to refer to those cases.

20. Viewing  the  case  of  the  appellant  in  that  perspective,  in  our

opinion, no error was committed by them in fixing higher tariff for the

Self-Financing  Educational  Institutions  categorising  them  as

commercial entities. No undue preference has been given to the State

run and State aided institutions in the tariff notification. The fact that

SFEIs have been clubbed together with several commercial service

providers wholly unrelated to education becomes insignificant once

we find that purpose of the SFEIs could be differentiated from the

Government run and Government aided educational institutions.  

21. For these reasons, we are unable to agree with the view of the

Division  Bench.  The  judgment  under  appeal  is  set  aside  and  the

judgment of the First Court is restored. The appeals are allowed in the

above  terms.   All  connected  applications  are  disposed  of.  Interim

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orders,  if  any,  shall  stand dissolved.  There shall  be no order  as  to

costs.

     …………………………J.

    (Deepak Gupta)

New Delhi,

Dated:  20th February, 2020

      ………………………J.    (Aniruddha Bose)

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