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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1368 OF 2007

M/s. Jayasawals Neco Ltd.  Appellant

                Versus

Chhattisgarh State Electricity Respondents Regulatory Commission and Another

J U D G M E N T  

Dipak Misra, J.

The  respondent  No.2,  Chhattisgarh  State  Electricity

Board (CSEB), filed Petition No.5/2005 under Sections 45,

46 and 64 of the Electricity Act, 2003 (for brevity, 'the Act')

for  determination of  Retail  Supply  Tariff  for  the  financial

year  2005-2006.  The  Chhattisgarh  State  Electricity

Regulatory Commission (for short, 'the Commission'), while

dealing with the power intensive industries adverted to the

tariff  that is  to be determined qua the present appellant.

Paragraph 3 of  the  HV-5 Power  Intensive  Industries  that

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deals with tariff reads thus:-

Category  of consumers

Demand  Charges [Rs./KVA/month]

Energy Charges [Rs./KWh]

HV-5 Power  Intensive Industries

5.1. 220/132  KV Supply

260 2.55

5.2. At 33 KV Supply 275 2.65

2. Paragraph 4(a) adverts to minimum monthly payment

of charges.  It reads as follows:-

“4. Minimum  Charge  [a]  For  220/132  KV Supply

The  consumer  will  guarantee  a  minimum monthly  payment  of  charges  of  the  unit  [Kwh] equivalent  to  30%  load  factor  on  the  contract demand  plus  demand  charges  on  the  billing demand  for  the  month  irrespective  of  whether any  energy  is  consumed  during  the  month  or not.”

3. In  the  present  appeal,  we  are  only  concerned  with

minimum  charges  as  nothing  else  is  in  dispute.   The

Commission,  while  dealing  with  minimum  charges,  fixed

30% of the load factor taking into consideration the pattern

of consumption as minimum charges.  Be it noted, the said

tariff  determination  was  applicable  for  the  said  financial

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year in respect of all the power intensive industries.

4. After  the  said  order  was  passed,  the  appellant  filed

Petition No.19 of 2005 (M) under Section 94 of the Act.  The

Commission vide order dated 5th October, 2005, taking note

of the consumption in the said year, reduced the minimum

monthly payment of charges to 10% of the load factor.  The

analysis of the Commission is reproduced below:-

“11. Based  on  last  eight  months  consumption (January 2005 to August 2005), the average load factor is found to be as 11.4%.  If the load factor is decided to be maintained at 10% then the TMG unit comes to 12,31,200 as against the average consumption  of  11,27,525  units  which  would appear to be reasonable though marginally more for which the petitioner has to pay the charges irrespective of his consumption.  In that case the petitioner will still be required to pay the demand charges of Rs.41.26 lakh per month which he was not  required  to  pay  earlier,  and  Rs.31.39  lakh towards energy charges totalling to Rs.72.65 lakh per  month,  as  against  Rs.60.50  lakh  at  the pre-revised  tariff  rate.   According  to  this  the average  unit  rate  comes  to  Rs.6.44  as  against Rs.5.37  earlier,  i.e.  rise  by  about  20%.   The request of the petitioner for reducing the demand charge to 33% on the ground that he draws power only for 8 hours and exports power to CSEB for 16 hours has no logic as the concept of demand charge has been introduced to recover the fixed charges.  In this case, the CSEB has to remain prepared to supply power to the petitioner for 8 hours and the power not drawn or less drawn by the petitioner from CSEB can not be allotted to other consumers.

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12. In view of the petitioner's peculiar pattern of power  consumption,  the  Commission  feels  that the  minimum  guaranteed  consumption  of  the petitioner  should  be  different  from  the  other industries  in  his  tariff  category  and  should  be fixed  at  a  much  lower  level.   The  Commission accordingly directs that the petitioner be required to  guarantee  a  minimum  monthly  payment  of charges of units equivalent to 10% load factor on the contract demand plus demand charges on the billing demand per month irrespective of whether any energy is consumed during the month or not. This  will  not  adversely  affect  the  income of  the CSEB, as it will be earning Rs.10 lakh extra per month as compared to the pre-revised tariff.  This will be further increased due to increased rate of low P.F. penalty.”

5. The aforesaid order was assailed before the Appellate

Tribunal for Electricity (for short, ‘the tribunal’)  in Appeal

No.186 of 2005.   

6. During the pendency of the appeal, the appellant along

with others approached the Commission in Petition No.17 of

2005,  making  manifold  prayers.  The  Commission

enumerated the following aspects for consideration:-

“(i) Set  off  on  contract  demand  (CD)  of  the CPP-holder,  captive  consumer  and non-captive consumers availing power from the CPP through open access.

(ii) Parallel operation charges.

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(iii) Separate tariff for start up power.

(iv) Tariff for supply to CSEB/licensee and  definition for firm and infirm power.

(v) Issue of sale of electricity to third parties.

(vi) Wheeling charges.

(vii) Introduction of ABT for CPP-holders.”

7. While dealing with the minimum charges, which was

the part of issue No.1, the Commission came to hold that:-

“In  view of  the  above,  the  Commission  decides that  for  the  present  no  set  off  on  CD may  be permitted.   The  Commission  will  review  the position when the intra-State ABT regime is fully operational  and  the  Balancing  and  Settlement Code  is  fully  implemented.   The  Commission, however, decides that both the captive as also the non-captive consumers of the CPPs, while paying demand  charges  including  tariff  minimum charge,  will  not  be  required  to  pay  monthly minimum  charges  on  consumption  considering the fact that their requirement of power is to be met from the CPP only and they may take very little power from the licensee/CSEB.  Thus such consumers, whether EHV or HT, shall be required to  pay  tariff  minimum charges  on the  contract demand  or  the  recorded  maximum  demand, whichever is higher only.  This dispensation will, however,  be  available  to  these captive/non-captive consumers who avail  power both  from  a  CPP  and  the  licensee,  on  the condition that the supply from the CPP is more than 50% of their requirement in terms of unit consumption.   Every  captive  and  non-captive consumer will  have to declare that they will  be

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drawing  more  than  50%  of  their  monthly consumption from the CPP failing which it will be presumed that their power requirement from the CSEB/licensee is  more than 50% and they will not get the benefit of waiver of monthly minimum charge on consumption.”

8. We may note here that the said order passed by the

Commission was challenged in appeal before the appellate

authority and the appeal has been disposed of affirming the

same.  It is also apt to note here that the appellant is not a

party to the same and in the instant case, the only issue is

levy  of  minimum  charges  at  10%  for  the  financial  year

2005-2006.

9. We  have  heard  Mr.  Devashish  Bharuka,  learned

counsel for the appellant and Ms. Swapna Seshadri, learned

counsel for the respondent No.1.  

10. Mr.  Bharuka,  learned  counsel  for  the  appellant

submits that the minimum charge has been abolished as a

concept in the case of likes of the appellant and, therefore,

there is no justification whatsoever to levy the same for the

year 2005-2006.  It is urged by him that though the order

passed in Petition No.17 of 2005 was brought to the notice

of  the  tribunal,  the  same has  neither  been appropriately

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dealt  with or addressed to inasmuch as the tribunal  has

concurred with the order passed in review by ascribing no

reason.   

11. Ms.  Swapna  Seshadri,  learned  counsel  for  the

respondent-Commission, in support of  the order contends

that the appellant is enjoying the benefit of the order of the

Commission that has been affirmed by the tribunal after the

concept of levy of minimum charges has been abolished in

respect of subsequent years, but the said principle cannot

be  made  applicable  to  the  year  2005-2006,  for  the  “load

factor”,  that  is,  11.4%  was  specifically  taken  into

consideration by the Commission in respect of the said year.

12. From the rivalized submissions canvassed at the Bar,

we find that both sides lay emphasis on the “consumption

pattern of  the  load factor”  for  the  calculation of  monthly

minimum  charges.   It  is  the  admitted  position  that  the

Commission while dealing with Petition No.17 of 2005 has

returned a categorical finding that the likes of the appellant

are not liable to pay the minimum charges.  However, as we

find, it is not a determination in absoluteness.  It depends

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upon the  scrutiny  and analysis  of  the  factual  score.   To

elucidate, abolition of minimum charges is not stated as a

principle of law but has been so adjudicated on the basis of

certain conditions precedent being satisfied.  Therefore, the

factual score, delineation thereof and the ultimate analysis

thereon constitute the structural pillar of the discussion.   

13. Our  duty  would  have  been  easier  had  the  tribunal

adverted to the said aspect.  As we find from paragraph 18

of the order passed by the tribunal, it has really not taken

note of the order passed on 6th February, 2006, wherein as

a  concept  which  is  founded  on  factual  analysis,  the

minimum charges stood abolished.   Needless to say, as the

conclusion is based on appreciation of relevant facts and

other enquiry, it was incumbent on the Commission to dwell

upon  the  same  and  then  only  such  analysis  could  be

scrutinised in appeal by the appellate authority in its proper

perspective.  It is a statutory obligation.  At this juncture, it

is fairly stated by the learned counsel for the Commission

that  the  factual  analysis  can  be  made  in  an  apposite

manner by the Commission but not by the tribunal at the

first instance.  Learned counsel for the appellant does not

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dispute the said position.   

14. As  the  factual  analysis  is  necessary  and  certain

conditions precedent are required to be gone into for  the

purpose  of  determination  as  regards  the  aspect  whether

there should be abolition of the minimum charges for the

financial year 2005-2006 or not, the competent authority,

we  are  disposed  to  think,  should  be  the  Commission.

Therefore,  we  are  inclined  to  remit  the  matter  to  the

Commission for fresh determination.

15. In  view  of  the  aforesaid  premises,  the  appeal  is

allowed, the order passed by the tribunal as well as by the

Commission is set aside and the matter is remitted to the

Commission for determination on the basis of  the factual

score keeping its own analysis that has been made while

dealing  with  the  grievance  put  forth  in  Petition  No.17  of

2005.   We may repeat at the cost of repetition that levy or

non-levy  being  determinable  on  the  factual  base,  every

aspect  relatable  to  the  same  has  to  be  considered.

Accordingly, we direct that the said determination shall be

done within a period of four months from the date of receipt

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of the order.  We will be failing in our duty if we do not note

that  the  tribunal  has  dealt  with  other  aspects.   As  the

learned counsels have restricted the argument pertaining to

contract demand, we have only delved into the same.  There

shall be no order as to costs.  

     .........................................J.

  (Dipak Misra)

.........................................J.   (A.M. Khanwilkar)

.........................................J.  (Mohan M. Shantanagoudar)

New Delhi; February 22, 2017.