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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO. 4510 OF 2006

PUNJAB STATE POWER CORPORATION ... APPELLANT (S) LIMITED

VERSUS PUNJAB STATE ELECTRICITY REGULATORY COMMISSION & ORS.      ...    RESPONDENT (S)

J U D G M E N T

RANJAN GOGOI, J.

1. This  appeal,  against  the  judgment  and  order  dated  

26.05.2006 and 25.07.2006 passed by the Appellate Tribunal  

for  Electricity,  New  Delhi  (hereinafter  referred  to  as  the  

“Appellate Tribunal”)  was  initially filed by the Punjab State  

Electricity Board (PSEB). Pursuant to a statutory scheme of  

transfer,  vide notification dated 16.04.2010, the PSEB had  

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been  unbundled  and  the  functions  of  generation  and  

distribution came to  be vested in  the  Punjab State Power  

Corporation  Limited  (Corporation).   By  order  dated  

03.09.2014  the  Corporation  has  been  substituted  as  the  

appellant in place of the PSEB.   

2. Before the learned Appellate Tribunal the tariff orders of  

the  Punjab  State  Electricity  Regulatory  Commission  

(Commission)  dated  30.11.2004  and  14.06.2005  for  the  

financial  years  2004-2005  and  2005-2006  were  under  

challenge.   Such  challenge  was  both  by  the  present  

appellant as well  as various industrial  consumers.  By the  

impugned judgment while the appeals filed by the present  

appellant have been dismissed, those filed by the industrial  

consumers  have  been disposed of  with  certain  directions.  

Aggrieved, the instant appeal has been filed under Section  

125 of the Electricity Act, 2003 (for short “the Act”) against  

the aforesaid common order of the Appellate Tribunal.

3. Section 125 of the Act contemplates filing of an appeal  

to this Court against an order of the Appellate Tribunal on  

any one or more of the grounds specified in Section 100 of  

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Code of Civil Procedure, 1908.  The scope of an appeal to  

this  Court  under  the  aforesaid  provision  of  the  Act  was  

considered  in  DSR  (Steel)  Pvt.  Ltd.  Vs.  State  of  

Rajasthan1 holding, inter alia, that :

“14. An appeal under Section 125 of the Electricity  Act, 2003 is maintainable before this Court only on  the grounds specified in Section 100 of the Code of  Civil  Procedure.  Section 100 CPC in turn permits  filing  of  an  appeal  only  if  the  case  involves  a  substantial  question  of  law.  Findings  of  fact  recorded by the courts below, which would in the  present case, imply the Regulatory Commission as  the  court  of  first  instance  and  the  Appellate  Tribunal  as  the  court  hearing  the  first  appeal,  cannot be reopened before this Court in an appeal  under Section 125 of the Electricity Act, 2003. Just  as  the  High  Court  cannot  interfere  with  the  concurrent findings of fact recorded by the courts  below in a second appeal under Section 100 of the  Code of Civil Procedure, so also this Court would  be  loath  to  entertain  any  challenge  to  the  concurrent  findings  of  fact  recorded  by  the  Regulatory Commission and the Appellate Tribunal.  The  decisions  of  this  Court  on  the  point  are  a  legion.  Reference to  Govindaraju v.  Mariamman2,  Hari  Singh v.  Kanhaiya  Lal3,  Ramaswamy  Kalingaryar v.  Mathayan Padayachi4,  Kehar Singh  

1  (2012) 6 SCC 782

2  (2005) 2 SCC 500  

3  (1999) 7 SCC 288

4  1992 Supp (1) SCC 712

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v.  Yash Pal5 and  Bismillah Begum v.  Rahmatullah  Khan6 should, however, suffice.”

The  challenge  in  the  present  appeal,  therefore,  will  

have to be considered keeping in  mind the principles laid  

down in  DSR (Steel)  Pvt.  Ltd.  Vs.  State of Rajasthan  

(supra) enumerated above.

4. Before  proceeding  any  further  it  would  require  a  

mention that though several issues arise from the judgment  

and order of the learned Appellate Tribunal, counsel for the  

appellant has confined his arguments to only four of such  

issues dealing with  the specific claims made by the PSEB  

thereunder  in  the  application  for  determination  of  tariff  

under Section 62 of the Act.  The aforesaid four issues are:-

(i) Cost of supply and cross subsidy

(ii) Disallowance of interest cost on account of alleged  diversion of funds

(iii) Disallowance of Employees Cost and

(iv) Coal transit losses.

5  AIR 1990 SC 2212

6  (1998) 2 SCC 226

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5. Having regard to the issues calling for an answer, at the  

outset, a reference to the statement of objects and reasons  

for enactment of the Act would be appropriate.  The objects  

and reasons are self-explanatory as would be evident on a  

plain reading of  para 1.2,  1.3 and paragraph 3 which are  

reproduced hereinbelow:

“1.2 The Electricity (Supply) Act, 1948 mandated  the creation of a State Electricity Board.  The State  Electricity Board has the responsibility of arranging  the supply of electricity in the State.  It was felt  that  electrification  which  was  limited  to  cities  needed  to  be  extended  rapidly  and  the  State  should  step  in  to  shoulder  this  responsibility  through the State Electricity Boards.  Accordingly  the State Electricity Boards through the successive  Five Year Plans undertook rapid growth expansion  by utilizing Plan funds.

1.3 Over  a  period  of  time,  however,  the  performance  of  SEBs  has  deteriorated  substantially  on  account  of  various  factors.   For  instance, though power to fix tariffs vests with the  State Electricity Boards, they have generally been  unable to take decisions on tariffs in a professional  and independent manner and tariff determination  

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in  practice  has  been  done  by  the  State  Governments.   Cross-subsidies  have  reached  unsustainable levels.  To address this issue and to  provide  for  distancing  of  government  from  determination of tariffs, the Electricity Regulatory  Commissions Act, was enacted in 1998.  It created  the Central Electricity Regulatory Commission and  has an enabling provision through which the State  Governments  can  create  a  State  Electricity  Regulatory  Commission.   16  States  have  so  far  notified/created  State  Electricity  Regulatory  Commissions either under the Central Act or under  their own Reform Acts.

3. With the policy of encouraging private sector  participation  in  generation,  transmission  and  distribution  and  the  objective  of  distancing  the  regulatory responsibilities from the Government to  the  Regulatory  Commissions,  the  need  for  harmonizing and rationalizing the provisions in the  Indian Electricity Act, 1910, the Electricity (Supply)  Act,  1948  and  the  Electricity  Regulatory  Commissions  Act,  1998  in  a  new  self-contained  comprehensive  legislation  arose.   Accordingly  it  became necessary to enact a new legislation for  regulating  the  electricity  supply  industry  in  the  country  which  would  replace  the  existing  laws,  preserve its core features other than those relating  

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to the mandatory existence of the State Electricity  Board  and  the  responsibilities  of  the  State  Government and the State Electricity Board with  respect to regulating licensees.  There is also need  to provide for newer concepts like power trading  and open access.  There is also need to obviate  the requirement of each State Government to pass  its  own  Reforms  Act.   The  Bill  has  progressive  features  and  endeavours  to  strike  the  right  balance given  the current  realities  of  the  power  sector in India.  It gives the State enough flexibility  to develop their power sector in the manner they  consider appropriate.  The Electricity Bill, 2001 has  been  finalised  after  extensive  discussions  and  consultations with the States and all  other stake  holders and experts.”

6. Chapter VII of the Act deals with tariff.  While Section 61  

provides for the principles on basis of which tariff is to be  

determined,  Section  62  contemplates  that  such  

determination will be at the point of generation, transmission  

and wheeling as well as retail supply to the consumers.  The  

basic principles on which tariff is to be determined as laid  

down  in  Section  61  of  the  Act  are  that  generation,  

transmission and distribution and supply of electricity should  

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be conducted on commercial principles; factors which would  

encourage  competition,  efficiency,  economical  use  of  

resources, good performance and optimum investments are  

to be kept in mind.  The interests of the consumers are to be  

safeguarded, and at the same time, balanced with recovery  

of cost of electricity in a reasonable manner.  Of particular  

significance  to  the  present  case  would  be  the  principle  

enshrined in Section 61(g) of the Act (as originally enacted)  

which provides that the tariff shall progressively reflect the  

cost of supply of electricity and also reduce and eliminate  

cross-subsidies  within  the  period  to  be  specified.   By  Act  

No.26 of  2007,  Section 61(g)  has  been amended and the  

word ‘eliminate’ has been omitted.  The significance of the  

said amendment will be noticed separately.

7. Section 62 of the Act provides for determination of tariff  

at different stages i.e. generation and supply; transmission;  

wheeling as well as retail sale of electricity.  Section 62(3) of  

the  Act,  which  would  also  have  some significance  to  the  

present  appeal,  visualise  that  while  the  Regulatory  

Commission  shall  not  show  any  undue  preference  to  any  

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consumer  in  fixing  the  tariff,  the  Commission  may  at  its  

discretion  differentiate  according  to  the  consumer’s  load  

factor,  power  factor,  voltage,  total  consumption  of  

electricity,  geographical  area,  nature of supply etc.   For a  

fuller appreciation, the entire of the provisions of Sections 61  

and 62 may be quoted hereinbelow:

“61.  Tariff  regulations.—The  Appropriate  Commission shall,   subject  to  the provisions  of  this Act, specify the terms and conditions for the  determination of tariff, and in doing so, shall be  guided by the following, namely:-

(a) the principles and methodologies specified by  the Central Commission for determination of the  tariff  applicable  to  generating  companies  and  transmission licensees;

(b) the generation, transmission, distribution and  supply  of  electricity  are  conducted  on  commercial principles;

(c) the  factors  which  would  encourage  competition,  efficiency,  economical  use  of  the  resources,  good  performance  and  optimum  investments;

(d) safeguarding  of  consumers’  interest  and  at  the same time, recovery of the cost of electricity  in a reasonable manner;

(e) the  principles  rewarding  efficiency  in  performance;

(f) multi-year tariff principles;

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(g) that the tariff progressively reflects the cost  of  supply  of  electricity  and  also  reduce  cross- subsidies  in  the  manner  specified  by  the  Appropriate Commission;

(h) the  promotion  of  co-generation  and  generation of electricity from renewable sources  of energy;

(i) the National Electricity Policy and tariff policy:

Provided  that  the  terms  and  conditions  for  determination of tariff under Electricity (Supply)  Act, 1948 (54 of 1948), the Electricity Regulatory  Commissions  Act,  1998  (14  of  1998)  and  the  enactments  specified  in  the  Schedule  as  they  stood  immediately  before  the  appointed  date,  shall continue to apply for a period of one year or  until  the  terms  and  conditions  for  tariff  are  specified under this section, whichever is earlier.

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 distributing 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:

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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  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  procedure 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  

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equivalent to the bank rate without prejudice to  any other liability incurred by the licensee.”

8. We may now proceed to  consider  the  four  issues  as  

enumerated hereinabove which have been raised before us.

9. Cost of Supply and Cross Subsidy

The statement  of  objects  and  reasons  for  the  

enactment  of  the  Act,  extracted  above,  would  indicate  a  

legislative realisation that the power sector in the country  

was  in  dire  straits.    This  was  largely  on  account  of  

implementation of policy decisions to provide free or highly  

subsidised  power  to  certain  classes  of  consumers.   In  a  

regime wherein tariff was a matter of governmental dictation  

and  directives  providing  free  or  subsidised  power  to  one  

section at the cost of another or others and a host of such  

related  decisions  divorced  from  commercial  and  prudent  

practices had plunged the power sector into uncertainty and  

darkness.   To  remedy  the  situation,  the  Act  of  2003  was  

enacted  which,  inter-alia,  vested  the  power  of  fixation  of  

tariff  in  the  Regulatory  Commissions  with  the  Legislature  

itself  clearly  enunciating  the  principles  for  such  

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determination as  are to  be found in  Section 61 details  of  

which has already been noted.  Section 61(g), as originally  

enacted, contemplated a progressive journey to reduce and  

ultimately eliminate cross-subsidies by identifying the cost of  

supply to the consumer.  The vision of each consumer fully  

paying for  the power drawn by such consumer was to be  

reached over a period of time.  In fact in the tariff  policy  

notified under Section 3 of the Act it was visualised that by  

the end of the year 2010-2011 tariff should be within ± 20  

per cent of the average cost of supply (average cost).  The  

aforesaid  National  Tariff  Policy  was  published  in  the  year  

2006.  Clause 2 thereof which deals with the above aspect of  

the matter is in the following terms:-

“2. For  achieving  the  objective  that  the  tariff  progressively  reflects  the  cost  of  supply  of  electricity,  the  SERC  would  notify  roadmap  within six months with a target that latest by  the end of year 2010-2011 tariffs are within ±  20% of the average cost of supply.  The road  map  would  also  have  intermediate  milestones,  based  on  the  approach  of  a  gradual reduction in cross subsidy.

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For example if the average cost of service is  Rs. 3 per unit, at the end of year 2010-2011  the tariff for the cross subsidised categories  excluding those referred to in para 1 above  should  not  be lower  than Rs.  2.40 per  unit  and  that  for  any  of  the  cross-subsidising  categories should not go beyond Rs.3.60 per  unit.”

10. Section 61(g),  as earlier  noted,  was amended by Act  

No.26  of  2007.   The  amended  Section  omitted  the  word  

“eliminate” the effect whereof was that cross-subsidies were  

destined to remain for the present and the emphasis was on  

attainment  of  minimum  levels  of  such  subsidy.  The  

determination of “cost of supply” and reduction/elimination  

of cross-subsidies is closely interlinked.  The difference in the  

intent  and  purport  of  Section  61(g)  before  and  after  its  

amendment would not be very relevant.  The reduction of  

cross subsidy was contemplated by the unamended section  

as  the  first  step  leading  to  elimination.   The  change  of  

legislative  intent  to  put  on  hold,  if  not  to  abandon,  the  

elimination of cross subsidies occurred during the period of  

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transition itself.  This is so because of the close proximity of  

time between the original  enactment  and its  amendment.  

Besides, the road map visualised by the National Tariff Policy  

itself contemplated the continuance of cross subsidy even in  

the  year  2010-2011  whereas  the  amendment  to  Section  

61(g) came about in the year 2007.

11. The Commission while considering the fixation of tariffs  

for  the  years  2004-2005  and  2005-2006  based  its  

determination on the average cost of supply which plainly is  

to be worked out by taking into account the total volume of  

electricity  produced  and  the  total  cost  incurred  in  such  

production.  The industrial consumers in the appeal before  

the Tribunal contended that the cost of supply should be the  

voltage  cost  of  supply,  namely,  the  cost  at  which  the  

consumer  receives  electricity  at  a  particular  voltage  as  a  

higher  voltage  would  mean  a  lower  price  on  account  of  

lesser  amount  of  distribution  losses.   As  the  industrial  

consumer receives supply of electricity at a high voltage, the  

average  cost  of  supply,  according  to  the  industrial  

consumers,  were  to  their  detriment  and  was  thus  not  

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contemplated under the Act.  The Appellate Tribunal on an  

interpretation of Section 61(g) and 62(3) particularly in the  

absence of any prefix to the expression “cost of supply” in  

Section 61(g)  took the view that  it  is  more reasonable to  

advance towards a regime of voltage cost of supply which  

would provide a more actual/realistic basis for dealing with  

the issue of cross subsidies.  However, as the progress to a  

regime of voltage cost of supply by reduction/elimination of  

cross-subsidies  is  to  be  gradual,  the  learned  Appellate  

Tribunal  held  that  no  fault  can  be  found  with  the  

determination of  the average cost  of  supply made by the  

Commission for  the financial  years in  question.   However,  

keeping  in  view  what  the  Tribunal  understood  to  be  the  

ultimate object of the Act it had directed that the relevant  

data with regard to voltage cost should be laid before the  

Commission  and  for  the  future  the  Commission  would  

gradually proceed to determine the voltage cost of supply.

12. We have  considered  the  perspective  adopted  by  the  

learned Appellate Tribunal in seeking an answer to the issue  

of cost of supply/cross subsidies that had arisen for decision  

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by it.  The provisions of the Act and the National Tariff Policy  

requires  determination  of  tariff  to  reflect  efficient  cost  of  

supply  based  upon  factors  which  would  encourage  

competition,  promote  efficiency,  economical  use  of  

resources,  good  performance  and  optimum  investments.  

Though the practice adopted by many State Commissions  

and utilities is to consider the average cost of supply it can  

hardly  be  doubted  that  actual  costs  of  supply  for  each  

category of consumer would be a more accurate basis for  

determination  of  the  extent  of  cross-subsidies  that  are  

prevailing so  as  to  reduce the same keeping in  mind the  

provisions of the Act and also the requirement of fairness to  

each category of consumers.  In fact, we will not be wrong in  

saying that in many a State the departure from average cost  

of supply to voltage cost has not only commenced but has  

reached  a  fairly  advanced  stage.   Moreover,  the  

determination of voltage cost of supply will not run counter  

to the legislative intent to continue cross subsidies.   Such  

subsidies,  consistent  with  executive policy,  can always be  

reflected in  the tariff  except that  determination of cost of  

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supply  on  voltage  basis  would  provide  a  more  accurate  

barometer for identification of the extent of cross subsidies,  

continuance of which but reduction of the quantum thereof is  

the  avowed  legislative  policy,  at  least  for  the  present.  

Viewed from the aforesaid perspective, we do not find any  

basic  infirmity  with  the directions  issued by the Appellate  

Tribunal requiring the Commission to gradually move away  

from  the  principle  of  average  cost  of  supply  to  a  

determination of voltage cost of supply.

13. Disallowance  of  Interest  cost  on  account  of  alleged  

diversion of funds

The Commission disallowed a total of Rs.100 crores on  

account of interest paid on borrowed funds on the ground  

that  the  loans obtained to  meet  capital  expenditure  were  

diverted by the Board (PSEB) to meet revenue expenditure.  

The bulk of the interest (except Rs.100 crores) was, however,  

allowed by the Commission on the ground that the same is a  

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consequence of the events in force prior to the coming into  

existence of the Commission and that if the Board is asked to  

bear the burden of the entire interest it will have a crippling  

effect  on  its  resources.   In  considering  the  issue  the  

Commission further came to the finding that the total assets  

of the Board would be of the value of Rs.9.431.06 crores out  

of which the assets created with the funds available from  

consumers’ contribution, grants and subsidy towards capital  

assets  etc.  works  out  to  Rs.  1784.48  crores  leaving  the  

balance assets at  Rs.7646.58 crores.   As against  this,  the  

PSEB  has  availed  loans  and  equity  amounting  to  

Rs.11828.48 crores upto the period ending March 31, 2004.  

The Commission accordingly recorded the finding that  the  

Board had availed loan to the extent of Rs.4181.90 crores in  

excess of its capital assets.  Obviously, the entire of the said  

excess  amount  was  diverted  towards  meeting  revenue  

expenditure  which  is  against  all  canons  of  acceptance.  

Therefore, the amount on this loan paid by the PSEB cannot  

be shifted to the consumer.  Despite the said findings, for the  

reasons  already  noticed,  the  Commission  had  disallowed  

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interest of an amount of       Rs.100 crores only allowing the  

balance to be charged on the consumers through the tariff.  

The Appellate  Tribunal  taking note of  the facts  mentioned  

above did not interfere with the limited disallowance made  

by the Commission and instead remanded the issue for  a  

fuller consideration of the Commission, in the determination  

for the subsequent years, in the following terms :

“Since the issue of diversion of funds is interlinked  

with  other  issues  namely  RSD  cost  allocation,  

subsidy, high rate of interest on Government loans  

etc.,  the  controversy  relating  to  the  extent  of  

interest which can be allowed as a pass through  

cannot  be  resolved  unless  the  other  issues  are  

also decided by the Commission as directed by us.  

The resolution of these issues are bound to take  

time and cannot be decided without relevant data.  

Therefore,  relief  can  only  be  given  to  the  

consumers for the future years.   

In view of the foregoing, we direct that for the  

year 2006-2007 the issue relating to the extent of  

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interest which can be allowed as a pass through  

shall  be  determined  and  resolved  by  the  

Commission  alongwith  the  determination  of  the  

issue relating to RSD cost allocation, subsidy and  

high rate of interests on Govt. loans.  This shall be  

accomplished during the truing up exercise for the  

year 2006-2007.”   

The  conclusion  of  the  learned  Tribunal  being  on  a  

consideration of the facts and circumstances noted above,  

we can only approve the views expressed.

14. Disallowance of Employees Cost

The Board had projected employees cost at Rs.1605.40  

crores in the ARR for 2004-2005 and at Rs.1700 crores for  

2005-2006.  The Commission in its tariff order for financial  

year  2002-2003  had  allowed  employees  cost  of  

Rs.1274.66 crores with the rider that for the next year the  

employees’ cost will  be capped.  However,  the employees  

cost  for  financial  year  2003-2004  and  2004-2005  had  

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remained  capped.  The  Commission  allowed  a  cumulative  

increase of  15.6% for  the  year  2005-2006  by  taking  into  

account  the  increase  in  wholesale  price  index  taking  the  

financial year 2002-03 as the base year.  The approved level  

of employees’ cost of the Board of Rs.1274.66 crores for the  

year 2002-2003, consequently, stood allowed to the extent  

of Rs.1473.63 crores.

15. In the appeal before the Appellate Tribunal, the Board  

contended that  the  capping of  the increase of  employees  

cost for the year 2004-2005 was not justified and that the  

increase allowed by the Commission for the financial  year  

2005-2006 is not adequate.  The employees of the Board are  

governed by the Punjab State Electricity Service Regulations  

1972 whereunder the employees are given parity with the  

pay  scales  of  the  State  Government  employees.   As  the  

Board  had  adopted  the  recommendation  of  the  5th Pay  

Commission a higher pay scale was required to be given to  

its employees.  The Board also placed before the Tribunal the  

details of the efforts made by it to contain the employees  

cost including reduction in the number of its employees.

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16. The  Appellate  Tribunal  took  the  view  that  what  was  

obligatory on the Board was to provide parity of pay scales  

of its employees with those of the State Government at the  

time when the transfer of the Electricity Board took place.  

Grant  of  higher  pay  scale  without  linking  the  same  to  

performance  would,  according  to  the  Tribunal,  defeat  the  

provisions of Electricity Act 2003.  The Tribunal further held  

that  the  measures  pointed  out  by  the  Board  to  cut  the  

employees cost were cosmetic.  In this regard the Tribunal  

observed  that  though  the  Board  had  claimed  to  have  

reduced its employees from 91224 in the year 2000-2001 to  

82494 in the year     2003-2004 appointment on contract  

basis as well as in the exigencies of service continued to be  

made on no known basis.  The Tribunal found that even the  

voluntary retirement scheme which could have been a viable  

option  was  not  adopted  on  the  ground  that  the  State  

Government was not in a position to provide the expenses.  

In this regard the Tribunal in its order has specifically found  

that :  

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(i) The  number  of  consumers  of  electricity  in  the  State of  Punjab is  the least  as compared to the  other six States referred to in the charts;

(ii) PSEB 0.24 MU per employee, which puts the Board  in the second lowest position in the matter of sale  of energy per employee;  

(iii) Each  employee  of  the  PSEB  caters  to  59  consumers in the State of Punjab.  This ranking is  the lowest amongst the seven SEBs;  

(iv) PSEB has the highest percentage of establishment  cost  to  total  cost  as it  constitutes  56 paise/Kwh  cost  of  energy  sold,  which  is  also  the  highest  compared to other six States and  

(v) The Boards per employee cable line circuit is the  lowest being 2.95 Km/ckt cost against 7.84 Km/ckt  in respect of Gujarat State.

17. It is in the light of the aforesaid facts that the Appellate  

Tribunal  came  to  the  conclusion  that  the  employees  cost  

computed and claimed by the PSEB at 1700 crores for the  

financial year 2005-2006 cannot be allowed.  However, the  

Tribunal taking into account the fact that for the previous two  

years 2003-2004 and 2004-2005 no increase in employees  

cost  have  been  allowed  thought  it  proper  to  allow  the  

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cumulative increase  permitted  by  the  Commission  i.e.  

15.61% over and above the employees cost of Rs.1274.66  

crores in the year 2002-2003 which, on proper calculation,  

works out to Rs.1473.63 crores.

18. The  eventual  conclusion  of  the  learned  Appellate  

Tribunal  having  been  arrived  at  in  the  manner  indicated  

above and being on due consideration of the facts relevant  

to  the  issue  we  are  of  the  view  that  no  interference  in  

exercise of the limited jurisdiction of this Court under Section  

125 of the Act would be justified.

19. Coal transit losses

For the year 2004-05 the Tribunal had allowed transit  

loss of 2% as against 3% allowed in the previous year i.e.  

2003-04.  The Tribunal also directed the PSEB to bring down  

the level of transit loss to 1% in the next 3 years with yearly  

reduction  target  of  0.33%.   For  the  year  2005-2006,  

however, the learned Tribunal had approved the allowance of  

transit  loss  of  0.8% allowed by the  Commission.   Though  

there appears to be a slight inconsistency in the above view  

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of  the  Tribunal,  as  the  same  has  been  prompted  by  the  

necessity to bring down losses by the utilities by adopting  

appropriate and prudent measures we do not think that any  

interference will be justified particularly when what has been  

allowed is as per the CERC norms (0.8%).  The Tribunal had  

also taken the view that excessive loss reflected inefficiency  

and must therefore be eliminated.  If the Appellate Tribunal,  

on consideration of the above fact had for the year 2004-

2005 allowed transit loss to the extent of 2% as against the  

prescribed norm of 0.8% and for  the year  2005-2006 had  

kept such allowance at 0.8%, we do not see how interference  

with the above directions would be justified in the present  

appeal under Section 125 of the Act.  

20. For  all  the  reasons  stated  above  we  find  no  ground  

whatsoever  to  interfere  with  the  impugned  judgment  and  

order  dated  26.05.2006  and  25.07.2006  passed  by  the  

Appellate  Tribunal  or  any  part  thereof.   The  appeal  is,  

therefore, dismissed without any order as to cost.      

.…………………………...J.          [RANJAN GOGOI]

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          ……………………….…… J.

[R.K. AGRAWAL]

New Delhi; February 10, 2015.  

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