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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO…5542 OF 2016 [Arising out of SLP [C] No.12398/2014]

Sai Bhaskar Iron Ltd. … Appellant(s)

Vs.

A.P. Electricity Regulatory Commission & Ors. … Respondents

WITH

CA Nos.5543-5544 of 2016 @ SLP [C] Nos. 14638-14639/2014 CA No.5545 of 2016 @ SLP [C] No. 15205/2014 CA Nos. 5546-5571 of 2016 @ SLP [C] Nos. 15245-15270/2014 CA Nos. 5572-5575 of 2016 @ SLP [C] Nos. 15348-15351/2014 CA Nos. 5576-5578 of 2016 @ SLP [C] Nos. 15356-15358/2014 CA Nos. 5579-5583 of 2016 @ SLP [C] Nos. 15360-15364/2014 CA Nos. 5584-5586 of 2016 @ SLP [C] Nos. 15389-15391/2014 CA No. 5587 of 2016 @ SLP [C] No. 15603/2014 CA No. 5588 of 2016 @ SLP [C] No. 15845/2014 CA Nos. 5589-5598 of 2016 @ SLP [C] Nos. 15878-15887/2014 CA No. 5599 of 2016 @ SLP [C] No. 15891/2014 CA Nos. 5600-5601 of 2016 @ SLP [C] Nos. 15938-15939/2014 CA No. 5602 of 2016 @ SLP [C] No. 15940/2014 CA Nos. 5603-5611 of 2016 @ SLP [C] Nos. 15985-15993/2014 CA No. 5612 of 2016 @ SLP [C] No. 15998/2014 CA Nos. 5613-5618 of 2016 @ SLP [C] Nos. 17138-17143/2014 CA No. 5619 of 2016 @ SLP [C] No. 17469/2014 CA No. 5620 of 2016 @ SLP [C] No. 17495/2014 CA No. 5622 of 2016 @ SLP [C] No. 17509/2014 CA Nos. 5623-5625 of 2016 @ SLP [C] Nos. 17860-17862/2014

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CA No. 5626 of 2016 @ SLP [C] No. 17869/2014 CA Nos. 5630-5631 of 2016 @ SLP [C] Nos. 18043-18044/2014 CA Nos. 5632-5663 of 2016 @ SLP [C] Nos. 18199-18230/2014 CA No. 5666 of 2016 @ SLP [C] No. 18254/2014 CA No. 5667 of 2016 @ SLP [C] No. 18261/2014 CA No. 5668 of 2016 @ SLP [C] No. 18317/2014 CA No. 5670 of 2016 @ SLP [C] No. 18331/2014 CA No. 5671 of 2016 @ SLP [C] No. 18334/2014 CA No. 5672 of 2016 @ SLP [C] No. 18354/2014 CA No. 5673 of 2016 @ SLP [C] No. 18358/2014 CA No. 5674 of 2016 @ SLP [C] No. 18395/2014 CA No. 5675 of 2016 @ SLP [C] No. 18458/2014 CA No. 5676 of 2016 @ SLP [C] No. 18956/2014 CA No. 5677 of 2016 @ SLP [C] No. 19116/2014 CA Nos. 5678-5685 of 2016 @ SLP [C] Nos. 19261-19268/2014 CA No. 5686 of 2016 @ SLP [C] No. 19401/2014 CA No. 5687 of 2016 @ SLP [C] No. 19448/2014 CA No. 5688 of 2016 @ SLP [C] No. 19575/2014 CA No. 5689 of 2016 @ SLP [C] No. 19640/2014 CA No. 5690 of 2016 @ SLP [C] No. 19686/2014 CA Nos. 5692-5703 of 2016 @ SLP [C] Nos. 19709-19720/2014 CA No. 5704 of 2016 @ SLP [C] No. 19728/2014 CA No. 5705 of 2016 @ SLP [C] No. 19752/2014 CA No. 5706 of 2016 @ SLP [C] No. 19774/2014 CA Nos. 5707-5709 of 2016 @ SLP [C] Nos. 19782-19784/2014 CA No. 5710 of 2016 @ SLP [C] No. 19785/2014 CA No. 5711 of 2016 @ SLP [C] No. 19786/2014 CA Nos. 5712-5731 of 2016 @ SLP [C] Nos. 19789-19808/2014 CA Nos. 5732-5745 of 2016 @ SLP [C] Nos. 19818-19831/2014 CA No. 5746 of 2016 @ SLP [C] No. 19880/2014 CA No. 5747 of 2016 @ SLP [C] No. 20340/2014 CA No. 5748 of 2016 @ SLP [C] No. 20383/2014 CA No. 5749 of 2016 @ SLP [C] No. 20406/2014 CA No. 5750 of 2016 @ SLP [C] No. 20581/2014 CA No. 5751 of 2016 @ SLP [C] No. 20940/2014 CA No. 5752 of 2016 @ SLP [C] No. 20956/2014 CA No. 5753 of 2016 @ SLP [C] No. 21054/2014 CA Nos. 5754-5755 of 2016 @ SLP [C] Nos. 21396-21397/2014 CA No. 5756 of 2016 @ SLP [C] No. 21399/2014 CA Nos. 5757-5768 of 2016 @ SLP [C] Nos. 21500-21511/2014

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CA Nos. 5769-5776 of 2016 @ SLP [C] Nos. 21615-21622/2014 CA No. 5777 of 2016 @ SLP [C] No. 21624/2014 CA No. 5778 of 2016 @ SLP [C] No. 21928/2014 CA No. 5779 of 2016 @ SLP [C] No. 22665/2014 CA No. 5780 of 2016 @ SLP [C] No. 22677/2014 CA Nos. 5781-5786 of 2016 @ SLP [C] Nos. 22688-22693/2014 CA Nos. 5787-5789 of 2016 @ SLP [C] Nos. 22777-22779/2014 CA No. 5790 of 2016 @ SLP [C] No. 22781/2014 CA No. 5791 of 2016 @ SLP [C] No. 23484/2014 CA Nos. 5792-5793 of 2016 @ SLP [C] Nos. 23492-23493/2014 CA No. 5794 of 2016 @ SLP [C] No. 23495/2014 CA No. 5795 of 2016 @ SLP [C] No. 23556/2014 CA Nos. 5796-5798 of 2016 @ SLP [C] Nos. 24581-24583/2014 CA Nos. 5799-5800 of 2016 @ SLP [C] Nos. 27121-27122/2014 CA Nos. 5801-5804 of 2016 @ SLP [C] Nos. 22950-22953/2014 CA Nos. 5806-5809 of 2016 @ SLP [C] Nos. 27062-27065/2014 CA Nos. 5810-5811 of 2016 @ SLP [C] Nos. 24541-24542/2014 CA No. 5812 of 2016 @ SLP [C] No. 27200/2014 CA No. 5813 of 2016 @ SLP [C] No. 26323/2014 CA No. 5814 of 2016 @ SLP [C] No. 26324/2014 CA Nos. 5815-5818 of 2016 @ SLP [C] Nos. 27201-27204/2014 CA Nos. 5819-5822 of 2016 @ SLP [C] Nos. 26061-26064/2014 CA No. 5823 of 2016 @ SLP [C] No. 26819/2014 CA No. 5824 of 2016 @ SLP [C] No. 24857/2014 CA Nos. 5825-5826 of 2016 @ SLP [C] Nos. 27674-27675/2014 CA No. 5827 of 2016 @ SLP [C] No. 28332/2014 CA No. 5828 of 2016 @ SLP [C] No. 28354/2014 CA No. 5829 of 2016 @ SLP [C] No. 28358/2014 CA No. 5830 of 2016 @ SLP [C] No. 28606/2014 CA Nos. 5831-5832 of 2016 @ SLP [C] Nos. 29863-29864/2014 CA No. 5833 of 2016 @ SLP [C] No. 28246/2014 CA Nos. 5834-5835 of 2016 @ SLP [C] Nos. 29242-29243/2014 CA No. 5836 of 2016 @ SLP [C] No. 32016/2014 CA No. 5837 of 2016 @ SLP [C] No. 31408/2014 CA Nos. 5838-5839 of 2016 @ SLP [C] Nos. 31800-31801/2014 CA No. 5840 of 2016 @ SLP [C] No. 35438/2014 CA No. 5841 of 2016 @ SLP [C] No. 36224/2014 CA No. 5842 of 2016 @ SLP [C] No. 35460/2014 CA No. 5843 of 2016 @ SLP [C] No. 34650/2014 CA No. 5844 of 2016 @ SLP [C] No. 2689/2015

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CA No. 5845 of 2016 @ SLP [C] No. 663/2015 CA No. 5846 of 2016 @ SLP [C] No. 35082/2014 CA No. 5847 of 2016 @ SLP [C] No. 36504/2014 CA No. 5848 of 2016 @ SLP [C] No. 1302/2015 CA No. 5849 of 2016 @ SLP [C] No. 4494/2015 CA No. 5850 of 2016 @ SLP [C] No. 2841/2015 CA No. 5851 of 2016 @ SLP [C] No. 4478/2015 CA No. 5852 of 2016 @ SLP [C] No. 8551/2015 CA No. 5853 of 2016 @ SLP [C] No. 7102/2015 CA No. 5854 of 2016 @ SLP [C] No. 7096/2015 CA No. 5855 of 2016 @ SLP [C] No. 16494/2015 CA No. 5856 of 2016 @ SLP [C] No. 16617/2015 CA No. 5857 of 2016 @ SLP [C] No. 16487/2015 C.A. No. 8249/2015; CA No. 5858 of 2016 @ SLP [C] No.12607/2015 CA No. 5859 of 2016 @ SLP [C] No. 34088/2015 CA No. 5860 of 2016 @ SLP [C] No. 3063/2016; and CA No. 5861 of 2016 @ SLP [C] No. 3516/2016.

J U D G M E N T

ARUN MISHRA, J.

1. Delay condoned in filing SLPs.  

2. Leave granted.

3. The question involved in the present  case is with respect  to levy of  fuel

surcharge adjustment (in short ‘FSA’) which is collected from the consumers in

addition to fixed tariff for consumption of power. The concept of FSA was brought

in by the Andhra Pradesh Electricity Reform Act, 1998 (hereinafter referred to as

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‘the  Act  of  1998’).  Earlier  the  Electricity  Board  used  to  collect  fuel  cost

adjustment.  Under  section 3(1)  of  the  Act  of  1998,  Andhra  Pradesh Electricity

Regulatory Commission has been established bestowed with the power to grant

licences and fix tariff for supply of power. Section 26(9) of the Act lays down that

no tariff or part of tariff required to be determined under sub-section (6) of section

29 may be amended more frequently than once in any financial year ordinarily

except in respect of any changes expressly permitted under the terms of any fuel

surcharge formula prescribed by the regulations.

4. The  Government  of  India  enacted  the  Electricity  Act,  2003  (hereinafter

referred to as “the Act of 2003”) to consider the laws of trading of power for the

purpose  of  making  it  consumer-friendly  and  to  create  better  environment  for

development  of  power  industry,  at  the  same  time  protecting  the  rights  of  the

consumers. Section 62(3) of the Act of 2003 prohibits preference to any consumer

of electricity but may differentiate according to the consumer’s load factor and

other aspects permissible under the aforesaid provision. Section 62(4) of the Act of

2003 is  pari materia to section 26(9) of the Act of 1998. By virtue of the power

conferred under sections 9(2) and 54(2) of the Act of 1998, the A.P. Electricity

Regulatory Commission (hereinafter referred to as “the Commission”) has framed

the  Andhra  Pradesh  Electricity  Regulatory  Commission  (Conduct  of  Business)

Regulations,  1999  (hereinafter  referred  to  as  “the  Regulations  of  1999”).  The

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Commission has framed Regulation No.8 dated 28.8.2000 called Andhra Pradesh

Electricity  Regulatory  Commission  (Conduct  of  Business)  First  Amendment

Regulations,  2000.  By  virtue  of  the  aforesaid  First  Amendment  Regulations,

provisions  contained  in  the  chapter  on  tariff  were  incorporated  by  way  of

Regulation 45-A specifying expected revenue from charges and tariff proposals

and  under  Regulation  45-B  fuel  surcharge  adjustment  formula  was  prescribed.

Regulation 45C was also inserted providing for subsidies as the State Government

may  consider  appropriate.  Regulation  45-B  was  further  amended  by  way  of

reforms called the Andhra Pradesh Electricity Regulatory Commission (Conduct of

Business)  Amendment  Regulations,  1  of  2003.  They  came  into  force  w.e.f.

1.4.2003. The amended Regulation 45-B provided a formula for working out the

FSA.  Condition  No.1  also  mentioned  that  FSA will  be  distributed  among  all

categories of consumers that existed in the quarter. However the consumption by

the  agricultural  sector  will  be  excluded  till  the  Commission  is  satisfied  that

metering of agricultural consumption is complete, as may be notified from Tariff

orders from time to time. As per section 61 of the Act of 2003, the Commission has

to  be  guided  by  the  aforesaid  provisions.  As  the  Central  Government  had  not

framed the national electricity policy or interim policy, as such Regulation No.9 of

2004  was  notified  by  the  A.P.  Electricity  Regulatory  Commission.  The

Commission made the transitory Regulations in exercise of the power conferred

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under section 181 read with section 61 of the Act of 2003 called the A.P. Electricity

Regulatory  Commission  (Transitory  Provisions  for  Determination  of  Tariff)

Regulations, 2004 (in short “Regulations of 2004”). They came into force w.e.f.

10.6.2004. It was specified that the Regulations of 1999 as amended from time to

time under the provisions of the Act of 1998 shall continue to apply as regulations

under the Electricity Act, 2003 and remain in force till appropriate new regulations

are notified by the Commission under the Electricity Act, 2003.

5. The Commission had also framed terms and conditions for determination of

tariff  for  wheeling  and  retail  sale  of  electricity  called  the  Andhra  Pradesh

Electricity Regulatory Commission (Terms and Conditions for Determination of

Tariff for Wheeling and Retail Sale of Electricity), Regulation, 2005. Aggregate

Revenue  Requirement  (in  short  “ARR”)  was  specified  in  Regulation  2(1)(2).

Regulation 3(4) provided ARR to be the basis for the fixation of the tariff/charges

for  retail  sale  of  electricity  including  surcharges.  However  Regulation  24(3)

provided that nothing  in the Regulation shall, expressly or by implication, bar the

Commission from dealing with any matter or exercising any power under the Act

for which no Regulations have been framed, and the Commission may deal with

such matters, exercise such powers and discharge such functions in a manner it

deems fit. The orders of the Commission determining the FSA were questioned

before the High Court. Writ petitions were filed before the High Court challenging

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the vires of section 26(2) of the Act of 1998, and the validity of Regulation 45-B of

Regulations of 1999 as substituted in 2003. The Commission determined the FSA

for all the eight quarters for the period from 2010 to March, 2012 vide order dated

20.9.2012 and vide order dated 2.11.2012 for  the first  quarter  of financial  year

2012-13. The orders were also questioned in the writ petition. The Division Bench

of the High Court vide order dated 24.2.2014 upheld the vires of the Regulations

and on merits left the matter to be agitated in the alternative remedy of appeal.

However, writ petitions which were filed were also disposed of in terms of order

dated 24.2.2014 hence the special leave petitions have been filed in this Court.      

Rival Submissions :

6. It  was submitted on behalf of the appellants that  Regulation 45-B of the

Regulations of 1999 is ultra vires the provisions contained in section 26(9) of the

Act  of  1998  and  section  62(4)  of  the  Act  of  2003,  insofar  as  it  provides  for

inclusion of any variation other than that arising out of fuel costs alone. It was

further submitted that only fuel cost had to be considered and no other charges

other than transportation can be included. The FSA formula in Regulation 45B

provides  for  element  other  than  variable  cost  of  all  purchases  even  beyond

variation of fuel costs alone and the same transgresses the limits of FSA formula

permitted under the Act. Since the provision of section 26(9) of the Act of 1998

and section 62 of the Act of 2003 provide for variation of tariff more than once in a

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financial year the exception provided is with respect to FSA. Fuel has to be given

natural meaning. In fact, the negative imperative of no variation of tariff more than

once is being violated. Condition Nos.5, 10 and 11 of the formula are also ultra

vires to the aforesaid provisions. It was also submitted that providing for exclusion

of agricultural consumption till metering of agricultural services are complete as

contained in Condition 1 of Regulation 45-B is bad in law and contrary to the

mandate of section 55(1) of the Act of 2003; more so, after a lapse of 2 years’

period. Time mandated under section 55(1) for metering the consumption has not

been extended. Mandate of compulsory metering has taken effect from 10.6.2005.

Consequently, condition No.1 is repugnant to the aforesaid provision as such it was

submitted that all sales of electricity including the agricultural consumption has to

be considered in computing the factor ‘Qi’ in the FSA formula. Regulation 45B

ceased to have effect on 10.6.2004 after one year from the date of coming into

force of the Electricity Act, 2003 by virtue of the proviso to section 61 of the said

Act. It was further submitted that on coming into force of Tariff Regulation 4 of

2005 modified under the Act of 2003, Regulations of 1999 containing Regulation

45-B ceased to have the effect. The Regulations of 2003 were also attacked on the

ground that there was no previous publication of the draft. Regulation 9 of 2004

made under the Reform Act with retrospective effect of 10.6.2004, the Commission

has no power to make regulations with retrospective effect. Regulation 45B casts

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an additional burden without authority of law. Condition No.1 is contrary to the

provision contained in sections 61 and 65 of the Act of 1998. It was also submitted

that  it  was the liability of the State Government to compensate the supplier  of

electricity  affected  by  the  grant  of  subsidy   made  to  the  agricultural  sector.

Condition  No.1  is  also  contrary  to  sections  61  and  65  of  the  Act  of  2003.

Regulations  of  2005  indicate  that  power  purchase  cost  for  each  year  stands

included  in  the  ARR and  FSA over  and  above  the  purchase  cost.  It  does  not

provide  for  adjustment  in  price  on  account  of  fluctuation  in  the  cost  of  fuel.

Formula for determining the FSA travels beyond that.  

7. It was submitted on behalf of the Commission and the State Government

that  under  section  85(3)  of  the  Act  of  2003,  the  Act  of  1998 is  saved,  in  the

Schedule at serial No.3. Consequently, the provisions of the Act of 1998 which are

not consistent with the provisions of the Act of 2003 shall continue to apply to the

State of Andhra Pradesh. The saving provision in the Regulations of 2005 reflects

that the Regulations of 1999 framed under the Act of 1998 are still in operation.

Regulation  12.4  of  Regulations  of  2005  provides  for  levy  of  FSA.  The  fuel

surcharge has not been defined under the Act of 1998 or the Act of 2003 or in the

Regulations of 2005 framed thereunder. The meaning and scope of fuel surcharge

is  given in  Regulation 45-B of  Regulations  of  1999.  The formula contains the

components to form part of FSA and had been implemented for the last more than

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one  decade.  FSA  has  been  determined  as  per  the  formula  prescribed  under

Regulation 45-B. It is incorrect to submit that FSA should be confined to variation

of fuel cost. Condition Nos.1, 5, 10 and 11 of Regulation 45-B have been notified

in the Gazette, therefore, there is complete compliance of the provisions contained

in section 55(1) of the Act of 2003. The Commission is empowered to differentiate

according to consumer’s load factor or power factor etc. as provided in section

26(7) of the Act of 1998. Similar provisions are contained in section 62(3) of the

Act of 2003. The Commission has  power to frame the regulations under sections

26(9) and 54 of the Act of 1998 with respect to FSA and under section 62(4) of the

Act  of  2003.  FSA is  a  related  surcharge  levied  to  meet  the  increased  cost  of

generation and purchase of electricity. The vires of section 62(4) of the Act of 2003

have not been questioned and the challenge to the vires of the provisions of section

26(9) of the Act of 1998 has been given up. The orders passed by the Regulatory

Commission are justified and writ  petitions have been rightly dismissed by the

High Court.  

Statutory Provisions :

8. For appreciating the rival contentions, we deem it appropriate to take note of

the various provisions of the Act of 1998 which have been enacted to establish and

incorporate autonomous statutory Electricity Regulatory Commissions to balance

the interest of all the stakeholders in the electricity industry and to promote healthy

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growth of power sector in the State. The State has been divested of its regulatory

functions. Section 11 deals with the functions of the Commission. It has the power

under section 11(1)(c) to issue licences and determine the conditions to be included

in the licences. Under section 11(1)(e) it has the power to regulate the purchase,

distribution, supply and utilization of electricity, the quality of service, the tariff

and charges payable. Part ‘A’ of the Act of 1998 deals with tariff. Section 26 deals

with licensee’s revenues and tariffs.  The provisions contained in section 26 are

extracted hereunder :

“26. Licensee's revenues and tariffs:- (1) The holder of each licence granted under this Act shall  observe the methodologies and procedures  specified  by  the  Commission  from  time  to  time  in calculating the expected revenue from charges which it is permitted to recover pursuant to the terms of its licence and in designing tariffs to collect those revenues.  

(2)  The  Commission  shall  subject  to  the  provisions  of sub-section (3) be entitled to prescribe the terms and conditions for the determination of the licensee’s revenue and tariffs by regulations duly published in the Official Gazette and in such other manner as the Commission considers appropriate.  

Provided that in doing so the Commission shall be bound by the following parameters:–

(a) the financial principles and their applications provided in the Sixth Schedule to the Electricity (Supply) Act,  1948 read with Sections 57 and 57-A of the said Act;

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(b) the factors which would encourage efficiency, economic use of the resources, good performance, optimum investments performance of licence conditions and other matters which the Commission considers appropriate keeping in view the salient objects and purposes of the provisions of this Act; and  

(c)  the interest of the consumers.  

(3)  Where the Commission,  departs from factors specified in the  Sixth  Schedule  of  the  Electricity  (Supply)  Act,  1948  while determining  the  licensees'  revenues  and  tariffs,  it  shall  record  the reasons therefor in writing.

(4)  Any  methodology  or  procedure  specified  by  the Commission under  sub-sections  (1),  (2),  and (3)  above shall  be  to ensure that the objectives and purposes of the Act are duly achieved.  

(5) Every licensee shall provide to the Commission in a format as specified by the Commission at least 3 months before the ensuing financial year full details of its calculation for that financial year of the expected aggregate revenue from charges which it believes it is permitted to recover pursuant to the terms of its licence and thereafter it  shall  furnish  such  further  information  as  the  Commission  may reasonably require to assess the licensee's calculation. Within 90 days of the date on which the licensee has furnished all the information that the Commission requires,  the Commission shall  notify the licensee either—

(a)  that  it  accepts  the  licensee's  tariff  proposals  and revenue calculations; or  

(b) that it does not consider the licensee's tariff proposals and revenue  calculations  to  be  in  accordance  with  the methodology or procedure in its licence, and such notice to the licensee shall,-  

(i) specify fully the reasons why the Commission considers that the licensee's calculation does not comply with the

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methodology or procedures specified in its licence or is in any way incorrect, and  

(ii) propose a modification or an alternative calculation of the expected revenue from charges, which the licensee shall accept.  

(6) Each holder of a supply licence shall publish in the daily newspaper having circulation in the area of supply and make available to the public on request the tariff or tariffs for the supply of electricity within its licensed area and such tariff or tariffs shall take effect only after seven days from the date of such publication.  

(7) Any tariff implemented under this section, –

(a)  shall  not  show  undue  preference  to  any  consumer  of electricity,  but  may  differentiate  according  to  the consumer's  load  factor  or  power  factor,  the  consumer's total consumption of energy during any specified period, or the time at which supply is required; or paying capacity of category of consumers and need for cross-subsidisation;

(b)  shall  be just  and reasonable and be such as to  promote economic  efficiency  in  the  supply  and  consumption  of electricity; and  

(c)   shall satisfy all other relevant provisions of this Act and the conditions of the relevant licence.  

(8) The Commission also shall endeavour to fix tariff in such a manner that, as far as possible, similarly placed consumers in different areas pay similar tariff.  

(9) No tariff or part of any tariff required by sub-section (6) may be  amended  more  frequently  than  once  in  any  financial  year ordinarily except in respect of any changes expressly permitted under the terms of any fuel surcharge formula prescribed by regulations. At least three months before the proposed date for implementation of any tariff or an amendment to a tariff the licensee shall provide details of the  proposed  tariff  or  amendment  to  a  tariff  to  the  Commission,

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together with such further information as the Commission may require to determine whether the tariff or  amended tariff would satisfy the provisions of  sub-section (7).  If  the Commission considers that  the proposed tariff or amended tariff of a licensee does not satisfy any of the provisions of sub-section (7), it shall, within 60 days of receipt of all the information which it required, and after consultation with the Commission Advisory Committee and the licensee, notify the licensee that  the  proposed  tariff  or  amended  tariff  is  unacceptable  to  the Commission and it shall provide to the licensee an alternative tariff or amended  tariff  which  shall  be  implemented  by  the  licensee.  The licensee shall  not amend any tariff unless the amendment has been approved by the Commission.  

(10) Notwithstanding anything contained in Sections 57-A and 57-B of the Electricity (Supply) Act, 1948, no Rating Committee shall be constituted after the date of this enactment and the Commission shall secure that licensees comply with the provisions of their licences regarding their charges for the sale of electricity (both wholesale and retail) and for the connection to and use of their assets or systems in accordance with the provisions of this Act.

Explanation :- In this section, –

(a)  "the  expected  revenue  from  charges" means  the  total revenue  which  a  licensee  is  expected  to  recover  from charges  for  the  level  of  forecast  supply  used  in  the determination under sub-section (5) above in any financial year in respect of goods or services supplied to customers pursuant to a licensed activity; and  

(b)    “tariff” means a schedule of standard prices or charges for specified  services  which  are  applicable  to  all  such specified  services  provided  to  the  type  or  types  of customers specified in the tariff notification.”

Section  26(9)  specifically  allows  changes  in  fuel  surcharge  which  is  to  be

prescribed as per the formula prescribed by the regulations.

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9. The Commission has power under section 26 of the Act of 1998 to prescribe

tariffs by Regulations duly published in the Official Gazette, inter alia, considering

the interests of consumers. Licensee is obligated to furnish the information under

section  26(5)  as  to  its  calculation  for  financial  year  of  the  expected  aggregate

revenue which it would recover. Under section 26(6) the holder of a supply licence

shall publish in the daily newspaper tariff or tariffs for the supply of electricity in

his  licensed  area.  As  per  the  provision  in  section  26(8)  the  Commission  shall

endeavour to fix tariff in the manner as far as possible, similarly placed consumers

in different areas pay similar tariff. Section 26(9) creates a negative mandate on

amendment of tariff determined under section 26(6) which may not be amended

more than once in a financial year except FSA. Section 39 provides for appeals

against the orders of the Commission. Section 54 of the Act of 1998 deals with the

power to make regulations. Under section 54(2)(g) the Commission has the power

to fix the method and manner of determination of licensee’s revenues and tariff

fixation and the matters to be considered in such determination and fixation.

10. The provision contained in section 185(3) of the Central Act of 2003 saves

the enactment specified in the Schedule not inconsistent with the provisions of the

Act. Relevant portions of section 185(3) and the Schedule are extracted hereunder :

“185. Repeal and saving.—(1) Save as otherwise provided in this Act,  the  Indian  Electricity  Act,  1910  (9  of  1910),  the  Electricity

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(Supply)  Act,  1948  (54  of  1948)  and  the  Electricity  Regulatory Commissions Act, 1998 (14 of 1998) are hereby repealed.

(2) Notwithstanding such repeal,— (a) anything done or any action taken or purported to have been

done  or  taken  including  any  rule,  notification,  inspection order  or  notice  made  or  issued  or  any  appointment, confirmation or declaration made or any licence, permission, authorisation  or  exemption  granted  or  any  document  or instrument  executed  or  any  direction  given  under  the repealed laws shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act;

(b) the provisions contained in sections 12 to 18 of the Indian Electricity Act, 1910 and rules made thereunder shall have effect until the rules under sections 67 to 69 of this Act are made;

(c) the Indian Electricity Rules, 1956 made under Section 37 of the  Indian  Electricity  Act,  1910  (9  of  1910)  as  it  stood before  such  repeal  shall  continue  to  be  in  force  till  the regulations under section 53 of this Act are made;

(d) all  rules made under sub-section (1)  of  section 69 of  the Electricity (Supply) Act, 1948 (54 of 1948) shall continue to have effect until such rules are rescinded or modified, as the case may be;

(e) all directives issued, before the commencement of this Act, by a State Government under the enactments specified in the Schedule shall  continue to apply for  the period for  which such directions were issued by the State Government.

(3) The provisions of the enactments specified in the Schedule, not inconsistent with the provisions of this Act, shall apply to the States in which such enactments are applicable.

(4)  The  Central  Government  may,  as  and  when  considered necessary, by notification, amend the Schedule.

(5) Save as otherwise provided in sub-section (2), the mention of particular  matters  in  that  section,  shall  not  be held to  prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897), with regard to the effect of repeals.

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THE SCHEDULE ENACTMENTS

[See sub-section (3) of Section 185] 1. The Orissa Electricity Reform Act, 1995 (Orissa Act No.2 of 1996). 2. The Haryana Electricity Reform Act, 1997 (Haryana Act No. 10 of

1998). 3. The Andhra Pradesh Electricity Reform Act, 1998 (Andhra Pradesh

Act No. 30 of 1998). 4. The Uttar Pradesh Electricity Reform Act, 1999 (Uttar Pradesh Act

No. 24 of 1999). 5. The Karnataka Electricity Reform Act, 1999 (Karnataka Act No. 25

of 1999). 6. The Rajasthan Electricity Reform Act, 1999 (Rajasthan Act No. 23

of 1999). 7. The Delhi Electricity Reforms Act, 2000 (Delhi Act No. 2 of 2001). 8.  The Madhya Pradesh  Vidyut  Sudhar  Adhiniyam,  2000 (Madhya

Pradesh Act No. 4 of 2001). 9.  The Gujarat Electricity Industry (Reorganisation and Regulation) Act,  

2003 (Gujarat Act No. 24 of  2003).”

In the Schedule at item No.3, Act of 1998 is mentioned as such it has been

saved from repeal. As specified and provided under section 185(3) of the Act of

2003,  the  provisions  of  the  Act  of  1998,  which  are  not  inconsistent  with  the

provisions of the Act of 2003 are in vogue.  

11. In the aforesaid backdrop, we proceed to take note of the Regulations of

1999 framed by the Commission under the provisions of sections 9 and 54 of the

Act of 1998.   The Regulations provide for provisions for conduct of the business.

By virtue of the First Amendment Regulations, 2000, the Regulations of 1999 had

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been amended. Under the heading of tariffs,  Regulation 45-B has been inserted

providing for fuel surcharge adjustment formula.  

Regulation 45-B had been substituted in 2003 which is extracted hereunder:

“45-B:       Unless otherwise agreed by the Commission, the amount eligible for recovery towards the Fuel Surcharge Adjustment (FSA) for the price and mix variations in the quantity of energy to be purchased as per the tariff  order  during  a  quarter  ‘1’  shall  be  determined  as  per  the following formula, aggregated for the quarter ‘1’.

Fi = (Pi x Ei +FCi + Z + Ai)                   ----------------------------

Qi

Where

Pi is the difference in the Weighted Average Variable Cost in Rupees  adjusted  to  four  decimal  points,  of  power purchase  cost  in  quarter  ‘1’  for  the  power  purchase quantity  mentioned  in  the  tariff  order  compared  to  the Weighted  Average  Variable  Cost  adopted  in  the  tariff order.

Ei is the energy purchase as mentioned in the tariff order in K wh during the quarter to be submitted for each of the generating stations.

FCi difference in Rupees, of the actual total fixed charges of the generating stations from the base values adopted in the tariff order.    

Qi is the actual energy sold to all categories in K wh in the quarter in DISCOM or RESCO, subject to condition No. 1, mentioned here under.

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Z is the changes in the cost  in Rupees as allowed by the Commission for a period extending in the past beyond the relevant quarter.

Ai adjustment in Rupees to account for the financial impact of  demonstrated  incidents  of  merit  order  violation  on account  of  controllable  factors  or  any  other  events  the financial  impact  of  which,  in  the  Commission’s  view, should be given appropriate treatment.

Condition (1)  The FSA as worked out will be distributed among all categories  of  consumers  that  existed  in  the  quarter. However the consumption by the agricultural  sector will be excluded till the Commission is satisfied that metering of agricultural consumption is complete, as may be notified in the Tariff orders from time to time.

(2)   The licensee shall  provide the Commission with its calculation of each fuel surcharge adjustment required to  be  made  pursuant  to  its  tariff  before  it  is implemented  with  such  documentation  and  other information as it may require, for purpose of verifying the correctness of adjustments.   

(3) FSA billed to retail categories to be made over to Bulk supplier by individual Distribution Companies and/or RESCOS as the case may be.

(4) APTRANSCO  must  file  with  the  Commission  all information  (including  sales  data  from  the DISCOMS/RESCOs) required for  calculation  of  the Fuel Surcharge Adjustment within 30 days of the end of the respective quarter failing which it will forfeit any  future  claims  on  this  account  for  such  quarter.

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DISCOMS/RESCOs  should  use  actual  consumption details of the relevant quarter when levying FSA.

(5) The licensee will report data from computing the total cost  (split  for  fixed  and  variable)  for  each  of  the generation  stations  that  has  supplied  power  in  the respective quarter for which fuel surcharge adjustment is  being  computed.   The  total  amount  eligible  for recovery will be computed on an aggregate basis.

(6) Fuel cost data has to conform to the fuel costs to the allowed  level  and  no  other  charges  other  than  the transportation cost  can be included in the fuel  cost. Every statement has to be confirmed by the licensee to that effect.  The costs arrived at will be compared to the fuel cost indexation which will be developed by the Commission in the future.

(7) Penalties are leviable for furnishing wrong data.

(8) The licensee shall publish the FSA approved by the Commission  in  one  English  and  one  Telugu  daily newspaper with circulation in the area of supply, for general information of the consumers, and shall make available  copies  of  the  FSA order  for  the  relevant quarter to the public on request, at a reasonable cost.

(9) The FSA shall be implemented after 7 days of such publication.

(10) The actual  variable costs and Fixed costs computed for Central Generating Stations 9CGS) should exclude the effect of UI charges.

(11) The FSA will include not only fixed costs of two part tariff  but  also  of  single  part  tariff  wherever applicable”.

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                       (By Order of the Commission)

S. SURYA PRAKASA RAO, Secretary to Commission

Hyderabad, 23-06-2003.”

12. Sections 61 and 62 of the Act of 2003 deal with the tariff regulations and

determination of tariff. The provisions are extracted hereunder :

“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; (g) that the tariff progressively reflects the cost  of  supply of

electricity and also reduces 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  the  Electricity  (Supply)  Act,  1948  (54  of  1948),  the Electricity Regulatory Commissions Act, 1998 (14 of 1998) and the

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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 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 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.

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

Section 62(1) provides for determination of tariff for supply of electricity by

generating company to a distribution licensee, transmission of electricity, wheeling

of  electricity  and  for  retail  sale  of  electricity.  Section  62(3)  enables  the

Commission to  differentiate  according to  consumer’s load factor,  power  factor,

voltage, total consumption of electricity, geographical position of any area, nature

of supply and purpose for which supply is required. At the same time, it is not to

show undue preference to any consumer. Section 62(4) of the Act of 2003 is akin

to section 26(7) of the Act of 1998 and permits change in fuel surcharge as per the

specified formula. Section 55(1) of the Act of 2003 mandates that no licensee shall

supply electricity after the expiry of two years from the appointed date, except

through installation of a correct meter.

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13. Though  the  Act  of  1998  had  been  specifically  saved  by  the  provisions

contained in section 185 of the Act of 2003, the Commission decided to make a

transitory regulation to be in force till new regulations are framed and accordingly,

published a draft regulations in the A.P. Gazette on 16.6.2004 seeking comments

and suggestions by 26.6.2004. No suggestions for any changes/modifications had

been received. Thus, in exercise of power conferred under section 181 and section

61 of the Act of 2003 and other powers enabling the Commission in that behalf, it

framed the Regulations of 2004 which came into force with effect from 10.6.2004

and it has adopted the existing Regulations of 1999 as amended from time to time,

and they shall continue till new Regulations are notified by the Commission under

the Act of 2003. Regulations of 2004 are extracted hereunder :

“ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION

Regulation No. 9 of 2004

INTRODUCTION

Under section 61 of the Electricity Act,  while specifying the terms and conditions for the determination of tariff, the Commission has  to  be  guided  inter-alia  by  the  Provisions  of  clauses  (a)  to  (i) thereof.  One of the provisions refers to the National Electricity Policy and tariff policy to be notified by the Central Government.   As the Central  Government has not  framed the National  Electricity Policy and  tariff  policy  till  date,  the  Commission  has  not  finalized  the aforementioned terms and conditions for the determination of tariff. The Commission  is  also  in  the  process  of  finalizing  various  other Regulations under the Electricity Act, 2003.  The Commission will be notifying  these  Regulations  including  the  Conduct  of  Business

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Regulations  under  the  Electricity  Act,  2003.   The  Commission therefore decided to make a transitory Regulation to be in force till the new  Regulations  are  framed  and  accordingly  published  a  draft Regulation in the A.P. Gazette on 16-06-2004 seeking comments and suggestions of interested persons by 26-06-2004.  No suggestions for any changes/modifications have however been received.

In  exercise  of  the  powers  conferred  on  the  A.P. Electricity Regulatory  Commission  under  Section  181  read  with  61  of  the Electricity Act, 2003 (Act 36 of 2003) and other powers enabling the Commission in that behalf, the Commission here makes the following Regulation, namely:

1. (i)  This Regulation may be called the A.P. Electricity Regulatory Commission  (Transitory  Provisions  for  Determination  of  Tariff) Regulation, 2004.

(ii) This shall  be deemed to have  come into force on 10 th June, 2004.

2. The  existing  Regulations  notified  by  the  Andhra  Pradesh Electricity  Regulatory  Commission,  including  the  A.P.  Electricity Regulatory  Commission  (Conduct  of  Business)  Regulation,  1999, incorporating  the  provisions  relating  to  determination  of  tariff  and terms and conditions and notified as Regulation No. 2 of 1999 and published in the A.P. Gazette No. 23 dt.  22-07-99 and as amended from time  to  time  as  well  as  all  other  regulations  notified  by  the Commission from time to time under the provisions of  the Andhra Pradesh  Electricity  Reform  Act,  1998,  shall  continue  to  apply  as regulations under the Electricity Act,  2003 and remain in force till appropriate new Regulations are notified by the Commission under the Electricity Act, 2003.

(BY ORDER OF THE COMMISSION)

                                                          S. SURYA PRAKASA RAO, Secretary”

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14. The Commission has framed the Regulations of 2005 under section 181 read

with sections 61 and 62 of the Act of 2003. ‘ARR’ is defined in Regulations under

section 2(1)(2) thus :

“2.  DEFINITIONS AND INTERPRETATION

1.       In this Regulation, unless the context otherwise requires: 1.        xxx xxx xxx

2. “Aggregate  Revenue Requirement:  (ARR) means the revenue required to meet the costs pertaining to the licensed business,  for a financial year, which would be permitted to be recovered through tariffs and charges by the Commission.

xxx xxx xxx”

Regulation 3 deals with the extent of application of the regulations. Same is

extracted hereunder :

“3. EXTENT OF APPLICATION

1. This Regulation shall  apply to all  the Distribution Licensees in the State for a) Distribution Business and b) Retail Supply Business.

2. In  accordance  with  the  principles  laid  out  in  this  Regulation,  the Commission  shall  determine  the  Aggregate  Revenue  Requirement (ARR) for a) Distribution Business and b) Retail Supply Business.

3. The ARR determined for Distribution Business will be the basis for the fixation of the wheeling tariff/charges.

4. The ARR determined for Retail Supply Business will be the basis for the fixation of the Tariff/Charges for retail sale of electricity including surcharges.”

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The expenditure of the Distribution Licensee considered as “controllable”

and  “uncontrollable”  has  been  specified  in  Regulation  10.  The  cost  of  power

purchase  is  uncontrollable.  It  is  also  provided  in  Regulation  10(4)  that  the

Distribution Licensee shall be eligible to claim variations in “uncontrollable” items

in the ARR. Regulation 24 of Regulations, 2005 deals with the saving. Same is

extracted hereunder :

“24. SAVING

1. Nothing in this Regulation shall be deemed to limit or otherwise affect the  power  of  the  Commission  to  make  such  orders  as  may  be necessary  to  meet  the  ends  of  justice  or  to  prevent  abuse  of  the process of the Commission.  

2. Nothing in this Regulation shall bar the Commission from adopting in conformity with the provisions of the Act, a procedure, at  variance with any of the provisions of this Regulation, if the Commission, in view of the special circumstances of a matter or class of matters and for reasons to be recorded in writing, deems it necessary or expedient for dealing with such a matter or class of matters.

3. Nothing in this Regulation shall, expressly or by implication, bar the Commission from dealing with any matter or exercising any power under the Act for which no Regulations have been framed, and the Commission may deal with such matters, exercise such powers and discharge such functions in a manner it deems fit.”

It is clearly provided in Regulation 24(3) that nothing in Regulations of 2005

shall,  expressly  or  by  implication,  bar  the  Commission from dealing  with  any

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matter or exercising any power under the Act for which no Regulations have been

framed.

Meaning of ‘surcharge’ :

15. As  to  the  meaning  of  ‘surcharge’,  appellants  have  relied  upon  various

decisions, it is appropriate to mention them.  Relying upon The Commissioner of

Income Tax,  Kerala v. K.  Srinivasan  1972 (4)  SCC 526,  it  was submitted  that

income-tax includes surcharge.   Reference has also been made to Sarojini Tea Co.

(P) Ltd. v. Collector of Dibrugarh, Assam and Anr. (1992) 2 SCC 156 in which this

Court  has  considered various  decisions  relating  to  the  meaning  of  ‘surcharge’,

thus :

“10. Since  the  question  for  consideration  is  whether  the surcharge  levied  under  the  Surcharge  Act  can  be  held  to  be  land revenue,  it  is  necessary  to  examine  the  nature  of  the  said  levy. According  to  the  Shorter  Oxford  English  Dictionary the  word ‘surcharge’ stands for  an additional  or  extra charge or  payment.  In Bisra Lime Stone Co. Ltd. v. Orissa State Electricity Board (1976) 2 SCC 167 after referring to the said definition, this Court had observed: (SCR pp. 310-11 : SCC p. 170, para 11)

“Surcharge is  thus a superadded charge,  a  charge over and above the usual or current dues.”

11. In that case the Orissa State Electricity Board had imposed a uniform surcharge of 10 per cent on the power tariff. It was argued that  surcharge  was  unknown  to  the  provisions  of  the  Electricity (Supply) Act, 1948 and the Electricity Board had no power under the said Act to levy a surcharge. This Court negatived the said contention

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and in that  context,  after explaining the meaning of the expression ‘surcharge’, it was observed: (SCR p. 311 : SCC p. 170, para 11)

“Although, therefore, in the present case it is in the form of a surcharge, it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.”

12. Similarly, in  CIT v.  K.  Srinivasan  (1972)  4  SCC 526 a question arose whether the term ‘income tax’ as employed in Section 2 of the Finance Act, 1964, would include surcharge and additional surcharge whenever provided. This Court while tracing the concept of surcharge in taxation laws of our country, has observed: (SCR p. 312 : SCC p. 528, para 5)

“The power to increase federal tax by surcharge by the Federal legislature was recommended for the first time in the report of the committee on Indian Constitutional Reforms, Vol. I Part I. From para 141 of the proposals it appears that the word ‘surcharge’ was used compendiously for the special addition to taxes on income imposed in September 1931. The Government of India Act,  1935, Part VII,  contained provisions relating to finance, property, contracts and suits. Sections 137 and 138 in Chapter I headed ‘finance’ provided for levy and collection of certain succession duties, stamp duties, terminal tax, taxes on fares  and  freights,  and  taxes  on  income  respectively.  In  the proviso to Section 137 the federal legislature was empowered to increase at any time any of the duties of taxes leviable under that section by a surcharge for federal purposes and the whole proceeds  of  any  such  surcharge  were  to  form  part  of  the revenue of  the federation. Sub-section (3) of Section 138 which dealt  with  taxes  on  income  related  to  imposition  of  a surcharge.”

13. It was further observed at page 315 of the report: (SCR p. 315 : SCC p. 530, para 10)

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“The meaning of  the word ‘surcharge’ as  given in  the Webster’s New International Dictionary includes among others ‘to charge (one) too much or in addition …’ also ‘additional tax’. Thus the meaning of surcharge is to charge in addition or to subject to an additional or extra charge.”

14. In  C.V. Rajagopalachariar v.  State  of  Madras  AIR 1960 Mad  543:  (1959)  in the  context  of  the  Madras  Land  Revenue Surcharge  Act,  1954  and  the  Madras  Land  Revenue  (Additional Surcharge) Act, 1955, it has been laid down: [AIR p. 545, para (5)]

“The word ‘surcharge’ implies  an  excess  or  additional burden or amount of money charged. Therefore, a surcharge of land revenue would also partake the character of land revenue and  should  be  deemed  to  be  an  additional  land  revenue. Although Section 4 of  the two enactments  referred  to  above only deems it to be recoverable as a land revenue it is manifest that  the surcharge would be a  part  of  the land revenue.  The effect of the two Acts would be, therefore, to increase the land revenue payable by a landholder to the extent of the surcharge levied.  If  therefore,  a  surcharge  levy  has  been  made,  the government would be enabled to collect  a higher amount by way of land revenue from a ryotwari pattadar than what was warranted by the terms of the previous ryotwari settlement.”

15. The said decision was approved by this Court in Vishwesha Thirtha Swamiar v.  State of Mysore (1972) 3 SCC 246. In that case this  Court  was  considering the  question  whether  the  Mysore  State legislature  was  competent  to  enact  the  Mysore  Land  Revenue (Surcharge)  Act,  1961.  After  examining the  nature  of  the  levy  the Mysore High Court had held that the so-called land revenue surcharge was but an additional imposition of land revenue or a land tax and fell either  within  Entry  45  or  Entry  49  of  the  State  List.  This  Court agreeing with the view of the High Court held that the surcharge fell squarely within Entry 45 of the State List, namely, land revenue. It was observed: (SCC pp. 249-50, paras 10 and 12)

“The  legislation  is  but  an  enhancement  of  the  land revenue by imposition of surcharge and it cannot be called a tax on land revenue, as contended by the learned counsel for the

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appellant. It is a common practice among the Indian legislatures to impose surcharge on existing tax. Even Article 271 of the Constitution speaks of a surcharge for the purpose of the Union being levied by way of increase in the duties or taxes mentioned in Article 269 and Article 270 ….

It  seems to us that  the Act clearly levies land revenue although it is by way of surcharge on the existing land revenue. If this is so, the fact that the surcharge was raised to 100 per cent of the land revenue on the wet and garden land and 75 per cent of the land revenue in respect of dry lands, subject to some minor  exceptions,  does  not  change  the  nature  of  the imposition.”

16. From  the  aforesaid  decisions,  it  is  amply  clear  that  the expression ‘surcharge’ in the context of taxation means an additional imposition which results in enhancement of the tax and the nature of the additional imposition is the same as the tax on which it is imposed as surcharge. A surcharge on land revenue is an enhancement of the land revenue to the extent of the imposition of surcharge. The nature of such imposition is the same viz.,  land revenue on which it  is  a surcharge.”

16. In  State of Orissa & Anr. v. Jayashree Chemicals & Ors. 2004 (13) SCC

594, this Court considered the provisions contained in section 2(g)(v) and section 3

of the Orissa Electricity (Duty) Act, 1961 and held that charge in section 2(g)(v)

includes surcharge which amounts to charge on freight.

17. On due consideration of meaning of ‘surcharge’ in various decisions, in our

opinion, nature of surcharge has to be considered as per intendment in which it has

been used in the enactment.  ‘Surcharge’ is basically over and above main levy and

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is in the form of additional charge. It may carry different contours as per provisions

of an enactment and different methodology for its determination.

In Re : Formula of  FSA and its vires :

18. In  the  backdrop  of  the  aforesaid  provisions,  we  now advert  to  the  first

submission whether  Regulation 45-B is  ultra  vires  to  the  provisions  of  section

26(9) of the Act of 1998 or sections 61 and 62(4) of the Act of 2003. Regulation

45-B deals with the determination of fuel surcharge. ‘Fuel surcharge’ has not been

defined in the Act of 1998 or the Act of 2003. The Commission has the power

under section 26(2) to prescribe the terms and conditions for determination of the

licensee’s revenue and tariffs. Section 26(9) enables the Commission to vary fuel

surcharge which is to be determined as per the formula prescribed by regulations.

Thus the Commission has been given the legislative power to prescribe the fuel

surcharge formula by way of making regulation and to include such factors as it

considers appropriate for determination of fuel surcharge. Under Section 61 of the

Act of 2003 the Commission has the power to specify the terms and conditions for

determination  of  tariff.  It  is  pertinent  to  note  that  under  the  Act  of  2003

Commission has adjudicatory, legislative as well as advisory powers.  It has to

consider under section 61(b) commercial  principles in regard to the generation,

transmission,  distribution  and  supply  of  electricity.  Under  section  61(d)  the

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Commission has to frame the conditions with regard to safeguarding of consumers’

interest and at the same time, recovery of the cost of electricity in a reasonable

manner. Section 62(4) of the Act of 2003 provides that no tariff or part of any tariff

creates  an  embargo  on  deviation  of  tariff  frequently  more  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. Section 62 does not deal

with the matter to be provided in determination of fuel  surcharge formula. The

provisions of section 61 contain principles on which the Commission has to act, it

cannot be said to be ultra vires. The fuel surcharge formula in Regulation 45-B is

in consonance with the factors provided under sections 61 and 62 of the Act of

2003 and also  the  provisions  contained in  section  26 of  the  Act  of  1998.  The

fixation is as per law laid down by this Court  and the statutory guidelines given

under section 61 of the Act of 2003 are binding upon the Regulatory Commission

and tariff has to be fixed in compliance thereof as held in PTC India Ltd. v. Central

Electricity  Regulatory  Commission,  through  Secretary (2010)  4  SCC  603  and

National Thermal Power Corporation Ltd. v. Madhya Pradesh State Electricity

Board &  Ors. (2011)  15  SCC  580.   In  Transmission  Corporation  of  Andhra

Pradesh Ltd. & Anr. v. Sai Renewable Power Pvt.  Ltd. & Ors.  (2011) 11 SCC 34

also, similar proposition was laid down :

“56. Sections 61 to 64 of  the Electricity Act,  2003 place an obligation upon the appropriate Commission to determine the tariff in

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accordance  with  the  provisions  of  this  Act.  An  application  for determination of tariff shall be made by the generating company under Section  64  and  the  tariff  has  to  be  determined  by  the  appropriate Commission and it is also required to specify the terms and conditions for determination of the tariff as per the factors and the guidelines specified under Section 61 of the Act.”

19. It is also true, as contended on behalf of the appellants that administrative

instructions  are  binding  in  the  absence  of  statutory  guidelines  and  any  breach

thereof would be arbitrary as held in Dr. Amarjit Singh Ahluwalia v. The State of

Punjab  & Ors.  (1975)  3  SCC  503  which  decision  has  been  followed  in  B.S.

Minhas v. Indian Statistical Institute & Ors. (1983) 4 SCC 582. However, in our

opinion, there is no violation of the provisions of section 61 of the Act of 2003 and

we have found FSA regulations are in compliance of the statutory directives given

in section 61.

20. In Rohtas Industries Ltd. & Ors. v. Chairman, Bihar State Electricity Board

& Ors. 1984 (Supp) SCC 161, a question arose as to the validity of supplementary

bills raised by the Bihar State Electricity Board for fuel surcharge. In exercise of

the power conferred under section 49 of the Electricity Act, 1948 the Electricity

Board  from  time  to  time  issued  notifications  fixing  tariffs  and  terms  and

conditions. Para 16.7 of the tariff Notification, 1978 provided that the consumers

of specified category shall be liable to pay fuel surcharge at a rate to be determined

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every year in accordance with the formula set out in sub-para 2 of said paragraph

16.7. A dispute arose due to raising of the fuel surcharge. One of the questions

raised  was  that  the  bills  were  not  in  accordance  with  the  provisions  of  tariff

notification. The High Court disagreed hence the matter travelled to this Court.

This Court answered the question whether the fuel surcharge can only be on the

actual cost of fuel consumed in the generating stations. This Court has held that

though  the  nomenclature  given  to  the  levy  is  “fuel  surcharge”,  it  is  really  a

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

and this is made absolutely clear in the formula given in para 16.7.2. The formula

considered by this Court in  Rohtas Industries (supra) and relevant discussion is

extracted hereunder :

“9. The next argument advanced on behalf of the appellants was that even if the Board is legally entitled to levy the fuel surcharge, that can only be for the purpose of recouping the amounts actually paid by the  Board  by  way  of  “fuel  surcharge”  to  the  Damodar  Valley Corporation and the U.P. State Electricity Board for the quantities of energy purchased by the Board from those sources and the extra cost that the Board had actually to incur on fuel consumed in those two generating stations at Patratu and Barauni. From the counter-affidavit filed on behalf of the Board, it is seen that in respect of the increase in the cost of production of electricity in the two generating stations of the Board, the fuel surcharge has taken into account only that part of the increase in cost which is relatable to the increased price of the coal and oil  i.e.  fuel  alone.  The increase in expenditure referable to the enhancement in cost of the energy generated on other accounts such as wages, maintenance, etc. has not been taken into account in the fuel surcharge.  Such increase in cost  of production on account of  those other factors has been offset by a revision of the basic general tariff by

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16.5 per  cent  payable  not  only by the industries but  by all  classes except the agriculturist class. In respect of the energies purchased by the  Board  from  outside  sources,  namely,  the  Damodar  Valley Corporation and the U.P. State Electricity Board, the increase in cost per unit incurred by the Board has been included in the computation of  the  fuel  surcharge.  We  see  no  substance  whatsoever  in  the contention advanced by the appellants that only such amounts, if any, as might have been paid by the Board to the D.V.C. and the U.P. State Electricity  Board as and by way of  fuel  surcharge can go into the computation  of  the  fuel  surcharge  levied  by  the  Board  under paragraph 16.7 of the 1979 tariff. Though the nomenclature given to the levy is “fuel surcharge” it is really a surcharge levied to meet the increased cost  of  generation and purchase of  electricity  and this  is made absolutely clear in the formula given in para 16.7.2.

10. The formula for determining the fuel surcharge set out in paragraph 16.7.2 reads:

     (A1 x A3 + B1 x B3 + C1 x C3 + D1 x D3 + E1 x E3) S= -----------------------------------------------------       (A2 + B2 + C2 + D2 + E2)

This  is  followed  by  detailed  explanation  as  to  what  the  different alphabets  used  in  the  numerator  and  denominator  signify.  The explanation given in respect of Cl is “increase in the average unit rate of  purchase  of  energy  from D.V.C.  during  the  year  for  which  the surcharge is to be calculated. The said increase to be calculated with respect  to  the  base  year  1977-78”.  C3  stands  for  “units  purchased from  D.V.C.  during  the  year”.  Likewise,  El  and  E3  have  been explained as “Increase in the average unit rate of purchase of energy from Uttar Pradesh State Electricity Board during the year for which surcharge is to be calculated, the said increase to be calculated with respect  to the base year 1977-78” and “units purchased from Uttar Pradesh State Electricity Board” respectively.

11. We see no force in the contention put forward on behalf of some of the appellants that the words “increase in the average unit rate of purchase of energy” used in Cl below paragraph 16.7.2 should be interpreted  as  taking  their  colour  from  the  contents  of  paragraph

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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 the D.V.C.  and  the  U.P.  State  Electricity  Board  has  to  go  into  the computation  of  the  surcharge  leviable  under  paragraph  16.7.  The contention  to  the  contrary  advanced by the  appellants  is  therefore, only to be rejected. There is no ambiguity whatever in the words used in Cl so as to require us to take light from paragraph 16.7.3 for the purpose of understanding their scope and meaning.

xxx xxx xxx

18. Some of the appellants have endeavoured to persuade us to go into the minutest details of the mechanism of the tariff fixation effected  by  the  Board  in  an  endeavour  to  demonstrate  in  relation thereto that a factor here or a factor there which ought to have been taken into  account  has  been ignored.  We have declined to  go into those factors which are really in the nature of matters of price fixation policy  and  the  Court  will  be  exceeding  its  jurisdiction  if  it  is  to embark upon a scrutiny of matters of this kind which are essentially in the domain of the executive to determine, subject, of course, to the constitutional limitations.”

It  was  submitted on behalf  of  the  appellants  that  the stand of  the  Bihar

Electricity Board in Rohtas Industries (supra) particularly in para 9 of the report,

where it had realized fuel surcharge on the basis of that part of the increase in cost

which is relatable to increased price of coal and oil that is fuel alone but a close

scrutiny of para 9 makes it clear that in respect of energy purchased by the Board

from outside sources namely Damodar Valley Corporation and U.P.State Electricity

Board, the increase in cost per unit incurred by the Board has been included in the

computation of fuel surcharge and this Court has found no merits in the contention

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that  such  amount  as  might  have  been paid  by the  Board  to  the  DVC and the

U.P.State  Electricity  Board  as  and  by  way  of  fuel  surcharge  can  go  into  the

computation of fuel surcharge levied by the Board under the 1979 tariff. The law

laid down is that the nomenclature given to the levy as fuel surcharge is really a

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

electricity. Thus the submission has no merit to sustain. This Court has clearly laid

down that  the  increased  cost  of  generation  and  purchase  of  electricity  can  be

realized under the head of fuel surcharge.

21. This Court has considered the question of levy of fuel surcharge again in

Bihar State Electricity Board  v. Pulak Enterprises & Ors.  (2009) 5 SCC 641.

Section  49  of  the  Electricity  (Supply)  Act,  1948  and  Clause  16.10.1  of  the

Notification  dated  21.6.1993 came up for  consideration  before  this  Court.  The

notification provided payment of operational surcharge at a rate to be determined

every year which consists of two elements i.e. fuel surcharge and other operational

surcharge. Clause 16.10.3 laid down the formula for determining fuel surcharge.

Clause  16.10.4  laid  down  the  formula  for  determination  of  other  operational

surcharge.  Following  was  the  formula  on  fuel  surcharge  which  came  up  for

consideration of this Court :

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“11. 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 = A1 × A3 + B1 × B3 + C1 × C3 + D1 × D3 + E1 × E3 + F1 × F3  + G1 × G3 + H1 × H3 ------------------------------------------------------------------------------------ (A2 + B2 + C2 + D2 + E2 + F2 + G2 + H2)….

Whereas,

S1                          = Average fuel surcharge per unit in    paise applicable during the financial year.

A1, B1, C1            = Units  generated  from  PTPS,  BTPS  and MTPS respectively.

D1, E1, F1, G1, H1= Units  purchased  from  DVC,  U.P.  SEB, OSEB, NTPC, PGCIL and any other source respectively.

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

D2, E2, F2, G2, H2 = Units sold, out of purchased from DVC, U.P. SEB, OSEB, NTPC, PGCIL and any other source respectively during the year in 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, U.P. SEB, OSEB, NTPC, PGCIL  and  any  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  1992-1993  (after amendment, read 1991-1992).

(In the above, PTPS stands for Patratu Thermal Power Station, BTPS for  Barauni  Thermal  Power  Station  and  MTPS  for  Muzaffarpur

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Thermal  Power  Station.  They are  Board’s own generating stations. Likewise, DVC stands for Damodar Valley Corporation, U.P. SEB for Uttar  Pradesh  State  Electricity  Board,  OSEB  for  Orissa  State Electricity Board, NTPC for National Thermal Power Corporation and PGCIL for Power Grid Corporation of India Ltd. They are external sources of supply of electricity to the Board.)”

         This Court has laid down that fuel surcharge has to be calculated strictly

within the framework of the formula provided in tariff notification. This Court also

laid down that 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, and fixing rates of fuel surcharge do not stand on a par.  

22. This  Court  in  Pulak  Enterprises (supra)  has  reaffirmed  the  decision  in

Rohtas Industries (supra) as to the factors which can be taken into consideration

for determination of fuel surcharge. Since determination of fuel surcharge formula

is not the function of the court. It is not defined in the Act, as such the Commission

has specified in its wisdom formula for its calculation in Regulation 45B. It cannot

be said to be ultra vires  to the aforesaid provisions.  We find no breach of  the

provisions of section 26 of the Act of 1998 and principles enumerated in section 61

and section 62 of the Act of 2003 or any other provisions of the Act of 2003. The

Regulations advance the mandate of the provisions of the Act. Reliance has been

placed  on  the  provisions  which  were  in  vogue  in  the  year  2000  before  the

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impugned provision was inserted in the year 2003 to contend that earlier provision

was proper and legal. Question is not of choosing a better Regulation, but of power

to frame it. In our opinion, as the Commission has the power to specify the fuel

surcharge  formula  and  considering  nature  of  levy,  could  have  taken  into

consideration  the  difference  in  total  fixed  cost,  changes  in  adjustment  as

contemplated in the regulation inserted in the year 2003, the Commission has not

at all transgressed its limits while carving out the formula. There is no violation of

statutory  provisions  while  enacting  Regulation  45B  in  the  year  2003.   The

submission raised that fuel has to be given a specific natural meaning and it is

circumscribed cannot be accepted in view of the decision of this Court in Rohtas

Industries (supra) and Pulak Enterprises (supra) and in view of the provisions of

the Act of 1998 and the Act of 2003.

Scope of interference :

23. The scope of  interference in judicial  review in such matters reserved for

expert bodies is limited. The court cannot substitute its opinion. It has been laid

down by this Court that price fixation is not the function of the court. This Court in

Pulak Enterprises (supra) has discussed the scope of interference in such a matter

thus :

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“29. 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. As a general proposition, the law on the point is settled.

30. In Prag Ice and Oil Mills v. Union of India (1978) 3 SCC 459 a seven-Judge Bench of this Court by majority observed: (SCC p. 490, para 52)

“52.  … 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 processual basis of price fixation has to be accepted in the generality of cases as valid.”

31. The legal position was reiterated in Rohtas Industries Ltd. v. Bihar SEB (1984) Supp. SCC 161 and  Kerala SEB v.  S.N. Govinda Prabhu & Bros. (1986) 4 SCC 198 wherein it was observed, “ ‘price fixation’ is neither  the forte nor the function of  the court” (Kerala SEB case, SCC p. 214, para 10).

32. As  regards  the  nature  of  the  function,  in  Saraswati Industrial  Syndicate  Ltd. v.  Union of  India  (1974)  2 SCC 630 the Court had observed (at SCC p. 636, para 13) that “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 (1978) 3 SCC 459 the Court observed: (SCC p. 482, para 37)

“37.  We think  that  unless,  by  the  terms  of  a  particular statute, or order, price fixation is made a quasi-judicial function for  specified  purposes  or  cases,  it  is  really  legislative  in character…. A legislative measure does not concern itself to the

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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 or class.”

33. In Union of India v. Cynamide India Ltd. (1987) 2 SCC 720 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 act, the performance of which does not require giving opportunity of hearing. Following passage from the judgment may usefully be noticed: (SCC pp. 734-35, para 5)

“5.  … 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 instances 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 not chosen to provide for any notice or hearing, no one can insist upon it and it will not be permissible to read natural justice into such legislative activity.”

Reference may also be made to a Constitution Bench decision in Shri Sitaram Sugar Co. Ltd. v. Union of India (1990) 3 SCC 223.

34. 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  stand  on  a  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 rates for different categories of consumers. Such is not the position with the fuel surcharge.

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35. Clause 16.10.1 specifies the categories coming 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.”

24. In  National  Thermal  Power  Corporation  Ltd.  (supra),  this  Court  has

observed that price fixation is legislative in character.  In  PTC India Ltd.  (supra)

also, this Court has held that fixation of tariff like price fixation is legislative in

character. The functions of  the Commission have been held to be adjudicatory,

advisory and legislative. The powers and functions enumerated under section 178

of the Act of 2003 confer wide powers upon the Commission to frame regulations

which cannot be said to be ultra vires.

25. This  Court  in  Association  of  Industrial  &  Electricity  Users (supra)  has

observed that the court has not to act as an appellate authority and laid down

the scope of judicial interference in such matters thus :  

“11. We also agree with the High Court that the judicial review in a matter with regard to fixation of tariff has not to be as that of an

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Appellate Authority in exercise of its jurisdiction under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that its decision is on the face of it arbitrary or illegal or contrary to the Act, the court will not interfere. Fixing a tariff and providing  for  cross-subsidy  is  essentially  a  matter  of  policy  and normally a court would refrain from interfering with a policy decision unless the power exercised is arbitrary or ex facie bad in law.”

26. No doubt about it that section 26(9) and sections 61 and 62(4) of the Act of

2003 contain an embargo on variation of tariff more than once in a financial year.

Negative words are prohibitory and are  ordinarily used as legislative devise to

make a statute imperative as laid down by this Court  in  M. Pentiah & Ors.  v.

Muddala Veeramallappa & Ors. AIR 1961 1107 and as emphasized by this Court

in  Mannalal  Khetan & Ors.  v. Kedar Nath Khetan & Ors. 1977 (2)  SCC 424.

However, there is a positive mandate as to FSA variation which cannot be ignored

and has to be given full effect. While doing so there is no variation of tariff as

contemplated under the aforesaid provisions. Mechanism of determination of tariff

is different.   

In Re : Disrimination vis-à-vis Agriculture Sector :   

27. A challenge  has  been  made  to  Regulation  45-B  submitting  that  it  casts

additional  burden  without  authority  of  law  inasmuch  as  the  letter  “Q”  in  the

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formula  is  subject  to  condition  1  and  therefore  excludes  the  consumption  by

agricultural sector and does not permit distribution of additional charge among all

consumers for the actual energy sold to them. It makes all the consumers not only

to pay for the energy consumed by them but also for the electricity consumed in

the agricultural sector which is arbitrary and contrary to the scheme of the Act and

in particular sections 61 and 62. The submission cannot be accepted as differential

treatment is permissible within the ken of the provisions of section 26. As provided

in  section  26(8)  in  case  consumers  are  similarly  placed  same  tariff  has  to  be

applied. Agriculturists and consumers like appellants cannot be said to be similarly

placed.  It  is  also  provided  in  section  26(7)  that  the  tariff  implemented  may

differentiate according to the consumer’s load factor or power factor, consumer’s

total consumption of energy during any specified period from the time at which

supply is required or paying capacity of category of consumers and need for gross

subsidization. Thus paying capacity  inter alia is one of the factors which can be

used  for  protective  discrimination  under  discriminatory  tariffs  as  provided  in

section 26(7)(a).

28. In  Real Food Products Ltd. & Ors. v. A.P. State Electricity Board & Ors.

1995  (3)  SCC  295,  this  Court  considered  the  claim  of  discrimination  of  HT

consumers  with  agriculturists  to  be  untenable.  Concessional  tariff  extended  to

agriculturists as a separate class was held not violative of Article 14.

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29. In  Rohtas Industries (supra) also this Court had negatived the submission

based upon the classification and held that classification which is legally valid and

permissible for grant of concession in the basic rates will equally hold good for the

purpose  of  subsequent  scheme  of  distribution  of  burden  in  the  form  of  fuel

surcharge and the decision of the Board restricting levy of fuel surcharge to those

categories  of  consumers  who  were  enjoying  the  benefits  of  concession  in  the

general rate and in sparing smaller type of consumers such as agriculture, irrigation

and commercial consumers being subjected to that burden was upheld. This Court

in Rohtas Industries (supra) has laid down thus :

“8. The expression “licensee” means a person licensed under Part II of the Indian Electricity Act, 1910, to supply energy or a person who has obtained licence under Section 28 of that Act to engage in the business of supplying energy — through definition in Section 2(6). Admittedly,  the  appellants  before  us  are  not  licensees.   They  are consumers receiving high tension supply to  their  factories.  For the purpose of tariff fixation, the Board has classified the consumers into 10 categories, viz. “domestic”, “commercial (i)”, “commercial (ii)”, “street  light”,  “irrigation”,  “light  tension  industrial”  (small  scale industrial  upto 100 h.p.),  “11 k.v. h.t.s.”,  “33 k.v. h.t.s.”,  “132 k.v. h.t.s.” and “railway traction (25 k.v.)”. It is seen from the materials on record for us that the industries between themselves consume nearly 65 per cent  of  the total  quantity of  energy supplied by the Board. Apparently with a view to encouraging the establishment of industries in the State, the general tariff rate applicable in respect of high tension supply to industries and factories has been fixed at rates which are much  lower  when  compared  to  those  applicable  to  other  types  of consumers.  While  the  general  rate  applicable  for  supply  of  high tension  electric  energy  for  industries  of  the  class  to  which  the appellants  belong  was  22  paise  per  unit,  consumers  belonging  to “commercial”  categories were charged at  rates  ranging between 48

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paise to 58 paise per unit, “agricultural” consumers at 29 paise per unit,  “low  tension”  consumers  at  34  to  38  paise  per  unit  and “domestic” consumers at  rates  ranging between 38 to 43 paise  per unit.  Thus,  in  the  fixation  of  the  general  tariff  rate,  a  substantial concession has been shown in favour of industrial low tension and high  tension  consumers.  The  appellants  have  no  case  that  any illegality  was  involved  in  treating  the  industrial  consumers,  as  a separate class and granting them the benefit of a preferential treatment for the purpose of fixing the basic rate of levy for supply of electricity. The stand taken by the Board is that it was found absolutely necessary at the time of the revised tariff fixation effected in 1979 to augment its revenue by levying of the additional fuel surcharge in order to offset the heavy increase in  expenditure  and after  taking into account  all relevant  facts  and  circumstances,  it  was  decided  to  distribute  that burden  amongst  the  privileged  class  of  consumers,  namely  those belonging to categories of low tension industrial service, high tension service, extra high tension service and railway traction service. Even after taking into account the fuel surcharge so levied under 1979 tariff, the  rates  applicable  to  high  tension  consumers  like  the  petitioners range between 40.31 paise and 58.80 paise per unit only, while the commercial (ii) consumer has to pay 71.33 paise per unit and even the domestic  consumer has to pay 48 paise  per  unit.  The position that obtains under the 1981 tariff which also has been challenged by some of the appellants is substantially similar. In our opinion, the Board was perfectly  within  its  rights  in  deciding  to  restrict  the  levy  of  fuel surcharge to those categories of  consumers who were enjoying the benefit of a concession in the general rate and in sparing smaller type of  consumers  such  as  the  agricultural,  irrigation  and  commercial consumers from being subjected to that burden, in view of the fact that they were already being subjected to a basic levy at substantially higher rates. The true consequence of the action so taken by the Board is only to effect a reduction in the quantum of concession that was being  enjoyed  by  the  consumers  belonging  to  the  industrial  and railway traction categories. A classification which is legally valid and permissible for the grant of a concession in the basic rates will equally hold good for the purpose of a subsequent scheme of distribution of the burden in the form of fuel surcharge.  In this context,  it  is also relevant to remember that the levy of surcharge was necessitated by reason of the extra expenditure which the Board had to incur in the generation of electricity in the two power stations run by the Board

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and in the purchase of power from the two outside sources, namely, the D.V.C. and the U.P. State Electricity Board and 65 per cent of the total quantity of energy supplied by the Board is consumed by the industrial  and railway traction  consumers.  A classification  of  these bulk consumers has a rational nexus with the object and purposes of the  levy  of  surcharge.  Having  regard  to  all  these  facts  and circumstances, we find no substance in the contention advanced by some of  the  appellants  that  the imposition of  fuel  surcharge under paragraph 16.7 of the 1979 tariff is arbitrary and violative of Article 14 of the Constitution.”

30. In  Hindustan Zinc Ltd. etc. etc. v. Andhra Pradesh State Electricity

Board & Ors. (1991) 3 SCC 299 placing burden of enhanced tariff on high

tension  consumers  including  power  intensive  industries  was  held  not

unreasonable and discriminatory since consumers consisted a separate class.

The challenge on the ground of making good the loss on supply of electricity

at cheaper rates was also repelled. This Court also laid down that the court

could  not  strike  down the  upward  revision  made  as  arbitrary  unless  the

Board is found to have shed its public utility character and there is a limited

scope of  judicial  review and this  Court  further  laid down that  there  is  a

limited judicial review in the matter of price fixation. The relevant portion is

extracted hereunder :

“26. It is, therefore, obvious that mere generation of surplus by the  Board  as  a  result  of  adjusting  its  tariffs  when the  quantum of surplus has not been specified by the State Government after the 1978 amendment  of  Section  59  of  the  Supply  Act,  cannot  invite  any

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criticism unless it  is  further  shown that  the surplus  generated as a result  of  the adjustment  of  tariffs  by the Board has resulted in the Board  acting  as  a  private  trader  shedding  off  its  public  utility character. In other words, if the profit is made not merely for the sake of profit, but for the purpose of better discharge of its obligations by the Board, it cannot be said that the public enterprise has acted beyond its authority. The Board in the present case has shown that the surplus resulting  from  upward  revision  of  tariffs  applicable  to  the  HT consumers made in the present  case,  was for  the purpose of better discharge of its other obligations under the Supply Act and in effect, it has merely resulted in a gradual withdrawal of the concessional tariffs provided earlier to the power intensive consumers which do not in its opinion require continuance of the concessional tariffs any longer. In fact,  no  material  has  been  placed  before  us  to  indicate  that  this assertion of the Board is incorrect or there is any reasonable basis to hold that the upward revision of tariffs applicable to HT consumers is merely with a desire to earn more profits like a private trader and not to  generate  surplus  for  utilisation  of  the  funds  to  discharge  other obligations  of  the  Board  towards  more  needy  consumers,  such  as agriculturists,  or  to  meet  the  needs  of  expansion  of  the  supply  to deserving  areas.  The  argument  with  reference  to  statistics  that  the upward revision of  tariffs  for  the HT consumers results  in earning amounts in excess of the cost of generation does not, therefore, merit a more detailed consideration.

27. It was also contended on behalf of the appellants that the generation of electricity by the Andhra Pradesh Electricity Board is both thermal as well as hydro, the quantity from each source being nearly equal and the entire electricity generated is fed into a common grid, from which it is supplied to all categories of consumers. On this basis, it was argued that the rise in the fuel cost which led to the fuel cost  adjustment  applicable  only  to  the  HT  consumers  was unreasonable and discriminatory since the burden of rise in fuel cost was placed only on the HT consumers. In our opinion, this argument has  no  merit.  The  HT  consumers,  including  the  power  intensive consumers,  are  known  power  guzzlers  and  in  power  intensive industries,  electricity  is  really  a  raw  material.  This  category  of consumers,  therefore,  forms  a  distinct  class  separate  from  other consumers  like  LT consumers  who  are  much  smaller  consumers. There is  also a rational  nexus of  this  classification with the object

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sought to be achieved. Moreover, the power intensive consumers have been enjoying the benefit of a concessional tariff for quite some time, which too is a relevant factor to justify this classification. Placing the burden of fuel cost adjustment on these power guzzlers, who had the benefit  of  concessional  tariff  for  quite  some time  and have  also  a better  capacity  to  pay,  cannot,  therefore,  be  faulted  since  the consumption in  the power  intensive industries  accounts  for  a large quantity.”

The decision in  Hindustan Zinc Ltd. (supra)  has been followed in  Pulak

Enterprises (supra).           

31. This Court in  Association of Industrial Electricity Users v. State of A.P. &

Ors. 2002 (3) SCC 711 has considered and upheld the levy of different tariffs. It

has laid down thus :

“10. We are also unable to agree with the learned counsel for the  appellants  that  the  Act  does  not  envisage  classification  of consumers  according  to  the  purpose  for  which  electricity  is  used. Sub-section (9) of Section 26 does state that the tariff which is fixed shall  not show undue preference to any consumer of electricity but then the said sub-section itself permits differentiation according to the consumer’s load factor or power factor, consumer’s total consumption of  energy during the specified period,  time at  which the supply  is required or paying capacity of category of consumers and the need for cross-subsidisation or such tariff as is just and reasonable and be such as to promote economic efficiency in the supply and consumption of electricity  and  the  tariff  may  also  be  such  as  to  satisfy  all  other relevant  provisions  of  the  Act  and  the  conditions  of  the  relevant licence. This section has to be read along with Section 11 which sets out  the  functions  of  the  Commission  and,  inter  alia,  provides  that amongst the functions is the power to regulate the tariff and charges payable keeping in view both the interest of the consumer as well as the  consideration  that  the  supply  and  distribution  cannot  be

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maintained unless the charges for electricity supplied are adequately levied  and  duly  collected.  Depending  upon  the  various  factors stipulated  in  Section  26(7),  categorisation  between  industrial  and non-industrial, agricultural or domestic consumers can certainly take place. This is precisely what has been done in the present cases. The High Court has at length considered all aspects of the cases and has examined  in  detail  the  exercise  which  was  undertaken  by  the Commission  in  fixing  the  tariff  and,  in  our  opinion,  the  view expressed by the High Court calls for no interference.”

In  view  of  the  aforesaid  discussion,  the  submission  with  respect  to

favourable treatment and discrimination vis a vis the agricultural sector  is hereby

repelled.

In Re : Variation in cost of Rupee :

32. It was also submitted on behalf of the appellant that Regulation 45B that

letter ‘Z’ in the formula for which the Commission to apply the change in cost of

rupee for  a  period beyond the period of  supply of  electricity to the consumers

without any time limit,  the submission in this regard is baseless and cannot be

accepted. As a matter of fact the fuel surcharge is determined as per the formula

which takes into account the change in cost of rupee for a period extending in the

past beyond the relevant quarter. There is nothing bad in it as there is change in the

cost of rupees which can be allowed by the Commission for realization of fuel

surcharge as and when it is determined. It is a method of determining the actual

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value to be paid in rupees and cannot be said to be illegal or arbitrary at all. It is in

consonance with business norms.

In Re : Vagueness of Formula :

33. It was also submitted that letter ‘A’ in the formula is vague and unrealistic so

as to permit the Commission to impose additional burden unrelated to escalation of

fuel cost under the guise of FSA. The submission is too tenuous to be accepted and

proceeds on assumption that only escalation in fuel cost can be levied even the

financial  year  impact  of  demonstrated  incidents  of  merit  order  violations  on

account of controllable factors and any other event which had the financial impact

can be given appropriate treatment  and can also form part of FSA as laid down by

this Court in Rohtas Industries (supra) and Pulak Enterprises (supra).

In Re : Metering of consumption :

34. Coming to the submission that as metering is mandated on completion of

two years, as such agricultural aspect cannot be included on lapse of said period.

Section 55 of the Act of 2003 deals with the use of meters and it is provided that no

licensee shall supply electricity after expiry of two years from the appointed date

except through installation of a correct meter in accordance with the regulations.

The said Commission may also extend the period up to two years for a class or

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class of persons as may be specified in the notification. The provision made in

condition No.1 of Regulation 45-B cannot be said to be repugnant to section 55(1)

as it deals with the licensee’s obligation to supply electricity after two years only

on the basis of metered supply. It has not been achieved so far. However, electricity

is being consumed and the authorities are not able to do the complete metering of

agricultural  services.  In  our  opinion,  in  the  prevailing  conditions,  in  particular

plight  of  agricultural  sector  and  purpose  of  enactment,  it  is  open  to  the

Commission to make such a wholesome provision carved out in condition No.1.

Thus there is no violation of the provisions contained in section 55(1) of the Act of

2003. The consequence of section 55 of the Act of 2003 cannot be that if metering

is not achieved within two years the consumption in agricultural sector cannot be

provided within the purview of FSA formula. Thus condition 1 did not cease to

have effect after 10.6.2005 as submitted on behalf of the appellants.

In Re : Subsidy :

35. Coming to submission of violation of section 65, section 65 of the Act of

2003 which enables the State Government to make a provision for subsidy to any

consumer or class of consumers. The State Government has to pay in advance in

such manner the amount to compensate the person affected by the grant of subsidy.

Section 65 is extracted hereunder :

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“65. Provision of subsidy by State Government.—If the State Government  requires the grant  of  any subsidy to  any consumer or class of consumers in the tariff determined by the State Commission under  section  62,  the State  Government  shall,  notwithstanding any direction which may be given under section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person  affected  by  the  grant  of  subsidy  in  the  manner  the  State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government:

Provided that no such direction of the State Government shall be  operative  if  the  payment  is  not  made  in  accordance  with  the provisions contained in this section and the tariff fixed by the State Commission shall be applicable from the date of issue of orders by the Commission in this regard.”

36. Considering the condition of farmers which is pathetic and they are unable

to face the burden, it is rightly pointed out on behalf of the Commission that the

State  Government  had  given them certain  concessions  in  the  form of  subsidy.

However  the Commission had excluded them from meeting the  fuel  surcharge

adjustment  charges.   Provision  of  section  65  relating  to  subsidy  by  the  State

Government is not at all attracted.  The matter involved in the present cases is not

of  subsidy but  determination of  fuel  surcharge  formula.   Thus,  the  submission

based upon the violation of the provision of section 65 is wholly unwarranted and

is liable to be rejected as subsidy has not been included in the determination of fuel

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surcharge.  It  cannot  be  invalidated  on  the  ground  of  violation  of  provisions

contained in section 65 of the Act of 2003.  

In Re : Lapse of Regulations of 1999 :

37. Next submission raised on behalf of the appellants is that the Regulations of

1999 as amended in 2003 being the tariff regulation under the Act of 1998, ceased

to have effect on 10.6.2004 after one year from the date of coming into force of the

said Act, by reason of proviso to section 61 of the Act of 2003. The submission

raised is untenable for various reasons. First is that regulations have been framed

with effect from 10.6.2004. The proviso to section 61 of the Act of 2003 makes it

clear that the terms and conditions for determination of tariff and the enactment

specified in the Schedule as they stood 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 section 61, whichever is earlier. Thus, the tariff regulations framed

under the Act of 1998 would remain in force for maximum period of one year and

the regulations had been framed with effect  from 10.6.2004 and the Transitory

Regulations  have  been  enacted  vide  Regulations  of  2004  by  the  Commission.

Regulation 2 of said Regulations of 2004 clearly provides that Regulations of 1999

as amended from time to time under the Act of 1998 shall  apply as regulation

under the Electricity Act, 2003 and shall remain in force or till new regulations are

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notified by the Commission under the Act of 2003. Even if earlier Regulations of

1999 came to an end on 10.6.2004 and if it is further assumed without deciding

that the Commission had no authority to enact retrospectively, in our opinion, it

could have adopted the Regulations of 1999 as amended, framed under the Act of

1998  shall  continue,  to  apply  for  future.  Considering  the  period  in  question

involved in the matter, it cannot be said to be Regulations of 1999, as amended, are

inoperative as they have been adopted vide Regulation No.9/2004. With respect to

the  fuel  surcharge  adjustment  no  provision  has  been  made  in  the  regulations

framed in the year 2005. On facts also,  the Regulation 45-B was implemented

subsequently and had been again amended in the year 2013. It has operated for

more than a decade for determination of FSA.  

In Re : Procedural lapse in framing Regulations :

38. The  submission  raised  that  amended  Regulations  were  without  previous

publication as envisaged under section 181(3) of the Act of 2003, as such they are

void due to non-compliance of the said provision. It is apparent that Regulation

9/2004 was previously notified as mentioned in the notification itself. A draft of

regulations was published seeking suggestions and comments. No suggestions for

changes/modification were submitted. As such the regulations are in compliance

with the provision of section 181 read with section 61. Thus we find no violation of

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the  provision  of  section  181(3). The  contention  that  there  was  no  previous

publication is factually incorrect.  

Effect of Regulations of 2005 :  

39. Submission raised that the FSA can be realized in terms of the Regulations

of 2005 cannot be accepted for the simple reason that the Regulations of 2005 do

not  deal  with  FSA and there is  a  saving clause  as  provided in  Regulation  24.

Moreover, the Act of 1998 had not been repealed and there was re-adoption of the

Regulations of 1999 in the year 2004. It is also factually incorrect submission that

FSA had been realized under the Regulations of 2005 after framing of the said

regulations. In fact FSA had been determined as rightly contended on behalf of the

Commission under Regulation 45-B as amended in 2003 for more than a decade. A

challenge had been raised for the first time after 10 years. It is obvious that the

parties  clearly  understood  Regulation  45-B  is  in  vogue  and  in  fact  it  legally

prevailed and rightly followed.  

40. It was also submitted that Regulation 6(4) of Regulations of 2005 provides

that ARR shall contain power purchase cost for each year of the controlled period.

It is clear from ARR as defined in Regulations of 2005 and FSA that they do not

run counter to each other but are supplementary. The Regulations of 2005 do not

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deal with determination of fuel surcharge. Regulation 45-B cannot be said to be

invalid for the aforesaid reason.  

41. There is a saving clause contained in Regulation 24 of Regulations of 2005.

Regulation 12.4 provides that the distribution licensee shall be entitled to recover

or refund as the case may be the charges on account of fuel surcharge adjustment

as approved by the Commission from time to time suo motu or based on the filing

made by the institution company as the Commission may deem fit. The provisions

of the Act provided that the formula has to be specified by the Commission for

FSA and this has been specified only in Regulation 45-B which has been adopted

in  the  year  2004  for  continuance  by  the  Commission.  The  Commission  had

adopted the said regulations and the same continues to be in operation.

Conclusion :

42. In  our  opinion,  the  challenge  made  by  the  appellants  is  unworthy  of

acceptance. Fuel surcharge is really a surcharge levied to meet increased cost of

generation and purchase of electricity and the scope cannot be circumscribed by its

nomenclature. Thus the formula in Regulation 45B and the FSA determined by the

Commission  would  take  into  consideration  various  factors  which  result  in  the

increased cost of generation and purchase of electricity.

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43. The appeals are found to be devoid of merits and are hereby dismissed. The

appellants are directed to make the deposit along with interest; if no other rate is

prescribed at the rate of 8 per cent per annum, and other charges for delay, as may

be permissible to recover within a period of one month from today. In addition, the

respondents are at liberty to take coercive steps to recover the amount.  

………………………..J. (V. Gopala Gowda)

New Delhi; ………………………..J. July 5, 2016. (Arun Mishra)

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ITEM NO.1B               COURT NO.3               SECTION XIIA                S U P R E M E  C O U R T  O F  I N D I A           

    RECORD OF PROCEEDINGS Civil Appeal  No(s). 5542 @ SLP(C) No.12398/2014 SAI BHASKAR IRON LTD.                              Appellant(s)                                 VERSUS A.P.ELECT.REGUL.COMMISSION & ORS.                  Respondent(s) WITH CA Nos.5543-5544 of 2016 @ SLP [C] Nos. 14638-14639/2014 CA No.5545 of 2016 @ SLP [C] No. 15205/2014 CA Nos. 5546-5571 of 2016 @ SLP [C] Nos. 15245-15270/2014 CA Nos. 5572-5575 of 2016 @ SLP [C] Nos. 15348-15351/2014 CA Nos. 5576-5578 of 2016 @ SLP [C] Nos. 15356-15358/2014 CA Nos. 5579-5583 of 2016 @ SLP [C] Nos. 15360-15364/2014 CA Nos. 5584-5586 of 2016 @ SLP [C] Nos. 15389-15391/2014 CA No. 5587 of 2016 @ SLP [C] No. 15603/2014 CA No. 5588 of 2016 @ SLP [C] No. 15845/2014 CA Nos. 5589-5598 of 2016 @ SLP [C] Nos. 15878-15887/2014 CA No. 5599 of 2016 @ SLP [C] No. 15891/2014 CA Nos. 5600-5601 of 2016 @ SLP [C] Nos. 15938-15939/2014 CA No. 5602 of 2016 @ SLP [C] No. 15940/2014 CA Nos. 5603-5611 of 2016 @ SLP [C] Nos. 15985-15993/2014 CA No. 5612 of 2016 @ SLP [C] No. 15998/2014 CA Nos. 5613-5618 of 2016 @ SLP [C] Nos. 17138-17143/2014 CA No. 5619 of 2016 @ SLP [C] No. 17469/2014 CA No. 5620 of 2016 @ SLP [C] No. 17495/2014 CA No. 5622 of 2016 @ SLP [C] No. 17509/2014 CA Nos. 5623-5625 of 2016 @ SLP [C] Nos. 17860-17862/2014 CA No. 5626 of 2016 @ SLP [C] No. 17869/2014 CA Nos. 5630-5631 of 2016 @ SLP [C] Nos. 18043-18044/2014 CA Nos. 5632-5663 of 2016 @ SLP [C] Nos. 18199-18230/2014 CA No. 5666 of 2016 @ SLP [C] No. 18254/2014 CA No. 5667 of 2016 @ SLP [C] No. 18261/2014 CA No. 5668 of 2016 @ SLP [C] No. 18317/2014 CA No. 5670 of 2016 @ SLP [C] No. 18331/2014 CA No. 5671 of 2016 @ SLP [C] No. 18334/2014 CA No. 5672 of 2016 @ SLP [C] No. 18354/2014 CA No. 5673 of 2016 @ SLP [C] No. 18358/2014 CA No. 5674 of 2016 @ SLP [C] No. 18395/2014 CA No. 5675 of 2016 @ SLP [C] No. 18458/2014 CA No. 5676 of 2016 @ SLP [C] No. 18956/2014

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CA No. 5677 of 2016 @ SLP [C] No. 19116/2014 CA Nos. 5678-5685 of 2016 @ SLP [C] Nos. 19261-19268/2014 CA No. 5686 of 2016 @ SLP [C] No. 19401/2014 CA No. 5687 of 2016 @ SLP [C] No. 19448/2014 CA No. 5688 of 2016 @ SLP [C] No. 19575/2014 CA No. 5689 of 2016 @ SLP [C] No. 19640/2014 CA No. 5690 of 2016 @ SLP [C] No. 19686/2014 CA Nos. 5692-5703 of 2016 @ SLP [C] Nos. 19709-19720/2014 CA No. 5704 of 2016 @ SLP [C] No. 19728/2014 CA No. 5705 of 2016 @ SLP [C] No. 19752/2014 CA No. 5706 of 2016 @ SLP [C] No. 19774/2014 CA Nos. 5707-5709 of 2016 @ SLP [C] Nos. 19782-19784/2014 CA No. 5710 of 2016 @ SLP [C] No. 19785/2014 CA No. 5711 of 2016 @ SLP [C] No. 19786/2014 CA Nos. 5712-5731 of 2016 @ SLP [C] Nos. 19789-19808/2014 CA Nos. 5732-5745 of 2016 @ SLP [C] Nos. 19818-19831/2014 CA No. 5746 of 2016 @ SLP [C] No. 19880/2014 CA No. 5747 of 2016 @ SLP [C] No. 20340/2014 CA No. 5748 of 2016 @ SLP [C] No. 20383/2014 CA No. 5749 of 2016 @ SLP [C] No. 20406/2014 CA No. 5750 of 2016 @ SLP [C] No. 20581/2014 CA No. 5751 of 2016 @ SLP [C] No. 20940/2014 CA No. 5752 of 2016 @ SLP [C] No. 20956/2014 CA No. 5753 of 2016 @ SLP [C] No. 21054/2014 CA Nos. 5754-5755 of 2016 @ SLP [C] Nos. 21396-21397/2014 CA No. 5756 of 2016 @ SLP [C] No. 21399/2014 CA Nos. 5757-5768 of 2016 @ SLP [C] Nos. 21500-21511/2014 CA Nos. 5769-5776 of 2016 @ SLP [C] Nos. 21615-21622/2014 CA No. 5777 of 2016 @ SLP [C] No. 21624/2014 CA No. 5778 of 2016 @ SLP [C] No. 21928/2014 CA No. 5779 of 2016 @ SLP [C] No. 22665/2014 CA No. 5780 of 2016 @ SLP [C] No. 22677/2014 CA Nos. 5781-5786 of 2016 @ SLP [C] Nos. 22688-22693/2014 CA Nos. 5787-5789 of 2016 @ SLP [C] Nos. 22777-22779/2014 CA No. 5790 of 2016 @ SLP [C] No. 22781/2014 CA No. 5791 of 2016 @ SLP [C] No. 23484/2014 CA Nos. 5792-5793 of 2016 @ SLP [C] Nos. 23492-23493/2014 CA No. 5794 of 2016 @ SLP [C] No. 23495/2014 CA No. 5795 of 2016 @ SLP [C] No. 23556/2014 CA Nos. 5796-5798 of 2016 @ SLP [C] Nos. 24581-24583/2014 CA Nos. 5799-5800 of 2016 @ SLP [C] Nos. 27121-27122/2014 CA Nos. 5801-5804 of 2016 @ SLP [C] Nos. 22950-22953/2014 CA Nos. 5806-5809 of 2016 @ SLP [C] Nos. 27062-27065/2014 CA Nos. 5810-5811 of 2016 @ SLP [C] Nos. 24541-24542/2014 CA No. 5812 of 2016 @ SLP [C] No. 27200/2014 CA No. 5813 of 2016 @ SLP [C] No. 26323/2014 CA No. 5814 of 2016 @ SLP [C] No. 26324/2014

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CA Nos. 5815-5818 of 2016 @ SLP [C] Nos. 27201-27204/2014 CA Nos. 5819-5822 of 2016 @ SLP [C] Nos. 26061-26064/2014 CA No. 5823 of 2016 @ SLP [C] No. 26819/2014 CA No. 5824 of 2016 @ SLP [C] No. 24857/2014 CA Nos. 5825-5826 of 2016 @ SLP [C] Nos. 27674-27675/2014 CA No. 5827 of 2016 @ SLP [C] No. 28332/2014 CA No. 5828 of 2016 @ SLP [C] No. 28354/2014 CA No. 5829 of 2016 @ SLP [C] No. 28358/2014 CA No. 5830 of 2016 @ SLP [C] No. 28606/2014 CA Nos. 5831-5832 of 2016 @ SLP [C] Nos. 29863-29864/2014 CA No. 5833 of 2016 @ SLP [C] No. 28246/2014 CA Nos. 5834-5835 of 2016 @ SLP [C] Nos. 29242-29243/2014 CA No. 5836 of 2016 @ SLP [C] No. 32016/2014 CA No. 5837 of 2016 @ SLP [C] No. 31408/2014 CA Nos. 5838-5839 of 2016 @ SLP [C] Nos. 31800-31801/2014 CA No. 5840 of 2016 @ SLP [C] No. 35438/2014 CA No. 5841 of 2016 @ SLP [C] No. 36224/2014 CA No. 5842 of 2016 @ SLP [C] No. 35460/2014 CA No. 5843 of 2016 @ SLP [C] No. 34650/2014 CA No. 5844 of 2016 @ SLP [C] No. 2689/2015 CA No. 5845 of 2016 @ SLP [C] No. 663/2015 CA No. 5846 of 2016 @ SLP [C] No. 35082/2014 CA No. 5847 of 2016 @ SLP [C] No. 36504/2014 CA No. 5848 of 2016 @ SLP [C] No. 1302/2015 CA No. 5849 of 2016 @ SLP [C] No. 4494/2015 CA No. 5850 of 2016 @ SLP [C] No. 2841/2015 CA No. 5851 of 2016 @ SLP [C] No. 4478/2015 CA No. 5852 of 2016 @ SLP [C] No. 8551/2015 CA No. 5853 of 2016 @ SLP [C] No. 7102/2015 CA No. 5854 of 2016 @ SLP [C] No. 7096/2015 CA No. 5855 of 2016 @ SLP [C] No. 16494/2015 CA No. 5856 of 2016 @ SLP [C] No. 16617/2015 CA No. 5857 of 2016 @ SLP [C] No. 16487/2015 C.A. No. 8249/2015; CA No. 5858 of 2016 @ SLP [C] No.12607/2015 CA No. 5859 of 2016 @ SLP [C] No. 34088/2015 CA No. 5860 of 2016 @ SLP [C] No. 3063/2016; and CA No. 5861 of 2016 @ SLP [C] No. 3516/2016. [HEARD BY HON'BLE V. GOPALA GOWDA AND HON'BLE ARUN MISHRA, JJ.]   Date : 05/07/2016 These appeals were called on for pronouncement  of     judgment today.

For Appellant(s) Mr. C. S. N. Mohan Rao,Adv.

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                                         Mr. Abhijit Sengupta,Adv.                

Mr. Sudhir Naagar,Adv.                     Mr. Y. Raja Gopala Rao,Adv.                   Ms. Vismai Rao,Adv.                     Mr. Ananga Bhattacharyya,Adv.                 Mr. B. Ramana Murthy,Adv.                     Mrs. Sudha Gupta,Adv.                     Mr. Rakesh Dahiya,Adv.                     Mr. M. P. Shorawala,Adv.                     Mr. M. Ram Babu, Adv. Mr. N. Eswara Rao, Adv. for M/s. M. Rambabu & Co.

                  Mr. Senthil Jagadeesan,Adv.              Mr. Venkateswara Rao Anumolu,Adv.             Mr. G. Umapathy, Adv.  for Mr. Rohit K. Singh,AOR

                  Mr. Sanjay Jain,Adv.                     Mr. Vikas Mehta,Adv. Ms. Anushree Menon, Adv.

                  Ms. Liz Mathew, Adv. for M/s. Mclm & Co.

                  Mr. D. Mahesh Babu,Adv.                    Mr. Danish Zubair Khan,Adv.

For Respondent(s) Mr. Rakesh K. Sharma,Adv.                     Mr. K. V. Mohan,Adv.                     Mr. G. N. Reddy,Adv.

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                     Hon'ble Mr. Justice Arun Mishra pronounced the judgment

of the Bench comprising Hon'ble Mr. Justice V. Gopala Gowda and His Lordship.  

Delay, if any, in filing substitution application/s is also condoned.  Substitution applications are allowed.

For the reasons recorded in the reportable judgment, which  is  placed  on  the  file,  the  appeals  are  dismissed.  The appellants are directed to make the deposit along with interest; if no other rate is prescribed at the rate of 8 per cent per annum, and other charges for delay, as may be permissible to recover within a period of one month from today. In addition, the respondents are at liberty to take coercive steps to recover the amount.  

Pending applications, if any, stand disposed of.

(Renuka Sadana) (Parveen Kumar)  Court Master    AR-cum-PS