IMPORTANT POINT
Fixation of tariff by Electricity Board under Indian Electricity Act is a legislative policy and it for the State Govt. to consider whether the Board has properly implemented the directions issued by the State Govt. and Court cannot give a direction to implement the directions issued by State Govt. to direct the Board to exercise its powers under Section 78A(1) of Indian Electricity Act.

ORDER

This special leave petition arises from the judgment and order of the Division Bench of the Allahabad High Court at Lucknow made on May 8, 1996 in Writ Petitioner No. 10195/89.

The admitted position is that the Government of Uttar Pradesh had laid down a sanction for grant of 10% developmental rebate in supply of electricity to the newly set up industries on July 16 , 1986 and that was to be in vogue till 1990. It is the claim of the petitioner that pursuant to that policy, the petitioner had set up his industry in Nainital District. Consequently, he is entitled to the rebate. When the bill was issued, the Board imposed its tariff rates contrary to the rebate. Resultantly, they filed the writ petition. The High Court in the impugned judgment has held that Section 78A of the Indian Electricity (Supply) Act, 1948 (Act 54 of 1948) (for short, the Act ) being a legislative policy, the Board was not automatically bound by the directions issued by the State Government. The Board is entitled to revise tariff in accordance with its procedure. Therefore, writ could not be issued compelling the Board to follow the directions issued by the State Government. Thus, this special leave petition.

It is contended for the petitioner that in view of the law laid down by this Court in Real Food Products Ltd. & Ors. v. A.P. State Electricity Board & Ors.1 in particular paragraph 8, the Board is bound by the directions issued by the State Government. The view taken by the High Court is, therefore, not correct in law. We find no force in the contention. It is well settled legal position that the fixation of the tariff is a legislative policy and the Board is entitled to revise unilaterally the tariff from time to time. The consumer is bound by the revision of the tariff duly notified in accordance with the procedure prescribed under the Act. The question is: whether contrary to the conditions of the tariff entered into by the parties, the policy direction issued by the State would be interposed and be revised by the Electricity Board in consonance with the directions issued by the State Government? In this regard, the observations of this Court in paragraph 8 are worth recapitulation :

"The only surviving question is with regard to the nature and effect of the direction given by the State Government under Section 78A of the Act. The question has to be examined in the context of the facts of the present case which is confined to the charging of a flat rate per H.P. for agricultural pump sets. The nature of the function of the Board in the fixing the tariffs and the manner of its exercise has been considered at length in the earlier decisions of this Court and it does not require any further elaboration in the present case. Section 78A uses the expression "the Board shall be guided by such directions on question of policy as may be given to it by the State Government". It does appear that the view expressed by the State Government on a question of policy is in the nature of a direction to be followed by the Board in the area of the Policy to which it relates. In the context of the function of the Board of fixing the tariffs in accordance with Section 49 read with Section 59 and other provisions of the Act, the Board is to be guided by any such direction of the State Government, as in the present case, was to fix a concessional tariff for agricultural pump sets at a flat rate per H.P., it does relate to a question of policy which the Board must follow. However, in indicating the specific rate in a given case, the action of the State Government may be in excess of the power of giving a direction on the question of policy, which the Board, if its conclusion be different, may not be obliged to be bound by. But where the Board considers even the rate suggested by the State Government and finds it to be acceptable in the discharge of its function of fixing the tariffs, the ultimate decision of the Board would not be vitiated merely because it has accept