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SUPREME COURT OF INDIA
J.S.Verma : M.N.Venkatachaliah : Yogeshwar Dayal
Ashok Soap Factory
Versus
Municipal Corporation Of Delhi
Case No. : 1478 of 1990
Date of Decision : 1/12/93
Advocates Appeared: Jain R.K. : Jaiswal Kamini : Kumar Ranjit : Kumar Vineet : Mathur Ashok : Mudgal Mukul : Ray Tripurari : Salve Harish N. : Tripathi P.P.
Corporation Act - Section 277 - Against the judgment - Challenge to the fixation - One of the categories is large industrial power consumers - Consumers who have a sanctioned load fall in the category of large industrial powers - Writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed, namely the flat-rate system and the other two-part tariff system. Under the former, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power, and it is comprised of two charges (1 minimum consumption guarantee charges 2 energy charges for the actual amount of energy consumed – Held, It was also stipulated that the minimum consumption guarantee charges would not be payable if a consumer utilizes or consumes 60 per cent of the sanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised - If a consumer consumes more than 60 per cent of the sanctioned load, then he is not adversely affected by the revision of the minimum demand charges - It is difficult to appreciate or understand how the manufacturers using arc/induction furnaces could have such variation in the consumption of electricity, as indicated in the tabulated statement, except to suggest that there was large-scale pilferage of electricity. It is not easy to accept that induction furnaces having sanctioned loads of more than consuming electricity, if converted into approximate number of hours worked in a month at the maximum load, being as little as 18.1 hours especially when there were instances of other induction furnaces consuming far more number of units per month - Respondents had to keep in readiness the supply of energy as per the sanctioned load of various consumers and were incurring expenditure for the generation, supply or purchase of the same. When the consumers were not paying for it, the respondents obviously had no option but to revise the minimum demand charges so as to cover up and make good the generating and supply costs - Apart from that the Fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground of unreasonableness or arbitrariness and not on demonstrative grounds in the sense that the reasons for the levy of charge must be disclosed in order imposing the levy or disclosed to the court, so long as it is based on objective criteria – Court are thus satisfied that the recommendations of D.E.S.C. were justified on facts and were rightly accepted by. in raising the minimum consumption guarantee charges to per month for first which are neither unreasonable nor arbitrary - Coming to the plea of discrimination it will be noticed that as bulk consumers belonging to LIP category the consumers of arc/induction furnaces are of a class by themselves and in any case the revision is as per the agreement between the licensee and the consumers which is neither unreasonable nor arbitrary and thus the plea of discrimination has no merit – Appeal dismissed
Judgment
YOGESHWAR DAYAL, J.
(1) THESE are batch of appeals against the judgment of Delhi High court dated 1/03/1990 whereby the High court by a common judgment disposed of a bunch of writ petitions, inter alia, filed by Gulab Rai against the Municipal Corporation of Delhi and others.
(2) THE challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.C.) to enhance minimum consumption guarantee charges from Rs. 40.00 per KVA to Rs. 340.00 per KVA in respect of arc/induction furnaces.
(3) THE petitioners in the writ petitions had set up/installed arc/induction furnaces for the manufacture of castings and have their factories in Delhi.
(4) ONE of the important raw materials for the writ petitioners is electricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctioned load, among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.
(5) THE case of the petitioners before the High court was that Section 283 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the Corporation Act) empowers respondent 1 (D.M.C.) to levy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is "large industrial power" (LIP) consumers. The consumers who have a sanctioned load of 100 KWS fall in the category of large industrial powers. The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed, namely the flat-rate system and the other two-part tariff system. Under the former, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power, and it is comprised of two charges (1 minimum consumption guarantee charges (called demand charges) and (2 energy charges for the actual amount of energy consumed.
(6) IT was the case of the petitioners that two-part tariff system was applicable to them. Under this system an LIP consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges. But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges then the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity, beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words, if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.
(7) FOR the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per c KVA for 1,000.00 KVA and Rs. 38.00 per KVA above 1,000.00 KVA. The tariff for the LIP consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows:
"(D) Tariff Demand charges F irst 1,000.00 KVA of billing Rs. 40.00 per KVA or part thereof demand for the month All above 1,000.00 K
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