MAIN POINT
Powers of State Electricity Regulatory Commission and Appellate Tribunal are statutory.
Exemption in electricity levy granted on basis of “compromise” and “concession” in 1999 came to an end with enactment of Electricity Act, 2003.
Adding penal element as disincentive to discourage consumers from continuing with unreasonable practice is not unjustified.

Headnote:(a) Electricity Act, 2003 – Sections 61 to 64 – State Electricity Regulatory Commission – Powers thereof held statutory – Must be exercised within the four corners of Sections 62 to 64 and in accordance with the principles laid down in Section 61. (Para 7)
       (b) Electricity Act, 2003 – Sections 62 to 64 – Levy of surcharge on industries having drawal of more than 1500 KVA on 11 KV supply – Exemption granted on basis of “compromise” and “concession” in 1999 – Change in regime by the Act ending life of the compromise and concession – Regulatory Commission consistently upholding levy of the surcharge – Appellate Tribunal rejecting challenge thereto – Upheld by Supreme Court – High Court rightly dismissing writ petitions. (Para 20)
       (c) Electricity Act, 2003 – Sections 62 to 64 – Regulatory Commission, in 2011, reducing rate of surcharge from 10% and 17.5% respectively to 7% and 10% respectively – State Commission, to work out the appropriate rate of surcharge, adding a penal element to the cost of conversion as disincentive for the consumers to continuing to receive supply on 11 KV transmission lines – Basis for determination of rate by the Expert Body upheld by Appellate Tribunal – No fault. (Para 23)
       (2011) 11 SCC 34; AIR 1976 SC 127 – Relied upon
       Facts of the case:
       A circular dated 23rd June, 1995 was issued by the Punjab State Electricity Board mandating all existing as well as prospective consumers, who had installed induction furnace units with a load above 1500 KVA, to shift to 66 KV voltage supply failing which they were required to pay surcharge at the rate of 17.5%.
       The Induction Furnace Industries Association of the State of Punjab took up the matter with the State Government and on the advice of the High Powered Committee constituted, recommendations were made to the effect that all units existing as on 23rd June, 1995 should be exempted from the necessity of conversion to 66 KV as well as levy of 17.5% surcharge.
       The aforesaid recommendations of the Committee (made in its meeting held on 19th January, 1999) were accepted by the Board and a commercial circular bearing No.25/1999 dated 8th June, 1999 was issued and the Industry was exempted from payment of 17.5% levy.
       However after enactment of Electricity Act, 2003 the tariff decided by the SERC included the levy orders were issued to recover the same.
       Writ petitions filed thereagainst have been dismissed.
       Finding of the Court:
       There is no fault in impugned decision.
       Result: Appeals dismissed.

JUDGMENT :

RANJAN GOGOI, J.

1. The appellant-companies are arc furnace industries engaged in the manufacture of steel ingots. The very nature of the operations carried out require the appellants to draw heavy load of electrical power i.e. above 2500 KVA. The said connections are, accordingly, categorized as “Industrial Connections”.

2. The appellants who were all established prior to June 1995 draw power from 11 KV High Tension Supply Line. Electricity in the State of Punjab, where the industrial units are located, are supplied through different kinds of voltage supply system i.e. (i) low tension (LT) at 440 volt – normally fed to domestic, small power or medium supply electric connection below 100 KW; (ii) high tension (HT) at 11,000 voltage (11 KV) to large supply industrial connections; and (iii) extra high tension (EHT) at 66,000 voltage (66 KV) – supplied to very big industrial consumers for whom a dedicated 66 KV line directly from sub-Station of the Board is provided.

3. A circular dated 23rd June, 1995 was issued by the Punjab State Electricity Board (hereinafter referred to as “the Board”) mandating all existing as well as prospective consumers, who had installed induction furnace units with a load above 1500 KVA, to shift to 66 KVA voltage supply failing which they were required to pay surcharge at the rate of 17.5%. All the appellants received due notice for conversion of their voltage supply from 11 KV to 66 KV on or before 31st December, 1996. On receipt of such notices, the Induction Furnace Industries Association of the State of Punjab took up the matter with the State Government and on the advice of the High Powered Committee constituted, recommendations were made to the effect that all units existing as on 23rd June, 1995 should be exempted from the necessity of conversion to 66 KV as well as levy of 17.5% surcharge.

4. The aforesaid recommendations of the Committee (made in its meeting held on 19th January, 1999) were accepted by the Board and a commercial circular bearing No.25/1999 dated 8th June, 1999 was issued to the following effect.

“3. To resolve the issue, a Committee comprising of officers of PSEB and representatives of Public & Industry, was constituted on the intervention of State Government. The committee was asked to study the grievances of Induction Furnace Industry in details and give its recommendations acceptable to both PSEB and Industry. Accordingly, the committee went into this issue in detail and has submitted the following recommendations to PSEB, which have now been accepted by the Board.

(i) Board may not insist to levy 17.5% surcharge for non-conversion by the consumers as existing in 6/95 and also by those consumers who were released connections at 11 KV with an undertaking to pay 17.5% surcharge after 6/95.

(ii) The 17.5% surcharge already billed and the late payment surcharge already levied w.e.f. 1.1.97 may be written back. Wherever certain consumers have deposited this surcharge, the same may be refunded through subsequent energy bills.

(iii) All future connections above 1500 KVA/2500KW shall be at 66 KV only. However, where feasibility at 11 KV has already been given before 3/97, the same need not be reviewed. (This para has been corrected vide CC No.30/99)”

5. The Electricity Act, 2003 (hereinafter referred to as “2003 Act”) came into force with effect from 10th June, 2003. The object of the 2003 Act, inter alia, is to protect the interests of consumers and rationalize electricity tariff. Part VII of the 2003 Act deals with ‘tariff’. Specifically, Section 61 of the 2003 Act contained in Part VII thereof provides that “the Appropriate Commission” shall specify the terms and conditions for the determination of tariff and while doing so the Appropriate Commission shall be guided by the principles mentioned in the said Section. Section 62 of the 2003 Act deals with determination of tariff and is in the following terms:

“62. Determination of tariff:-(1) The Appropriate Commission shall determ

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2017 Supreme(SC) 596

SUPREME COURT OF INDIARANJAN GOGOI, NAVIN SINHA, JJ.Waryam Steel Castings Pvt. Ltd. – AppellantVersusPunjab State Poser Corporation Ltd. And Anr. - RespondentsCivil Appeal No.7856 of 2012, Civil Appeal No. 6269, 6276, 6289-6290, 6625-6626, 6291-6292 of 2013Decided on : 19-06-2017

Cases Referred (2)

SUPREME COURT OF INDIA
RANJAN GOGOI, NAVIN SINHA, JJ.
Waryam Steel Castings Pvt. Ltd. – Appellant
Versus
Punjab State Poser Corporation Ltd. And Anr. - Respondents
Civil Appeal No.7856 of 2012, Civil Appeal No. 6269, 6276, 6289-6290, 6625-6626, 6291-6292 of 2013
Decided on : 19-06-2017