Sr. Annie, Manager. St. Charles Convent School vs Kerala State Electricity Board

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(Ker) 304

High Court Of Kerala
K.M. JOSEPH
Sr.Annie, Manager.St.Charles Convent School - Appellant
Versus
Kerala State Electricity Board - Respondent
Writ Petitions (Civil) Nos. 7818 of 2008-E, 16488 of 2008-K, 19622 of 2008-J, 7781 of 2008-B, 7777 of 2008-A, 7137 of 2008-Y, 7138 of 2008-Y, 10267 of 2008-V, 10372 of 2008-I, 10474 of 2008-V, 10545 of 2008-E, 10492 of 2008-Y 10618 of 2008-L, 7255 of 2008-L, 7167 of 2008-C, 7166 of 2008-C, 8005 of 2008-C, 8008 of 2008-C, 4802 of 2008-V, 6692 of 2008-V, 6341 of 2008-E, 6016 of 2008-N, 6032 of 2008-R, 6181 of 2008-J6182 of 2008-J, 5370 of 2008-L, 6524 of 2008-B, 6495 of 2008-W,6530 of 2008-B, 6659
Decided On : 04/06/2009

Advocates Appeared:
For the Petitioners:Wilson Urmese , Advocate. For the Respondents:T.K. Kunhabdulla, Advocate.

Headnote:
Writ Petitions challenging the tariff order issued by the Kerala State Electricity Regulatory Commission (KSERC) classifying Self-financing Educational Institutions (SEIs) under LT VII A category with higher tariff rates. Petitioners contend that the classification violates Article 14 of the Constitution, is arbitrary and unreasonable, and was made without affording an opportunity to object. KSERC argues that the classification is based on rational considerations, that SEIs have higher consumption patterns and offer luxurious amenities, and that the tariff order was issued after following due process. The Court held that: 1. KSERC has the power to act suo motu to determine tariffs under Section 61 of the Electricity Act, 2003, and that the impugned tariff order was not vitiated by non-observance of the principles of natural justice. 2. The classification of SEIs as commercial consumers is reasonable and does not violate Article 14. SEIs have distinct features from Government and Aided Educational Institutions, including higher consumption patterns, availability of better financial resources, and the ability to earn a surplus. These factors justify a differential tariff rate. 3. The tariff order was issued after following due process, including the issuance of notices and consideration of objections and suggestions. The Court rejected the petitioners' contention that they were not aware of the proposed classification, finding that they had ample opportunity to object but failed to do so. The Court dismissed the Writ Petitions, holding that the classification of SEIs as commercial consumers was valid and that the tariff order was issued in accordance with the law.
Fact of the Case:

Writ Petitions challenging the tariff order issued by the Kerala State Electricity Regulatory Commission (KSERC) classifying Self-financing Educational Institutions (SEIs) under LT VII A category with higher tariff rates.
Finding of the Court:

The Court held that: 1. KSERC has the power to act suo motu to determine tariffs under Section 61 of the Electricity Act, 2003, and that the impugned tariff order was not vitiated by non-observance of the principles of natural justice. 2. The classification of SEIs as commercial consumers is reasonable and does not violate Article 14. SEIs have distinct features from Government and Aided Educational Institutions, including higher consumption patterns, availability of better financial resources, and the ability to earn a surplus. These factors justify a differential tariff rate. 3. The tariff order was issued after following due process, including the issuance of notices and consideration of objections and suggestions. The Court rejected the petitioners' contention that they were not aware of the proposed classification, finding that they had ample opportunity to object but failed to do so.
Issues: 1. Whether KSERC has the power to act suo motu to determine tariffs under Section 61 of the Electricity Act, 2003? 2. Whether the classification of SEIs as commercial consumers is reasonable and does not violate Article 14? 3. Whether the tariff order was issued after following due process?
Ratio Decidendi: 1. KSERC has the power to act suo motu to determine tariffs under Section 61 of the Electricity Act, 2003. The Court rejected the petitioners' contention that KSERC lacked the power to act suo motu, finding that Section 61 of the Act empowers the Commission to specify the terms and conditions for determining the tariff, and that this includes the power to initiate suo motu proceedings. 2. The classification of SEIs as commercial consumers is reasonable and does not violate Article 14. The Court found that SEIs have distinct features from Government and Aided Educational Institutions, including higher consumption patterns, availability of better financial resources, and the ability to earn a surplus. These factors justify a differential tariff rate. The Court also noted that the classification was based on rational considerations and was not arbitrary or discriminatory. 3. The tariff order was issued after following due process. The Court found that KSERC had issued notices and considered objections and suggestions before issuing the tariff order. The Court rejected the petitioners' contention that they were not aware of the proposed classification, finding that they had ample opportunity to object but failed to do so.
Final Decision: The Court dismissed the Writ Petitions, holding that the classification of SEIs as commercial consumers was valid and that the tariff order was issued in accordance with the law.

Judgment :

Since common questions arise in these Writ Petitions, they are disposed of by a common Judgment.

2. All the petitioners are running Self-financing Educational Institutions. Some of them are affiliated to the CBSE, some are following the State Syllabus, yet others are Industrial Training Institutions. There are Colleges also. All the petitioners are aggrieved by the classification of "Self-financing Educational Institutions" under LT VIIA tariff as commercial institutions. The classification has been done by the Kerala State Electricity Regulatory Commission with effect from 12.2007. Under this classification, Aided Private Educational Institutions and Government Schools are classified under LT VIA category, while Self-financing Educational Institutions/Hostels fall under LT VII A tariff.

3. I heard the learned counsel appearing on behalf of all the petitioners, led by Shri Kurian George Kannanthanam, (senior counsel), Shri Wilson Urmese, Shri Rajit, Shri Ashik K. Mohammed Ali, Shri Nagaresh, Shri Tom Jose P. and Shri M.A. Thomaskutty, Shri Gangesh, Shri T.P.Ibrahim Khan and Shri Paul K. George. The other counsel appearing for the petitioners have adopted the arguments. I also heard Shri K.P. Dandapani, learned senior counsel appearing on behalf of the Kerala State Electricity Regulatory Commission (hereinafter referred to as the Commission) and Shri C. K. Karunakaran, learned senior standing counsel appearing on behalf of the Kerala State Electricity Board (hereinafter referred to as the Board).

4. Contentions of the petitioners:

(I) Shri Kurian George Kannanthanam: The source of revenue cannot be the basis of discrimination between Educational Institutions. In other words, while the source of revenue for a Government School or an Aided Private Educational Institution may be governmental funds and the source of revenue for a Self-financing Educational Institution may be the students, the difference in the source of revenue cannot be a legal and valid basis for discrimination between the two categories. Both Institutions are engaged in imparting of education. Secondly, he contended that this is a case where, even if there may be an alternate remedy under Section 110 of the Electricity Act, 2003 (hereinafter referred to as the Act), in view of the fact that the tariff has been brought into force without affording an opportunity to the petitioners to object to the introduction of the tariff, the tariff order in question is violative of the principles of natural justice. Thirdly, it is contended that there was no material to decide the matter as was done. He further took me through Section 61 of the Act. Section 61 provides that the Commission shall, subject to the Act, specify the terms and conditions for the determination of the tariff and in doing so, shall be guided by certain principles which are as follows:

"Sec.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)

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