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IN THE HIGH COURT OF ALLAHABAD
N. D. OJHA, R. K. SHUKLA
MODI INDUSTRIES LTD. - Appellant
Versus
U.P.S.E.BOARD - Respondents
C. M. W. P. 1146 Of 1979
Decided On : 01/16/1986
ELECTRICITY ACT - LEVY OF COAL PRICE VARIATION ADJUSTMENT, FUEL COST VARIATION ADJUSTMENT AND FUEL SURCHARGE - VALIDITY - HELD, THE BOARD WAS ENTITLED TO LEVY THE IMPUGNED CHARGES IN EXERCISE OF ITS STATUTORY POWER UNDER SECTION 49(1) OF THE ELECTRICITY (SUPPLY) ACT, 1948.
Fact of the Case:
THE PETITIONER, A PRIVATE LIMITED COMPANY ENGAGED IN THE MANUFACTURE AND SALE OF IRON AND STEEL PRODUCTS, ENTERED INTO AGREEMENTS WITH THE RESPONDENTS FOR SUPPLY OF 9500 KVA OF ELECTRICAL ENERGY CONTINUOUSLY FOR 24 HRS. THE U. P. STATE ELECTRICITY BOARD (BOARD) FRAMED UNIFORM TARIFFS IN EXERCISE OF THE POWER CONFERRED ON IT BY SECTION 49(1) OF THE ELECTRICITY (SUPPLY) ACT, 1948 (SUPPLY ACT). SOME OF THESE TARIFFS ALSO PROVIDED FOR CHARGE OF "COAL PRICE VARIATION ADJUSTMENT" AND "FUEL COST VARIATION ADJUSTMENT" AS WELL AS FOR "FUEL SURCHARGE". THE PETITIONER CHALLENGED THE LEVY OF THE AFORESAID CHARGES FOR DIFFERENT PERIODS BY THE VARIOUS NOTIFICATIONS MENTIONED ABOVE.
Finding of the Court:
THE COURT HELD THAT THE BOARD WAS ENTITLED TO LEVY THE IMPUGNED CHARGES IN EXERCISE OF ITS STATUTORY POWER UNDER SECTION 49(1) OF THE ELECTRICITY (SUPPLY) ACT, 1948. THE COURT FURTHER HELD THAT THE BOARD WAS NOT OBLIGED TO TAKE INTO CONSIDERATION THE REPAYMENTS OF LOANS THEMSELVES AS DISTINGUISHED FROM INTEREST ON SUCH LOANS WHILE FIXING THE TARIFF. THE COURT ALSO HELD THAT THE BOARD WAS NOT ENTITLED TO TAKE INTO CONSIDERATION FACTORS WHICH WERE EXTRANEOUS TO THE CONCEPT OF FUEL COST, SUCH AS WAGES ETC. OF THE STAFF.
Issues: 1. WHETHER THE BOARD WAS ENTITLED TO LEVY THE IMPUGNED CHARGES? 2. WHETHER THE BOARD WAS OBLIGED TO TAKE INTO CONSIDERATION THE REPAYMENTS OF LOANS THEMSELVES AS DISTINGUISHED FROM INTEREST ON SUCH LOANS WHILE FIXING THE TARIFF? 3. WHETHER THE BOARD WAS ENTITLED TO TAKE INTO CONSIDERATION FACTORS WHICH WERE EXTRANEOUS TO THE CONCEPT OF FUEL COST, SUCH AS WAGES ETC. OF THE STAFF?
Ratio Decidendi: 1. THE BOARD WAS ENTITLED TO LEVY THE IMPUGNED CHARGES IN EXERCISE OF ITS STATUTORY POWER UNDER SECTION 49(1) OF THE ELECTRICITY (SUPPLY) ACT, 1948. 2. THE BOARD WAS NOT OBLIGED TO TAKE INTO CONSIDERATION THE REPAYMENTS OF LOANS THEMSELVES AS DISTINGUISHED FROM INTEREST ON SUCH LOANS WHILE FIXING THE TARIFF. 3. THE BOARD WAS NOT ENTITLED TO TAKE INTO CONSIDERATION FACTORS WHICH WERE EXTRANEOUS TO THE CONCEPT OF FUEL COST, SUCH AS WAGES ETC. OF THE STAFF.
Final Decision: THE COURT DISMISSED THE WRIT PETITIONS AND VACATED THE INTERIM ORDERS PASSED THEREIN.
( 1 ) THE petitioner is a private limited company incorporated under the Companies Act, 1956. It is engaged in the manufacture and sale of iron and steel products in the district of Ghaziabad and shall hereinafter be referred to as the Company. In order to run the factory the Company entered into agreements with the respondents for supply of 9500 KVA of electrical energy continuously for 24 hrs. The U. P. State Electricity Board (hereinafter referred to as the Board) vide notifications issued from time to time framed uniform tariffs in exercise of the power conferred on it by S. 49 (1) of the Electricity (Supply) Act, 1948 (hereinafter referred to as the Supply Act ). Some of these tariffs also provide for charge of "coal price variation adjustment" and "fuel cost variation adjustment" as well as for "fuel surcharge". These writ petitions have been filed challenging the levy of the aforesaid charges for different periods by the various notifications mentioned above. Some of the impugned notifications were issued prior to the institution of these writ petitions and the rest thereafter. By applications made for amendment of the writ petitions which were allowed the notifications issued after the institution of the writ petitions were also challenged.
( 2 ) BEFORE dealing with the submissions made by counsel for the parties it will be useful to refer to Ss. 46 and 49 of the Supply Act and the relevant provisions in the notifications in regard to the aforesaid charges. S. 46 of the Supply Act deals with "the grid tariff. Sub-sec. (1) thereof provides that a tariff to be known as the grid tariff shall, in accordance with any regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a scheme is in force, and tariffs fixed under this section may, if the Board thinks fit, differ for different areas. This applies to supply of energy to licensees. S. 49 of the Supply Act reads as hereunder:-"49. Provision for the sale of electricity by the Board to persons other than licensees. (1) Subject to the provisions of this Act and the regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may, for the purposes of such supply, frame uniform tariffs. (2) In fixing the uniform tariffs the Board shall have regard to all or any of the following factors namely; (a) The nature of the supply and the purposes for which it is required; (b) the co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner with particular reference to such development in areas not for the time being served or adequately served by the licensees; (c) the simplification and standardization of methods and rates of charges for such supplies; (d) the extension and cheapening of supplies of electricity to sparsely developed areas. (3) Nothing in foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee having regard to the geographical portion of any area, the nature of the supply and purpose for which supply is required and any other relevant factors. (4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person. "reference during the course of arguments has been made to S. 59 of the Supply Act also and as such for the sake of convenience the same too is reproduced as hereunder :-"59. General principles for Boards finance :- (1) The Board shall, after taking credit for any subvention from the State Government under S. 63, carry on its operations under this Act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues,
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