TMI Blog2009 (4) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board purchased from other sources in order to meet the requirements of power supply to its consumers. The sources from which the Board purchases power are Damodar Valley Corporation, National Thermal Power Corporation, Tenughat Vidyut Nigam Ltd., Uttar Pradesh Electricity Board, Orissa State Electricity Board, Power Grid Corporation of India Ltd. According to the Board, the power purchased from outside sources forms the bulk of the total power supplied by the Board. In other words, power generated by the generating units of the Board is much less in comparison to the purchased power from outside sources. 4. The Tariff framed by the Board in exercise of its powers conferred upon it under the provisions of Section 49 of the Electricity (Supply) Act, 1948 (in short the `Act') vide Tariff Notification dated 21.6.1993 published in the Bihar Gazette on 23.6.1993 which came into effect from 1.7.1993 prescribes rates for supply of power to the consumers of the Board. Because of infrequent revision of tariffs and in order to neutralize increase in the cost of generation and purchase of power, the 1993 Tariff provides for levy and collection of fuel surcharge from the consumers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in letter No. A/CS/Costing-44/92-93/397 dated 29.3.1993 amounting to 32 paise per unit has been merged in the tariff. Any increase in the operational surcharge thereafter only shall be levied. 8. In order to appreciate the facts to be stated hereinafter it would be appropriate to notice the formula for computation of the fuel surcharge laid down in Clause 16.10.3 as under: S1 = A1xA3+B1xB3+C1xC3+D1xD3+E1xE3xF1xF3+G1xG3+H1xH3 (A2+B2+C2+D2+E2+F2+G2+H2)... Whereas, S1 = Average Fuel Surcharge per unit in paise applicable during the financial year. A1 , B1 ,C1 =. Unit generated from PTPS, BTPS MTPS respectively. D1,E1,F1,G1,H1 = Unit purchased from DVC, UPSEB,OSEB,NTPS,PGCL and any other source respectively. A2,B2,C2 = Unit sold out of sent out from PTPS, BTPS MTPS on which fuel surcharge is leviable. D2,E2,F2,G2,H2 = Unit sold, out of purchased from DVC, UPSEB, OSEB, NTPC, PGCL and any other source respectively during the year on which Fuel Surcharge is leviable. A3,B3,C3 = Increase in average cost of Fuel Surcharge in paise per unit computed for Board's Generation at PTPS, BTPS and MTPS D3, E3,F3,G3,H3 = Increase in average unit rate of pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r unit shall be based on an average cost of 18166.04 paise per 10,00,000 K.Cal. of fuel delivered at: the bunkers of the Board's generating station at Muzaffarpur. In the event of rise or fall in the aforesaid cost , at airy time, the rate per unit will be increased or decreased, as the case may be by 0.7368 paise for each one percent variation in the cost of fuel per 10,00,000 K.Cal. In calculating the above variation, percentage variation of 0.5 and above, will be treated as next higher percentage and percentage variation below 0.5 will be ignored. As, regards the latter :i.e. electricity purchased from external sources the clause says that the actual increase in the average unit rate of purchase will apply, that is to say, will be the basis. 10. On 4.4.1994 the Board issued circular stating that on final calculation the fuel surcharge for the period 1992-1993 had been determined as 26.14 paise per Kwh. On 5.1.95 the Board issued another circular calculating the fuel surcharge for the period July 1993 ( i.e. after coming into force of the new tariff) to March 1994 to be 25.98 paise per Kwh. I am not referring to the rate of other operational surcharge under Clause 16.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh writ petitions being CWJC Nos. 1632 of 1997 and analogous cases. On 12.3.1997 when the cases came up for preliminary hearing dispute again arose as to circumstances in which the aforesaid Committee had not finalised the report. After hearing counsel for the parties, however, a consent order was passed to the effect that the Committee shall finalise its report on 14.3.1997 when it was scheduled to meet next, on the basis of documents already on record and submit the report to the High Court on 17.3.1997. On 16.3.1997 the Committee submitted its report. On 21.3.1997 when the matter came up for further hearing the High Court noted that the findings reached by the members of the committee were not unanimous. While four members of the Committee had worked out the fuel surcharge @ 12.38 paise/Kwh for the period from July 1993 to March 1994, 21.33 Paise/Kwh for the period 1994-95 and 44.00 paise/Kwh (provisional) for the period 1995-96, the other two members who were Board's nominees, had worked out the same @ 25.98 paise, 43.98 paise and 72.12 (provisional) paise per Kwh for the aforesaid periods respectively. As an interim measure the High Court directed the petitioners to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of clause 17 of the tariff was not correct. The High Court noted that the objections of the petitioners were in consonance with the Board's own decision vide letter dated 28.12.1995 (supra) by which the Board had suggested certain amendments in the relevant clauses of the tariff to the State Government. The High Court, however, took the view that in terms of the order dated 17.10.1996 passed in CWJC No. 2771 of 1995(R) the Committee was required to submit its report to the Chairman of the Board and not to the High Court. Observing that the report of the committee would assist the Board in coming to fair and just decision, and if the Board was satisfied that the tariff modification requires any modification it was open to it to modify the tariff in accordance with law, the High Court instead of finally deciding the issues itself directed the Board to consider the report of the committee submitted before the High Court on 16.3.1997, and in consultation with the State Government, take a final decision, by reasoned order, on the points: (i) Whether any modification of Clause 16.10.3 of the tariff notification published on 23.6.93 is required so that the increase in the avera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ula. The Board is a body corporate and it takes its decision on the basis of the facts and figures furnished to it in the agenda notes supported by materials. It is apparent that after the decision of the High Court the matter was examined at different levels and finally the said agenda notes dated 26.11.1998 and 6.1.1999 were put up for consideration which were approved respectively on 14.12.1998 and 21.1.1999. High Court did not find any substance whatsoever in the contention that the Board failed to implement the direction of the High Court, by not passing a reasoned order or otherwise. 17. The submission that the dispute should be referred to a Committee of experts was rejected by the High Court considering the nature of the dispute. It was of the view that such a course should be taken only when the Court cannot decide the dispute. There may be justification to constitute a committee and refer the dispute to it when the relevant data have to be gathered or facts have to be ascertained without which the dispute cannot be resolved. This normally is done in public interest litigation. In adversary litigation it is for the parties to produce materials in support of their respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Amount recoverable as fuel surcharge(Rs.in lakhs) 9536.09 16328.20 28431.10 53385.22 2 Units on which Fuel surcharge is leviable(in MKwh) 2645.76 3437.95 3822.96 3834.04 3 Rate of fuel surcharge (in P/Kwh) 36.04 47.49 74.37 139.24 4 Less (20 P/Kwh) As per the Hon ble High Court s Order dated 30.6.98 Passed in CWJC No.1632 of 99 20.00 20.00 20.00 20.00 5 Net rate (P/Kwh)If T D losses as Per serial No.6 Of table at para 3.7 Of CAG report at page 80 is taken into account (3-4) 16.04 27.49 54.37 119.24 6 Present rates of fuel Surcharge as per the Impugned notification Dated 31.5.1999 23.38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition was reiterated in Rohtas Industries v. Bihar State Electricity Board [1984]3SCR59 and Kerala State Electricity Board v. S.N. Govind Prabhu and Brothers [1986]3SCR628 , wherein it was observed, Price fixation is neither the forte nor the function of the Court . 23. As regards the nature of the function, in Saraswati Industrial Syndicate Limited v. Union of India [1975]1SCR956 , the Court had observed that the price fixation is more in the nature of a legislative measure even though it may be based upon objective criteria found in a report or other material. It should not, therefore, give rise to a complaint that rule of natural justice has not been followed in fixing the price. In Prag Ice and Oil Mills v. Union of India (supra) the Court observed: We think that unless by the terms of particular statute or order, price fixation is made a quasi judicial function for specified purposes or cases it is really legislative in character ...the legislative measure does not concern itself to the facts of an individual case. It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind of class. 24. In Union of India v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise, it would appear, involves arithmetical accounting. There is no scope for exercise of any discretion or flexibility. This distinction, however, does not help the petitioners. It rather goes against them because if fixing rate of fuel surcharge is just an arithmetical exercise, giving opportunity of hearing would hardly serve any useful purpose. How mathematical in nature is the process of computation is clearly illustrated in a chart which is part of Annexure E series at page 290 of the Paper Book as under: CALCULATION OF FUEL SURCHARGE RATE FOR THE YEAR 1996-97 FUEL SURCHARGE = (A1xA3)+(B1xB3)+(C1xC3)+(D1xD3)+(E1xE3)+(F1xF3)+(G1xG3) ---------------------------------------------------------------------------- (A2+B2+C2+D2+E2+F2+G2 1. A1 = Generation of PTPS (MKWH) = 1116.54 A3 = Increase in Average cost of PTPS (Paise/Kwh) = 17.33 = 1934.96 A1 x A3 (Rs. in lakhs) 2. B1 = Generation of BTPS (MKWH) = 387.37 B3 = Increase in Average cost of BTPS (Paise/kwh) = 69.17 B1xB3 (Rs. In lakhs) = 2679.44 3. C1 = Generation of MTPS (MKWH) = 213.52 C3 = Increase in Average cost of MTPS (Paise/Kwh) = 53.05 C1xC3 = 1132.72 4. D1 = Powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted, is arbitrary and discriminatory. The High Court noted that the submission was in the teeth of formula contained in Clause 16.10. Relevant part of the formula was re-stated: A2,B2,C2- Units sold, out of sent out from PTPS, BTPS and MTPS on which fuel surcharge is leviable. D2 to H2- Units sold, out of purchased from DVC, UPSEB, OSEB, NTPC, PGCL and any other source during the year on which fuel surcharge is leviable. 29. The High Court that A2,B2,C2,D2 etc. component of the Formula represents the extent of units generated i.e. sent out from the three generating stations or purchased from the external sources. Counsel for the writ petitioners referred to 'comma' occurring prior to the words out of . Though sometimes presence or absence of comma has been taken aid of in interpreting the particular provision, the ordinary rule is that punctuation mark is a minor element in the interpretation of Statute (See Aswini Kumar Ghose v. Arbinda Bose [1953]4SCR1 ). More so, in the case of subordinate legislation. The words out of according to the High Court have to be understood in the sense of to the extent of , and so read; the formula postulates that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to go into the compensation of the surcharge leviable under paragraph 16.7 31. In Kerala State Electricity Board v. S.N. Govind Prabhu Brothers [1986]3SCR628 , the Court noticed the amendments in Section 59 of the Act and held that a plain reading of Section 59, as amended, plainly indicates that it is the mandate of Parliament that the Board should adjust its tariff so that after meeting the various expenses properly required to be met, a surplus is left. It will not be out of place to mention here that in terms of Section 59, as it stood prior to 1978, the Board was supposed to adjust its tariff in such a way as not to incur loss. By amendment made in 1978, the Board was supposed to adjust its tariff so as to ensure that the total revenues in any year of account should after meeting expenses leave such surplus as State Government may, from time to time, specify . The section was amended again in 1983 and as per the 1983 amendment the Board is supposed to adjust its tariff in a manner so as to ensure that the total revenues in any year of account after meeting all expenses shall leave such surplus as is not less than three per cent or such higher percentage as State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consider amending Clause 16.10.3 so as to provide for the same base year i.e. 1991-92 with respect to both the increase in the average cost of generation and increase in the rates of purchase, and accepting the verdict of the High Court the Board amended the last part of Clause 16.10.3. Purchase of electricity from TVNL which admittedly came into existence in the year 1996-97, therefore, cannot be treated as component of H3 i.e. increase in the average unit rate of purchase of electricity from any other source . As a matter of fact, the case of writ petitioners was that the TVNL is nothing but a unit of the Board in disguise of a subsidiary company and, therefore, could not be treated as a component of 113. It may not be necessary to go behind the veil of the separate legal character of the TVNL. The fact that TVNL did not exist in the year 1991-92 and came into existence only in the year 1996-97 is sufficient to justify its deletion as component of H3. Counsel for the Board accepted that if TVNL is to be treated as a source, some mechanism has to be worked out, and the Court has then to see whether it is rational. The Board submitted that if the High Court comes to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as a deemed supply by the Board. While it may be permissible to charge the TISCO at the rates prescribed by the Board, i.e. at rates higher than the DVC rates, and it may also be permissible to treat sale of such electricity sold by DVC to TISCO as deemed supply/sale by the Board to TISCO. High Court held that two rates of supply/sale cannot be permitted for the purpose of computing D3 in the ordinary course, in the absence of any tripartite agreement referred to above, the Board would have supplied/sold electricity to TISCO and charged at its rates. Such supply would have been made from the electricity either generated by it at its own generating station or purchased from external sources including DVC. Clause 16.10.3.1 provides for computation of the cost of generation at the Board's own generating station; as regards purchase of energy from other sources, the said clause lays down that the actual increase in average unit rate of purchase will apply. If the Board is purchasing electricity from different sources for the purpose of D3, E3, F3 etc. the actual increase in the average unit rate of purchase so far as the particular source is concerned, is to be taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. respectively, but it would appear that after the electricity generated at the Board's stations or purchased from external sources are fed into transmission lines, they lose their separate identity as electricity generated at the Board's own power stations or purchased from other sources. It is difficult thereafter to find out as to how much of electricity fed in the transmission lines came from the Board's own power stations and how much of it from external sources. 37. Board's stand was that it pays large amounts as delayed payment surcharge (DPS) to the DVC, NTPC etc. contributing to further increase in the average unit rate of purchase of electricity resulting in higher fuel surcharge and causing thus additional burden on the consumers. The fact that the Board has had to pay large amounts as DPS to the external agencies from which it has been purchasing electricity is more or less an admitted position. The case of the Board, however, is that the default in payment was mainly on account of defaults committed by the consumers themselves. It is said that as much as 3,200 crores of rupees are due from the consumers as a result of which the Board is not in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity from generating unit of TVNL established in 1996. By treating TVNL as a source falling under the category of other source, the Board calculated weighted average cost of power as Rs. 60.57 paise/Kwh. 42. Stand of the writ petitioners was that since TVNL came into existence in the year 1996-97 there cannot be any incremental cost in respect of electricity purchased from TVNL inasmuch increase in the average unit rate of purchase of electricity has to be calculated treating 1991-92 as the base year. The other stand of the writ petitioners was that the Board has treated the supply of electricity by DVC to TISCO as deemed supply by the Board to TISCO at a different rate which is not in accordance with the formula. The stand of the writ petitioners was accepted by the High Court. So far as TVNL and deemed supply to TISCO are concerned, the High Court held that there is no infirmity in the fixing of rates of fuel surcharge except on the aforesaid two grounds. All other stands taken in the writ petition was rejected. 43. Judgment of the High Court is under challenge in these appeals by the Board. An appeal has been filed by the private companies so far as the conclusions of the ..... 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