TMI Blog1984 (3) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent by way of charges for electric energy supplied by it stood stayed and the consequent urgency in passing final orders in these cases, as soon as the hearing was completed we passed the following order announcing the conclusion reached by us: All these Civil Appeals and Special Leave Petition are dismissed with costs in each case. All interim orders made in each of these matters at various stages are vacated. Reasons will follow . We now proceed to state the reasons in support of the said conclusion. The Bihar State Electricity Board hereinafter called the Board ) is incorporated under Section 12 of the Electricity (Supply) Act 1948 (hereinafter referred to as the Act ). The general powers and duties of the Board are set out in Section 18. Thereunder the Board has the duty, inter alia, to arrange for the supply of electricity that may be required within the State and for the transmission and distribution of the same in the most efficient and economic manner, with particular reference to those areas which are not, for the time being, supplied or adequately supplied with electricity. Section 49 of the Act makes provision for the sale of electricity by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard form containing substantially identical terms. Annexure I in the Writ Petition C.W.J.C. No. 1855/81 out of which C.A. 28 58/82 arises in a copy of the agreement entered into by M/s Usha Martin Black (Wire Rods) Ltd. with the Board on 18.8.1961. In clause 4 of the agreement, it is stipulated that the consumers shall pay to the supplier (Board for) the energy supplied and registered by the meters at the rates from time to time in force and paid by similar consumers . It has been further provided in clause 11 that the agreement should be read and construed as subject in all respects to the provisions of the Indian Electricity Act 1910 and the rules for the time being in force there under. After the introduction of the revised tariffs, 1979, all the appellants continued to draw and consume high tension electric energy in their factories. Para 16.7 of the Tariff Notification, 1979, provides that the consumers of low tension industrial service, high tension service, extra high tension service, and railway traction service shall be liable to pay fuel surcharge at a rate to be determined every year In accordance with the formula set out in sub-para (2) of the said paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e later dismissed in limine by separate short judgments, following the decision of the Divisional Bench in C.W.J.C. 1237 of 1981. Hence these appeals and special leave petitions by the appellant companies. At the outset, we may dispose of the contention urged on behalf of some of the appellants that the levy of fuel surcharge under the impugned tariff notification (paragraph 16.7) is discriminatory and hence violative of Article 14 of the Constitution. Sub-section 3 of Section 49 expressly authorises the Board to fix different tariffs for the supply of electricity to any person not being a licensee, having regard, inter alia, to the nature of the supply, the purpose for which the supply is required and other relevant factors. The power to classify the consumers into different into categories and to fix differen- tial tariffs has thus been conferred on the Board by the Section itself. The Constitutional validity of this Section has been upheld by this Court in Maharashtra State Electricity Board v. Kalyan Borough Municipality Another( ). The expression licensee means a person licensed under Part II of the Indian Electricity Act, 1910, to supply energy or a person who has o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion service and railway traction service. Even after taking into account the fuel surcharge so levied under 1979 tariff, the rates applicable to high tension consumers like the petitioners range between 40.31 paise and 58.80 paise per unit only, while the commercial (ii) consumer has to pay 71.33 paise per unit and even the domestic consumer has to pay 48 paise per unit. The position that obtains under the 1981 tariff which also has been challenged by some of the appellants is substantially similar. In our opinion, the Board was perfectly within its rights in deciding to restrict the levy of fuel surcharge to those categories of consumers who were enjoying the benefit of a concession in the general rate and in sparing smaller type of consumers such as the agricultural, irrigation and commercial consumers from being subjected to that burden, in view of the fact that they were already being subjected to a basic levy at substantially higher rates. The true consequence of the action so taken by the Board is only to effect a reduction in the quantum of concession that was being enjoyed by the consumers belonging to the industrial and railway traction categories. A classification which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside sources, namely, the Damodar Valley Corporation and the U.P. State Electricity Board, the increase in cost per unit incurred by the Board has been included in the computation of the fuel surcharge. We see no substance whatsoever in the contention advanced by the appellants that only such amounts, if any, as might have been paid by the Board to the D.V.C. and the U.P. State Electricity Board as and by way of fuel surcharge can go into the computation of the fuel surcharged levied by the Board under paragraph 16.7 of the 1979 tariff. Though the nomenclature given to the levy is fuel surcharge it is really a surcharge levied to meet the increased cost of generation and purchase of electricity and this is made absolutely clear in the formula given in para 16.7.2. The formula for determining the fuel surcharge set out in paragraph 16.7.2 reads: S = [A1XA3+B1XB3+C1XC3+D1XD3+E1XE3/ [A2+B2+C2+D2+E2] . This is followed by detailed explanation as to what the different alphabets used in the numerator and denominate or signify. The explanation given in respect of C1 is Increase in the average unit rate of purchase of energy from D.V.C. during the year for which the surch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergy will, therefore, reflect in the fuel surcharge hereafter . Similar is the position with respect to the tariff revision effected in 1981. Hence there is no factual foundation for the argument that there has been a double neutralisation of the increase in the fuel surcharge in respect of the energy purchased by the Board from outside sources. Paragraph 16.7.4 of the tariff notification states that the fuel surcharge for a financial year shall be calculated by the Board after the expiry of the financial year and until such calculation is actually made, fuel surcharge may be levied during each financial year at a rate provisionally calculated on monthly or quarterly or half-yearly basis as decided by the Board, and in case of short or excess realisation, the same is to be adjusted in the next bill to be served on the consumer. Based on these provisions, it was faintly argued on behalf of some of the appellants that the Board was under an obligation to issue provisional bills in respect of fuel surcharge during the course of each financial Year and on account of its failure to do so, the appellants were unable to include the said element in their price structure in respect of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, that the financial capacity of individual industrial consumers had not been taken into account, is devoid of force. The appellants in some of the appeals have challenged the subsequent tariff fixation of 1981 also on grounds that are substantially the same as those which we have dealt with above. For the reasons already indicated by us, none of those grounds can be accepted as correct or tenable. It was urged on behalf of the appellants that the supply of electricity being a monopoly service conducted by an agency of the State, namely, the Board, it must be carried out reasonably and not arbitrarily, that such reasonableness should be reflected in the price fixation and if the prices fixed are arbitrary, they are liable to be called in question before the Courts on the said ground. In support of the above contention, reliance was placed by counsel for the appellants on the decisions of this Court in Akadasi Padhan v. State of Orissa(1), Rashbihari Panda, etc. v. State of Orissa,(2) Vrajlal Manilal Co. Ors. v. State of Madhya Pradesh Ors.,(3) Ramana Dayaram Shetty v. The international Airport Authority of India and Ors.(4) It is well established that where a corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h surplus as the State Government may, from time to time, specify. The tariff fixation has, therefore, to be so made as to raise sufficient revenue which will not merely avoid any net loss being incurred during the financial year but will ensure a profit being earned, the rate of minimum profit to be earned being such as may be specified by the State Government. The learned Attorney General appearing on behalf of the Board has placed before us tabulated statements showing the working results (financial) of the Board in the years subsequent to 1977-78. It is found therefrom that the net result of the Board s working in each of the year 1978-79 to 1981-82 was a substantial deficit or loss. The deficit in 1978-79 was ₹ 15.31 crores, in 1979-80 ₹ 10.21 crores, in 1980-81 ₹ 32.69 crores and in 1981-82 ₹ 18.60 crores. The statement also shows that the revenue earned per unit of electric energy sold was much lower than the actual cost of production incurred by the Board per unit. The cost of production per unit in the four years aforementioned was 51.10 p., 65.10 p., 73.86 p., and 87.16 p. respectively, whereas the revenue per unit was only 3848 p., 47.17 p., 53 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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