vil Appeal No 1306 of 1988
From the Judgment and Order dated 241987 of the Allahabad High Court in Writ Petition No 1818 of 1984
HN Salve PPTripathi Manoj Swarup and KJ Johan for the Appellants
BSen Gopal Subramaniam Prashant Kumar and Mrs section Dikshit for the Respondents
The Judgment of the Court was delivered by RANGANATHAN J
There was a time when in almost every State in India people were invited to avail of the supply of the electric energy produced in the State and offered special concessions when they agreed to 158 do so in bulk under long term contracts
A situation however has since developed when the demand for the energy increased so rapidly that despite the quantity of available electric energy also having gone up tremendously the rates of supply agreed upon became uneconomical
The State and its instrumentalities who were supplying the energy found themselves without power to revise the rates to meet the altered situation until the legislature came to the rescue
It is this situation in the case of Kanoria Chemicals and Industries Ltd hereinafter referred to a the appellant  which has given rise to these appeals
The  hereinafter referred to as the 1948 Act  entrusted the control over the generation and distribution of electric energy to Electricity Boards constituted under the Act
In the State of Uttar Pradesh the UP State Electricity Board hereinafter referred to as the Board was constituted on 141959
At that time the State Government hereinafter referred to as the State  was in the process of establishing the Rihand Hydro Electric Generating Plant which become operational wef 1262 and attained an ultimate installed capacity of 300 MW
The control of this remained with the State till 3131965
Since the supply of electrical energy was then available in abundance and only the eastern area of the State was served by the plant the State considered it expedient to enter into contracts with bulk purchasers both with a view to ensure maximum utilisation of the electricity available and with a view to the industrialisation of the eastern areas of the State
In particular the State was keen on the industrial development of the district of Mirzapur which was considered to be an extremely backward area
The State was keen that power intensive units be set up in close proximity of Rihand so that electricity could be supplied to these units from the Rihand power plant
One feature of the supply of electricity from Rihand was that the metering was done at the point of generation so that transmission and distribution losses and costs could be borne by the consumers of electricity
The appellant set up an industry for manufacture of caustic soda at Renukoot sometime in 1964
According to the appellant this industry involved the use of electricity as the main raw material the other raw material needed being salt
It is said that there were considerable disadvantages in setting up the proposed caustic soda unit in the district of Mirzapur principally due to its distant location from areas from which salt had to be transported
The appellant it is said could easily have set up its factory in some other State with greater facilities and advantages but it was induced to set up the caustic soda plant at Pipri in the district of Mirzapur on account of the assurance given by the State that it will supply hydro electric 159 power to the assessee from the Rihand power plant on a long term basis at a cheap rate
It is claimed that but for this promise the appellant would never have chosen Pipri or the district of Mirzapur for the location of this plant
After elaborate discussions between the State Government and the promoters of the appellant company the plant was set up at Pipri and a contract was entered into between the State Government and the appellant on 3091963 ensuring the supply of electricity from the point of generation to the appellant for a period of 25 years from 1464
The supply to the extent of 65 MW
was to be from Rihand hydel station at a fixed rates of 25 paise per unit
An additional supply of 15 MW was also promised from an inter connection at the rate of 5 NP per unit
The rates could be revised after the first sixteen years but any enhancement in rates was not to exceed 10 per cent of the rates agreed upon
The State agreed further to supply 45 MW to the appellant from the Obra Hydro Electric Project on such rates as would be fixed subsequently
It may be mentioned that this clause gave rise to disputes which were referred to arbitration
An award was made by justice DP Madan a retired judge of this Court which was made a decree of this Court by an order dated 141987
Under the award the rate of supply was fixed at 869 paise per unit
The State s grievance is that it incurred a loss of Rs 1055 crores by supplying electricity from Rihand between 1464 and 19583 at concessional rates instead of applying the uniform tariff applicable to other bulk power consumers briefly referred to as HV 2 rates
 It says also that it likewise suffered a loss of 124 crores due to the supply at 869 paise instead of normal rates from Obra between 1471 and 31389 when the agreement came to an end by efflux of time
Obviously it was not economical to continue supplying energy at the preposterously low rates to which the State had committed itself in 1963 on account of the conditions that prevailed at the time of the agreement
The powers of the State or the Boards to revise contractual rates unilaterally were examined by this Court in Indian Aluminium Company Ltd vs Kerala State Electricity Board 1976 1 SCR 70
It is sufficient to say that after considering the provisions of section 49 and 59 of the Supply Act the Court held that the Electricity Board were not entitled to enhance charges in derogation of stipulations contained in agreement entered into between parties
This decision led to the provisions of the Supply Act being amended by various States
The State of Karnataka Orissa and Rajasthan brought in amendments enabling the Electricity Board to supersede contracts and 160 revise the rates contained in earlier agreements
The UP Government also enacted the Electricity Laws Uttar Pradesh Amendment Act 1983 to vest the State s agreement with the Board and to enable the Board to revise the contractual rates
The Act came into force from 2051983
Section 7 of the said Act amended Section 60 of the Supply Act 1948 by inserting the following sub sections 3 to 5 with retrospective effect from April 1 1965  3 All expenditure which the State Government may not later than two months from the commencement of the Electricity Laws Uttar Pradesh Amendment Act 1983 declare to have been incurred by it on capital account in connection with the purposes of this Act in respect of the Rihand Hydro Power System shall also be deemed to be a loan advanced to the Board under section 64 on the date of commencement of this sub section and all assets acquired by such expenditure shall vest in the Board with effect from such commencement
4 The provisions of the sub sections 1 and 1 A shall subject to the provisions of sub section 5 apply in relation to the debts and obligations incurred contracts entered into and matters and things obliged to be done by with or for the State Government in respect of the Rihand Hydro Power system after the first constitution of the Board and before the commencement of this sub section as they apply in relation to debts and obligations incurred contracts entered into matters and things engaged to be done by with or for the State Government for any of the purposes of this Act before the first constitution of the Board
5 All such contracts entered into by the State Government for supply of electrical energy based on or connected with the generation of electricity from the Rihand Hydro Electric Generating Station to any consumer and any contract entered into by the Board on or after April 1 1965 for the supply of electrical energy to such consumer shall operate subject to the modifications specified in the following clauses which shall have effect from the date of the commencement of the Electricity Laws Uttar Pradesh Amendment Act 1983 hereinafter referred to as the said date 161 a the rates to be charged by the Board for the energy supplied by it to any consumer under any contract for which the payment will be due for the first time on or after the said date shall be such as may with the previous approval of the State Government be fixed by the Board having due regard to the geographical position of the area of supply the nature of the supply and purpose for which supply is required and any other relevant factor
b If the State Government directs the Board under Section 22 B of or under any other law for the time being in force to reduce the supply of energy to a consumer and thereupon the Board reduces the supply of energy to such consumer accordingly the consumer concerned shall not be entitled to any compensation for such reduction and if the consumer consumes energy in excess of the reduced limit fixed under the said section 22 B or any other law for the time being in force as the case may be then the Board shall have the right to discountinue the supply to the consumers without notice and without prejudice to the said right of the Board the consumer shall be liable to pay for such excess consumption at double the normal rate fixed under clause a c Any arbitration agreement contained in such contract shall be subjects to the provisions of this sub section
Parliament also at about the same time amended section 59 of the Act by Act 18 of 1983
The amended section 591 which is sufficient for our purpose reads thus  59
General principles for Board s finance 1 The Board shall after taking credit for any subvention from the State Government under Section 63 carry on its operation 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 including operating maintenance and management expenses taxes if any on income and profits depreciation and interest payable on all debentures bonds and loan leave such surplus as is not less than three per cent or such higher percentage as the State Government may by notification in the official Gazette specify in this behalf of the value of the fixed assets of the Board in service at the 162 beginning of such year
Explanation For the purposes of this sub section
value of the fixed assets of the Board in service at the beginning of the year means the original cost of such fixed assets as reduced by the aggregate of the cumulative depreciation in respect of such assets calculated in accordance with the provisions of this Act and consumer s contributions for service lines
It has been pointed out to us that the UP State amendment is somewhat different from those of the other States
The Karnataka legislature amended section 49 of the 1948 Act and the Orissa and Rajasthan legislatures inserted section 49A in the said Act
These provisions enabled the Boards  to prescribe tariffs and these rates were to prevail over those specified in the agreement
The latter two amendments actually declare the relevant clauses in the agreement void from inception
The UP amendment
however retains the effectiveness of the earlier contracts and only reads into them the rates that may be prescribed by the Board
This is the first difference
The second is that while the other legislations affect all agreements entered into before a specified date the UP amendment is restricted to contracts for supply of electricity from the Rihand Hydro Electric Generating Station
We are informed that when the above amendment was sought to be effected the only outstanding contract of the State for the supply of electricity from the Rihand Hydro Electric Generating Station was the contract with the appellant on the 30th of September 1963
There had been two agreements entered into for supply of electricity from this power station but the other one with Hindustan Aluminium Company had become ineffective since that company gave up its claim to supply from the above power plant in 1975 76 having been successful in putting up a power plant for its captive use
Thus though the Act purports to be one of general application it was really intended to enable the State and the Board to modify the rates of supply of electricity to appellant under the contract of 3091963
At this stage it may be useful to refer also to the terms of section 49 of the Act
It reads thus  1 Subject to the provisions of this Act and or 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
163 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 licensee c the simplification and standardisation 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 the 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 position 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 conditions for the supply of electricity the Board shall not show undue preference to any person
After the statute was thus amended the Additional Chief Engineer of the Board wrote to the appellant on 621984 stating that though the bills were being drawn on the basis of the agreement the rates were subject to revision with effect from May 20 1983 with the approval of the State Government and that a supplementary bill would be sent for the arrears as and when the rates were revised in pursuance of section 605 a
On 5th April 1984 the appellant filed Writ Petition No 1818 of 1984 in the High Court of Allahabad assailing the validity of section 7 of the amending Act and the right of the Board to enhance the rates
While admitting the writ petition the High Court passed an interim order to the effect that the State Government should provide an opportunity of hearing to the appellant before bringing about any change in the terms and conditions of the Agreement or tariff rates and that no revised rates shall be charged from the 164 appellant till it is heard and the matter decided by the State Government
On June 11 1984 the Law Officer of the Board wrote to the appellant requesting it to give in writing the points which they wanted to urge before the rates were approved by the State Government
According to the appellant this was not sufficient compliance with the court s order and it moved the High Court for amending its petition and made further applications to the Court
It may be mentioned that the stand taken up by the Board in the writ petition was that the writ petition was premature as the State s approval had not been obtained and no injury had been caused to the appellant
But suddenly on 31185 the Board wrote to the appellant informing it that the State Government had approved the levy of rates as per Schedule HV 2 as defined in the UP Gazette Notification dated 29th October 1982 applicable to heavy power consumers in substitution of the rates mentioned in the agreement of 20th September 1963
It was stated curiously enough that the approval of the State Government had been given on 2891983
The effect of the revision was to oblige the petitioner to pay 5771 paise per unit for 1983 84 and 6160 paise per unit for 1984 85
An idea of the magnitude of the revision can be had by pointing out that supplementary bills raised on the basis of the revision for the period 20583 to 31121984 were to the tune of Rs 307 crores
The appellant s allegation is that no such approval had been given and it is asserted that the internal correspondence between Board and State would show that the legal Department of the Board had raised certain objections to the levy of HV 2 rates on the appellant and that consequently Board had sent a fresh proposal in December 1983 seeking approval of the State Government for imposing a flat rate in respect of supplies to the appellant in place of earlier proposal
It is also stated no proposal was made or approval sought for imposing the revised rates wef 2051983
The Board however proceeded to make demands against the appellant on the basis of the revised rates
According to the Board reference was made to a resolution dated 30185 to the withdrawal on that date of the proposal for a flat rate in place of HV 2 rates
Thus demands on the basis of HV 2 rates were sought to be sustained
The demands amounted to several crores of rupees and disconnection was threatened in case of nonpayment
The appellant obtained certain interim orders from High Court which have been subsequently considered and modified from time to time by this court during the pendency of these appeals
It is however not necessary to refer to these interim orders as the final liability of the appellant will have to be decided on the basis of the orders of this Court on the appeals
165 The writ petition was heard by a Bench of two judges
Both judges repelled the challenge to the validity of the Amendment Act but differed on some of the points which came up for their consideration
Srivastava J was of the opinion that the intention and purpose of the Amendment Act was to revise the existing contractual rate of energy charges and charge higher rates upto the extent of uniform tariff rates for the supply of electricity to the consumers whose contract stood modified by the said statute
The rates so fixed had to be dependent upon the factors enumerated in section 605
According to him the material on record showed that the factors enumerated in section 605 had not been taken into account by the Board before fixing the rates or by the State Government in according its approval to the same
The Board and the Government appeared to have acted upon a consideration of the factors mentioned in section 492 of the Act of 1948 while framing a uniform tariff but this was not sufficient compliance with the provisions of section 605
On the other hand Mathur
J was of the opinion that the move for amendment of the Act and enforcement of HV 2 tariff was initiated by the Board and that the notings contained a detailed justification for enforcing the said tariff
It also appeared from the statement of objects and reasons of the amending bill that the supply of electricity at concessional rates despite losses and the desirability of replacing the said rate by uniform tariff came up for discussion in the State Legislature and that the Board did not act wrongly or illegally if it felt that it had no option but to apply uniform rates in view of the statement contained in the objects and reasons of the bill and the discussion in the State Legislature
He was also of the opinion that the factors contemplated by section 605 a were similar to those envisaged by section 492 and since consideration had been given to the latter factors while farming the uniform tariff no consideration of factors relevant to individual consumers was called for
The two learned judges thus differed on the following two points  a Whether the language of section 60 5 a of UP Act No 12 of 1983 required consideration of factors prescribed in section 60 5 a viz geographical position of the area of supply the nature of supply and purpose for which supply is required and other relevant factors with reference to petitioner company for revising the existing contractual rate of HC tariff b Whether the factors mentioned in section 492 of  having already been considered at the time of farming uniform tariff no fresh consideration of any factors mentioned in section 605a of UP Act No 12 of 1983 was required when the uniform tariff itself was being fixed while 166 revising the rate  The difference of opinion was therefore referred to a third Judge Mehrotra J
This learned Judge answered that question referred to him as follows  a The language of section 605a of UP Act 12 of 1983 requires consideration of factors prescribed in it with reference to the petitioner company for revising the existing contractual rate and b Fresh consideration of the factors mentioned in section 605a was required irrespective of the fact that factors mentioned in section 492 of the had already been considered at the time of framing of the uniform tariff which was being fixed for the petitioner company while revising the rates
Consequent on the opinion of this learned Judge the writ petition was allowed and a writ of certiorari was issued quashing the approval dated 2891983 given by the State Government to the new rates and the consequent resolutions sanctions bills and demands of the Board and the State Government
A writ of mandamus was also issued commanding the respondents not to charge the uniform tariff rate for the period beginning from 20th May 1983 till the rates were fixed in accordance with section 605 a of UP Act No 12 of 1983
The Order disposing of the Writ petition finally is dated 241987
Immediately the judgement was pronounced the State Electricity Board and the State Government sought a certificate of fitness for preferring an appeal to this Court and the High Court granted the certificate as prayed for
This appeal has not been numbered on account of delay
Though the High Court had quashed the revision of the rates it had left it to the board and State to fix revised rates afresh
That apart the appellant had also a grievance that in applying the HV 2 rates which were applicable to other consumers the Board and the State had not taken into account the special factors relevant to the supplies made to it
The appellant also therefore filed SLP No 13967 of 1987 for leave to appeal from the judgement dated 241987
Leave has been granted by this Court on 841988 and the appeal of the company had been registered as CA 1306 of 1988
In the meantime the Board and State were apparently carrying on an 167 exercise for the revision of the rates afresh as directed by the High Court and on 2831988 the Board purported to fix the following revised rates for the supply from 20th May 1983
Period Rate Paise per unit 2051983 to 3131984 7021 141984 to 3131985 7493 141985 to 3131986 8514 141986 to 3131987 8860 It will be observed that rates thus fixed and said to have been approved by the State Government were much higher than the HV 2 rates fixed earlier objected to by the appellant and quashed by the High Court
Having done this this Board sought leave to withdraw the appeal preferred by it
So far the appellant s appeal was concerned it was contended that the appellant s remedy was to challenge the revision of 2831988 if so advised in fresh proceedings
This was the position when these appeals came to be heard by us on April 10 1991
We heard the appeals at length and reserved orders
In doing so we passed the following order  The appeals pertain to the fixation of tariff rates for supply of electricity to the appellants caustic soda plant at Renukoot
The appellants originally came to court challenging the levy of the electricity charges on the basis of HV II rates applicable generally to consumers drawing supply from the UP State Electricity Board
However the High Court held that the rates applicable to the appellants should be determined having regard to the individual circumstances of the appellants
This was by a majority judgement in the High Court
Subsequently the Electricity Board had proposed and the State Government has approved certain rates for the period from 2051983 to 3131987 which are somewhat higher than the HV II rates originally approved
This is the bone of controversy between the parties
We find that the State Government and Board have filed no counter affidavits in regard to the challenge by the appellants to the revision of rates effected subsequent to the High Court 168 judgment
In the circumstances before we pronounce our judgment we think that in the interests of justice it would be proper to direct the State Board and the State Government to reconsider the fixation effected by them on the basis of the following directions  1
Within a period of three weeks from today the appellants will file before the State Electricity Board with a copy to the State Government a representation setting out what according to them are the individual factors which should be taken into account in fixing the rates applicable to them within the meaning of section 605a 1948 as amended in 1983
The State Electricity Board will consider this representation and make appropriate recommendations to the State Government
However before doing so and particularly if the Board intends to take into account any factors other than those mentioned in the appellants  representation they should indicate the factors which they so wish to take into account in their recommendations to the State Government
A copy of the recommendations should be forwarded to the appellants within seven weeks from today
On receipt of the recommendations made by the Board the appellants may submit to the State Government if they so desire any representation which they wish to make regarding the recommendations within a period of three weeks thereafter
The State Government will consider the recommendations of the State Board as well as the representations made by the appellants to the Board as well as to themselves and approve of the rates which they consider proper in the circumstances of the case by a reasoned order giving a board indication of the factors which they have taken into account in fixing the rates
This decision should be arrived at within a period of four weeks from the date of the receipt of the representation of the appellants
As indicated above since the High Court has decided that in fixing the rates the individual circumstances of the appellants should be taken into account the State Board as well as the State Government should take into consideration the special 169 circumstances of the appellants in fixing the rates
The Government s order may also in case different rates for different periods are fixed indicate the respective dates from which the several rates will come into operation
The rates and dates so fixed by the Government will naturally be subject to the decision on these appeals
 Subsequent to our order the appellant made a representation to the Board on 29491
The Board made its recommendations thereon to the State Government on 26691
Thereafter the appellant made its representation to the State Government on 22791
The State Government has subsequently passed an order on 31891 and submitted the same to us
It is perhaps sufficient to extract the concluding paragraphs of the order After analysing the contentions of Kanoria Chemicals and the State Electricity Board the State Govt comes to the conclusion that Ms Kanoria Chemicals and Industries Ltd has taken benefit of establishing this unit in a backward area for the last 19 years and there is no justification in giving this benefit in continuously future also because this area has been developed in comparison to earlier years
The request of Ms Kanoria Chemicals and Industries Ltd that the factors shown by State Electricity Board should be limited to Rihand Hydel Power Station is without justification since at present they are getting supply from UP Grid and not from Rihand Power Station
Hence the point of view of the State Electricity Board is justifiable
After due consideration of representation dated 24291 and 22791 of Ms Kanoria Chemicals and Industries Ltd and the recommendations of the State Electricity Board dated 26691 the State Govt
comes to the conclusion that Ms Kanoria Chemicals and Industries Ltd has failed to indicate any fact which comes under the provisions of Sec
605a of the and which has not been considered by the State Electricity Board while fixing the rates in March 88 has kept in mind the decision of Hon
High Court of Allahabad and 170 complied with the provisions of sec
605a of the 
Since keeping in view the factors enumerated in sec
605a of the  the Rules were revised in March 1988 in the following manner hence there appears no necessity to change these rates  SNo
Period Rate 1
20583 to 31384 7021 paiseunit 2 1484 to 31385 7493 paiseunit 3 1485 to 31386 8514 paiseunit 4
1486 to 31387 8860 paiseunit In other words the State and Board adhere to the rates fixed on 28388
It may be interesting to set out a comparative table of the revisions effected by the Board originally which was quashed by the High Court and the rates now approved  Period HV 2 rate Revised rate Paiseunit paiseunit 20583 to 31384 5571 7021 1984 85 5986 7493 1985 86 6389 8514 1986 87 8088 8860 1987 88 8464 8860 1988 89 9339 8860  The revised rates for 1987 88 and 1988 89 are stated to be provisional but so far till today no fresh rates have been fixed in respect of these periods
171 The resultant position is that the appellant is now facing huge demands in respect of the period since 2051983 and till 3131989 when the agreement expires at rates which will be higher than the HV 2 rates which had been sought to be applied in the first instance
The appellant vehemently challenges the fixation of rates on 28388 and 31891
A good part of the argument before us in these appeals in the first instance was addressed on the question whether the State Government was obliged to give a hearing to the consumer before revising the rates under section 605 and whether the factors relevant under s605 can be said to have been taken into account on the ground that they had already been taken into account while fixing uniform rates under s49
In this context reference was made to several decisions and contentions where canvassed in regard to the nature of the process of fixation of rates of charges for supply of electricity
It is however unnecessary to go into all these aspects because in pursuance of the directions of this Court dated 1041991 the matter has been re considered by the Board and the State Government and fresh rates have been fixed along with the respective dates of operation after hearing the appellant s representatives
Broadly two principal submissions have been addressed before us at this stage on behalf of the appellants
The first is that the fixation of rates as on 3181991 is not valid as the respondents have not complied with the directions given by this Court in the order dated 1041991
It is argued that the respondents have neither disclosed the factors based on which the rates were revised in March 1988 nor have they indicated the monetary incidence or impact of the factors taken into account though a specific request was made in this regard by the appellant to the Board and to the State Government
The appellant it is said has been gravely prejudiced and handicapped in the absence of any such disclosure in making any effective representation
Further in the final order dated 31891 the State Government has stated that the fixation of rate by the State Government was based upon the consideration of facts and data communicated by the Board to the State Government in March 1988 but admittedly no facts data or basis had been placed before this court at the time of the original writ petition on the basis of which the State Government had fixed the rates in March 1988 compelling this Court to remand the matter for fresh consideration
Suddenly the Board while concluding its recommendation to the State Government on 26991 reminded the State Government that prior approval of the State Government for the rates had already been obtained in March 88 and persuaded the State Government to mechanically uphold the pre determined rates
Finally it is contended that even in this process of re fixation of the 172 rates there was no genuine exercise to consider relevant factors in determining the rate under section 605a
We do not think that there is any force in these contentions
By the time the matter came up before us for hearing in the first instance the State Government had already passed its order of revision dated March 28 1988
The rates which had been recommended by the State Electricity Board and approved by the State Government were within the knowledge of the appellant
It was of course necessary and equitable that before giving effect to these rates if not even before they were recommended the consumer should have had no opportunity of placing before the Electricity Board and the State Government its side of the picture
This opportunity has however been provided by to the appellant
The appellant has also filed its representation
After considering the representation the Board made its recommendations to the State Government and a copy of these recommendations were also available to the appellant
The appellant also had full opportunity to meet the various points set out in the recommendations of the Board
The comments of both the Board and the appellant have been taken into account by the State Government before finally approving of the rates proposed by the Board
The grievance of the appellant seems to be that the Board has not set out anywhere the precise manner in which the rates recommended by them were arrived at and that this has considerably handicapped any effective representation being made by it to the Board and to the State Government
We do not think the proceedings are vitiated for this reason
It is true that the actual computations of the rates were not set out by the Board in its recommendations made in 1983 or 1985 or 1988 but the proper approach to the issue is not the one adopted by the petitioner
The section does not require the Board or the State Government to explain each and every step in its calculation
All that the State Government has to do is to take into consideration the factors relevant under section 605 and propose rates for fixation to the State Government
It is in order to ensure that these recommendations take into account all relevant factors that an opportunity has been provided to the consumer to satisfy the Board as well as the State Government that the fixation has not taken into account certain relevant factors
We therefore think the appellant must be held to have been given a fair opportunity under section 605a so long as it had an opportunity to explain to the Board and the State Government the factors individual to its case and also as to how and why the rates recommended by the Board need modification
Moreover the issue here was in a narrow compass for the following reason
On the passing of the Amendment Act the Board decided to substitute the contract rates by the HV 2 rates
But this was rendered infructuous because of the terms of section 605a which it was said were 173 different from those of section 49
If the factors under section 49 were alone to be taken into account then the consumers one and all would have been liable to pay for the electricity at the tariff rates
The claim of the appellant was that in applying these rates certain factors individual to it had not been taken into account
If one compares the two provisions one will find that most of the elements are common to the two provisions
Both under section 49 and section 60 the authorities have to take into account the geographical position of any area the nature of supply and purpose for which supply is required and any other relevant factor
The only difference between the two provisions is that since section 49 deals with a general fixation while section 605 deals with a fixation for a particular individual case there may be some special factors to be taken into account which may or may not be germane while fixing the general tariff under section 49
Hence the only point which needed to be considered when the matter was reexamined pursuant to our directions was whether having regard to the factors prevailing in the case of the appellant the rates to be fixed should be higher or lower than the HV 2 rates or whether they should be the same
It was open to the petitioner to contend as it in fact did that there are special features in its case which make it legitimate to fix some concessional rates as compared to other consumers
On the other hand it is equally open to the State Electricity Board to contend that having regard to the prevalence of certain circumstances the rates to be fixed should be higher than the tariff rates applicable generally
This is a short aspect on which both parties have made their positions clear
Apart from the general factors which have been taken into account in fixing the general tariff rates the Board has in making its recommendations taken into account the purpose for which supply was required by the petitioner along with the factor of recurring losses incurred by the Board year after year and its statutory requirements to maintain a minimum surplus of 3 per cent as required under section 59 of the Supply Act 1948
We are therefore satisfied that the appellant had full opportunity to place all its special features before the Board and the State Government and that all aspects have been fully considered by the authorities
The fixation of rates on 3181991 is not therefore vitiated for the reasons urged by the appellant
The only other aspect that requires consideration is regarding the maintainability of the rates as now fixed by the Board and the State
Three questions arise in regard to this  i Can the Board fix rates higher than HV 2 rates in respect of bulk consumers like the company for whom a concessional rate had been granted on special considerations  174 ii Can the Board determine rates in 1991 and make them retrospective wef 1983 iiiWas there material for the Board to fix rates which they have eventually fixed We find that the answer to the first two questions posed only be in the affirmative
On the first issue there are no obstacles statutory or theoretical standing in the way of the Board fixing rates for the company which will be higher than the rates applicable to bulk consumers
The provision in s605a is intended to enable the Board and State to cut off the shackles cast by an ancient contract entered into at a time when conditions were totally different
It confers an absolute and unrestricted enabling power to revise the rates in an appropriate manner and contains no restriction of the nature suggested for the appellant
In doing this the only limitation which the statute requires the authorities to keep in mind are the factors mentioned in the section
Whether the revised rates for the consumer governed earlier by the contract should be higher or lower than or equal to the tariff rates would depend on a large number of considerations in particular the basis on which and the point of time at which those general rates were fixed
In principle it is quite conceivable that in an appropriate case a consideration of the relevant factors may justify even a rate higher than the general tariff rates intended for the particular category of consumers
We shall examine later whether this was justified in the present case
At the moment all we are concerned with is the legality of fixing such higher rates and we see no difficulty in this either on the language of the Statute or on other considerations
A retrospective effect to the revision also seems to be clearly envisaged by the section
One can easily conceive a weighty reason for saying so
If the section were interpreted as conferring a power of revision only prospectively a consumer affected can easily frustrate the effect of the provision by initiating proceedings seeking an injunction restraining the Board and State from revising the rates on one ground or other and thus getting the revision deferred indefinitely
Or again the revision of rates even if effected promptly by the Board and State may prove infructuous for one reason or another
Indeed even in the present case the Board and State were fairly prompt in taking steps
Even in January 1984 they warned the appellant that they were proposing to revise the rates and they did this too as early as in 1985
For reasons for which they cannot be blamed this proved ineffective
They revised the rates again in March 1988 and August 1991 and till today the validity of their action is under challenge
In this 175 state of affairs it would be a very impractical interpretation of the section to say that the revision of rates can only be prospective
The language of the section also supports this view
Slightly rearranging the syntax of the clause to facilitate easier understanding what it provides is that the revised rates fixed by the Board shall be the rates to be charged by the Board for the energy supplied by it to any consumer for which the payment will be due for the first time on or after the 20th May 1983
In other words the rates eventually fixed will by force of statute apply to all supply of electricity for which the charges become payable in terms of the contract after 2051983
There are three objections suggested against this interpretation
The first is that it precludes the Board and State where they choose to do so from revising the rates prospectively or with effect from such dates after 2051983 which they may consider appropriate
We think this consequence does not flow from the language of the provision
The mandate is only that the rates to be charged on supplies for which payment becomes due after 20883 shall be as fixed by the Board
The powers of the Board in fixing the rates including the dates from which they will be operative are not restricted in any manner
The Board is at complete liberty to fix different rates from different dates and that scheme of fixation will be read with the contract
Only the Board cannot revise the rates in respect of supplies for which payment under the contract fell due before 20583
The second objection which is a follow up of the first is that if the power us 60 is held exercisable more than once the interpretation will permit successive revisions each superseding the earlier one a position that could lead to immense harassment
We have no doubt the power us 60 is exercisable more than once
All the same the answer to the appellant s objection is that while this could be a basis of substantial harassment if repeated revisions are automatically dated back to 20583 as argued on the first point for the assessee it loses all force on our interpretation leaving it open to the Board and State to fix the dates with effect from which revisions will be effective
In view of this one can take in that while making a subsequent revision the authorities will not normally tamper with an earlier revision s or alter the dates of effectiveness fixed for the earlier revision s without a valid reason to do so
If this is done it will be open to a court to examine the basis thereof and sustain it only where the earlier fixation was based on an error or misconception or the like and called for modification
The third objection is that the Hindi version of the Amendment Act is differently worded and does not contain the words for the first time found in the English version
Reliance is placed on the decision of a Bench of seven judges of the Allahabad High Court in Mata Badal Pandey vs Board of Revenue 1974 UPTC 570 to 176 the effect that where there appears a doubt or ambiguity on a plain reading of the English words as to the true intention of the legislature and the Hindi version is conflicting or different
the Hindi text will be the key for finding the answer
We do not think the Hindi version really alters the position actually it is the presence of the words for the first time in the English version that create an ambiguity
Without these words the clause clearly provides that all supply of electricity for which payment is to be made after 20583 will be charged at the rates to be fixed by the Board
We therefore reject the appellant s contention and hold that the fixation by the Board of rates from 20583 and at different rates for different periods of time is unexceptionable
This takes us to the real and crucial question in the case as to whether rates to be fixed in the present case should on proper consideration be less than equal to or higher than the general HV 2 rates
The appellant contends that it should be charged at the cost of generation plus a reasonable margin of profit or at the rate at which the supply is made to the Madhya Pradesh State Electricity Board
At any rate it is said the rates charged to the appellant should be less than HV 2 rates
For this it relies on a the special circumstance that the appellant at great detriment to itself agreed to set up a caustic soda plant in a backward area at the request of the State Government and in public interest only because of a promised concession in rates of electricity supply b the fact that the supply to the appellant is metered at the point of generation with the result that the transmission and distribution losses in so far as the appellant is concerned are borne by the appellant and not by the Board as in the case of other consumers and c the important fact that electricity in the case of the appellant is one of the only two raw materials needed for its business
On the other hand for the Electricity Board it is contended that the appellant should be called upon to pay higher than HV 2 rates for the following reasons  i The appellant has been having substantial supplies of electricity at nominal rates of 25 paise and 275 paise per unit between 1963 and 1983
ii The supply to the assessee is being made only from the State Grid and there is no reason why it should draw the supply at lower rates than others  iii The Board had been incurring heavy losses over the years
This is to a considerable extent due to the spiraling demand for electricity the Board s responsibilities under the statute to co 177 ordinate development of the supply of energy throughout the State and the necessity to supply energy at concessional rates to certain sectors such as the agricultural sector
iv The Board is also entitled under s59 of the 1948 Act to take into account the necessity of building up a surplus statutorily fixed in the fixation of rates of supply to all or any of its consumers
We have given careful thought to the considerations urged before us and we are of opinion that there is no material to justify any departure from the HV 2 rates in the case of the appellant
We find no force in the contentions put forward on behalf of the appellant to reduce the rates applicable to the appellant below HV 2 level
The special circumstances pleaded have lost their importance with the passage of time
It is obvious that the conditions that prevailed in 1963 are not valid and the appellant has had the benefit of concessional rates for twenty years
No doubt the benefits would have continued for five more years but for statutory intervention
But the statute permits a reconsideration of the situation as in May 1983 and it is unarguable it seems to us that the rate of 275 p should continue even after 1983 or that the appellant should be entitled to any special concession
The consideration that electricity is a raw material in the assessee s business is again irrelevant for it can mean nothing more than that the appellant needs substantial quantities of the energy and there is no reason why it should not pay for it at the normal market rates
The point regarding take off of supply at the generating point will no doubt have some relevance on the question of rates and we shall refer to this aspect later in the context of the pleas put forward by the Board
We are therefore of the view that the appellant has no valid justification for staking a claim to less than the HV 2 rates
Equally it seems to us the authorities have no case for seeking to raise the rates beyond the HV 2 rates
They are supplying energy to the appellant from the grid since 1968 and they cannot justifiably seek to demand higher rates from the appellant than from the HV 2 consumers
This is sought to be justified on the basis of the huge losses that the Board has been incurring and the statutory justification for escalation in the rates keeping in view the necessity to build up a surplus
This however is an aspect of working which should affect all the consumers equally
May be the Board can in appropriate circumstances seek to make up for a part of the losses by hiking up the rates to one particular category of consumers but that would not be justified here as the transmission and distribution losses 178 in respect of the supply to the appellant are borne by it and in the absence of some special vital reason it would not be equitable to fix the rates of supply to the appellant above the rates applicable to other HV 2 consumers
Some reference was made to the difficulties in completely fitting the scheme of computations for determining the HV_2 rates into the scheme under the appellant s contract
It is however unnecessary to go into that aspect as we are only on the question of rates and holding that there is no justification for charging more than HV 2 rates from the appellant
Moreover the appellant has been paying for the Obra supply at HV 2 rates since 1989
We have also been informed that in 1972 the appellant took a further additional supply of 8 MW and agreed to pay therefor at HV 2B rates as applicable to other Bulk Power Consumers in the State
In these circumstances we have reached to the conclusion that there is no justification to charge more than HV 2 rates from the appellant
We therefore allow this appeal in part quash the determinations of 1988 and 1991 and direct that the appellants should be charged from 20583 to 31389 at the HV 2 rates applicable to other consumers
The appeal of the appellant is partly allowed to the above extent
The Board s appeal has not yet been numbered as it is delayed by a few days
It was however stated that the Board wishes to withdraw its appeal because of the subsequent developments
For these reasons and also in view of our above conclusion the Board s appeal also stands dismissed
In the circumstances we direct each party to bear its own costs
TNA CA 130688 Partly allowed
CA 12892 dismissed


Summary:
On 1611986 the Deputy Commissioner issued a notification constituting a Mandal under section 4 1 of the Karnataka Zila Parishads Taluk Panchayat Samithis Mandal Panchayats and Nyaya Panchayats Act 1983 and located the headquarter of the Mandal at Mudiyannur
Later on exercising powers under section 4 3 of the Act he changed the headquarter to Uthanpur
On 14121987 a writ petition WPNo 768586 was filed challenging the decision of the Deputy Commissioner
The High Court dismissed the petition holding that on passing a resolution my Mandal to change the headquarter from the existing place to another place the Deputy Commissioner was to consider if he would like to exercise power under section 42 of the Act
The Mandal passed a fresh resolution and thereupon the Deputy Commissioner issued a notification under section 4 2 of the Act for change of headquarter and on 2011988 the draft notification was published in the Gazette
The respondents 1 to 10 filed a writ petition WP No 188888 287 before the High Court challenging the draft notification
The writ petition was dismissed
Considering the resolution and the objections to the notification the Deputy Commissioner issued another notification under section 4 2 of the Act and the headquarter of the Mandal was changed from Uthanpur to Mudiyannur
The respondents challenged the notification by filing a revision application under section 4 3 of the Act which was dismissed by the Divisional Commissioner
The respondents moved the High Court in WP No 77 of 1989 challenging the order of the Deputy Commissioner
The Single Judge of the High Court dismissed the petition against which an appeal was filed before the Division Bench of the High Court
The Division Bench allowed the appeal following an earlier decision of the High Court in Writ Application No 2564 of 1987 dated 2851991
The correctness of the decision of the Division Bench of the High Court was challenged in this appeal by special leave
The appellant contended that once the power to specify the headquarter was conferred on the Deputy Commissioner by Section 4 1 of the Act it could be exercised from time to time by virtue of section 14 of the Karnataka General Clauses Act1897 that the scheme of section 4 of the Act should be construed with the aid of section 14 of the General Clauses Act in such a manner as not to leave a vacuum for the exercise of power for a change of headquarter that if the High Court s view was approved there could be no power vested in any authority whatsoever for changing or specifying the headquarter of the reconstituted Mandal which vacuum might lead to avoidable complications and that once the legislature invested the Deputy Commissioner with the power to specify the headquarter under section 4 1 subject to the modification by the Commissioner under section 4 3 the power to alter the headquarter of the Mandal from time to time if the occasion so required must be read into it
288 The respondents submitted that while sub section 2 of Section 4 of the Act in terms empowered the Deputy Commissioner to alter the headquarter of the Mandal because the headquarter once specified under section 41 should remain unaltered that the act designedly did not confer any power on any authority whatsoever to change the headquarter once specified under section 4 1
Allowing the appeal this Court HELD  101 Section 4 1 empowers the Deputy Commissioner to do two things namely i to declare an area as a Mandal and ii to specify its headquarter
293 B 102 The power conferred by sub section 2 of Section 4 of the Karnataka Zila Parishads Taluk Panchayat Samithis Mandal Panchayats and Nyaya Panchayats Act 1983 can be exercised where there is a change in the areas of the Mandal either by addition or reduction in the area
Under clause c of sub section 2 of Section 4 the Deputy Commissioner is also invested with the power to alter the name of any Mandal
293 D E 10 The scheme of sub section 2 of Section 4 would show that when there is any increase or decrease in the area of any Mandal the Deputy Commissioner may after the previous publication of the proposal by notification exercise that power and rename the Mandal if so required
293 E 104 If the situation so demands and there is justification for altering the place of headquarter it would be open to the Deputy Commissioner to exercise power under section 4 1 of the Act read with Section 14 of the General Clauses Act to meet the situation
294 C 105 The word also  preceding the words specify its headquarter  cannot be understood to convey that the power once exercised would stand exhausted
Such a construction sought to be placed by counsel for the respondent does not accord with the language of the provision
It merely conveys that when the Deputy Commissioner constitutes a Mandal for the first time it will be necessary for him to specify its headquarter also
293 B C 106 The power to specify the headquarter conferred on the Deputy Commissioner can be exercised from time to time as occasion 289 requires by virtue of section 14 of the General Clauses Act
293 C D 107 The ultimate decision as to the place or location of Mandal headquarter is left to the Government to decide and conferment of discretion upon the concerned authority in that behalf must necessarily leave the choice to the discretion of the authority and it would not be proper for the courts to interfere with the discretion so exercised
This is not to say that the discretion can be exercised in an arbitrary or whimsical manner without proper application of mind or for ulterior or malafide purpose
If it is shown that the discretion was so exercised it would certainly be open to the courts to interfere with the discretion but not otherwise
293 H 294 A B 2
The absence of the power in sub section 2 of Section 4 to specify the headquarter afresh does not necessarily mean that once the initial constitution of the Mandal takes place and the headquarter is specified the power is exhausted notwithstanding section 14 of the General Clauses Act
If such an interpretation is placed on the scheme of section 4 of the Act neither the Deputy Commissioner nor any other authority will thereafter be able to alter and specify any other place as the Mandal s headquarter
Such a view would create a vacuum and even when a genuine need for specifying any other headquarter arises the authorities will not be able to exercise power for want of a specific provision in the Act and that may lead to avoidable hardship and complications
It is therefore essential that the provision of the Act be read in a manner so as to ensure that such a vacuum does not arise and the power is retained in the concerned authority which can be exercised should a genuine need arise
293 F H JR Raghupaty  Ors
vs State of AP  Ors
   referred to