IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH Date of Decision: 09.09.2011 (1) LPA No. 605 of 2009 M/s Antarctic Industries and others …Appellants Versus Punjab State Electricity Board and others …Respondents Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellants. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (2) LPA No.670 of 2009 M/s Northern India Steel Rolling Mills …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. D.S.Bali, Senior Advocate with Mr. Salil Bali, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (3) LPA No. 681 of 2009 M/s Waryam Steel and others …Appellants Versus Punjab State Electricity Board and others …Respondents Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellants. LPA No.605 of 2009 Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (4) LPA No. 708 of 2009 Pepsi Foods Private Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Rohit Khanna, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (5) LPA No.710 of 2009 M/s Arihant Threads Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Anand Chhibbar, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (6) LPA No.712 of 2009 M/s Vardhman Polytex Limited …Appellant Versus Punjab State Electricity Board and others …Respondents 2 LPA No.605 of 2009 (7) LPA No.755 of 2009 M/s Shreyans Industries Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents (8) LPA No.756 of 2009 M/s Shreyans Industries Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents (9) LPA No.757 of 2009 M/s Gillanders Arbuthnot & Co. Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellant(s). Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (10) LPA No.808 of 2009 M/s Krishna Alloys Private Limited …Appellant Versus Punjab State Electricity Board and others …Respondents Present: None for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. 3 LPA No.605 of 2009 Mr. Sanjeev Pabbi, Advocate for the Commission. (11) LPA No.925 of 2009 M/s Poddar Tyres …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellants. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (12) LPA No.930 of 2009 M/s Govind Rubber Ltd. (Unit-II) …Appellant Versus Punjab State Electricity Board and others …Respondents (13) LPA No.931 of 2009 M/s Govind Rubber Ltd. (Unit-I) …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Sham Lal Bhalla, Advocate, for the appellant(s). Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. 4 LPA No.605 of 2009 Mr. Sanjeev Pabbi, Advocate for the Commission. (14) LPA No.941 of 2009 M/s Didar Steel Complex (Pvt.) Limited …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Tushantdeep Garg, Advocate, for Mr. Sanjiv Bansal, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (15) LPA No.1093 of 2009 M/s Surendra Steel Rolling Mills …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Anand Chhibbar, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (16) LPA No.1272 of 2009 M/s Singla Steel Pvt. Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents 5 LPA No.605 of 2009 Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (17) LPA No.417 of 2010 M/s Rana Polycot Limited …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Rahul Sharma, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. (18) LPA No.1313 of 2010 M/s JMP Casting Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Ashok Aggarwal, Senior Advocate with M/s Puneet Jindal and Mukul Aggarwal, Advocates, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. 6 LPA No.605 of 2009 (19) LPA No.298 of 2011 M/s Cheema Spintex Ltd. …Appellant Versus Punjab State Electricity Board and others …Respondents Present: Mr. Rahul Sharma, Advocate, for the appellant. Mr. Rupinder Khosla, Senior Standing Counsel and Mr. Puneet Gupta, Advocate, for the PSEB. Mr. Sanjeev Pabbi, Advocate for the Commission. CORAM: HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE VIJENDER SINGH MALIK HEMANT GUPTA, J. This order shall dispose of aforesaid 19 Letters Patent Appeals arising out of common judgment passed by the learned Single Judge of this Court on 27.04.2009, whereby writ petitions filed by the appellants challenging surcharge on their large supply connections were dismissed. The facts are taken from LPA No.605 of 2009 arising out of CWP No.8451 of 2007 even though the facts in all these are identical raising common issues. In LPA No.605 of 2009, the appellant has sought amendment of the writ petition so as to take additional legal grounds in support of its challenge to the claim of surcharge. The said application was allowed by this Court on 14.10.2009. The present set of appeals fall in two categories i.e. first set of cases pertaining to industrial units, who have set up induction furnaces with sanctioned load of 2500 kVA or more prior to 25.06.1995 and; the second set being LPA Nos.298 of 2011, 417 of 2010, 712 of 2009, 925 of 2009 & 7 LPA No.605 of 2009 708 of 2009 by other industrial consumers of large supply, who have been granted large supply connections in post-June 1995 period. Their grievance is primarily in respect of calculation of surcharge beyond the sanctioned contract demand of more than 2500 kVA. Firstly, we take up for decision, the cases pertaining to large supply consumers granted connection at 11 kV prior to June, 1995. The Punjab State Electricity Board (for short ‘the Board’) transmits the electricity in three kinds of voltage supply system i.e. (i) low tension (LT) at 440 volt – normally fed to domestic, small power or medium supply electric connection below 100 KW; (ii) high tension (HT) at 11000 voltage (11 kV) to large supply industrial connections; and (iii) extra high tension (EHT) at 66000 voltage (66 kV) – supplied to very big industrial consumers for whom a dedicated 66 kV line directly from sub-Station of the Board is provided. All the pre-1995 consumers have been granted large supply industrial connection at 11 kV with contract demand of more than 2500 kVA. On 23.06.1995, a circular (Annexure P-2) was issued in respect of policy for release of connections to Power Intensive Units inclusive of Induction Furnace Units. It was communicated that it has been decided that all Induction Furnaces, prospective as well as existing furnaces with a contract load of 1500 kVA and above shall be supplied electricity under the category of 66 kV. It was decided to give option to Induction Furnaces to convert to 66 kV within 18 months i.e. by 31.12.1996 after which they will be liable to pay surcharge at the rate of 17.5% on the tariff already being charged. The Induction Furnaces consumers were to take action for getting supply at 66 kV at their cost. The said circular reads as under: “CC No.62/95 Issued vide memo No.67602 / 68352 / SSM-6 dated 23.06.1995 8 LPA No.605 of 2009 Sub: - Policy for release of connection to power Intensive Units. In continuation of this office CC No. 3/59 dated 6.1.1995. 2. It has been decided to bring all the Induction Furnaces-prospective as well as existing with a load of 1500 KVA and above under the category of 66 kV. Accordingly, Form CS-1(c) of Power Intensive Units registered upto 26.3.1993, which had earlier been cancelled in light of CC No. 55/93 and now have been revived in accordance with CC No. 3/95 dated 6.1.1995 and also those forms CS-I (C) which have been individually revived after being cancelled/withdrawn prior to 31.10.1992 on account of terrorist threats/disturbed conditions etc., provided they requested upto 31.12.1994, as well as all those causes of Induction Furnace applications where demand notice has not been issued by 19.6.1995 shall be released on 66 kV. 3. Regarding existing Induction Furnace consumers, it has been decided to give option to them to convert to 66 kV within 18 months i.e. by 31.12.1996 after which they will be liable to pay surcharge at the rate of 17 ½ % on the tariff already being discharged. Registered notices be, therefore, sent to all the existing Induction Furnace consumers to take action for conversion of getting supply at 66 kV, the cost of which shall have to be borne by the consumers as per standing instructions.” The Association of Induction Furnace Industries objected to such circular. A High Powered Committee was constituted to consider the Circular dated 23.06.1995. In terms of the report of High Powered Committee, the Board issued another Commercial Circular No.25/99 on 08.06.1999 (Annexure P-6). Such circular reads as under: “Sub: - Policy for release of connections to Power Intensive Units Induction Furnaces). 9 LPA No.605 of 2009 Vide Commercial Circular Nos. 62/95 dated 23.6.1995 and 64/95 dated 28.6.1995 instructions were issued that all Induction Furnace consumers in the State with a load of 1500 KVA and above, shall get power supply on 66 kV only. The existing induction furnace consumers who were getting power at 11 kV, were given the option to convert to 66 kV voltage within a time period of 18 months i.e. upto 31.12.1996 failing which they were also required to pay surcharge @ 17.5 % on the existing tariff. Also those with pending applications (having load upto 2500 KVA) were given the options for 11 kV supply, but in this case, they were required to pay 17.5% surcharge on the applicable tariff from the date of release of their connections. 2. Only a few consumers, however, changed over their supply to 66 kV in compliance of the above instructions, and many representations were received on the subject. Consequently, it was decided that PSEB will not disconnect the connections of induction furnace consumers, who did not pay 17.5% surcharge as mentioned above. 3. To resolve the issue, a Committee comprising of officers of PSEB and representatives of Public & Industry, was constituted on the intervention of State Government. The Committee was asked to study the grievances of Induction Furnace Industry in details and give its recommendations acceptable to both PSEB and Industry. Accordingly, the Committee went into this issue in detail and has submitted the following recommendations to PSEB which have now been accepted by the Board. i) Board may not insist to levy 17.5% surcharge for non-conversion by the consumers as existing in 6/95 and also by those consumers who were released connections at 11 kV with an undertaking to pay 17.5% surcharge after 6/95. ii) The 17.5% surcharge already billed and the late payment surcharge already levied w.e.f. 1.1.1997 may be written back. Wherever certain consumers have deposited this surcharge, the same may be refunded through subsequent energy bills. iii) All future connections above 1500 KVA/2500KW shall be at 66 kV only. However, where feasibility at 11 kV has already been given before 3/97, the same need not be reviewed. (This para has been corrected vide CC No. 30/99). You are, therefore, requested to implement the above. The 17.5% surcharge wherever already billed may now be treated as withdrawn in case of Induction Furnace consumers covered under recommendations/decisions as in para-3 above. Similarly, where 17.5% surcharge has been paid by Induction Furnace consumers, the same may be adjusted against their future monthly energy bills. 10 LPA No.605 of 2009 All other instructions pertaining to the supply of power to Induction Furnaces, will however remain unchanged. This issue with the approval of Competent Authority.” In view of the decision circulated vide Commercial Circular (Annexure P-6), surcharge was not charged from the Induction Furnace Units, who have availed large supply electric connection prior to 23.06.1995 availing energy at 11 kV. In the year 1998 “The Electricity Regulatory Commission Act, 1998” (for short ‘1998 Act’) came to be enacted and in terms of such Act, Punjab State Electricity Regulatory Commission Tariff Regulations, 2002 (for short ‘the Tariff Regulations’) were promulgated. The 1998 Act was repealed by the Electricity Act, 2003 (for short ‘the Act’), which came into force on 26.05.2003. “The Punjab State Electricity Regulatory Commission” (for short the Commission) has been constituted under the Act. The Tariff Regulations framed under the 1998 Act were notified to continue for the purposes of determining tariff under the Act as well vide notification dated 08.07.2004. It is not disputed by any of the parties that under the licensee i.e the Board cannot recover any amount towards the electricity charges not contemplated under the Tariff Order published under the Tariff Regulations. Some of the relevant Regulations read as under: “Tariff Fixation Guidelines xxx xxx xxx (2) Neither the Board (or any of its successor entities) nor the utilities for transmission (intra-State transmission), distribution and supply of power shall charge any tariff without prior approval of the Commission. Provided that the existing tariff being charged by generating companies and other utilities shall, subject to any specific order passed by the Commission in this behalf to the contrary, continue to be charged until the revised tariff is notified by the Commission, 11 LPA No.605 of 2009 without prejudice to the powers of the Commission within the scope of Section 22 and 29 of the Act. Annual Revenue Reports and Tariff Filings 4. (1) Each year, every utility and licensee shall file with the Commission a report for each of its Separate Business on its expected aggregate revenue from charges under its currently approved tariff and its expected cost of service. Tariff filings 5. xxx xxx xxx (3) Tariff application shall include the following: - (a) Where the proposed date of implementation falls within a financial year for which the Commission has previously determined a permitted aggregate revenue requirement, the filing of proposed tariff should be accompanied by a copy of the relevant Annual Revenue Report as submitted by the utility/licensee, plus a copy of the order passed by the Commission in relation to that report. Where no determination of a permitted aggregate revenue requirement has been made for the financial year in which the proposed tariff is to be implemented, the filing of proposed tariff should be accompanied by the Annual Revenue Report for that Financial year and a copy of the order passed if any, by the Commission thereon for tariff filing. (b) The information to be provided by the utility/licensee must include (i) A statement of the current tariff rates and all applicable terms and conditions and the expected full year revenue from the current tariff rates in the year in which the new tariff is to be implemented. (ii) A statement of the proposed tariff rate prices and changes, including a full statement of all applicable terms and conditions. This statement should be shown in a form appropriate to the proposed tariff structure. Details should also be supplied of the publicity intended to be given to new tariff options when they are proposed to be implemented. (iii) A statement of the expected full year revenue of the proposed tariff for the year in which the tariff is to be implemented. xxx xxx xxx 12 LPA No.605 of 2009 (4) If the utility/licensee believes that the amendments being proposed are minor in nature and will not change significantly either the expected aggregate revenues of the bills of any class of consumer, the utility/licensee may request waiver of any of the requirements of paragraph (5) (3) (6) subject to the approval of the Commission. (5) Within 7 days after the Commission has notified the utility/licensee that it has received all necessary information, the utility/licensee shall arrange for publication of a notice of its tariff application and send copies to the commission and relevant local authorities in accordance with the Conduct of Business Regulations of the Commission. The notice shall include a general description of the tariff amendment being applied for and its effect on the bills of different categories of consumers, and an invitation to submit written comments and objections to the tariff application to the Commission within 30 days. The utility/licensee shall also paste the notification in each of its offices. xxx xxx xxx General 11. The utility/licensee shall publish a notice informing its consumers of each change in the tariff rate at least seven days before the change is required to be implemented.” The process for the fixation of Tariff for the year 2003-04 was initiated by the Commission. The Board proposed levy of 17.5% surcharge on the consumers who have not migrated to supply at 66 kV. The North India Induction Furnace Association objected to proposed Tariff hike by 17.5% surcharge vide objections dated 25.2.2003 (Annexure P-7) on Induction/Arc Furnace Industries, who do not change to 66 kV Sub-Station in view of circular dated 08.06.1999. In response to such objection, the Board communicated on 17.03.2006 (Annexure P-8) that imposition of 17.5% surcharge on Arc/Induction Furnaces for supply at 11 kV is not applicable under the present and proposed Tariff Schedule and the position reflected in the Tariff petition is not correct. Thus no surcharge was claimed till the year ending 31.03.2004. 13 LPA No.605 of 2009 It may be mentioned here that the load limit of 1500 kVA as mentioned in Circular dated 23.06.1995 was revised to 2500 kVA vide commercial circular No 51/200 dated 17.7.2000. The limit for release of connections at 11 kV supply voltage to Power Intensive Units was again revised vide Commercial Circular No.44/03 dated 24.06.2003 from 2500 kVA to 4000 kVA with the condition that energy recorded at 11 kV shall be increased by 10%, whereas Arc Furnaces Consumers and other consumers having contract demand exceeding 4000 kVA at 11 kV supply voltage, the surcharge @ 17.5% is to be levied. The appellants have been issued separate bills during the months of March to October, 2008 claiming surcharge @ 10% from the units having contract demand of 2500 kVA to 4000 kVA and 17.5% from 01.04.2004 as surcharge from the consumers having contract demand of more than 4000 kVA at 11 kV supply for not switching over to supply at 66 KV. Mr. Ashok Aggarwal, learned Senior counsel for the appellants has vehemently argued that as per the Tariff Regulations, the Board has to file a claim titled “Annual Revenue Requirement” before the each Financial Year before the Commission constituted under the Act. The abridged version is also to be made available by the Board in terms of such Tariff Regulations. Such Annual Revenue Requirement or the general description (abridged version) is required to be published in the daily newspapers so as to give an opportunity to all affected consumers to submit their objections as contemplated by Regulation 5(5) of the Tariff Regulations. It is after considering the objections filed against the proposed Tariff, the Commission fixes the Tariff, which is valid for the period fixed by the Commission. It is contended that in the Public Notice of abridged Annual 14 LPA No.605 of 2009 Revenue Requirement and Tariff Applications for the year 2004-05, there is no reference in respect of surcharge from the large supply consumers having connections at 11 kV. Such Public Notice had ‘Note 5’, which is to the effect that all other charges, which are being collected by the Board as per sales regulation for supply of energy to the consumers will be continued at the existing rates. It is, thus, contended that since the existing rates do not include the right of surcharge from pre-1995 consumers, therefore, it cannot be said that the Board has claimed variation in the tariff in terms of Tariff Regulations. It is contended that even minor variation could be carried out only after taking prior exemption from the Commission. But in the present case, the Board has not taken any prior exemption nor proposed any change in the tariff as per the Public Notice (Annexure P-19) and that surcharge not being the existing rate, the claim of the Board in respect of surcharge is not tenable. The Commission published Tariff Order (Annexure P-21) dated 30.11.2004 but enforced the same with effect from 01.10.2004. ‘Note ii’ in Table 10.1 of the Tariff Structure (Annexure P-20-A) published by the Commission is that all other charges including rentals, parallel operation charges and deposits, which are being collected by the Board as per the Sales Regulations for Supply of Energy to Consumers, will continue at the existing rates. The said note is almost same as proposed in Note 5. It is pointed out in the Table that there is no reference of surcharge from the consumers like the present appellants. It was, in pursuance of such Tariff Structure, Commercial Circular No.57 of 2004 (Annexure P-20) was also issued by the Board. The Note 9 of such Circular is that existing surcharge for 11 kV Arc/Induction Furnace to continue as per existing rates. It is pointed out the Arc Furnace Units were paying surcharge and also post 15 LPA No.605 of 2009 1995 consumers, therefore, surcharge from such units alone was to continue. On the basis of such documents, it is sought to be contended that 10% or 17.5% surcharge was not the existing tariff, which was being levied and collected by the Board prior to enforcement of Tariff Order 2004-05 with effect from 01.10.2004. The abridge Annual Revenue Requirement does not contain any proposal of surcharge and that the Board has raised demands of electricity charges from 1.4.2004 even though the Tariff was made effective from 1.10.2004. Therefore, the claim of the Board to claim surcharge from 01.04.2004 is wholly illegal and unjustified. Any electricity charge not authorized by the Tariff Order cannot be claimed in terms of Section 45 of the Act. It is also contended that the General Conditions of Tariff and Schedule of Tariff issued by the Board on 14.07.2006 with effect from 01.04.2006 is not applicable to the consumers such as the appellants; as such General Conditions of Tariff is meant only for the new consumers. Controverting the said arguments, Mr. Khosla has submitted that the claim of the Board to claim surcharge on large supply consumers at 11 kV is based upon Tariff Order for the year 2004-05 dated 30.11.2004, but made effective from 01.10.2004 and not on the basis of General Conditions of Tariff and Schedule of Tariff. It is contended that the Board filed Annual Revenue Requirement or the Aggregate Revenue Requirement (hereinafter referred to as ARR) for the Financial Year 2004-05 initially on 08.12.2003 for the tariff of the year 2004-05. But on the directions of the State Government, the said ARR was withdrawn in view of the exceptional circumstances of the restructuring efforts of the Board being underway. The Commission allowed the Board to withdraw ARR on 06.04.2004 and,