IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 08-10-2010 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN WRIT PETITION No.17662 OF 2010 M/s.Sharadha Terry Products Ltd., rep.by its Chairman and Managing Director, Badrakaliamman Koil Road, Nellithurai Post, Mettupalayam-641 305, Coimbatore District. ... Petitioner -vs- 1.The Chairman, Tamil Nadu Electricity Board, 144, Anna Salai, Chennai-2. 2.The Chief Engineer/Distribution, Tamil Nadu Electricity Board, 144, Anna Salai, Chennai-2. 3.The Chief Engineer/Distribution, Coimbatore Region, Tamil Nadu Electricity Board, Tatabad, Coimbatore-641012. 4.The Superintending Engineer, Coimbatore Electricity Distribution Circle/North, Tamil Nadu Electricity Board, Tatabad, Coimbatore-641 012. ... Respondents Writ Petition under Article 226 of the Constitution of India. For petitioner : Mr.V.Radhakrishnan, Senior Counsel, for Mr.K.Sasindran. For respondents : Mr.J.Ravindran https://hcservices.ecourts.gov.in/hcservices/ O R D E R By consent, the Writ Petition is taken up for final disposal. This Writ Petition has been filed for issuance of a writ of certiorarified mandamus, to call for the records of the fourth respondent relating to his letter No.SE/CEDC/N/AEEGL/AEII/F M/s.Sharadha Terry EHT/D 1787/09, dated 05.12.2009 and of the second respondent relating to his letter No.CE/Commt/EET/AEE1/F.Sharadha/D.239/2010, dated 30.04.2010, quash the same as illegal and without jurisdiction and consequently direct the respondents to refund the amount paid by the petitioner towards Service Connection Charges for a sum of Rs.1,15,23,000/- to the petitioner together with interest at the rate of 15% per annum till the date of payment. 2. The facts, which led to the filing of this Writ Petition, are as follows : 2.1. Petitioner is a public limited company, incorporated under Indian Companies Act,1956, having its registered office at Badrakaliamman Koil Road, Nellithurai Post, Mettupalayam, Coimbatore. It is having its factory in the same premises where terry products are manufactured. It is a 100% export oriented unit. The said unit was started in the year 1994. 2.2. Originally, the petitioner company applied to the respondents for supply of 2000 KVA. Finally, the sanctioned demand was 1350 KVA in S.C.No.181. In the year 2005, the petitioner installed a captive generation plant of 5.225 MW. Thereafter, the petitioner surrendered the power supply in S.C.No.181 on 23.07.2007. Ultimately, the Service Connection No.181 was dismantled and a sum of Rs.53,81,059/- was payable to the petitioner as current consumption deposit and it was retained by the Tamil Nadu Electricity Board, in short, "the Board", for being adjusted towards consumption charges payable by the sister concern of the petitioner company, on request. 2.3. While so, in February,2008, the petitioner company decided to revert back to H.T.power supply from the Board, as it found that the captive power plant was not viable. In that connection, on 15.02.2008, the petitioner made an application to the fourth respondent, requesting to supply 6000 KVA power for the unit, for which it paid registration fee of Rs.500/- and Rs.48,00,000/- payable towards E.M.D.was requested to be adjusted from the account of HT S.C.No.181 of the petitioner's dismantled service. 2.4. On receipt of the application, the fourth respondent, in his letter dated 21.05.2008, submitted a feasibility report along with an estimate to the third respondent and requested that load https://hcservices.ecourts.gov.in/hcservices/ sanction and estimate sanction for a maximum demand of 6000 KVA at 110 KV to the petitioner may be obtained from the first respondent and communicated so as to take further action at his end. 2.5. While the proposal and estimate were pending in the office of the first respondent, a review meeting was held by the first respondent with all Chief Engineers/Distribution on 04.07.2008. In the said meeting, the first respondent decided that the cost of extending supply to HT,LTCT and all industrial services be collected as per Regulations 44 and 45 of the Tamil Nadu Electricity Distribution Code, in short, "the Code". Pursuant to the said meeting, minutes of the meeting were communicated to all the Superintending Engineers through their respective Chief Engineers/Distribution and they were directed to send the Action Taken Report. As a result, the second respondent by his letter dated 09.07.2008, requested the third respondent to revise the estimate for extension of EHT supply for a demand of 6000 KVA at 110 KV to the petitioner's unit as per the Regulations 44 and 45 (1) of the Code, pursuant to which the third respondent, by his letter dated 06.08.2008, sent the revised estimate to the second respondent and requested to accord necessary administrative and estimate sanction. As per the revised estimate, a sum of Rs.1,22,44,000/- is chargeable to the consumer, namely, petitioner. On receipt of the revised estimate, the first respondent, by his proceedings dated 18.09.2008, accorded administrative approval and sanction for extension of EHT supply for a demand of 6000 KVA at 110 KV to the petitioner unit subject to the conditions stipulated therein. In the said proceedings, it is stated that a sum of Rs.7,32,000/- is chargeable as gross and net chargeable to the Board and Rs.1,15,23,000/- as gross and net is chargeable to the consumer, namely, petitioner. Pursuant thereto, the fourth respondent, through his letter dated 22.09.2008, called upon the petitioner to pay a sum of Rs.1,15,23,000/- towards the service connection charges within 15 days. Besides the said sum, the fourth respondent also directed the petitioner to pay a sum of Rs.21,00,000/- towards development charge at the rate of Rs.350/- per KVA. In addition, a sum of Rs.1,00,000/- was also directed to be paid towards meter cost and deposit. Accordingly, the petitioner paid the said amounts on 25.09.2008. However, supply was effected on 03.03.2010. 2.6. In the meanwhile, Tamil Nadu Electricity Regulatory Commission, in short, "the Commission", a regulatory authority constituted under the provisions of the Electricity Act,2003, in short, "the Act", issued a show cause notice dated 10.09.2008 to the Member/Distribution, Tamil Nadu Electricity Board, and another calling upon them to explain the contravention of the provisions contained in the Code. On 19.09.2008, the Commission passed an order, staying the direction of the Chairman, Tamil Nadu Electricity Board in letter No.CE/Com./AEE1/F.TNERC/D147/08, dated 08.09.2008, instructing the Chief Engineers and Superintending Engineers to https://hcservices.ecourts.gov.in/hcservices/ collect extension cost as per the procedure recommended by the Board in its letter dated 14.08.2008 in anticipation of the approval of the Commission. The order of the Commission further stated that the charges prescribed by the Board regarding cost of meters and collection of extension cost are stayed with immediate effect. As a result of the stay order, the second respondent, in his memo dated 19.09.2008, directed all the Chief Engineers and Superintending Engineers to keep in abeyance of the earlier instructions given for recovery of charges and the cost for extending supply to HT,LTCT and to all industrial services to be collected as per the Code till further clarifications are issued. The memo dated 19.09.2008, sent by the second respondent was received in the office of fourth respondent on 22.09.2008. But, for the reasons best known to them, the fourth respondent did not disclose the same to the petitioner when the petitioner remitted the amount of Rs.1,37,23,000/- on 25.09.2008. Despite the instructions given by the second respondent on 19.09.2008, the fourth respondent received the service connection charges from the petitioner. 2.7. On coming to know of the stay order passed by the Commission regarding collection of service connection charges payable under Regulations 44 and 45 of the Code, on 03.02.2009, the petitioner sent a letter to the fourth respondent requesting to refund the entire service connection charges collected from it on 25.09.2008. Thereafter, the Commission directed the respondents to refund the money collected pursuant to its order regarding collection of cost for extension of supply of all HT, LTCT and all industrial services, withdrawing their earlier instructions issued to the Field Engineers. But, on instructions from the second respondent that the petitioner is not eligible for refund, the fourth respondent, by his letter dated 05.12.2009, informed the petitioner that the request for refund of service connection charges is not feasible of compliance. Thereafter, the second respondent, by his letter dated 30.04.2010, informed the petitioner that as per the Board practice, the petitioner is eligible for supply at 33 KV only since its application is for demand of 6000 KVA and hence the costs collected towards extension of supply at 110 KV are not refundable. Hence, this Writ Petition. 3. Respondents have filed a counter affidavit, stating as follows : 3.1. Petitioner has extra high tension electricity supply HT SC No.529 with sanctioned maximum demand of 6000 KVA and the service was effected on 03.03.2010. Petitioner has applied for maximum demand of 6000 KVA for its industry at SF No.948/1,2,947/2, Thekkampatty Village, Mettupalayam Taluk and the application was registered on 15.05.2008. Petitioner requested for 110 KV supply in its application for a maximum demand of 6000 KVA. Hence, based on the request of the applicant, the feasibility report was submitted to https://hcservices.ecourts.gov.in/hcservices/ extend the supply from the 110 KV network available in the vicinity. Since the consumer requested for 110 KV, the proposal was evolved for extending supply from 110 KV and therefore feasibility for extending from 33 KV or 66 KV was not studied. The Board would find the feasibility for extending 33 KV supply from nearby sub-stations if the consumer had requested for 33 KV supply. 3.2. Based on Board's instruction vide Memo No.CE/Comml/EET/AEE1/F.SARADHA/C8/08, dated 09.07.2008, the estimate was evolved and submitted for sanction. Administrative approval and sanction were accorded vide (Per) B.P.(Ch) No.415 dated 18.09.2008. As per the sanction, a sum of Rs.7,32,000/- is chargeable to Board and Rs.1,15,23,000/- is chargeable to the consumer. Technical sanction for the estimate was accorded by the Chief Engineer vide Memo No.CE/D/CBE/AEE/PLG/F.Est North/D809/2008, dated 24.09.2008 and the load sanction was accorded vide BN/006/08- 09/AEEGL/AEGLII/F.M/s.Sharadha EHT/D1323/08 dated 22.09.2008 wherein the consumer was intimated to execute the agreement and pay the amount of Rs.21,00,000/- towards development charges; Rs.1,00,000/- towards meter caution deposit and Rs.1,15,23,000/- towards service connection charges and the petitioner has paid the above amount on 25.09.2008. 3.3.The charges prescribed in Lr.No.CE/Comml/EET/AEE1/F. TNERC/D, dated 14.08.2008, and the order of the Board on recovery of the cost of meters were stayed with immediate effect by the Commission vide stay order dated 19.09.2008 and the Board was directed to forward to the Commission a copy of the instructions staying their earlier orders. As per the Board's practice, for a demand of 5000 KVA to 10000 KVA, the voltage classification to HT/EHT consumers is at 33 KV only. In this regard, the Commission has also been addressed vide Board's letter dated 10.09.2007. The petitioner is eligible for 33 KV voltage supply only. But, as he has requested for 110 KV supply, the estimate charges have to be collected from the petitioner as per Board's practice. Hence, the order dated 19.09.2008 issued by the Commission has no relevance as far as the petitioner is concerned. 3.4. Administrative sanction of the proposal has been accorded on 18.09.2008 and the applicant has paid all the charges on 24.09.2008. Hence, the question of revision of estimate for the petitioner did not arise. Subsequently, instructions were issued vide memo No.CE/Comml/EET/AEE1/F.TNERC/D.293/09, dated 13.07.2009, to refund the amount to the applicants/consumers if any collected pursuant to the orders issued on 14.07.2008 and 10.09.2008 after evolving revised estimate as per the procedure in vogue and after obtaining sanction from the competent authority. The revised estimate was submitted only based on the petitioner's request for refunding the estimate charges by fourth respondent referring to Board's instruction vide Memo No.CE/Comml/EET/AEE1/F.TNERC/D.293/09, dated https://hcservices.ecourts.gov.in/hcservices/ 13.07.2009. It was informed to the petitioner vide the proceedings dated 30.04.2010 that as per Board's practice, the petitioner is eligible for supply at 33 KV only for the demand of 6000 KVA. As the petitioner has requested for 110 KV supply, the extension cost collected towards extension of supply at 110 KV is not refundable. 4. The contentions of the learned Senior Counsel for the petitioner are three fold. The first contention is that pursuant to the decision made in the review meeting held on 04.07.2008, the respondents 3 and 4 have revised the estimate requiring the petitioner to pay Rs.1,15,23,000/- instead of Rs.17,81,708/- as per the original estimate and the decision of the first respondent made in the review meeting was not approved by the Commission in accordance with Section 46 of the Act and, therefore, the levy of service connection charges is illegal. His second contention is that consequent to the order passed by the first respondent for collection of service connection charges, the Commission issued an order of stay dated 19.09.2008 and thereby the respondents are prevented from collecting various charges under Regulations 44 and 45 of the Code. The third contention is that when the petitioner made an application for a maximum demand of 6000 KVA, there were no 33 KV and 66 KV network available in the nearby area of the petitioner factory and there was no choice for the petitioner except to opt for 110 KV network and the reason given by the second respondent to reject the claim of the petitioner for refund is arbitrary. 5. In reply to the above contentions, learned counsel for the respondents, with regard to the first contention, would submit that the licensees are entitled to collect charges from a person requiring supply of electricity and any expenses reasonably incurred in providing any electric line or electric plant used for the purpose of giving that supply and the consumers are liable to pay such charges as applicable and at the rates specified by the Commission from time to time. As regards the second contention, the learned counsel for the respondents would submit that as the petitioner has requested for a demand of 6000 KVA, he is eligible for only 33 KV supply, but, as the petitioner has requested for 110 KV supply, he has to pay the estimate charges and that the stay order dated 19.09.2008 passed by the Commission has no relevance as far as the petitioner is concerned. In so far as the third contention, learned counsel for the respondents would submit that had the petitioner opted for 33 KV supply, the Board would have made arrangements for introducing the 33 KV source in nearby stations and extending supply from that source. He would finally urge that the Board is reeling under financial crisis and is incurring heavy expenditure for laying of HT/EHT lines and since the petitioner enjoys the facility of added benefits by availing 110 KV supply, the respondents are justified in collecting the extension cost of 110 KV line from the petitioner. https://hcservices.ecourts.gov.in/hcservices/ 6. I have heard the learned counsel for the parties and also gone through the records. 7. Tamil Nadu Electricity Board is a "Distribution Licensee" within the meaning of Section 2 (17) of the Electricity Act,2003. Under Section 82 of the Act, Tamil Nadu Electricity Regulatory Commission is constituted. Under Section 46, the Commission may, by regulations, authorise a distribution licensee to charge from a person requiring supply of electricity in pursuance of Section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply. The Commission, in exercise of power conferred under Sections 46 and 86 of the Act, formed Tamil Nadu Electricity Distribution Code,2004. Regulations 44 and 45 enable the licensee to collect various charges from a person requiring supply of electricity. The said Regulations read as under : "44. The licensees are entitled to collect the charges from a person requiring supply of electricity any expenses reasonably incurred in providing any electrical line or electrical plant used for the purpose of giving that supply. These charges have also to be reviewed either periodically or at times of an urgent need for a revision. The consumers are liable to pay such charges as applicable and at the rates specified by the Commission, from time to time, through separate orders/notifications. The various charges to be collected are furnished in the following clauses. 45. (1) Service connection charges.- Regarding the recovery relating to service connection charges : (i)For connecting up an installation, the licensee shall be entitled to charge the consumer the actual cost of materials up to meter board, labour, transport plus overhead charges. (ii)Extension, improvement or alteration to service-lines to meet any additional demand will be charged on the same basis. In each case, the consumer will be furnished with an estimate of the cost of the work and this amount is payable in advance. On completion of the work, a bill for the actual amount payable will be forwarded to the consumer and any difference shall be https://hcservices.ecourts.gov.in/hcservices/ paid by the consumer or will be refunded by the licensee, as the case may be. (iii)The estimate for service connection charges may also include the service connection charges for metering referred to in regulation 45 (2). The licensee shall give due credit for the materials, if any, supplied by the consumers. (2) Service connection charges for metering.- The licensee is authorised to collect service connection charges for metering. 8. The first respondent, in the review meeting held on 04.07.2008, decided to collect the cost for extending supply to all HT, LTCT and industrial services as per Regulations 44 and 45. In this connection, it is pertinent to state that as per the original estimate by the fourth respondent, a sum of Rs.17,81,708/- was required to be remitted by the petitioner. However, after the decision made in the review meeting held on 04.07.2008, the second respondent, by his letter dated 09.07.2008, directed the third and fourth respondents to revise the estimate for extension of EHT supply for a demand of 6000 KVA at 110 KV to the petitioner unit as per Tamil Nadu Electricity Distribution Codes 44 and 45 (1) and send the same so as to take further action in that regard. Consequently, the respondents 3 and 4 have revised the estimate requiring the petitioner to pay a sum of Rs.1,15,23,000/- instead of Rs.17,81,708/- as per the original estimate. 9. As already stated supra, Section 46 of the Act categorically states that the Commission may, by regulations, authorise a distribution licensee to charge from a person requiring supply of electricity in pursuance of Section 43 any expenses reasonably incurred under Regulations 44 and 45 in providing any electric line or electrical plant used for the purpose of giving that supply. In this case, the said decision of the first respondent was neither approved nor authorised by the Commission in accordance with Section 46 of the Act. The Board is bound to get authorisation from the Commission before collecting any charges. Without getting any such authorisation from the Commission, the first respondent proceeded to take a unilateral decision to levy charges under Regulations 44 and 45 of the Code, as a result of which the petitioner was called upon to pay a huge sum of Rs.1,15,23,000/- towards service connection charges. 10. When the Commission came to know about the decision and consequential order passed by the first respondent for collection of https://hcservices.ecourts.gov.in/hcservices/ service connection charges, it issued an order of stay dated 19.09.2008, thereby preventing the respondents from collecting various charges. 11. In the instant case, consequent to the order of stay passed by the Commission, the second respondent in his memo No.CE/Comm/EET/AEE1/F.TNERC/D159/08, dated 19.09.2008, instructed all the Chief Engineers and Superintending Engineers that the earlier orders for recovery of service connection charges under Regulations 44 and 45 are kept in abeyance till further clarifications are issued. Admittedly, the said memo of the second respondent was received in the office of the fourth respondent on 22.09.2008. The petitioner was not aware of the stay order passed by the Commission when he remitted a sum of Rs.1,15,23,000/- as service connection charges on 25.09.2008. However, the fourth respondent, being aware of the orders passed by the Commission and the further instructions issued by the second respondent in his memo dated 19.09.2008 informing not to collect service connection charges, collected a cheque from the petitioner for a sum of Rs.1,15,23,000/-, contrary to the specific orders and instructions issued by the Commission as well as the second respondent. 12. On coming to know of the stay order passed by the Commission regarding collection of service connection charges payable under Regulations 44 and 45 of the Code, on 03.02.2009, the petitioner sent a letter to the fourth respondent requesting to refund the entire service connection charges collected from him on 25.09.2008. That apart, the Commission, by its letter dated 22.05.2009, directed the Board to refund the money to the consumers, collected pursuant to its order dated 19.09.2008, towards cost for extension of supply of all HT, LTCT and all industrial services, withdrawing their earlier instructions issued to the Field Engineers. In view of the specific direction given by the Commission, the respondents are bound to refund the service connection charges collected from the petitioner. In this connection, it is useful to refer to the proceedings of the second respondent in Memo No.CE/Comml.EET.AEE1.F.TNERC/D.293/09, dated 13.07.2009, wherein he ordered withdrawal of earlier direction, regarding collection of cost for extending supply to all HT, LTCT and Industrial Services and further directing that action should be taken for refund of amount to the applicants/consumers, if any collected pursuant to the earlier orders. But, on instructions from the second respondent that the petitioner is not eligible for refund, the fourth respondent, by his letter dated 05.12.2009, informed the petitioner that the request for refund of service connection charges is not feasible of compliance. Thereafter, the second respondent, by his letter dated 30.04.2010, informed the petitioner that as per the Board practice, the petitioner is eligible for supply at 33 KV only since its application is for demand of 6000 KVA and hence the costs collected towards extension of supply at 110 KV are not refundable. https://hcservices.ecourts.gov.in/hcservices/ 13. It is true, as contended by the learned counsel for the respondents, the petitioner has requested for 110 KV supply in its application for a maximum demand of 6000 KVA. This was so, because, there were no 33 KV and 66 KV network available in the nearby area of the petitioner unit. The non-availability of 33 KV and 66 KV is also strengthened by the statement of the fourth respondent to the third respondent in his letter dated 21.05.2008. The relevant portion of the letter is extracted as under : "There are no 33 KV and 66KV network available in the nearby area of the proposed industry, and so the supply has to be extended from 110 KV network. The supply to the EHT service is proposed to be extended on 'T off '110 KV Pykara-Mettupalayam feeder radially fed from Pykara powerhouse. The existing feeder capacity is adequate for effecting this maximum demand of 6000 KVA. The proposed metering point is 20 meters from main gate." Therefore, there was no other choice for the consumers like the petitioner but to opt for 110 KV network. The extension of supply to be made from the existing network is within the powers of the respondents. 14. When the respondents were specifically forbidden by the competent authority under the provisions of the Act and the Code, any amount collected in violation of such orders is illegal and the respondents cannot be allowed to justify their action in retaining the amount even after a demand for refund is made by the petitioner. The reason given by the second respondent to reject the claim of the petitioner for refund is arbitrary and without application of mind. Therefore, the impugned orders of fourth and second respondents dated 05.12.2009 and 30.04.2010 respectively, rejecting the request of the petitioner for refund of the amount are ex facie illegal, unjust, not sustainable, without authority of law and contrary to the provisions of the Electricity Act,2003, Tamil Nadu Electricity Distribution Code and specific orders of the State Electricity Regulatory Commission. 15. For all the foregoing reasons, this Writ Petition is allowed and the orders impugned are quashed. The respondents are directed to refund the amount collected from the petitioner towards service connection charges of a sum of Rs.1,15,23,000/- within a period of four weeks from the date of receipt of a copy of this order. The rate