LPA No. 671 of 2010 (O&M) -1- IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH LPA No. 671 of 2010 (O&M) Date of Decision: April 28, 2011 D.H.B.V.N.L., Hisar …Appellants Versus Electricity Ombudsman, Haryana Panchkula and others ...Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE T.P.S. MANN Present: Mr. Vikas Suri, Advocate for Mr. Narender Hooda, Advocate for the appellants Mr. Aman Chaudhary, Addl. A.G., Haryana for respondent No.1-State. Mr. G.K. Chawla, Advocate for respondent Nos. 2 and 3. 1. To be referred to the Reporters or not? yes 2. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. 1. This order shall dispose of a group of five* Letters Patent Appeal, which are directed against common judgment dated 25.11.2009 rendered by the learned Single Judge dismissing a set of five writ petitions filed by the appellant- Dakshin Haryana Bijli Vitran Nigam Ltd. (for brevity 'DHBVNL'). In the writ petitions, the appellant had challenged order dated 20.12.2007 (P-9), passed by the Electricity Ombudsman (Vidyut Lokpal), Haryana, who has directed the appellant-DHBVNL to pay interest w.e.f. 10.12.2003 on consumption security and meter security deposited by the consumer-respondent No.3 at 6% which was the bank rate prevailing at that time. The basic reason for LPA No. 671 of 2010 (O&M) -2- issuance of direction was that M/s Faridabad Bolt-tight Industries (P) Limited-respondent No.3 in LPA No. 671 of 2010 had made security deposit of ` 3,31,200/- and ` 2,93,250/-, in lieu of the different sanctioned load. Through the Manufacturers Association Faridabad, they had filed CWP No. 2847 of 2006 in this Court, which was disposed of on 24.02.2006, with a direction to the appellant-DHBVNL-respondent No.2 to take final decision, as the matter was already under their consideration. After issuance of direction, the appellant issued sale instructions allowing interest at saving bank rate for the financial year 2005-06. However, it did not satisfy the Manufacturers Association, Faridabad and they claimed interest from 1992 and at a higher rate. Feeling aggrieved, the Manufacturers Association, Faridabad approached the Harayna Electricity Regulatory Commission (for brevity 'the Commission'). The Commission exercising power under Section 47(4) of the Electricity Act, 2003 (for brevity 'the 2003 Act'), issued directions vide memo No. HERC/742-744 dated 27.07.2006 to the appellant being the licensee to pay interest at the bank rate determined by the Reserve Bank of India from time to time. Respondent No.3, demanded interest on consumer security to be paid by the appellant from 1992. Accordingly they approached the Electricity Ombudsman who held that interest on consumer's security deposit was discontinued by treating the security to be advanced consumption deposit and therefore, interest was not payable w.e.f. 1992. It was, however, held that the 2003 Act, provided that consumer like respondent No.3 was entitled to payment of interest w.e.f. 10.12.2003 when the 2003 Act came LPA No. 671 of 2010 (O&M) -3- into force. It was in the aforesaid circumstances that the Electricity Ombudsman determined the rate of interest at 6% and directed the payment from 10.12.2003, when the 2003 Act was enacted. The operative part of the order dated 20.12.2007 (P-9) passed by the Electricity Ombudsman reads as under: “Therefore, keeping in view the facts and circumstances of the case I direct the licensee DHBVNL to pay the interest on security deposit at bank rate w.e.f. 10.12.2003 onwards. The Bank rate is defined as under: “The rate at which the Reserve Bank of India lends funds to the National Bank as notified by R.B.I. from time to time.” The bank rate w.e.f. April 2003 till 30.8.2007 is 6%. Therefore, I direct the licensee to pay the interest on consumption security and meter security @ bank rate of 6% from 10.12.2003 to 31.03.2007. The interest for the financial year 2005-06 was paid @ saving bank rate on 3.5% should also be paid @ 6%. From April 2006 to 26.07.2006 also be paid @ 6% per year. The amount of interest from 10.12.2003 to 31.03.2007 should be credited to the current bills of the applicant from the month of Jan 2008 onwards if not already paid and the interest for the current financil year i.e. 2007-08 may be paid in the month of April 2008 @ 6% per year.” LPA No. 671 of 2010 (O&M) -4- 2. The aforesaid order was challenged before the learned Single Judge. The learned Single Judge after referring to Sections 82, 85 and 86 of the 2003 Act, came to the conclusion that the Commission is not only obliged to determine the rate of tariff but it has also to protect the interest of the consumer, which is specified in the statement of reasons and objects of the 2003 Act. According to the learned Single Judge, Section 86 of the 2003 Act categorical vested the power in the State Commission to determine the tariff for generation, supply, transmission and wheeling of electricity, therefore, a distribution company can only charge those tariffs which are determined by the Commission. Accordingly, it was held that numerous duties are cast by Section 42 of the 2003 Act on the distribution licensee and open access. The learned Single Judge placed reliance on Section 47(4) of the 2003 Act, which reads as under: “Section 47. (Power to require security): “(1) XXX XXX XXX XXX (2) XXX XXX XXX XXX (3) XXX XXX XXX XXX (4) The distribution licensee shall pay interest equivalent to the bank rate or more, as may be specified by the concerned State Commission, on the security referred to in sub-section (1) and refund such security on the request of the person who gave such security”. 3. A perusal of the aforesaid provision would show that the consumer like respondent No.3 is entitled to interest upon LPA No. 671 of 2010 (O&M) -5- consumption and meter security and one of the duties cast on the Commission is to ensure that the distribution licensee like the appellant discharges that obligation. It is appropriate to mention that the Commission issued directions on 27.07.2006 (P-8) to the appellant that interest on all consumer Securities be paid with immediate effect, at the bank rate determined by the Reserve Bank of India. The interest accruing to the credit of the consumer like respondent No.3 was to be adjusted in energy bills of April or May of every year or in the final bill if permanent disconnection is sought by the consumer during the year. It was the aforesaid directions issued by the Commission, which was challenged before the Electricity Ombudsman, who has passed the order on 20.12.2007 and the same was subject matter of challenge before the learned Single Judge. 4. The learned Single Judge has divided the discussion into 6 following questions: “1) Whether the Consumer Grievance Redressal Forum (hereinafter referred to as “CGRF”) and the Electricity Ombudsman have jurisdiction or any authority of law, to deal with the subject matter of Section 47(4) of the Act? 2) Whether the CGRF and/or the Electricity Ombudsman deal only with the matters specified under Regulation 2(h) read with Regulations 2(m) & 2(n) of the Regulations? 3) Whether the action of the Electricity Ombudsman while passing the impugned order LPA No. 671 of 2010 (O&M) -6- dated 20.12.2007 (Annexure P9) is without jurisdiction and as such non-est in the eyes of law? 4) Whether the 2005 Regulations specifying the rate of interest payable and the directions of HERC in that regard sufficient compliance of the mandate of Section 47 of the Act? 5) Whether the Ombudsman is bound by the directions given by the Haryana State Regulatory Commission and in the interpretation of the same can determine bank rate or not? 6) What is the Reserve Bank of India rate or it is different from prevailing Saving Bank Account rate?” 5. The first question has been answered by the learned Single Judge holding that Section 47(4) of the 2003 Act bind the distribution licensee to pay interest equivalent to the bank rate or more as specified by the Commission. The learned Single Judge proceeded to observe as under: “Section 47(4) of 2003 Act bind the distribution licensee to pay interest equivalent to bank rate or more as may be specified by the HERC. In the present case, on a dispute referred by the Division Bench of this Court, in the writ petition, preferred by Manufacturer Association, Faridabad, HERC discharged its duty and determined what interest is to be paid on the security deposit vide order (Annexure P8). HERC LPA No. 671 of 2010 (O&M) -7- carried exercise to determine interest by taking into consideration Section 47(4) of 2003 Act, Regulation 5.7 of 2005 Regulations and concluded that consumer is entitled to interest at the bank rate determined from time to time by the Reserve Bank of India. In other words, the Commission being conscious of the fact that Regulation 5.7 of 2005 Regulations prescribe that a consumer is entitled to interest which is paid to a Saving Bank Account Holder of State Bank of India determined bank rate, and said that consumer is to be paid according to Bank Rate prescribed by Reserve Bank of India. In other words, bank rates payable by Reserve Bank of India may have been higher or lower than the rate of interest paid to a Saving Bank Account holder of a State Bank of India. Therefore, what rate of interest was to be paid was determined by HERC which was in their domain under Section 47 (4) of 2003 Act. HERC took a conscious decision regarding rate of interest. Having determined that the consumer is to be paid at a bank rate payable by Reserve Bank of India, CGRF and Electricity Ombudsman had only to decipher what was the bank rate payable by the Reserve Bank of India. Therefore, that being within the powers of the Electricity Ombudsman and he had acted LPA No. 671 of 2010 (O&M) -8- within his jurisdiction. He had only given effect to order (Annexure P8). Neither there was any attempt to reduce or increase the rate of interest which the Commission had determined vide Annexure P8 exercising powers under Section 47 (4) of 2003 Act. It will be pertinent to mention here that the order (Annexure P8) had attained finality and was not assailed by the petitioner- Nigam. There was a right of appeal available to Nigam to approach against the order of the Commission to the Appellate Tribunal. They had foregone this right. Therefore, the Electricity Ombudsman had to act in accordance with the mandate laid down by the HERC. It will be necessary to refer to the Electricity Rules, 2005 (hereinafter referred to as “2005 Rules”). Sub Rule (3) to Rule 7 of 2005 Rules read as under:- “7(3) The Ombudsman shall consider the representations of the consumers consistent with the provisions of the Act, the Rules and Regulations made hereunder or general orders or directions given by the Appropriate Government or the Appropriate Commission in this regard before settling their grievances”. Therefore, the Electricity Ombudsman was only acting in consonance with the general orders or directions given by the appropriate LPA No. 671 of 2010 (O&M) -9- Commission, in the present case HERC. HERC in its wisdom had deleted Regulation 23 of 2004 Regulation (Annexure P1). This part was not also challenged by the petitioner, therefore, right of appeal which vested was forsaken. Therefore, the answer to question No.1 formulated by the petitioner is in negative and it is held that in the facts and circumstances of the present case Electricity Ombudsman was well within its right to pass order (Annexure P9) as it was for giving effect to order (Annexure P8).” 6. It is, thus, evident from the observations made above that the Consumer Grievance Redressal Forum (for brevity 'the Forum') and the Electricity Ombudsman has the jurisdiction to deal with the subject matter of Section 47(4) of the 2003 Act because the Electricity Ombudsman was only acting with the powers and directions given by the appropriate Commission. The order passed by the Commission could have been challenged by the appellant in the appeal but no appeal was filed. 7. Likewise regarding question No.2, the learned Single Judge has recorded categorical finding that a consumer can always urge in the complaint that it was an unfair and restricted practice to hold the deposit and not to pay the interest as per the requirement of Statute. It is has been concluded that non payment of interest would amount to unfair practice especially when Section 47(4) of 2003 Act cast a duty upon a distribution licensee to pay interest at the bank rate which may be LPA No. 671 of 2010 (O&M) -10- determined by the Commission. Accordingly, it was held that the Electricity Ombudsman would be competent to deal with the matter concerning non payment of interest at the rate prescribed by the Commission as non payment would be unfair practice. It has also been held that respondent No.3 being consumer was entitled to file 'complaint' under Regulation 2(h) of Haryana Electricity Regulatory Commission (Guidelines) for Establishment of Forum for Redressal of Grievances of the Consumers) and (Electricity Ombudsman) Regulation, 2004 (For brevity “2004 Regulation”) and the definition of 'Consumer Dispute' is very broad, pervasive and non-payment of interest or payment of interest at a lesser rate than the one prescribed by the Commission can be safely termed as 'Consumer Dispute'. The learned Single Judge rightly held that the Electricity Ombudsman was well within his powers to pass order dated 20.12.2007 (P-9). 8. In respect of question No. 3, the learned Single Judge rejected the arguments that interest cannot be paid w.e.f. 10.12.2003 when the 2003 Act came into force. It has been held that the order of the Commission dated 27.07.2006 (P-8) was not being implemented retrospectively nor the order was without jurisdiction of the Electricity Ombudsman. Rejecting the contention raised by the counsel for the petitioner, the learned Single Judge proceeded to hold as under: “This contention raised by counsel for the petitioner cannot be accepted. This Court cannot become oblivious of the fact that consumers were agitating for non-payment of interest. LPA No. 671 of 2010 (O&M) -11- Manufacturer Association, Faridabad, had approached this Court by filing Civil Writ Petition No. 2847 of 2006. This Court had disposed of the writ petition by directing the respondents to take a final decision. Accordingly, order (Annexure P8) was passed and consumers were held entitled to interest at the Reserve Bank of India bank rate. Once rate was determined by the appropriate Commission HERC, Ombudsman was only giving effect to the same. Therefore, after determining the rate of interest, he had held consumers entitled to the interest from April 2003 onwards. The 2003 Act was enforced in the State of Haryana on 10.12.2003, therefore, under Section 47(4) of 2003 Act, consumers were entitled to payment of interest. Therefore, it is clarified that consumers in the present case will be entitled to interest from the date when the 2003 Act was adopted by the State of Haryana i.e. From 10.12.2003 and not from April 2003. The answer to question No. 3 is that Ombudsman was giving effect to order (Annexure P8) as the consumers were demanding interest right from the day they become entitled to the same and had pursued their claims by filing writ petition and subsequently approaching HERC. But the statutory right vested in them from 10.12.2003. LPA No. 671 of 2010 (O&M) -12- Therefore, from that date, consumers will be entitled to interest.” 9. Question No.4, in fact was deemed to be replied while answering question No. 3 and no separate discussion was undertaken. 10. With regard to Question No. 5, the learned Single Judge quoted the Rule 7(3) of the Electricity Rules, 2005 (for brevity 'the 2005 Rules'), which postulates that the Electricity Ombudsman is duty bound to consider the directions given by the Commission. The order dated 27.07.2006 (P-8), amounted to issuance of direction which the Electricity Ombudsman cannot ignore and was obliged to give effect to the same. Therefore, question No.5 has been answered in affirmative. 11. In respect of question No. 6, it was held that once the Commission has issued direction holding that the consumers are entitled to payment of interest on the security deposit at the bank rate determined from time to time by the Reserve Bank of India then the Electricity Ombudsman has rightly fixed the rate of interest at the rate of 6%. The view of the learned Single Judge is discernible from the following observations, which read as under: “Mr. Suri, during the course of arguments, has very fairly stated that definition of bank rate given by Ombudsman is not disputed. It is also not disputed that according to the bank rate, the rate at the relevant time was 6%. This submission that the bank rate was 6% at the relevant time and the definition of bank rate, has LPA No. 671 of 2010 (O&M) -13- been made by Mr. Suri on instructions from Ramesh Kamra, Accounts Officer, Chief General Manager (Finance), Dakshin Haryana Bijli Vitran Nigam Limited, Hisar. Mr. Chawla though stated that the consumers were entitled to higher rate of interest than 6% as sale circular issued in 1992 prescribed 10% rate of interest but he has failed to dislodge the definition of Reserve Bank of India bank rate. He also failed to place on record any document to show that at the prevailing time, Reserve Bank of India bank rate was more than 6%. Even otherwise, in a writ petition preferred by the distribution licensee- respondent No.3 cannot urge that higher rate of interest be awarded as order (Annexure P9) was accepted and no challenge was made to the same. Mr. Chawla has stated that awarding of 6% interest was accepted by consumer, that is why this order was not challenged.” 12. Mr. Vikas Suri, learned counsel for the appellant has again raised two submissions before us. Firstly, he has submitted that the Electricity Ombudsman has no jurisdiction to direct the payment of interest @ 6% from the date of enactment of the 2003 Act by Haryana , namely, 10.12.2003. According to the learned counsel, the payment of interest at the rate of 6% is required to be paid from 27.07.2006, when the order was passed by the Commission and not earlier to that date. Another LPA No. 671 of 2010 (O&M) -14- argument raised by the learned counsel is that the Electricity Ombudsman has no jurisdiction to pass the order dated 20.12.2007 (P-9). According to the learned counsel, there are certain parameters laid down in the 2004 Regulation, which must be construed, have restricted jurisdiction of Electricity Ombudsman. He has maintained that dispute with regard to rate of interest would not fall within those parameters. 13. We have minutely examined the submission made by the learned counsel and have gone through the detailed judgment recorded by the learned Single Judge. We are in agreement with the learned Single Judge for the reasoning and rationale adopted by him because there is statutory support provided by the provision of the 2003 Act, Rules and Regulation. We approve the view that Electricity Ombudsman has jurisdiction to entertain dispute with regard to the period concerning payment of interest. It has been rightly determined from the date of commencement of the 2003 Act i.e. 10.12.2003 because Section 47(4) of that Act expressly provided for payment of interest equivalent to the bank rate on the security deposited by a consumer and the same has to be paid by the distribution licensee like the appellant. There is, thus, no retrospectivity. We do not find any such restriction that a dispute concerning rate of interest cannot be brought before the Electricity Ombudsman. We approve the view of the learned Single Judge that under Regulation 2(h) of 2004 Regulation the definition of consumer dispute takes into its sweep the issue like the one in hand. The definition of consumer dispute is broad and all pervasive. Therefore, we are not inclined to admit these LPA No. 671 of 2010 (O&M) -15- appeals. 14. As a sequel to the above discussion, these appeals are devoid of merit and are accordingly, dismissed. 15. A photocopy of this order be placed on the files of connected cases. (M.M. KUMAR) JUDGE (T.P.S. MANN) JUDGE April 28, 2011 Atul * 1. LPA No. 671 of 2010 (D.H.B.V.N.L., Hisar v. Electricity Ombudsman, Haryana , Panchkula and others). 2. LPA No. 672 of 2010 (D.H.B.V.N.L., Hisar v. Electricity Ombudsman, Haryana , Panchkula and others) 3. LPA No. 673 of 2010 (D.H.B.V.N.L., Hisar v. Electricity Ombudsman, Haryana , Panchkula and others). 4. LPA No. 674 of 2010 (D.H.B.V.N.L., Hisar v. Electricity Ombudsman, Haryana , Panchkula and others). 5. LPA No. 675 of 2010 (D.H.B.V.N.L., Hisar v. Electricity Ombudsman, Haryana , Panchkula and others).