IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN MONDAY, THE 17TH AUGUST 2009 / 26TH SRAVANA 1931 WA.No. 1064 of 2009() -------------------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.16137/2008 DATED 06/04/2009 .................... APPELLANT/ PETITIONER ------------------------------------- SR.CELINE, MANAGER,KANIKKAMATHA CONVENT ENGLISH MEDIUM GIRLS HIGHER SECONDARY SCHOOL, PALAKKAD. BY ADV. MR.K.B.GANGESH SMT.SMITHA CHATHANARAMBATH RESPONDENTS/RESPONDENTS ---------------------------------------------- 1. STATE OF KERALA REP.BY THE SECRETARY TO GOVERNMENT,POWER DEPARTMENT,THIRUVANANTHAPURAM. 2. THE KERALA STATE ELECTRICITY BOARD, REP. BY ITS CHAIRMAN,VYDUTHI BHAVAN,PATTOM, THIRUVANANTHAPURAM. 3. THE KERALA STATE ELECTRICITY REGULATORY COMMISSION, REP.BY ITS SECRETARY, THIRUVANANTHAPURAM. R1 BY GOVERNMENT PLEADER MR.LAKSHMI NARAYANAN R2 BY ADV. MR.C.K. KARUNAKARAN, SC, KSEB. R3 BY ADV. SMT.SREEDEVI KAILASANATH, SC, KSE REGULATORY COMMN. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 30/06/2009, ALONG WITH W.A. NO.1063 OF 2009 AND CONNECTED CASES, THE COURT ON 17/08/2009 DELIVERED THE FOLLOWING: rs. P.R. RAMAN & P. BHAVADASAN, JJ. = = = = = = = = = = = = = = = = = = = = W.A. NOS. 1063, 1064, 1073, 1075, 1076,1079, 1080, 1083, 1084, 1100, 1115, 1116, 1121, 1122, 1123, 1179, 1180, 1191, 1192, 1202, 1204, 1205, 1207, 1208, 1210, 1211, 1212, 1213, 1218, 1219, 1224, 989, 994, 1233, 1243,1244, 1248, 1254, 1269, 1274, 1283, 1287, 1285,1288, 1306, 1316, 1321, 1280, 1329, 1349, 1351, 1356, 1348, 1355, 1311, 1370 & 1373 OF 2009. = = = = = = = = = = = = = = = = = = = = = = = DATED THIS, THE 17TH DAY OF AUGUST, 2009. J U D G M E N T Raman, J. These appeals are directed against the common judgment rendered by the learned Single Judge in a batch of writ petitions filed challenging the tariff modification issued by the Kerala State Electricity Regulatory Commission in the matter of fixation of tariff for the Self Financing Educational Institutions under Sections 62 and 86 of the Electricity Act, 2003 (hereinafter referred to for brevity "the Act"). The appellants are Self Financing Educational Institutions either in the school level or in the college level. Some of the schools are under State Syllabus and some others under the CBSE. Besides there are Industrial Training Institutions also. As per the new tariff notification Self Financing Educational Institutions are classified under LT VIIA as commercial institutions and the notification is effective from 1.12.2007. W.A. 1064/09 & CON. CASES :2: 2. Under this notification aided private educational institutions and Government schools are classified under LT VII category. The challenge was made on several grounds. The contentions raised were that the source of revenue cannot be the basis of the discrimination between the educational institutions since all the educational institutions irrespective of whether Self Financing Institutions or aided or Government educational institutions, are engaged in imparting education, that the notification was issued without affording an effective opportunity to the petitioners to raise their objection to the introduction of the new tariff and therefore, the remedy under the Act vide Section 110 of the Electricity Act cannot be a bar, being not an effective alternate remedy, that there was total lack of materials to justify the discrimination meted out to the Self Financing Educational Institutions by treating them as commercial tariff consumers as against the other educational institutions, that the provisions contained in Section 62 of the Electricity Act which provides the factors, based on which alone, any differentiation could be made, is totally absent and the Kerala State Electricity Regulatory Commission has traversed beyond the very provision contained in Section 62 of the Act in this regard, that the Self Financing Educational Institutions are prohibited from profiteering by the relevant statutes and also by the decision of the superior courts, that there is also no W.A. 1064/09 & CON. CASES :3: material available to show that there is any profiteering by the Self Financing Educational Institutions and that the Educational Institutions cannot be characterized as commercial establishment. Reference was also made to the decision in M.P. Electricity Board & Others vs. Shiv Narayan And Another (2005(7) SCC 283). It was pointed that students coming under the ITI category were generally drawn from the poorer sections and therefore, the mere fact that such ITI Institutions are Self Financing Educational Institutions does not mean that the student studying in such Institutions are better placed in life and the purpose of consumption of electricity in the Educational Institutions irrespective of whether it is aided or unaided or Self Financing Institution, is the same. Incidentally, it was also contended that the Commission has no suo motu power for initiating any action for revising the tariff. 3. The Kerala State Electricity Regulatory Commission and the Kerala State Electricity Board sought to justify the tariff notification, inter alia contending that the consumers, if at all they are aggrieved by the notification, has got an effective alternate remedy by way of an appeal to the Appellate Tribunal and thereafter, an appeal to the Apex Court. They also contended that there is no violation of the principles of natural justice in this case, that the Commission had issued Ext.R3(a) notice inviting objections/ W.A. 1064/09 & CON. CASES :4: suggestions from the public consumers and other stake holders in various newspapers and that in Ext.R3(a) it was mentioned that the details were available in the web site of the Commission as also on request. Ext.R3(c) is the detailed draft, Ext.R3(d) is the press release on the publication of the draft schedule and Ext.R3(e) is yet another press release extending the time for receiving objections. The draft schedule was discussed by the State Advisory Committee and public hearing was held; but the petitioners did not appear in the public hearing. It was also pointed out that the Electricity Board forwarded the proposals on the draft schedule to be effective from 1.6.2007 requesting that the tariff schedule be notified by the Commission with appropriate modification and that was accepted and treated as a petition filed by the Electricity Board - the Supplier. The notification is based on rationalisation principles, that educational institutions, were included in the earlier notification, as part of non domestic LT VI B as also commercial institutions were included in this category. It is the case of the Commission that Self Financing Educational Institutions have their own fees structure, wage structure etc. which are absent in a Government/Aided private school and that Self-Financing Educational Institutions are run on business prospects. Reference was made to Sections 61 and 86 of the Act to contend that though the Commission has started the process of revising the W.A. 1064/09 & CON. CASES :5: tariff initially suo motu, subsequently the Board has filed a petition and therefore, the Commission was within its legal limits in issuing the tariff order. Besides the Kerala State Electricity Board Regulatory Commission (Conduct of Business) Regulations, 2003 provides for service of notice and vide Regulation 27 publication in news papers or in any other manner is an accepted service form of notice. Regulation 27(8) specifically provides for service of notice and process issued by the Commission and that publication required to be done cannot be deemed to be invalid by reason of any defect in the name or description, provided the Commission is satisfied that such service is in other respect sufficient. Regulation 40 prescribes the procedure for publication of a petition. It is contended that the Commission has followed all these procedural regulations and notification issued is in full conformity with the requirements. On behalf of the Kerala State Electricity Board, the learned counsel contended that Section 62(3) of the Act is on the same lines as Section 49 of the Electricity Supply Act, 1948, that Self Financing Educational Institutions are by themselves a class and further, sought to justify the difference in tariff on the basis of nature and purposes of supply. It is contended that considering the higher fee structure and facilities in Self Financing Educational Institutions, they cannot be equated with the aided or Government Institution. W.A. 1064/09 & CON. CASES :6: 4. The learned Single Judge framed five issues for consideration , ie. (i)whether the matter should be considered under Article 226 of the Constitution of India, in the light of Section 111 and 127 of the Act , (ii) whether the impugned tariff order is vitiated on account of non observance of the principles of natural justice, (iii) Whether the tariff order is issued beyond jurisdiction and whether the Commission has power to determine the tariff suo motu, (iv) whether the Self-financing Educational Institutions can be treated as "commercial" and (v) whether there is violation of Section 62(3) of the Act and whether there is valid classification. 5. The learned Single Judge found that the plea of violation of principles of natural justice is not a ground in many of the writ petitions. Reference was made to Ext.R3(a) and found that in the extract published, there is mention regarding the demand charge and energy charge and that details will be available in the web site and that there is mention that the present tariff rates are continued for certain categories. But at the same time, the court found that in some cases, there are pleadings and in many cases counter affidavits are not filed. The documents produced by the Commission indicate that the draft tariff schedule is available with the Commission on the web site and also in its Office; but the extract would not give any impression about the proposal to include Self-Financing W.A. 1064/09 & CON. CASES :7: Education Institutions in the commercial tariff (emphasis given), but at the same, it cannot be overlooked that the objections were invited to the draft tariff schedule and not to the extract of the draft tariff schedule, that the draft tariff schedule was available on the web site which indicates the proposal to include Self Financing Institutions in the "Commercial" category and in such circumstances, it was incumbent on those petitioners who allege violation of principles of natural justice to have pursued the matter before the Commission to peruse the draft tariff schedule either from the web site or from the office of the Commission in which case they would have become aware of the inclusion of Self-Financing Institutions in Schedule VII A. Therefore, it was concluded that there was no violation of the principles of natural justice. 6. Turning to the contention regarding the power to act suo motu by the Commission, it was pointed out that though initially the Commission was proceeding suo motu, thereafter the Board had filed a petition which included the proposal to modify the proposal and the tariff order was passed on the basis of the suo motu petition and the petition filed by the Board. After referring to Sections 62, 64 and Section 86 (4) it was held that the statutory regulation made under the Act empowers the Commission to initiate suo motu action. Reference was also made to Regulation 22 of the W.A. 1064/09 & CON. CASES :8: Kerala State Electricity Regulatory Commission (Conduct of Business) Regulations, 2003 in this regard. The learned Single Judge then turned to the issue as to whether Section 62(3) of the Act is breached and he did not accept the contention of the petitioners and distinguished the decision in M/s. Rohtas Industries Ltd. and another v. The Chairman, Bihar State Electricity Board and Others (AIR 1984 SC 657) which held that the capacity to pay cannot be the basis for differentiation. The differentiation based on the capacity to pay will be bad if the differentiation is between the consumers falling in the same category and for that matter Self Financing Educational Institutions are to be treated as not falling in the same category. Referring to the contention that differentiation factors are nature of supply, purpose of supply and the consumption pattern, the learned Single Judge observed that there appears to be substantial difference in the consumption pattern of Self Financing Institutions and Government Institutions; but it does not appear to contain the consumption pattern of Aided Educational Institutions. It was held thus: "Further, under the head "purpose of supply", it is to be noted that the respondent has a case that Self-Financing Educational Institutions have their own fees structure, wage structure, student and employee welfare measures and they operate on business prospects. W.A. 1064/09 & CON. CASES :9: One way of looking at the premise relating to "purpose of supply" is to consider whether if a question is posed as to whether the purpose of supply to Government Educational Institutions/Aided Educational Institutions on the one hand and Self-Financing Educational Institutions on the other hand is the same, it could be said that the purpose is to supply connection to Educational Institutions which are providing education. However, it is also possible to consider whether, having regard to the differences between Government Educational Institutions and Aided Educational Institutions on the one hand and Self-Financing Educational Institutions on the other hand, it could be said that there is a difference in the purpose for which the supply is sought. In other words, if it could be found that there are substantially distinguishing features, they could be treated as falling in two different categories. " It was observed that it is not the source of funds, but the extent of the funds available that makes the difference and finally, repelling all the contentions raised by the writ petitioners, the writ petitions were dismissed. 7. We have referred to the finding of the learned Single Judge for the limited purpose of appreciating the fact that though an issue was raised as to whether the petition under Article 226 is maintainable, the writ petitions were not dismissed on the ground of alternate remedy. The contention on merits as to whether the tariff notification is justified under Section 62(3) of the Act was considered elaborately and negatived the contention of the W.A. 1064/09 & CON. CASES :10: petitioners. That being the position, the question of maintainability of the writ petition can no more be an issue before us. If the writ petitions are dismissed on the ground of alternate remedy, then there is no scope for considering the contentions on its merits. Once the court considered the various contentions on their merits and negatived the contentions, thereafter the parties cannot be relegated to the appellate forum. Hence we proceed to consider the contentions which were pressed at the time of hearing the appeal before us. 8. Though a contention was raised that the tariff notification differentiating the Self-Financing Educational Institutions from the other Educational Institutions is irrational and does not stand the test of Article 14 of the Constitution of India, the said contention was not pressed before us. So also, the contention whether the Regulatory Commission has got suo motu power or not is only academic in the factual situation and based on the subsequent development. The licensee namely, the Kerala State Electricity Board themselves have made a proposal later which was treated as a petition as contemplated under the Act, though initially suo motu power was invoked by the Commission, subsequently, it was based on the petition that further proceedings were taken. Hence this contention also is not seriously pressed. W.A. 1064/09 & CON. CASES :11: 9. However, the learned counsel appearing for the appellants contended that in so far as Section 62(3) of the Electricity Act, 2003 exhaustively provides the grounds on which the consumer could be differentiated for the purpose of tariff notification, the Regulatory Commission being a statutory authority cannot go beyond the same and the notification issued by the Commission has to be tested with reference to Section 62(3) of the Act alone and if there are no valid grounds as envisaged under Section 62(3) of the Act, the differentiation of Self- Financing Colleges from the rest of the Institutions for the purpose of tariff is to be held to be bad. In other words, whether Self-Financing Educational Institutions themselves form a class or not generally is not relevant in so far as the classification or differentiation for the purpose of tariff fixation must be decided within the frame work of the Statute and not beyond or dehors the provisions contained therein. In this context reference was made to Section 49 of the 1948 Act and the corresponding section, namely, Section 62(3) of the present Act and contended that while under Section 49 differentiation could also be made on any other grounds that is consciously omitted in the new Act. So much so, the intention of the legislation was clear that the condition or the grounds on which differentiation could be made for the purpose of tariff fixation must strictly W.A. 1064/09 & CON. CASES :12: be on the parameters fixed under Section 62(3) of the Act alone. In this case, it is shown that even according to the respondents, the nature and purpose are the factors justifying the Self-Financing Educational Institutions to be treated differently from other Educational Institutions. If so, it is contended that, the nature and purpose of supply of energy to an educational institution being the same, irrespective of source of fund, cannot be treated differently. It is contended that the Self-Financing Educational Institutions, as per the averments made in the counter affidavit, is a new class emerged which is factually incorrect. The averments made in the additional counter affidavit that Self-Financing Educational Institutions are run on business profit is totally denied and it is pointed out that it is not sought to be supported by producing the files containing any such materials. In other woods, the Commission has not made any enquiry regarding these aspects and there is total lack of application of mind and merely based on surmise and conjunctures it is held that all Self-Financing Educational Institutions are run as a business. 10. We have heard the arguments of the learned counsel appearing on behalf of the appellants Sri. Gangesh, Sri. Kurian George Kannanthanam, Sri. Wilson Urmese, Sri Rajit, Sri. Ashik K. Mohammed Ali, Shri. Nagaresh, Sri. Tom Jose P., Sri. M.A. Thomaskutty, Sri. T.P. W.A. 1064/09 & CON. CASES :13: Ibrahim Khan and Sri. Paul K. George and the learned Standing Counsel Smt. Sreedevi Kailasanath, appearing on behalf of the Kerala State Electricity Regulatory Commission and Sri. C.K. Karunakaran, learned Standing Counsel for the Electricity Board. 11. The Electricity Act, 2003 is an Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto. Section 2(64) of the said Act defines the "State Commission" as follows: "State Commission" means the State Electricity Regulatory Commission constituted under sub-section (1) of Section 82 and includes a Joint Commission constituted under sub-section (1) of section 83." 12. Section 82 deals with the Constitution of a State Commission. W.A. 1064/09 & CON. CASES :14: There is a proviso to Section 82(1) to the effect that the State Electricity Regulatory Commission established by a Government under Section 17 of the Electricity Regulatory Commissions Act, 1988 and the enactments specified in the Schedule, and functioning as such immediately before the appointed date shall be the State Commission for the purposes of this Act and the Chairperson, Members, Secretary and officers and other employees thereof shall continue to hold office, on the same terms and conditions on which they were appointed under those Acts. Section 86 enumerates the various functions to be discharged by the State Commission and determination of tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail within the State is one such function. It is in exercise of the said function that the State Regulatory Commission has issued the new tariff which is impugned in the writ petition to the extent where Self Financing Educational Institutions are included under Tariff VII A as commercial and treating them differently from the other Aided/Government Educational Institutions retaining them under Tariff VI. Section 61 empowers the appropriate Commission to specify the terms and conditions for the determination of tariff and in so doing, it shall be guided by the factors mentioned under Clause (a) to (i). Section 62 empowers the appropriate Commission to determine the tariff in accordance with the W.A. 1064/09 & CON. CASES :15: provisions of the Act and Section 62(3) clearly provides that the appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate the consumers on the basis of the factors enumerated thereunder. We may extract for easy reference Section 62(3) of the Act as follows: "The appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer's load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required." Section 49 of the Electricity (supply) Act, 1948 corresponds to Section 62 (3) of the Electricity Act, 2003. We may extract the said provision also as hereunder: "49. Provision for the sale of electricity by the Board to persons other than licensees.--(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 framed uniform tariffs. (2) In fixing the uniform tariffs, the Board shall have regard to all or any or the following factors, namely,-- W.A. 1064/09 & CON. CASES :16: (a) the nature of the supply and the purposes for which it is required; (b) the co-ordinated development of the supply ad 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 ad standardization 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 ad terms and conditions for the supply of electricity, the Board shall not show undue preference to any person." 13. It may be noticed that though Section 62(3) and Section 49(2) of the Act may appear to be similar, by virtue of Section 49(3) of the earlier Act, the Board, if it considered necessary or expedient, can fix different tariffs for the supply of electricity to any person not being a licensee having due 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. Therefore there could be any other relevant factors which may weigh with W.A. 1064/09 & CON. CASES :17: the Board to justify differentiation other than the factors specifically mentioned in the Section. In other words, the board has got a wider power and the Section is not exhaustive as regards the factors based on which differentiation could be made since there may be other factors which may justify differentiation for the purpose of tariff fixation. But while