Civil Writ Petition No.7544 of 2011 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.7544 of 2011 Date of decision: 26.7.2011 M/s Mittal Carding Works and others ...Petitioners Versus Union of India and others ...Respondents CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Lokesh Sinhal, Advocate for the petitioners. ADARSH KUMAR GOEL, ACJ. This petition seeks declaration of Section 45(3)(a) of the Electricity Act, 2003 (for short “the Act”) being ultra vires the Constitution of India and for quashing of order dated 13.9.2010 issued by the Haryana Electricity Regulatory Commission and sale circular dated 22.9.2010 issued by respondent no.3 Uttar Haryana Bijli Vitran Nigam Ltd. Case of the petitioners is that they are running spinning mills and are consumers of electricity generated and supplied by respondent no.3. Respondent No.2 is a commission set up under Section 86 of the Act to perform statutory functions, including determination of tariff and grant of licences etc. Section 45 of the Act enables recovery of charges by the distribution licencee for the supply of electricity as per tariff. The components of tariff can be not only charges for the electricity supply but also fixed charge in addition to charges for electricity supply. According to the petitioners, provision under Sections 45(3)(a) of the Act, to the extent of providing for fixed charge in addition to charges for electricity supply, was arbitrary and irrational. Civil Writ Petition No.7544 of 2011 -2- *** We are unable to accept the submission. As shown by the preamble to the Act, the Act seeks to consolidate the law relating to generation, transmission, distribution, trading and use of electricity. It envisages regulation of generation, transmission, distribution and tariff by Regulatory Commission constituted under the Act. The tariff has to be fixed on rational principles as specified under the Act and can be challenged before the Appellate Tribunal. The tariff has to take care of fixed cost as well as operational cost. Section 45 of the Act is as under:- “45. Power to recover charges:- (1) Subject to provisions of this section, the prices to be charges by a distribution licencee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and conditions of his licence. (2) The charges for electricity supplied by a distribution licencee shall be- (a) fixed in accordance with the methods and the principles as may be specified by the concerned State Commission; (b) published in such manner so as to give adequate publicity for such charges and prices. (3) The charges for electricity supplied by a distribution lincencee may include- (a) a fixed charge in addition to the charge for the actual electricity supplied; (b) a rent or other charges in respect of any electric meter of electrical plant provided by the distribution Civil Writ Petition No.7544 of 2011 -3- *** lincencee. (4) Subject to the provisions of section 62, in fixing charges under this section a distribution lincencee shall not show undue preference to any person or class of persons or discrimination against any person or class of persons. (5) The charges fixed by the distribution lincencee shall be in accordance with the provisions of this Act and the regulations made in this behalf by the concerned State Commission.” While fixing the tariff, the Regulatory Commission in its order dated 13.9.2010, inter-alia, observed:- “In line with the basic economic principle i.e. cost of fixed nature which has no correlation with the quantum of energy consumed ought to be recovered by way of 'damaged charge', the Commission, has introduced two part tariff comprising of a 'Fixed Charge' and 'Energy Charge' based on actual energy consumption in the HT industry category. In order to offset the introduction of fixed charge, the increase in energy charge has been kept at the minimum possible level while retaining the concession given to supply at a voltage higher than 11 KV.” It is clear from the statutory provision as well as the order of the Commission, that charges under Section 45(3) (a) are to be cover fixed cost and such charges are accounted for while fixing variable charges for electricity supply. Learned counsel for the petitioners submits that Section 46 of the Act enables expenses incurred for providing electricity lines or Civil Writ Petition No.7544 of 2011 -4- *** electrical plant to be recovered and thus, no other fixed cost can be recovered under Section 45(3)(a) of the Act. There is no merit in the submission. The fixed costs under Section 46 are not exhaustive. They cover only electrical plant and electricity lines and not any other fixed cost. Quantum of fixed charges is not subject matter of the petition, even according to statement of learned counsel for the petitioner. We are unable to hold that provision under Section 45(3)(a) is arbitrary and beyond legislative competence. The writ petition is dismissed. (Adarsh Kumar Goel) Acting Chief Justice July 26, 2011 (Ajay Kumar Mittal) Pka Judge