Case: Kanoria Chemicals And Industries Ltd. And Anr Vs. State Of U.P. And Ors. And Vice Versa


Decision reasoning: 1[ds]By the time the matter came up before us for hearing in the first instance the State Government had already passed its order of revision dated March 28, 1988. The rates which had been recommended by the State Electricity Board and approved by the State Government were within the knowledge of the appellant. It was of course necessary and equitable that, before giving effect to these rates (if not even before they were recommended), the consumer should have had no opportunity of placing before the Electricity Board and the State Government its side of the picture. This opportunity has, however, been provided by to the appellant. The appellant has also filed its representation. After considering the representation, the Board made its recommendations to the State Government and a copy of these recommendations were also available to the appellant. The appellant also had full opportunity to meet the various points set out in the recommendations of the Board. The comments of both the Board and the appellant have been taken into account by the State Government before finally approving of the rates proposed by the Board. The grievance of the appellant seems to be that the Board has not set out anywhere the precise manner in which the rates recommended by them were arrived at and that this has considerably handicapped any effective representation being made by it to the Board and to the State Government. We do not think the proceedings are vitiated for this reason. It is true that the actual computations of the rates were not set out by the Board in its recommendations made in 1983 or 1985 or 1988 but the proper approach to the issue is not the one adopted by the petitioner. The section does not require the Board or the State Government to explain each and every step in its calculation. All that the State Government has to do is to take into consideration the factors relevant under section 60(5) and propose rates for fixation to the State Government. It is in order to ensure that these recommendations take into account all relevant factors that an opportunity has been provided to the consumer to satisfy the Board as well as the State Government that the fixation has not taken into account certain relevant factors. We, therefore, think the appellant must be held to have been given a fair opportunity under s. 60(5)(a) so long as it had an opportunity to explain to the Board and the State Government the factors individual to its case and also as to how and why the rates recommended by the Board need modification. Moreover, the issue here was in a narrow compass for the following reason. On the passing of the Amendment Act, the Board decided to substitute the contract rates by therates. But this was rendered infructuous because of the terms of section 60(5)(a) which, it was said, were different from those of s. 49. If the factors under section 49 were alone to be taken into account then the consumers, one and all, would have been liable to pay for the electricity at the tariff rates. The claim of the appellant was that in applying these rates certain factors individual to it had not been taken into account. If one compares the two provisions, one will find that most of the elements are common to the two provisions. Both under section 49 and section 60 the authorities have to take into account the geographical position of any area, the nature of supply and purpose for which supply is required and any other relevant factor. The only difference between the two provisions is that since section 49 deals with a general fixation while section 60(5) deals with a fixation for a particular individual case, there may be some special factors to be taken into account which may or may not be germane while fixing the general tariff under section 49. Hence the only point which needed to be considered, when the matter was reexamined pursuant to our directions, was whether, having regard to the factors prevailing in the case of the appellant the rates to be fixed should be higher or lower than therates or whether they should be the same. It was open to the petitioner to contend, as it in fact did, that there are special features in its case which make it legitimate to fix some concessional rates as compared to other consumers. On the other hand, it is equally open to the State Electricity Board to contend that having regard to the prevalence of certain circumstances, the rates to be fixed should be higher than the tariff rates applicable generally. This is a short aspect on which both parties have made their positions clear. Apart from the general factors which have been taken into account in fixing the general tariff rates, the Board has, in making its recommendations, taken into account the purpose for which supply was required by the petitioner along with the factor of recurring losses incurred by the Board year after year and its statutory requirements to maintain a minimum surplus of 3 per cent as required under section 59 of the Supply Act, 1948. We are, therefore, satisfied that the appellant had full opportunity to place all its special features before the Board and the State Government and that all aspects have been fully considered by the authorities. The fixation of rates on 31.8.1991 is not, therefore, vitiated for the reasons urged by the appellant.We find that the answer to the first two questions posed only be in the affirmative. On the first issue, there are no obstacles, statutory or theoretical, standing in the way of the Board fixing rates for the company which will be higher than the rates applicable to bulk consumers. The provision in s.60(5)(a) is intended to enable the Board and State to cut off the shackles cast by an ancient contract entered into at a time when conditions were totally different. It confers an absolute and unrestricted enabling power to revise the rates in an appropriate manner and contains no restriction of the nature suggested for the appellant. In doing this, the only limitation which the statute requires the authorities to keep in mind are the factors mentioned in the section. Whether the revised rates for the consumer governed earlier by the contract should be higher or lower than, or equal to, the tariff rates would depend on a large number of considerations, in particular, the basis on which, and the point of time at which, those general rates were fixed. In principle, it is quite conceivable that, in an appropriate case, a consideration of the relevant factors may justify even a rate higher than the general tariff rates intended for the particular category of consumers. We shall examine later whether this was justified in the present case. At the moment, all we are concerned with is the legality of fixing such higher rates and we see no difficulty in this either on the language of the Statute or on other considerations.23. A retrospective effect to the revision also seems to be clearly envisaged by the section. One can easily conceive a weighty reason for saying so. If the section were interpreted as conferring a power of revision only prospectively, a consumer affected can easily frustrate the effect of the provision by initiating proceedings seeking an injunction restraining the Board and State from revising the rates, on one ground or other, and thus getting the revision deferred indefinitely. Or, again, the revision of rates, even if effected promptly by the Board and State, may prove infructuous for one reason or another. Indeed, even in the present case, the Board and State were fairly prompt in taking steps. Even in January 1984, they warned the appellant that they were proposing to revise the rates and they did this too as early as in 1985. For reasons for which they cannot be blamed this proved ineffective. They revised the rates again in March 1988 and August 1991 and, till today, the validity of their action is under challenge. In this state of affairs, it would be a very impractical interpretation of the section to say that the revision of rates can only be prospective.24. The language of the section also supports this view. Slightly rearranging the syntax of the clause to facilitate easier understanding, what it provides is that the revised rates fixed by the Board shall be the rates to be charged by the Board for the energy supplied by it to any consumer for which the payment will be due for the first time on or after the 20th May, 1983. In other words, the rates eventually fixed will, by force of statute, apply to all supply of electricity for which the charges become payable in terms of the contract, after 20.5.1983. There are three objections suggested against this interpretation. The first is that it precludes the Board and State, where they choose to do so, from revising the rates prospectively or with effect from such dates, after 20.5.1983, which they may consider appropriate. We think this consequence does not flow from the language of the provision. The mandate is only that the rates to be charged on supplies for which payment becomes due after 20.8.83 shall be as fixed by the Board. The powers of the Board in fixing the rates including the dates from which they will benot restricted in any manner. The Board is at complete liberty to fix different rates from different dates and that scheme of fixation will be read with the contract. Only the Board cannot revise the rates in respect of supplies for which payment under the contract, fell due before 20.5.83. The second objection, which is a follow up of the first, is that if the power u/s 60 is held exercisable more than once, the interpretation will permit successive revisions, each superseding the earlier one, a position that could lead to immense harassment. We have no doubt the power u/s 60 is exercisable more than once. All the same, the answer to the appellants objection is that, while this could be a basis of substantial harassment if repeated revisions are automatically dated back to 20.5.83 (as argued, on the first point, for the assessee), it loses all force on our interpretation leaving it open to the Board and State to fix the dates with effect from which revisions will be effective. In view of this, one can take in that, while making a subsequent revision, the authorities will not normally tamper with an earlier revision (s) or alter the dates of effectiveness fixed for the earlier revision (s) without a valid reason to do so. If this is done, it will be open to a court to examine the basis thereof and sustain it only where the earlier fixation was based on an error or misconception or the like and called for modification. The third objection is that the Hindi version of the Amendment Act is differently worded and does not contain the words "for the first time" found in the English version. Reliance is placed on the decision of a Bench of seven judges of the Allahabad High Court in Mata Badal Pandey v. Board of Revenue, 1974 U.P.T.C. 570 to the effect that, where there appears a doubt or ambiguity on a plain reading of the English words as to the true intention of the legislature and the Hindi version is conflicting or different. the Hindi text will be the key for finding the answer. We do not think the Hindi version really alters the position; actually it is the presence of the words "for the first time" in the English version that create an ambiguity. Without these words, the clause clearly provides that all supply of electricity, for which payment is to be made after 20.5.83, will be charged at the rates to be fixed by the Board. We, therefore, reject the appellants contention and hold that the fixation by the Board of rates from 20.5.83 and, at different rates for different periods of time, is unexceptionable.We have given careful thought to the considerations urged before us and we are of opinion that there is no material to justify any departure from therates in the case of the appellant. We find no force in the contentions put forward on behalf of the appellant to reduce the rates applicable to the appellant belowlevel. The special circumstances pleaded have lost their importance with the passage of time. It is obvious that the conditions that prevailed in 1963 are not valid and the appellant has had the benefit of concessional rates for twenty years. No doubt the benefits would have continued for five more years but for statutory intervention. But the statute permits a reconsideration of the situation as in May 1983 and it is unarguable, it seems to us, that the rate of 2.75 p. should continue even after 1983 or that the appellant should be entitled to any special concession. The consideration that electricity is a "raw material" in the assessees business is, again, irrelevant for it can mean nothing more than that the appellant needs substantial quantities of the energy and there is no reason why it should not pay for it at the normal market rates. The point regarding take off of supply at the generating point will no doubt have some relevance on the question of rates and we shall refer to this aspect later in the context of the pleas put forward by the Board. We are, therefore, of the view that the appellant has no valid justification for staking a claim to less than the HV 2 rates.27. Equally, it seems to us, the authorities have no case for seeking to raise the rates beyond therates. They are supplying energy to the appellant from the grid since 1968 and they cannot justifiably seek to demand higher rates from the appellant than from theconsumers. This is sought to be justified on the basis of the huge losses that the Board has been incurring and the statutory justification for escalation in the rates keeping in view the necessity to build up a surplus. This, however, is an aspect of working which should affect all the consumers equally. May be the Board can, in appropriate circumstances, seek to make up for a part of the losses by hiking up the rates to one particular category of consumers but that would not be justified here as the transmission and distribution losses in respect of the supply to the appellant are borne by it and, in the absence of some special vital reason, it would not be equitable to fix the rates of supply to the appellant above the rates applicable to otherconsumers. Some reference was made to the difficulties in completely fitting the scheme of computations for determining the HV_2 rates into the scheme under the appellants contract. It is, however, unnecessary to go into that aspect as we are only on the question of rates and holding that there is no justification for charging more thanrates from the appellant. Moreover, the appellant has been paying for the Obra supply atrates since 1989. We have also been informed that in 1972 the appellant took a further additional supply of 8 MW and agreed to pay therefor at HV 2B rates as applicable to other Bulk Power Consumers in the State.