Case: Coimbatore Stock Exchange Ltd. &amp; Another Vs. Tamil Nadu Electricity Regulatory Commission &amp; Others

29(3). In our view, by enacting that section, the Legislature has empowered the Commission to give effect to the concept of equality enshrined in Article 14 of the Constitution. Article 14 of the Constitution mandates that the State shall not discriminate between similarly situated persons. This, however, does not mean that all persons should be subjected to similar treatment. From a positivistic point of view, the decision/action taken by the State or its instrumentality/ agency to accord favourable treatment to a particular class of persons on the ground of economic disparity and like factors cannot be said to be violative of the doctrine of equality enshrined in Article 14 of the Constitution. In the present case, the State Commission has, keeping in view the factors like geographical location of the consumers, the quantum of energy consumed by them, the time at which the energy is supplied to them, the nature of supply etc. fixed different tariffs for different classes of consumers. Therefore, it is not possible to find any fault with the view taken by the High Court that the Commission was entitled to fix different tariff for different consumers and that fixation of lower tariff for certain classes of consumers did not amount to violation of Article 14 of the Constitution.It is also apposite to note that in the past, the Board had been supplying electricity to HT consumers (industrial and commercial), who have been described by this Court in Hindustan Zinc Ltd. v. Andhra Pradesh State Electricity Board (supra) as power guzzlers and tariff was increased for them keeping in view the object of achieving the target of average cost of supply and reducing cross-subsidies in the State. In this context, reference can usefully be made to Paragraph 7.5 of the Tariff Order.We also agree with the High Court that the judgment in West Bengal Electricity Regulatory Commission vs. C.E.S.C. Limited (supra) is distinguishable on facts. The facts of that case show that the Calcutta High Court had interfered with the exercise undertaken by the appellant for determination of tariff for 2000-2001 and 2001-2002. While setting aside the order of the High Court, this Court considered various issues including the issue relating to cross-subsidy and observed:"A perusal of Sections 29(2)(d), 29(3) and 29(5) of the 1998 Act shows that the consumers should be charged only for the electricity consumed by them on the basis of average cost of supply of energy, and the tariff should be determined by the State Commission without showing any undue preference to any consumer. The statute also obligates the State Government to bear the subsidy which if it requires to be given to any consumer or any class of consumers, should be only on such conditions that the Commission may fix and such burden should be borne by the Government. However, the High Court in its judgment has directed the Company to maintain its tariff structure in regard to different types of supplies as it was prevailing before the Commission fixed the new tariff. It also directed the increase in the average rate of tariff which it had permitted to be distributed pro rata by the Company amongst different consumers, so that the percentage of increase of each rate is the same. In effect, therefore, the High Court has directed the continuance of cross-subsidy. One of the reasons given by the High Court in this regard is that Calcutta Tramways which is otherwise running a cheap transportation system might have to increase its fare and the same cannot be permitted since Calcutta Tramways were not heard in the matter of fixation of tariff and there is, therefore, a likelihood of wide discontentment if the fares are to be increased. We have noticed that the object of the 1998 Act is to prevent discrimination in fixation of tariff by imposing cross-subsidy, but at the same time under Section 29(5) of the 1998 Act, if the State Government so chooses to subsidise the supply of energy to any particular class of consumers, the same can be done provided of course the burden of loss suffered by the Company is borne by the State Government and not imposed on any other class of consumers. In this view of the matter, we are of the opinion that while the Commission was justified in its view as to the non-applicability of cross-subsidy, the High Court was in error in issuing a direction to the Commission, contrary to the object and provisions of the 1998 Act to maintain a tariff structure which was prevailing prior to the Commissions report. It is still open to the State Government if it so chooses to direct the Commission to fix the tariff of supply of electricity to any class of consumers at a reduced rate provided the State Government itself subsidises the same."The present one is not a case of giving cross subsidy by the State under Section 29(5) after determination of the tariff. What the State Government had done was to make a commitment before the State Commission that it would provide revenue subsidy of Rs.250 crore for financial year 2003 by making a provision in the State Budget and the Board had clarified that the subsidy was being given for the subsidized supply of electricity to agricultural consumers. The State Government had filed written statement making it clear that no subsidy is being provided for the financial year 2004. The Commission took note of the same and then determined the tariff.Thus, it is not a case in which burden of subsidy has been transferred to other consumers. That apart, the appellants cannot be heard to make a grievance against the so called favourable treatment accorded to certain consumers because they had also availed the benefit of subsidized tariff in the past.The tariff determined for the Railways is in conformity with the demand made by it and we do not find any error in the impugned judgment whereby the High Court rejected their grievance in the matter of fixation of tariff.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]In the present case, the State Commission has, keeping in view the factors like geographical location of the consumers, the quantum of energy consumed by them, the time at which the energy is supplied to them, the nature of supply etc. fixed different tariffs for different classes of consumers. Therefore, it is not possible to find any fault with the view taken by the High Court that the Commission was entitled to fix different tariff for different consumers and that fixation of lower tariff for certain classes of consumers did not amount to violation of Article 14 of the Constitution.It is also apposite to note that in the past, the Board had been supplying electricity to HT consumers (industrial and commercial), who have been described by this Court in Hindustan Zinc Ltd. v. Andhra Pradesh State Electricity Board (supra) as power guzzlers and tariff was increased for them keeping in view the object of achieving the target of average cost of supply and reducingin the State. In this context, reference can usefully be made to Paragraph 7.5 of the Tariff Order.We also agree with the High Court that the judgment in West Bengal Electricity Regulatory Commission vs. C.E.S.C. Limited (supra) is distinguishable on facts. The facts of that case show that the Calcutta High Court had interfered with the exercise undertaken by the appellant for determination of tariff for2. While setting aside the order of the High Court, this Court considered various issues including the issue relating toand observed:"A perusal of Sections 29(2)(d), 29(3) and 29(5) of the 1998 Act showsthat the consumers should be charged only for the electricity consumedby them on the basis of average cost of supply of energy, and thetariff should be determined by the State Commission without showingany undue preference to any consumer. The statute also obligates theState Government to bear the subsidy which if it requires to be givento any consumer or any class of consumers, should be only on suchconditions that the Commission may fix and such burden should be borneby the Government. However, the High Court in its judgment hasdirected the Company to maintain its tariff structure in regard todifferent types of supplies as it was prevailing before the Commission fixed the new tariff. It also directed the increase in the average rate of tariff which it had permitted to be distributed pro rata by the Company amongst different consumers, so that the percentage of increase of each rate is the same. In effect, therefore, the High Court has directed the continuance ofOne of the reasons given by the High Court in this regard is that Calcutta Tramways which is otherwise running a cheap transportation system might have to increase its fare and the same cannot be permitted since Calcutta Tramways were not heard in the matter of fixation of tariff and there is, therefore, a likelihood of wide discontentment if the fares are to be increased. We have noticed that the object of the 1998 Act is to prevent discrimination in fixation of tariff by imposingbut at the same time under Section 29(5) of the 1998 Act, if the State Government so chooses to subsidise the supply of energy to any particular class of consumers, the same can be done provided of course the burden of loss suffered by the Company is borne by the State Government and not imposed on any other class of consumers. In this view of the matter, we are of the opinion that while the Commission was justified in its view as to they, the High Court was in error in issuing a direction to the Commission, contrary to the object and provisions of the 1998 Act to maintain a tariff structure which was prevailing prior to the Commissions report. It is still open to the State Government if it so chooses to direct the Commission to fix the tariff of supply of electricity to any class of consumers at a reduced rate provided the State Government itself subsidises the same."The present one is not a case of giving cross subsidy by the State under Section 29(5) after determination of the tariff. What the State Government had done was to make a commitment before the State Commission that it would provide revenue subsidy of Rs.250 crore for financial year 2003 by making a provision in the State Budget and the Board had clarified that the subsidy was being given for the subsidized supply of electricity to agricultural consumers. The State Government had filed written statement making it clear that no subsidy is being provided for the financial year 2004. The Commission took note of the same and then determined the tariff.Thus, it is not a case in which burden of subsidy has been transferred to other consumers. That apart, the appellants cannot be heard to make a grievance against the so called favourable treatment accorded to certain consumers because they had also availed the benefit of subsidized tariff in the past.The tariff determined for the Railways is in conformity with the demand made by it and we do not find any error in the impugned judgment whereby the High Court rejected their grievance in the matter of fixation of tariff.