Case: S.Narayan Iyer Vs. Union Of India &amp; Anr

The appellant is a retired District Manager (Telephones), Madras. He filed a writ petition in the High Court for a writ of prohibition, directing the General Manager (Telephones), Madras to forbear from preferred to the Appellate Tribunal but that too proved abortive. The Tribunal, however, referred the following question of law for the opinion of the Highthe revised Telephone Tariff as per the Indian Telegraph Amendment Rules, 196 6. Under the rules, the rental and call charges were increased by 50 per cent and Trunk call charges by about 30 to 35 per cent. The petitioner alleged that the telephone system is a public utility service and not a Revenue earning establishment and the charges can be only in the nature of a fee which must be commensurate with the cost of rendering the service. The petitioner further alleged that the loss incurred by the Government in another establishment service is not a legitimate ground for raising telephoneTrial Court held that Telephone Tariff was unjust and unreasonable. The Trial Court allowed the writHigh Court on appeal held that the High Court could not interfere with the Tariff. The High Court said that the principal upon which public utility rates regulation as has developed in the United States is not applicable here in our country.

Court's reasoning:
These errors in the accounting have resulted in reducing the profits earned by theare three principal reasons why the writ petition is incompetent and not maintainable and the appeal should fail. First, when any subscriber to a telephone enters into a contract with the State, the subscriber has the option to enter into a contract or not. If he does so, he has to pay the rates which are charged by the State for installation. A subscriber cannot say that the rates are not fair. No one is compelling one to subscribe. Second. Telephone Tariff is subordinate legislation and a legislative process. Under Indian Telegraph Act, section 7 empowers the Central Government to make rules inter alia for rates. These rules are laid before each House of Parliament. The rules take effect when they are passed by the Parliament. Third, the question of rates is first gone into by the Tariff Enquiry Committee. The Committee is headed by non officials. The Tariff rates are placed before the House in the shape of Budget proposals. The Parliament goes into all the Budget proposals. The rates are sanctioned by the Parliament. The rates. therefore, become a legislative policy as well as a legislativeCourts have no jurisdiction under Article 226 to go into reasonableness of rates. These rates are decided as policy matter in fiscal planning. There is legislative prescription of rates. Rate s are a matter for legislative judgment and not for judicial determination.