Policy-based electricity tariff directions for agricultural consumers upheld, with concessional classification found consistent with Article 14.
A State Government direction under the Electricity (Supply) Act, 1948 on concessional tariff for agricultural pump sets was treated as binding policy guidance for the Electricity Board. Even where the direction indicated a flat rate, the Board's tariff decision remained valid because it independently accepted the rate as appropriate in exercising its statutory tariff function. Preferential tariff treatment for agricultural consumers was also held not to offend Article 14, since the classification between agriculturists and high-tension consumers was considered reasonable and non-arbitrary, and cross-subsidy alone did not make the scheme unconstitutional. The tariff revisions were therefore sustained.
Issues: (i) Whether a direction issued by the State Government under Section 78A of the Electricity (Supply) Act, 1948 on a question of policy was binding on the Electricity Board in the fixation of tariffs for agricultural pump sets. (ii) Whether preferential tariff treatment granted to agricultural consumers offended Article 14 of the Constitution of India.
Issue (i): Whether a direction issued by the State Government under Section 78A of the Electricity (Supply) Act, 1948 on a question of policy was binding on the Electricity Board in the fixation of tariffs for agricultural pump sets.
Analysis: Section 78A requires the Board to be guided by directions of the State Government on questions of policy. In the setting of tariff fixation under Sections 49 and 59 of the Electricity (Supply) Act, 1948, a governmental direction concerning concessional tariff for agricultural pump sets fell within the policy area. Even if the direction indicated a specific rate, the Board's final decision was not vitiated where the Board independently found that rate acceptable on merits and adopted it as appropriate in discharge of its statutory function.
Conclusion: The direction was binding in so far as it embodied policy guidance for concessional agricultural tariff, and the Board's acceptance of the suggested flat rate was valid.
Issue (ii): Whether preferential tariff treatment granted to agricultural consumers offended Article 14 of the Constitution of India.
Analysis: The claim that high-tension consumers had to be equated with agricultural consumers was rejected. Concessional treatment of agriculturists had already been upheld as a policy-based classification, and the distinction between high-tension consumers and agricultural consumers was treated as a valid one. The tariff scheme was not shown to be arbitrary or irrational merely because the burden of cross-subsidy fell on high-tension consumers.
Conclusion: Preferential tariff treatment to agricultural consumers did not violate Article 14.
Final Conclusion: The appeals failed on both issues, and the tariff revisions were sustained.
Ratio Decidendi: A governmental direction under a statutory policy-guidance provision is binding on the Board within the policy sphere, and concessional tariff classification for agriculturists is constitutionally permissible so long as the classification is reasonable and non-arbitrary.
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