1975 (10) TMI 106 - SC - Indian Laws

Court affirms Board's surcharge authority under Act, upholds tariff revision clause, dismisses discrimination claims

The Court upheld the Board's authority to levy a surcharge, finding it permissible under the Act. It determined that the agreement's Clause 13 covers the ... Power to fix or revise tariff including superadded charges - surcharge as enhancement of the stipulated tariff - validity and scope of arbitration clause in agreements for supply of electricity - special agreements under section 49(3) of the Electricity (Supply) Act, 1948 - prohibition on undue preference or discrimination in fixing tariffsPower to fix or revise tariff including superadded charges - surcharge as enhancement of the stipulated tariff - Levy of a surcharge is within the Board's power to revise or fix tariff and, in substance, constitutes enhancement of the stipulated rates. - HELD THAT: - The Court held that the term 'surcharge' denotes an additional or extra charge which, when appended to tariff rates, partakes of the character of tariff. Nomenclature does not alter substance; an enhancement effected by way of surcharge is effectively a revision of the rates for supply of electricity. Consequently, the Board's action in framing a general surcharge cannot be invalidated solely on the ground that the levy is called a 'surcharge' rather than a revision of tariff.The Board has power to levy a surcharge that operates as an enhancement of the tariff.Validity and scope of arbitration clause in agreements for supply of electricity - special agreements under section 49(3) of the Electricity (Supply) Act, 1948 - Questions as to the Board's power to levy the surcharge under the agreement, the interpretation of clause 13 and the reasonableness or arbitrariness of the surcharge fall within the arbitration clause and are to be referred to arbitration rather than decided by the court. - HELD THAT: - The Court applied its earlier decision in Titagarh's case and held that where an agreement contains a clause permitting revision of tariff (clause 13) and an express arbitration provision (clause 23), disputes concerning the levy of a surcharge as a means of revising rates are matters arising under the agreement and covered by the arbitration clause. Even issues of law arising from interpretation of the agreement are within the wide sweep of the arbitration clause; the court declined to exercise its discretionary power to retain the matter for determination under Article 226 or section 34 of the Arbitration Act, observing that it was not appropriate to withhold reference to arbitration in the circumstances.The dispute is arbitrable and must be referred to the arbitrator under the agreement.Prohibition on undue preference or discrimination in fixing tariffs - special agreements under section 49(3) of the Electricity (Supply) Act, 1948 - Exemption of consumers governed by special agreements from the surcharge does not, in the circumstances, amount to unlawful discrimination under section 49 or the agreement's non discrimination clause. - HELD THAT: - The Court explained that section 49 as a whole contemplates the continuing effect of special agreements entered under section 49(3), which suspend the Board's power to unilaterally revise rates during their currency. Where certain consumers are governed by such special agreements, exemption from a general surcharge does not establish an actionable discrimination because the terms and immunity of special agreements must be respected. The Court also noted that article 14 challenges were not pressed before it due to the emergency suspension and that the statutory prohibition on 'undue preference' operates differently from the constitutional guarantee.No impermissible discrimination is made out from exempting consumers covered by special agreements.Final Conclusion: The High Court's dismissal of the writ petition was upheld: the Board may levy a surcharge that effectively enhances tariff; disputes about the levy and its validity under the agreement fall within the arbitration clause and must be referred to arbitration; the exemption of consumers under special agreements does not amount to unlawful discrimination. Appeals dismissed with no order as to costs. Issues Involved:1. Power of the Board to levy a surcharge under the provisions of the Act.2. Applicability of Clause 13 of the agreement to the levy of surcharge and its reference to arbitration under Clause 23.3. Allegation of discrimination by the Board in exempting certain categories from the surcharge.Summary:Issue 1: Power of the Board to Levy a SurchargeMr. Gupte argued that the Board has no power to levy a surcharge under the Act. The Court rejected this argument, stating that although the term 'surcharge' is not defined in the Act, it is essentially an additional charge over the usual tariff. The Court held that the Board has the authority to enhance rates by way of surcharge under the Act.Issue 2: Applicability of Clause 13 and Arbitration under Clause 23Mr. Gupte contended that Clause 13 of the agreement does not cover the levy of a surcharge and thus should not be referred to arbitration under Clause 23. The Court referred to its previous decision in M/s Titagarh Paper Mills Ltd. v. Orissa State Electricity Board, which held that the Board cannot unilaterally enhance rates fixed under a special agreement unless the agreement itself provides for such revision. The Court found that Clause 13 allows for the revision of tariff rates, including surcharges, and thus the matter falls within the scope of arbitration under Clause 23.Issue 3: Allegation of DiscriminationMr. Gupte argued that the Board's exemption of certain categories from the surcharge constitutes discrimination, violating section 49 of the Act and Clause (2) of Schedule I to the agreement. The Court noted that the industries exempted were governed by special agreements, which could not be overridden by the Board. The Court held that the plea of discrimination loses significance in light of Clause 13 and the statutory framework of section 49, especially given the suspension of Article 14 during the emergency.Conclusion:The Court dismissed the appeals, upholding the High Court's decision to dismiss the writ application. The Court found no merit in the arguments against the Board's power to levy a surcharge, the applicability of Clause 13, and the allegations of discrimination. The matter was deemed appropriate for arbitration under Clause 23 of the agreement. No order as to costs was made.