2009 (3) TMI 1052 - SC - Indian Laws

Supreme Court upholds Kerala State Electricity Board's tariff revision authority post-1998 Act

The Supreme Court held that the Kerala State Electricity Board (KSEB) had the jurisdiction to revise tariffs post the enactment of the Electricity ... State Electricity Board's power to frame and revise tariff pending constitution of State Commission - Directory nature of State's obligation to constitute State Electricity Regulatory Commission - Non-obstante clause applicability only after Commission's constitution - Harmonious construction of Electricity Regulatory Commissions Act, 1998 and Electricity (Supply) Act, 1948 - Prospective operation of Commission's tariff determination powersState Electricity Board's power to frame and revise tariff pending constitution of State Commission - Non-obstante clause applicability only after Commission's constitution - Harmonious construction of Electricity Regulatory Commissions Act, 1998 and Electricity (Supply) Act, 1948 - Prospective operation of Commission's tariff determination powers - Whether the State Electricity Board retained jurisdiction to frame or revise tariff between commencement of the Electricity Regulatory Commissions Act, 1998 and constitution of the State Commission. - HELD THAT: - The Court held that Section 17 of the 1998 Act, which permits the State Government to constitute a State Commission, is directory and does not impose a mandatory obligation enforceable by writ of mandamus; the Central enactment's use of 'shall' for the Central Commission and 'may' for State Commissions indicates deliberate discretion for States (para 21). The 1948 Act was not repealed on commencement of the 1998 Act and the law does not contemplate a vacuum; therefore, where no State Commission exists the powers of the State Electricity Board under the 1948 Act to determine and revise tariff remain operative (paras 23-26, 34). A non-obstante provision in the 1998 Act would be attracted only after the Commission comes into existence; the principles listed in Section 29(2) of the 1998 Act are to be applied by the Commission when exercising its statutory powers and are not per se binding on the Board prior to constitution of the Commission (paras 27-28). Further, the Commission's power to determine tariff is not retrospective to periods before its constitution unless expressly provided (para 30). The decision in BSES Ltd. was confined to its facts where the State Commission had been constituted, and does not govern periods when no Commission existed (paras 31-34). [Paras 23, 24, 27, 30, 34]Held that until the State Electricity Regulatory Commission is constituted the State Electricity Board retains the jurisdiction under the Electricity (Supply) Act, 1948 to frame and revise tariff; the 1998 Act's overriding provisions operate only after constitution of the Commission.Reference to further adjudication by appropriate Bench - Disposition of other substantial questions of law raised in the appeal. - HELD THAT: - The Court observed that additional substantial questions raised by the appellant were not decided in the reference and should be considered by an appropriate two-Judge Bench (paras 36-37). Accordingly, those questions were not adjudicated in this reference to the Larger Bench. [Paras 36, 37]Other substantial questions of law are left open for determination by an appropriate two-Judge Bench.Final Conclusion: Reference answered: clarified that in the absence of a constituted State Electricity Regulatory Commission the State Electricity Board retains the power under the Electricity (Supply) Act, 1948 to determine and revise tariffs; the 1998 Act's provisions and non-obstante effect apply only after constitution of the Commission. Other substantial questions are referred to an appropriate two-Judge Bench for decision. Issues Involved:1. Jurisdiction of the Kerala State Electricity Board (KSEB) to revise tariffs post the enactment of the Electricity Regulatory Commissions Act, 1998.2. Obligation of the State to constitute the Electricity Regulatory Commission under the 1998 Act.3. Applicability of the principles laid down in the 1998 Act for tariff revision by the KSEB.4. Validity of the 2002 Tariff Revision Order by KSEB.Summary:1. Jurisdiction of KSEB to Revise Tariffs Post-1998 Act:The Supreme Court examined whether KSEB had the jurisdiction to revise tariffs after the enactment of the Electricity Regulatory Commissions Act, 1998 (1998 Act). It was held that until the Kerala State Electricity Regulatory Commission (KSERC) was constituted, the power to determine the tariff remained vested in the Board u/s 49, 59, and clause (j) of Section 79 of the Electricity (Supply) Act, 1948 (1948 Act). The Court noted, 'The 1948 Act has not been repealed or replaced by the 1998 Act.'2. Obligation of the State to Constitute the Electricity Regulatory Commission:The Court clarified that Section 17 of the 1998 Act did not impose a mandatory obligation on the State to constitute the Commission. The language used in Section 17 was directory, not mandatory, as it stated, 'The State Government may, if it deems fit, by notification in the Official Gazette, establish... a Commission.' The Court emphasized that the law does not contemplate a vacuum in its operation.3. Applicability of the Principles Laid Down in the 1998 Act:The Court held that the principles enumerated in clauses (c) to (g) of sub-section (2) of Section 29 of the 1998 Act were not binding on the State Electricity Boards until the Commission was constituted. The Court stated, 'It would be absurd to suggest that the principles required to be adopted by the Commission were per force required to be adopted by the Electricity Boards despite the fact that the Commission did not come into existence.'4. Validity of the 2002 Tariff Revision Order by KSEB:The Court upheld the validity of the 2002 Tariff Revision Order issued by KSEB, stating that the Board had the requisite jurisdiction to revise the tariff till the Commission was constituted. The Court noted, 'The power to make tariff would bring within its folds the power to revise the same.'Conclusion:The Supreme Court concluded that the KSEB had the jurisdiction to revise tariffs until the KSERC was constituted. The decision in BSES Ltd. v. Tata Power Company Ltd. was distinguished based on its facts, and the Court clarified that the principles of the 1998 Act were not binding on the KSEB until the Commission was established. The matter was referred back to an appropriate Bench for determination of other substantial questions of law raised in the appeal.