1984 (3) TMI 427 - SC - Indian Laws

Supreme Court Validates Bihar Electricity Board's Fuel Surcharge Bills

Rohtas Industries Versus Chairman Bihar State Electricity Board

The Supreme Court upheld the validity of the supplementary bills for fuel surcharge issued by the Bihar State Electricity Board, dismissing all appeals ... - Issues Involved:1. Validity of the supplementary bills issued for 'fuel surcharge.'2. Discrimination and violation of Article 14 of the Constitution.3. Legality and basis of the fuel surcharge computation.4. Obligation to issue provisional bills for fuel surcharge.5. Consideration of the financial capacity of consumers in tariff fixation.6. Reasonableness and arbitrariness of the tariff fixation.7. Compliance with Section 59 of the Electricity (Supply) Act, 1948.Issue-Wise Detailed Analysis:1. Validity of the Supplementary Bills Issued for 'Fuel Surcharge':The appeals and Special Leave Petitions challenge the supplementary bills issued by the Bihar State Electricity Board for 'fuel surcharge' as per the revised tariff dated 1st April 1979. The Court dismissed all appeals and petitions, vacating all interim orders and upholding the supplementary bills' validity.2. Discrimination and Violation of Article 14 of the Constitution:The appellants contended that the fuel surcharge was discriminatory, as it was imposed only on certain categories of consumers. The Court held that Section 49(3) of the Electricity (Supply) Act, 1948, explicitly authorizes the Board to fix different tariffs for different categories of consumers. The classification of consumers into categories like industrial, commercial, and domestic, and the imposition of different tariffs, including fuel surcharge, was found to be lawful and non-discriminatory. The Court referenced the case of Maharashtra State Electricity Board v. Kalyan Borough Municipality to uphold the constitutional validity of Section 49.3. Legality and Basis of the Fuel Surcharge Computation:The Court examined the formula and basis for computing the fuel surcharge, which was meant to offset the increased cost of fuel and energy purchases. The surcharge was calculated based on the increased cost of coal, oil, and purchased energy from external sources like the Damodar Valley Corporation (DVC) and the U.P. State Electricity Board. The Court found no merit in the appellants' contention that only amounts paid as fuel surcharge to these external sources should be included. The formula provided in the tariff notification was deemed clear and lawful.4. Obligation to Issue Provisional Bills for Fuel Surcharge:The appellants argued that the Board was obligated to issue provisional bills for fuel surcharge during each financial year. The Court rejected this argument, stating that the provision in the tariff notification was enabling, not mandatory. The appellants failed to provide factual data to support their claim that they were unable to adjust their price structure due to the lack of provisional bills.5. Consideration of the Financial Capacity of Consumers in Tariff Fixation:The appellants contended that the Board failed to consider the financial capacity of consumers while fixing tariffs. The Court held that Section 49(2) of the Act does not require the Board to consider the financial capacity of individual consumers. The tariff is to be uniform within each category, and the classification of consumers is based on factors like the nature of supply and geographical position, not financial capacity.6. Reasonableness and Arbitrariness of the Tariff Fixation:The appellants argued that the tariff fixation was arbitrary and unreasonable. The Court emphasized that tariff fixation is an executive function and should be left to the judgment of the executive unless there is clear evidence of hostile discrimination. The Court found no evidence of arbitrariness in the tariff notifications of 1979 and 1981. The rates specified were not found to be unreasonable or discriminatory.7. Compliance with Section 59 of the Electricity (Supply) Act, 1948:The Court examined the Board's compliance with Section 59, which mandates that the Board's operations should ensure sufficient revenue to cover expenses and leave a surplus as specified by the State Government. The Board's financial statements showed substantial deficits in the years following 1977-78, indicating that the tariffs were set lower than the actual cost of production. The Court found no basis for the appellants' contention that the tariff fixation was arbitrary or violated Section 59.Conclusion:The Supreme Court upheld the validity of the supplementary bills for fuel surcharge and dismissed the appeals and Special Leave Petitions. The Court found no merit in the appellants' contentions regarding discrimination, arbitrariness, and the legality of the fuel surcharge computation. The Board's actions were deemed lawful and in compliance with the relevant statutory provisions.