1999 (8) TMI 1003 - SC - Indian Laws

Supreme Court Upholds Revised Tariffs, Directs Payment.

The Supreme Court dismissed the appeals, upholding the validity of the revised tariffs from April 8, 1991. It directed the appellant to pay the ... - Issues Involved:1. Legality of the tariff increase by DPL.2. Applicability of the Sixth Schedule of the Electricity (Supply) Act, 1948 to sanction-holders under Section 28 of the Electricity Act, 1910.3. Requirement and validity of the 60 days notice for tariff revision.4. Retrospective approval by the State Government for tariff increase.5. Consideration of extraneous factors in tariff fixation.6. Judicial review of tariff revisions.Detailed Analysis:1. Legality of the tariff increase by DPL:The appellant, Graphite India Ltd., challenged the increase in tariff by Durgapur Projects Ltd. (DPL) through three successive writ petitions. The single Judge of the Calcutta High Court allowed these petitions, holding that the enhancement of tariff and the notices of enhancement issued by DPL were contrary to the provisions of Section 57 of the Electricity (Supply) Act, 1948, read with the statutory requirements of Schedule VI. However, the Division Bench of the High Court reversed this decision, dismissing the writ petitions, which led Graphite to appeal to the Supreme Court.2. Applicability of the Sixth Schedule of the Electricity (Supply) Act, 1948 to sanction-holders under Section 28 of the Electricity Act, 1910:Graphite argued that DPL, as a sanction-holder under Section 28, must comply with the Sixth Schedule of the Supply Act, which requires charges to be adjusted to not exceed a reasonable return. The Court noted that while the term 'licensee' under Section 2(6) of the Supply Act includes a sanction-holder, this does not necessarily mean that the Sixth Schedule applies to sanction-holders as it does to licensees. The Court held that the conditions imposed by the State Government on sanction-holders are contractual and not statutory, meaning the Sixth Schedule's provisions do not automatically apply.3. Requirement and validity of the 60 days notice for tariff revision:Graphite contended that the 60 days notice to the State Government before effecting tariff revision is mandatory. The Court found that while the Sixth Schedule requires such notice, this requirement is not statutory for sanction-holders but contractual. The Court also held that the State Government could waive this requirement and that the shortfall of two days in the notice period did not invalidate the tariff revision.4. Retrospective approval by the State Government for tariff increase:The Court addressed whether the State Government's approval of the tariff increase could be retrospective. It referred to the decision in U.P. Avas Evam Vikas Parishad v. Friends Coop. Housing Society Ltd., which held that approval could validate previous actions taken in anticipation of it. Thus, the Court concluded that the State Government's approval dated April 27, 1992, for the tariff increase effective from April 8, 1991, was valid and related back to the earlier date.5. Consideration of extraneous factors in tariff fixation:Graphite argued that the tariff revision was based on extraneous considerations, such as aligning DPL's rates with those of the West Bengal State Electricity Board (WBSEB), rather than the financial principles outlined in the Sixth Schedule. The Court found that the State Government's directive for uniformity in tariffs was a relevant consideration and that Graphite failed to show how the revised charges exceeded the reasonable return stipulated in the Sixth Schedule.6. Judicial review of tariff revisions:The Court emphasized that the scope of judicial review in tariff revision matters is limited and primarily concerns whether the revisions comply with statutory requirements. It held that Graphite had not demonstrated that DPL's tariff revisions contravened the Sixth Schedule or were arbitrary and unreasonable.Conclusion:The Supreme Court dismissed the appeals, upholding the validity of the revised tariffs from April 8, 1991. It directed Graphite to pay the differential amount due to DPL, along with charges for delayed payment, as per the agreement dated January 21, 1984. If there is any dispute regarding the amount, the parties may approach the High Court for resolution.