Electricity tariff revisions by a sanction-holder were upheld where later approval validated the change and no prejudice was shown.

A person sanctioned under Section 28 of the Indian Electricity Act, 1910 is not automatically treated as a Part II licensee for Section 57 of the Electricity (Supply) Act, 1948, but tariff conditions imposed in the sanction order may still bind the sanction-holder and incorporate Schedule VI by their own terms. The Court further treated later State Government approval as capable of validating an earlier tariff revision from the effective date, and held that the sixty days' notice requirement in Schedule VI was directory on the facts because no consumer prejudice was shown and the revised tariff was not beyond the reasonable return ceiling. The revised electricity rates were therefore upheld.

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Issues: (i) whether a person sanctioned under Section 28 of the Indian Electricity Act, 1910 was to be treated as a licensee for the purpose of Section 57 and Schedule VI of the Electricity (Supply) Act, 1948; (ii) whether the tariff revisions made by the sanction-holder were invalid for want of prior approval and for failure to give sixty days' notice under Schedule VI.

Issue (i): whether a person sanctioned under Section 28 of the Indian Electricity Act, 1910 was to be treated as a licensee for the purpose of Section 57 and Schedule VI of the Electricity (Supply) Act, 1948.

Analysis: Section 2(6) of the Electricity (Supply) Act, 1948 includes a person who has obtained sanction under Section 28 of the Indian Electricity Act, 1910 within the expression "licensee", but the context of Section 57 and Schedule VI does not permit a mechanical equation of sanction with licence. The statutory scheme distinguishes between a licensee under Part II and a sanction-holder under Part III of the 1910 Act. In the present case, however, the sanction order itself made the tariff to be fixed and adjusted in conformity with Schedule VI and with State Government approval, so the obligation arose through the sanction conditions rather than by direct statutory incorporation under Section 57.

Conclusion: A sanction-holder is not automatically governed by Section 57 as if it were a Part II licensee, but the tariff conditions in the sanction order remained binding and attracted Schedule VI by contract.

Issue (ii): whether the tariff revisions made by the sanction-holder were invalid for want of prior approval and for failure to give sixty days' notice under Schedule VI.

Analysis: Approval granted by the State Government on a later date was treated as validating the earlier tariff revision from the date from which the revised rates were made effective. The Court held that approval could relate back and that the notice requirement in the third proviso to paragraph 1 of Schedule VI was not mandatory in the facts of the case. The requirement was treated as directory, no prejudice to the consumer was shown, and the tariff revision was not established to be contrary to the ceiling of reasonable return under Schedule VI.

Conclusion: The tariff revisions were valid, the later approval operated retrospectively, and the sixty days' notice requirement did not vitiate the revision.

Final Conclusion: The challenge to the revised electricity tariff failed, and the revised rates were upheld with consequential liability to pay the differential charges.

Ratio Decidendi: A sanction-holder under Section 28 of the Indian Electricity Act, 1910 is not eo ipso a licensee for Section 57 of the Electricity (Supply) Act, 1948, but where the sanction order itself incorporates Schedule VI and State Government approval, later approval may validate the revision retrospectively and the sixty days' notice requirement may be directory rather than mandatory when no prejudice is shown.

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