Average revenue ceiling in electricity tariffs permits category-wise differential increases, validating the tariff notification.

Clause 9.1 of the provisional supply and distribution licence was construed to permit category-wise differential increases in electricity charges, provided the overall average revenue increase did not exceed the stipulated 17% ceiling. The Court gave effect to the words "charges made by the licensee" and "on average 117%", holding that a category-by-category cap would make those expressions redundant and frustrate the licence's balancing of consumer interest, cross-subsidy and revenue needs. The explanation to Section 26 did not govern the meaning of "charges made" in Clause 9.1. On that construction, the tariff notification dated 13.5.1996 was valid.

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Issues: Whether Clause 9.1 of the provisional supply and distribution licence permitted revision of electricity charges by fixing different percentage increases for different consumer categories, so long as the overall average increase in revenue did not exceed 17%, or whether it imposed a ceiling of 17% on each category-wise tariff increase; and whether the tariff notification dated 13.5.1996 was valid.

Analysis: Clause 9.1 was capable of more than one construction. The words "charges made by the licensee" and the expression "on average 117%" were significant and could not be treated as surplusage. Reading the clause in its natural and purposive sense, the provision was intended to permit revision of tariff rates with different increases across categories, while ensuring that the overall revenue realized from the revised charges did not exceed 17% over the revenue that would have been realized under the earlier interim tariff. An interpretation that capped every category at 17% would render the words "on average" meaningless and would also prevent the balancing of consumer interest, cross-subsidy, and revenue needs contemplated by the licence. The explanation to Section 26, which defined "tariff", did not control the meaning of "charges made" in Clause 9.1. The technical view of the Commission, once the erroneous equation of "charges" with category-wise tariff rates was set aside, supported the appellant's construction.

Conclusion: Clause 9.1 authorised category-wise differential increases so long as the overall average revenue increase remained within the stipulated ceiling, and the tariff notification dated 13.5.1996 was valid.

Ratio Decidendi: Where a licensing condition permits charges not to exceed a stated percentage "on average", the ceiling applies to the overall revenue effect and not to each individual consumer category, if that construction gives effect to all the words used and advances the object of the provision.

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