M/S Binani Zinc Limited v. Kerala State Electricity Board

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.SURENDRA MOHAN TUESDAY, THE 25TH DAY OF MARCH 2014/4TH CHAITHRA, 1936 WP(C).No. 9861 of 2009 (C) --------------------------- PETITIONER: ----------M/S.BINANI ZINC LIMITED, BINANIPURAM-683 502 REPRESENTED BY ITS ASSISTANT VICE PRESIDENT (ELECTRICAL AND INSTRUMENTATION) MR.A.A.MOHAMED NAWAZ. BY ADVS.SRI.JOSEPH KODIANTHARA SRI.TERRY V.JAMES RESPONDENT(S): -------------- 1. THE KERALA STATE ELECTRICITY BOARD, VYDHYUTHI BHAVAN, PATTOM PALACE P.O. THIRUVANANTHAPURAM-695 004, REPRESENTED BY ITS SECRETARY. 2. THE SPECIAL OFFICER (REVENUE), KERALA STATE ELECTRICITY BOARD, VYDHYUTHI BHAVAN PATTOM PALACE P.O., THIRUVANANTHAPURAM-695 004. 3. THE GOVERNMENT OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT (POWER (A) DEPARTMENT), SECRETARIAT THIRUVANANTHAPURAM. R1 & 2 BY ADV. SRI.P.P.THAJUDEEN, SC, K.S.E.B R1 BY ADV. SRI.C.K.KARUNAKARAN, SC FOR KSEB R1,R2 BY ADV. SRI.P.SANTHALINGAM (SR.) R1,R2 BY ADV. SRI.S.SHARAN,SC,K.S.E.BOARD R3 BY GOVERNMENT PLEADER M.A.ABDUL SHUKOOR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 9861 of 2009 (C) **A P P E N D I X** PETITIONER'S EXHIBITS EXT.P1: TRUE COPY OF THE ORDER DT.3.8.2001 PASSED BY THE 3RD RESPONDENT. EXT.P2: TRUE COPY OF THE GAZETTE EXTRAORDINARY DATED 7TH AUGUST, 2001 CONTAINING THE EXTRA HIGH TENSION TARIFF ORDER. EXT.P3: TRUE COPY OF INVOICE DATED 5.9.2001 ISSUED TO THE PETITIONER FOR THE MONTH OF AUGUST 2001. EXT.P4: TRUE COPY OF INVOICE DT.4.10.2001 FOR THE MONTH OF SEPTEMBER 2001 ISSUED TO THE PETITIONER. EXT.P5: TRUE COPY OF INVOICE DATED 5.11.2001 FOR THE MONTH OF OCTOBER 2001 ISSUED TO THE PETITIONER. EXT.P6: TRUE COPY OF LETTER DATED 8.11.2001 ISSUED BY THE DEPUTY CHIEF ENGINEER-IN-CHARGE (COMMERCIAL AND TARIFF) TO THE CHAIRMAN AND MANAGING DIRECTOR OF FACT. EXT.P7: TRUE COPY OF INVOICE DATED 4.12.2001 FOR THE MONTH OF NOVEMBER 2001 ISSUED TO THE PETITIONER. EXT.P8: TRUE COPY OF INVOICE DT.3.1.2002 FOR THE MONTH OF DECEMBER 2001 ISSUED TO THE PETITIONER. EXT.P9: TRUE COPY OF INTERIM ORDER DT.21.2.2002 PASSED BY THIS COURT IN O.P.NO.5669/2002. EXT.P10: TRUE COPY OF JUDGMENT DATED 10.01.2007 PASSED BY THIS COURT IN O.P.NO.5669/02. EXT.P11: TRUE COPY OF NOTICE DT.7.11.08 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. EXT.P12: TRUE COPY OF REPRESENTATION DT.20.11.08 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. ET.P13: TRUE COPY OF GOVERNMENT ORDER DT.11.10.2002. EXT.P14: TRUE COPY OF TARIFF ORDER DT.24.10.02 ISSUED BY THE 1ST RESPONDENT. EXT.P15: TRUE COPY OF JUDGMENT DT.4.4.08 PASSED BY THIS COURT IN WPC NO.11492/08. EXT.P16: TRUE COPY OF ORDER DT.17.1.09 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. EXT.P17: TRUE COPY OF LETTER DT.10.3.09 SENT BY THE PETITIONER TO THE 2ND RESPONDENT. EXT.P18: TRUE COPY OF DISCONNECTION NOTICE DT.11.06.09 FROM THE KERALA STATE ELECTRICITY BOARD. EXT.P19: TRUE COPY OF INTERIM ORDER DT.13.09.04 PASSED BY THE HON'BLE SUPREME COURT. WP(C).No. 9861 of 2009 (C) : 2 : EXT.P20: TRUE COPY OF ORDER DT.21.04.09 PASSED BY THE HON'BLE SUPREME COURT IN CIVIL APPEAL. EXT.P21: TRUE COPY OF INTERIM ORDER DT.14.1.09 IN WPC.NO.30229 OF 2008. EXT.P22: TRUE COPY OF LETTER NO.2751/A1/09/PD DT.18.09.2009 OF THE PRINCIPAL SECRETARY TO GOVERNMENT. EXT.P23: TRUE COPY OF LETTER NO.LA III/7675/2002 DT.7.5.09 OF THE SECRETARY, KERALA STATE ELECTRICITY BOARD, THIRUVANANTHAPURAM. EXT.P24: TRUE COPY OF BILL DT.3.6.98 ISSUED TO THE PETITIONER BY KSEB FOR THE MONTH OF MAY 1998. EXT.P25: TRUE COPY OF BILL DT.5.4.99 ISSUED TO THE PETITIONER BY KSEB FOR THE MONTH OF MARCH 1999. EXT.P26: TRUE COPY OF LETTER DT.22.6.09 ISSUED BY KSEB. EXT.P27: TRUE COPY OF BOARD ORDER B.O.(FB) No.106/2011 (HTB7/701/2010) DATED 7.1.2011. 3RD RESPONDEDNT'S EXHIBITS EXT.R3(a): TRUE COPY OF THE G.O(Rt) No.13/2009/PD DATED 17.1.09. EXT.R3(b): TRUE COPY OF THE JUDGMENT DT.21.4.09 OF THE HON'BLE SUPREME COURT OF INDIA. /TRUE COPY/ P.S TO JUDGE **K.SURENDRA MOHAN, J. ----------------------------------------------------W.P(c) No.9861 of 2009-C ---------------------------------------------------Dated this the 25[th] March, 2014** ## **J U D G M E N T** The petitioner, a Public Limited Company incorporated under the Companies Act, 1956, challenges Ext.P16 Government Order by which, the electricity tariff applicable to the petitioner has been fixed. Ext.P16 has been issued pursuant to the direction contained in Ext.P10 judgment of this Court. 2. The petitioner Company owns a Zinc smelter at Binanipuram, where it is engaged in the production of Zinc. The petitioner is an Extra High Tension (EHT) consumer of electrical energy. The terms on the basis of which the energy is supplied and the quantity thereof are incorporated in the agreements entered into between the Company and the 1[st] respondent. With respect to the rates at which energy is supplied to the petitioner, tariff orders are periodically issued by the 1[st] respondent revising the same 2 **W.P(c) No.9861 of 2009-C** in exercise of its power under the Electricity (Supply) Act, 1948 (hereinafter referred to as `the Electricity Supply Act' for short). 3. On 03.08.2001, the 3[rd] respondent issued Ext.P1 order revising and increasing the tariff applicable to all categories of consumers uniformly by 25%. The rate that was applicable to the petitioner before the issue of Ext.P1 was Rs.1.90 per unit. Consequent to the revision of tariff by an upward hike of 25%, the tariff became Rs.2.37 per unit. However, the 1[st] respondent rounded off the same to Rs.2.40 per unit. According to the petitioner, considering the quantity of energy consumed by the petitioner, though the difference in tariff rate may appear to be negligible, it works out to crores of rupees. 4. In view of the above, the petitioner challenged the action of the 1[st] respondent in O.P No.5669 of 2002. The Original Petition was admitted and by an interim order dated 21.02.2002, the petitioner was permitted to pay charges for the energy consumed at the rate of Rs.2.38 per 3 **W.P(c) No.9861 of 2009-C** unit. 5. While so, on 11.10.2002, there was a further revision of the tariff by a fresh Government Order to the tune of 50 paise per unit. Immediately, the 1[st] respondent enhanced the rate applicable to the petitioner to Rs.2.90 per unit. In November, 2007, under the new Act, `the Electricity Act, 2003', the Regulatory Commission fixed the tariff at Rs.2.90 per unit. Therefore, from November, 2007 the petitioner is bound to pay for the energy consumed at the said rate. The dispute in the present case in view of the above, is confined to the period from 10.08.2001 to November, 2007. 6. Original Petition O.P.No.5669 of 2002 was finally disposed of by Ext.P10 judgment dated 10.01.2007. As per Ext.P10, the 3[rd] respondent was directed to consider the case of the petitioner and to take a decision pursuant to the judgment dated 5.6.06 in O.P.No.3394 of 2002. O.P.No.3394 of 2002 was a Writ Petition filed by the Fertilisers and Chemicals Travancore Ltd. (FACT) raising a 4 **W.P(c) No.9861 of 2009-C** similar challenge against the action of the 1[st] respondent in rounding off and fixing the rate for the electrical energy consumed at Rs.2.40 per unit as in the case of the petitioner. Accordingly, the matter was considered by the 3[rd] respondent and by Ext.P16, the petitioner has been directed to pay for the energy charges consumed at the rate of Rs.2.38 per unit as against Rs.2.40 per unit fixed by the 1[st] respondent, for the period from 10.08.2001 to 01.10.2002. From 01.10.2002 onwards, the petitioner has been directed to pay at the rate of Rs.2.90 per unit. The petitioner has filed this Writ Petition aggrieved by the above stipulations in Ext.P16. 7. According to the learned Senior Counsel Sri Joseph Kodianthara, Ext.P1 Government Order sanctioned an increase of 25% in the electricity tariff w.e.f 10.08.2001. Since the rate applicable at that time was Rs.1.90 per unit, on enhancement by 25%, the rate works out to only Rs.2.375 per unit. If the said figure is rounded off to Rs.2.40 per unit, that accounts for an enhancement in 5 **W.P(c) No.9861 of 2009-C** excess of the 25% that has been sanctioned by Ext.P1. Consequently, the action of the Board is without the authority of Ext.P1 Government Order, on the basis of which the enhancement has been made. It is further contended that, this Court has declared in its judgment in O.P.No.3394 of 2012 that, the enhancement shall not exceed 25% which is the maximum limit that has been sanctioned by Ext.P1. Therefore, Ext.P16 is in violation of the said direction of this Court, which is binding inter parties. Absolutely no reasons have been stated to justify the decision of the 3[rd] respondent to fix the energy charges of the petitioner at Rs.2.38 per unit, which is in excess of what has been ordered by Ext.P1 Government Order. Therefore, it is contended that Ext.P16 to the extent it sanctions an increase in excess of Ext.P1 is liable to be set aside. 8. The learned Senior Counsel Sri P.Santhalingam, who appears for respondents 1 and 2, on the other hand points out that, by Ext.P1 increase in the tariff has been 6 **W.P(c) No.9861 of 2009-C** ordered taking into consideration the serious financial problems in which the 1[st] respondent is placed due to increase in operational costs, generation costs and various other inputs. It is contended that, the 1[st] respondent is the ultimate authority in the matter of fixing the rates at which energy is to be supplied to various consumers. Section 59 of the Electricity Supply Act casts a mandatory duty on the 1[st] respondent to generate a profit of 3%. Section 49 of the Electricity Supply Act also confers ample power on the Board to revise the tariff applicable for supply of energy. Since the Board is conferred with necessary powers to fix the tariff, necessarily the Board has to be held to be sufficiently empowered to round off the tariff as done in the present case. Reliance is placed on the decisions of the apex Court reported in **Hyderabad Engg. Industries Ltd. v. A.P.S.E.B** [(1988) 2 SCC 181] and **Real Food Products Ltd. v. A.P. State Electricity Board** [(1995) 3 SCC 295]. It is also pointed out by the learned Senior Counsel that, in the case of the petitioner, the action of the 1[st] respondent **W.P(c) No.9861 of 2009-C** 7 has been interfered with by the Government and sufficient relief has been granted reducing and fixing the rates of the petitioner at Rs.2.38 per unit. The rates of the FACT (Fertilizers and Chemicals Travancore Limited) have also been fixed accordingly, it is pointed out. The said company has not raised any complaint against the same. For the above reasons, it is contended that, the present complaint of the petitioner is unfounded. 9. Heard. It is true that Ext.P1 has been issued because the Government felt that the financial condition in which the 1[st] respondent was placed necessitated an increase in the tariff rates. Such a measure was held necessary to augment the resources of the 1[st] respondent. It is for the said reason that, the increase in tariff has been ordered. Clause 6 of Ext.P1 reads as follows: “The Electricity Tariff shall be increased by 25% to all Categories except old age homes, orphanages, polio homes, Cheshire homes, schools and hostels of mentally retarded, deaf 8 **W.P(c) No.9861 of 2009-C** and dumb, physically handicapped persons. This will fetch an additional annual revenue of Rs.600/- crores. This is an ad-hoc arrangement so as to tide over the present financial difficulties of the KSE Board.” 10. The above clause shows that, the increase in tariff has been ordered for all categories of consumers except those that are specifically exempted by the said clause. It is not in dispute that, the tariff rate applicable to the petitioner was Rs.1.90 per unit before the enhancement. The enhancement has been ordered w.e.f 10.08.2001, when 25% of Rs.1.90 is calculated and added on, the enhanced rate would come to Rs.2.375. However, by Ext.P2, tariff revision order, it has been ordered that Extra High Tension consumers like the petitioner shall be billed at Rs.2.40 per unit. The said order of the 1[st] respondent was under challenge before this Court at the instance of the FACT in O.P.No.3394 of 2002. As per judgment dated 5.6.06, the said O.P was finally disposed of with the following direction: **W.P(c) No.9861 of 2009-C** 9 “There will be a direction to the 4[th] respondent to examine whether the enhancement made by the first respondent is in tune with Ext.P1 Government order. It is declared that there shall not be enhancement above 25% since the mandate given by the Government is only to that effect. A decision shall be taken by the 4[th] respondent with notice to the petitioner and the first respondent. The needful as above shall be done within a period of two months from the date of production of a copy of this judgment. The interim order in CMP.No.8836/2002 will continue till such time. The remittance made by the petitioner will be duly adjusted depending on the order passed by the Government.” (emphasis supplied) 11. As already noticed above, the petitioner had also raised a similar challenge in O.P.No.5669 of 2002. As per Ext.P10, the Writ Petition filed by the petitioner was 10 **W.P(c) No.9861 of 2009-C** disposed of with the following direction: “On the very same issue raised by a similarly situated consumer, Fertilisers and Chemicals Travancore Limited, this Court by judgment dated 5.6.06 in O.P.3394/02 has directed the Government to consider the matter since the enhancement of the tariff is pursuant to the Government Order permitting only 25% enhancement. Accordingly, this writ petition is disposed of directing the 4[th] respondent to consider the case of the petitioner also, while taking a decision pursuant to the judgment dated 5.6.2006 in O.P.3394/02, with notice to the petitioner. The interim order passed by this Court in C.M.P.No.9969/02 will continue till such time. The amounts already remitted by the petitioner will be suitably adjusted, depending on the orders passed by the Government.” 12. It was pursuant to the above direction that, the 3[rd] 11 **W.P(c) No.9861 of 2009-C** respondent considered the matter again and issued Ext.P6. It is worth noticing here that, this Court has ordered that the petitioner's case should be considered on the same terms as that of the FACT in W.P(c) No.3394 of 2002. It has also been declared that, the enhancement cannot be in excess of 25%. 13. A perusal of Ext.P16 shows that the 3[rd] respondent has understood the decisions of this Court in the proper perspective. This is evident from the observation in Ext.P16 that whereas the 25% enhancement ordered by Ext.P1 would work out to only Rs.2.375 per unit, the rate ordered by the 1[st] respondent, ie. Rs.2.40 per unit accounts for an increase of 26.315%. The said increase is not authorised by Ext.P1. However, though the above aspect has been noticed in Ext.P16, the 3[rd] respondent has simply gone on to order that the tariff applicable to the petitioner would be at a concessional rate of Rs.2.38 per unit as against Rs.2.40 per unit as a special case. 14. It is true that the 1[st] respondent is sufficiently **W.P(c) No.9861 of 2009-C** 12 empowered to make tariff revisions by issuing tariff orders by the Electricity Supply Act. However, the fixing of the tariff at Rs.2.40 per unit in the case of the petitioner has not been done in exercise of any of its powers under the Electricity Supply Act. The 1[st] respondent has no such case in the counter affidavit, that has been filed in this case. What has been stated in para.4 of the counter affidavit dated 13.02.2010 filed in this case is as follows: “4. ........................ ............................. ..... .......... There is absolutely nothing illegality in fixing the tariff for 110 E.H.T consumers at 240m paise per unit. An increase of 25% on190 paise per unit actually amounts to 237.5 paise per unit. This was rounded to 240 paise per unit, as it is the practice followed by all the commercial establishments. ...... .......................... .................. .....” 15. Therefore, the case of the 1[st] respondent is that, it has only rounded off the rate, which according to it is the **W.P(c) No.9861 of 2009-C** 13 usual practice. The learned Senior Counsel appearing for the petitioner has drawn my attention to the table given in para.5 of the reply affidavit dated 02.06.2010 filed in this case to point out that, during the revisions made in May, 1998 and March, 1999, rounding off to the nearest 10 as claimed by the 1[st] respondent was not effected. Exts.P24 and P25 bills issued by the 1[st] respondent are also relied upon to support the above contention. It is true that, Exts.P24 and P25 show that the energy consumed has been charged at the rate shown in the table given in the reply affidavit. The above being the position, the contention that, the 1[st] respondent had enhanced the rates sanctioned by Ext.P1 in exercise of its powers under Sections 49 and 59 of the Electricity (Supply) Act, 1948 cannot be accepted. The direction contained in the judgment of this Court was to consider the case of the petitioner that the enhancement made by the 1[st] respondent was without the sanction of Ext.P1 Government Order. Though it has been found in Ext.P16 that the 1[st] respondent had exceeded the rate of **W.P(c) No.9861 of 2009-C** 14 enhancement that was sanctioned by Ext.P1, the rate has been fixed at Rs.2.38 per unit, without giving any reasons. It is no doubt true that the 3[rd] respondent had ample powers to effect an enhancement in excess of what it had ordered in Ext.P1. But that was not the question directed to be considered by this Court. It is also pertinent to note that this Court had held that the revision should not exceed the 25% that has been sanctioned by Ext.P1. Therefore, the decision in Ext.P1 fixing the rate of the energy charges supplied to the petitioner at Rs.2.38 and at 2.90 instead of 2.375 and 2.87 respectively, cannot be justified. The findings and directions in Ext.P10 judgment as well as the judgment of this Court in O.P.No.3394 of 2002 having been accepted by the respondents, who were all parties to the said Writ Petitions, they are bound by the same. For the foregoing reasons, this Writ Petition is allowed. Respondents 1 and 2 are directed to issue fresh bills for the energy consumed by the petitioner at Rs.2.375 per unit for the period from 10.08.2001 to September, 2002 and **W.P(c) No.9861 of 2009-C** 15 Rs.2.875 per unit for the period from October, 2002 to November, 2007. Sd/- _**(K.SURENDRA MOHAN, JUDGE)**_ rtr/