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Issues Involved:
1. Locus standi of consumers before the Commission and High Court. 2. Validity of the Regulations framed by the Commission. 3. Authority to determine the tariff under the 1998 Act. 4. Procedure to be followed for determination of tariff. 5. Extent of appellate power of the High Court under Section 27 of the 1998 Act. 6. Specific factual issues: Budge-Budge costs, Transmission & Distribution losses, Employees' cost, Working capital, Cross subsidy, Fixation of tariff for 2002-03, Auditor's report. 7. Commission's power to issue interim orders. 8. Allegations of bias against the Judges. Summary: Locus Standi: The Supreme Court held that consumers have a legal right to be heard in proceedings before the Commission u/s 29(2) of the 1998 Act and in an appeal u/s 27 of the said Act. The High Court erred in denying this right based on the impracticality of hearing a large number of consumers. The statute and regulations provide a controlled procedure for such hearings, and the High Court should have allowed consumer-appellants to participate. Validity of the Regulations: The High Court exceeded its jurisdiction by declaring the Commission's Regulations invalid while exercising appellate power u/s 27 of the 1998 Act. The Supreme Court held that the High Court could not question the vires of the Regulations, which are part of the statute. The Commission's Regulations, which allow consumer representation, are consistent with the Act and not arbitrary. Authority to Determine Tariff: The Supreme Court clarified that under the 1998 Act, it is the Commission alone that has the authority to determine the tariff, not the licensee. The High Court's view that the licensee has the primary right to determine the tariff, with the Commission only having a supervisory role, was incorrect. Procedure for Determination of Tariff: The Supreme Court held that while Schedule VI to the 1948 Act is one of the guidelines, the Commission must also consider other principles in Section 29(2) of the 1998 Act. The High Court erred in holding that only Schedule VI should be applied. Appellate Power of the High Court: The Supreme Court stated that while the High Court's appellate power u/s 27 of the 1998 Act is not restricted, it should be cautious in interfering with the findings of the expert Commission unless the findings are perverse or not based on evidence. Specific Factual Issues: - Budge-Budge Costs: The Commission should have accepted the CEA's finding of Rs. 2295.57 crores as the project cost, as it did not provide compelling reasons to differ. - Transmission & Distribution Losses: The Supreme Court adjusted the T&D losses to 19% for 2000-01 and 18% for 2001-02, considering the company's efforts and the need for gradual reduction. - Employees' Cost: The High Court's acceptance of actual expenditure on employees' costs was upheld, but future agreements should avoid unnecessary overtime payments. - Working Capital: The Supreme Court reinstated the Commission's neutral figure of zero for working capital, rejecting the High Court's acceptance of additional materials. - Cross Subsidy: The High Court's direction to maintain cross-subsidy was incorrect. The Commission's view against cross-subsidy was upheld, with the State Government bearing the subsidy burden if required. - Fixation of Tariff for 2002-03: The High Court's ad hoc fixation for 2002-03 was set aside. The Commission was directed to condone the delay and fix the tariff as per the 1998 Act. - Auditor's Report: The Commission is not bound by the auditors' report or the definition of "properly incurred expenditure" under Schedule VI to the 1948 Act. Commission's Power to Issue Interim Orders: The Commission has the power to issue interim orders to protect the interests of parties in case of delays in tariff determination. Allegations of Bias: The Supreme Court did not express an opinion on the merits of the bias allegations but emphasized that denial of hearing due to such allegations is inappropriate. Effective Appellate Forum: The Supreme Court recommended that the appellate power against the Commission's orders should be conferred on an expert body like the Central Electricity Regulatory Commission or a similar tribunal. Directions to the Commission: The matter was remitted to the West Bengal State Electricity Regulatory Commission to fix the tariff in accordance with the Supreme Court's judgment and directions. The interim order dated 12.7.2002 will continue until the Commission re-fixes the tariff.
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