2009 (3) TMI 1052 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Kerala State Electricity Board (KSEB) to revise tariffs post the enactment of the Electricity Regulatory Commissions Act, 1998.
2. Obligation of the State to constitute the Electricity Regulatory Commission under the 1998 Act.
3. Applicability of the principles laid down in the 1998 Act for tariff revision by the KSEB.
4. Validity of the 2002 Tariff Revision Order by KSEB.

Summary:

1. Jurisdiction of KSEB to Revise Tariffs Post-1998 Act:
The Supreme Court examined whether KSEB had the jurisdiction to revise tariffs after the enactment of the Electricity Regulatory Commissions Act, 1998 (1998 Act). It was held that until the Kerala State Electricity Regulatory Commission (KSERC) was constituted, the power to determine the tariff remained vested in the Board u/s 49, 59, and clause (j) of Section 79 of the Electricity (Supply) Act, 1948 (1948 Act). The Court noted, "The 1948 Act has not been repealed or replaced by the 1998 Act."

2. Obligation of the State to Constitute the Electricity Regulatory Commission:
The Court clarified that Section 17 of the 1998 Act did not impose a mandatory obligation on the State to constitute the Commission. The language used in Section 17 was directory, not mandatory, as it stated, "The State Government may, if it deems fit, by notification in the Official Gazette, establish... a Commission." The Court emphasized that the law does not contemplate a vacuum in its operation.

3. Applicability of the Principles Laid Down in the 1998 Act:
The Court held that the principles enumerated in clauses (c) to (g) of sub-section (2) of Section 29 of the 1998 Act were not binding on the State Electricity Boards until the Commission was constituted. The Court stated, "It would be absurd to suggest that the principles required to be adopted by the Commission were per force required to be adopted by the Electricity Boards despite the fact that the Commission did not come into existence."

4. Validity of the 2002 Tariff Revision Order by KSEB:
The Court upheld the validity of the 2002 Tariff Revision Order issued by KSEB, stating that the Board had the requisite jurisdiction to revise the tariff till the Commission was constituted. The Court noted, "The power to make tariff would bring within its folds the power to revise the same."

Conclusion:
The Supreme Court concluded that the KSEB had the jurisdiction to revise tariffs until the KSERC was constituted. The decision in BSES Ltd. v. Tata Power Company Ltd. was distinguished based on its facts, and the Court clarified that the principles of the 1998 Act were not binding on the KSEB until the Commission was established. The matter was referred back to an appropriate Bench for determination of other substantial questions of law raised in the appeal.