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TMI Blog2002 (10) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... he above civil appeals are preferred. C.A. No. 4037 of 2002 is preferred by the Commission specifically contending that the Commission is not challenging the tariff fixed by the High Court in its appellate jurisdiction. It contends that it was aggrieved by the interpretation by the High Court of some of the provisions of the 1998 Act as also the High Court's finding in regard to the validity of the Regulations and the procedure to be followed in fixing the tariff which findings, according to the appellant, would make the Commission nugatory and defeat the very object of the 1998 Act. C.A. No. 4047 of 2002 is filed by the Bharat Chamber of Commerce against the order made by the High Court dated 23.4.2002, whereby the High Court rejected the application filed by the appellant, seeking the refusal of the Judges from hearing the appeal on the ground of bias. C.A. No. 4048 of 2002 is filed by the same appellant as in C.A. No. 4047/02, against an order made by the High Court on 7.5.2002, whereby the High Court declined to hear the arguments of the appellants on merits, on the ground that the said appellants were not entitled to the heard by the High Court, because of the objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or approve in that behalf. Thus, the 1910 Act has made the auditing of the accounts of a licensee a statutory requirement. This statutory requirement continues to operate inspite of subsequent enactments. By the introduction of the 1948 Act, the legislature has sought to rationalise the provisions pertaining to supply of electricity and to take measures conducive to electrical development. While enacting the same, the legislature was of the opinion that within the framework of 1910 Act, it was not possible to have a coordinated development of electricity in India on a regional basis. Hence, it was necessary that the appropriate Government should be vested with the necessary legislative powers, to link together the supply and transmission of electricity to various parts of the country, by introducing a system known as the "grid system". With this view the 1948 system known as the "grid system". With this view the 1948 Act in Section 57 mandated that the provisions of Schedule VI shall be deemed to be incorporated in the licence of every licensee subject to the exception provided therein. Section 57A has provided for the constitution of a "Rating Committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be done by the Government on the ground of proved misbehavior, after the High Court on reference being made to it by the Governor, has reported that the member concerned ought to be removed on such ground of proved misbehavior. The qualification of the members of the State Commission as required under the Act, as also the method of their appointment and conditions of their service, including the protection given to them in reference to their removal and disqualification from holding subsequent office, clearly shows that the State Commission under the Act is constituted as a high power expert committee with autonomous authority and is expected to function independently. Section 22 of the Act enumerates the functions of the Commission. The most important function to be noticed in this Section, at least so far as these appeals are concerned, is the power of the Commission to determine the tariff for electricity, be it wholesale, bulk, and grid or retail. This determination of tariff under the Act will have to be made in the manner provided in Section 29 of the said Act. Section 22(1)(d) obligates the Commission to promote competition, efficiency and economy in the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while determining the tariff under this Act, shall not show undue preference to any consumer of electricity, but may differentiate according to the consumer's load factor, power factor, total consumption of energy during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required. (4) The holder of each licence and other persons including the Board or its successor body authorised to transmit, sell, distribute or supply electricity wholesale, bulk or retail, in the State shall observe the methodologies and procedures specified by the State Commission from time to time in calculating the expected revenue from charges which he is permitted to recover and in determining tariffs to collect those revenues. (5) If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under this Section, the State Government shall pay the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct, as a condition for the licensee or any other per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) of the said Rule mandates that before fixing the tariff, the Commission shall notify its intention in this behalf in leading newspapers of West Bengal and shall hold public hearing for the purposes. In exercise of its power under Section 58 of the 1998 Act, the State Commission herein has framed the West Bengal Electricity Regulatory Commission (Conduct of Business) Regulations, 2000 (the Regulations). Regulation 18 thereof provides for the Commission to permit an association or other bodies corporate, or any group of consumers to participate in any proceeding before the Commission. It also empowers the Commission to control the nature and extent of participation of these groups before the Commission. Regulation 9 thereof provides for recognition of associations, groups, forums or body corporate or registered consumer associations for the purpose of representation before the Commission. Regulation 24 provides for the coram at the meeting of the Commission. Regulation 30 provides for service of notices which in Sub-clause (d) includes the service of notice through publication in newspapers. Regulation 31 and 32 provides for the manner in which the Commission could regulate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment, and further stated that failure to do so might result in the invocation of the High Court's power under the Contempt of Courts Act. In deciding the validity of the regulations, the High Court proceeded on the basis that while entertaining the power of appeal under Section 27 of the 1998 Act, it also has the power vested in it under Article 226 and 227 of the Constitution of India. It also held that the non-obstante clause found in Section 29 of the 1998 Act and the other overriding provisions found in the 1998 Act could not come in the way of the application of the VI Schedule to the 1948 Act alone, while determining the tariff by the Commission. On factual aspects, it reversed many of the findings of the Commission to which separate reference will be made by us when we take up those issues for consideration. It is against this judgment of the High Court, various appeals have been filed. In these appeals the appellants have questioned each and every finding of the High Court, both in regard to the interpretation of the provisions of the 1998 Act and the 1948 Act, as also the factual findings given by the High Court in regard to various heads of accounts either accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on does not have the power to issue indiscriminate notice to the consumers or for hearing them. It also held that the advertisements published in this regard as per the Commission's regulations as also the advertisements issued by the High Court in the appeal were all on an erroneous view that the 1998 Act envisages such procedures. The question, therefore, for our consideration is whether the consumers have a legal right or not to be heard in the proceedings before the Commission under Section 29(2) of the 1998 Act, as also in an appeal under Section 27 of the said Act. The High Court in the course of its judgment has negatived this right to the consumers, primarily on the ground that permitting a large number of consumers who in the instant case are to the extent of 17 lacs would amount to an indiscriminate representation. It observed that permitting such large scale interference in the proceedings would lead to absurdity. It also held that normally a rate payer i snot heard before such a rate is fixed on the basis of public policy. In support of this conclusion, the High Court relied upon the procedure for fixing the rate of income-tax wherein a tax-payer had no such say in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the High Court that the company had no objection to the impleadment of the consumers either before the Commission or before the High Court, still tried to justify the finding of the High Court before us. Having considered the finding of the High Court, we are of the opinion that though generally it is true that the price fixation is in the nature of a legislative action and no rule of natural justice is applicable, (See Shri Sitaram Sugar Company Ltd. and Anr. etc. v. Union of India and Ors. ), the said principle cannot be applied where the statute itself has provided a right of representation to the party concerned. Therefore, it will be our endeavour to find out whether, as contended by learned counsel for the appellants, the statute has provided such a right to the consumers or not. While considering his question, it is relevant to notice that so far as the 1948 Act is concerned, the consumers had no such specific right. But we notice that the 1998 Act brought about a substantial change in the manner in which the determination of tariff has to be made. It not only took away the right of the licensee or a utility to determine the tariff, but also conferred the said power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may consider appropriate. The Commission under Regulation 19 is also empowered to notify a procedure to association, groups, forums or body corporate or registered consumer associations, for the purpose of representation before the Commission. These Regulations also provide for the procedure for the filing of affidavits, pleadings, service of notice and the right of participation. Under Regulation 32 of the manner of hearing before the Commission is also provided for. These rules and regulations framed by the State Government and the Commission will have to be placed before the State legislature under Section 59 of the 1998 Act. Thus, these rules and regulations have the necessary statutory force. A combined reading of these provisions of the Act, rules and regulations, clearly shows that the statute has unequivocally provided a right of hearing/representation to the consumers, though the manner of exercise of such right is to be regulated by the Commission. This right of the consumer is neither indiscriminate nor unregulated as erroneously held by the High Court. It is true that in Calcutta the respondent company supplies energy to nearly 17 lacs consumers, but the statute does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce contempt of court proceedings. The question for our consideration is whether the High Court sitting as an appellate court under Section 27 of the Act has the jurisdiction to go into the validity of the Regulations framed under the Act and if so, factually the Regulations as found by the High Court are contrary to the statute. The High Court while considering the validity of the Regulations came to the conclusion that the 1998 Act does not contemplate hearing of the consumers, and also that the Commission's Regulations have conferred an indiscriminate right of hearing on the consumers. We do not think that these findings of the High Court can be justified. While discussing the right of the consumer to be heard (locus standi), we have already held that the 1998 Act has both expressly and impliedly conferred such right of hearing on the consumers. Proceeding on that basis we now consider whether the Regulations framed by the Commission, in any manner, confer an indiscriminate right of hearing. The Commission in exercise of its power under Section 58 of the 1998 Act has framed the regulations keeping in mind the mandate of the Act. In Regulations 18, 19, 24, 25 and 31(4) the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98 Act could not have gone into the validity of the said Regulations in exercise of its appellate power. This Court in the case of K.S. Venkataraman & Co. v. State of Madras after discussing the judgment of the Calcutta High Court in the cases of (i) Raleigh Investment Co. Ltd. v. The Governor General in Council (1944 1 Cal. 34), (ii) United Motors (India) Ltd. v. The State of Bombay and (iii) M.S.M. Meyappa Chettiar v. Income-tax Officer, Karaikudi (1964 54 ITR 151) held: "There is, therefore, weighty authority for the proposition that a tribunal, which is a creature of a statute, cannot question the vires of the provisions under which it functions." From the above decision, we hold that the High Court while exercising its statutory appellate power under Section 27 of the 1998 Act could not have gone into the validity of the Regulations which are part of the statute itself. While deciding the above issue, the High Court also held that while exercising the appellate power by it under any particular statute, it also simultaneously exercises its constitutional power of writ under Articles 226 and 227 of the Constitution of India. In this process, this is what the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an indiscriminate hearing. On facts, we hold in the instant case that the Commission has not given any indiscriminate hearing to the consumers. Tariff Determination: The next question which arises for our consideration is under the 1998 Act who determines the tariff. The Commission proceeded on the basis that under the 1998 Act i.e. under Section 22 read with Section 29, it was the Commission which had the authority to determine the tariff. As per this understanding, the Commission had also laid down the terms and conditions under which it had to determine the tariff. However, the High Court proceeded on the basis that inspite of the said Sections viz., Sections 22 and 29, it is the licensee which in the first instance had to determine the tariff which subsequently had to be scrutinised and approved by the Commission. The High Court was thereby of the opinion that the role of the Commission in determining the tariff was only supervisory. In these appeals learned counsel appearing for the appellants contended that the above view of the High Court is wholly erroneous and contrary to the statute. They also argued that if the view of the High Court in regard to determination of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Act, as also from the provisions of this Act, it is clear that this is an enactment specially to provide for a procedure for determining the tariff for electricity, as also to confer the power of determination of tariff on an expert body like the Commission. In this regard we take note of Section 22(1)(a) of the 1998 Act, which in specific terms lays down that the Commission shall discharge the function of determining the tariff for electricity in the manner provided in Section 29. A plain reading of this Section leaves no room for doubt that so far as the State Commission is concerned, the Act has solely entrusted the responsibility of determining the tariff to it. Section 29 firstly requires the Commission to determine the tariff in accordance with the provisions of that Act. It then requires the Commission to frame Regulations providing for the terms and conditions for fixation of tariff. In exercise of this latter power of framing the Regulations, the Commission is mandated to be guided by the factors mentioned in Clause (a) to (g) of Sub-section (2) of Section 29. Thereafter Sub-section (3) of Section 29 mandates the State Commission not to show any undue preference wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, however, a determination has been made an the time and nature of such determination indicates the final and supervening nature of it, the licensee must obey such tariff decision. If after the accounts of the financial year are finalized, it appears to the Commission that the accountants have erred on a matter of principle, then and in that event, it is within the power of the Commission to correct that matter and to compel the licensee to make an adjustment in that regard." (copied in verbatim) It is in this context that the High Court in the operative portion of its judgment held: "For future years, the CESC shall adjust its rates as per the Sixth Schedule of the 1948 Act without the necessity of any prior approval of any authority but subject to the conditions laid down in the Sixth Schedule; it shall not alter its rates in any form or manner more than once every financial year. However, the final authority for correction of any revenue collected in excess, if shown to be so even after accounts, will lie as per the 1998 Act with the Commission and the High Court." This view of the High Court is strongly supported by learned counsel for the respondent company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which is not, what is contemplated by the 1998 Act. We are also unable to inter from Section 29 or for that matter from any other Section in the 1998 Act that the role ascribed to the Commission is only supervisory. Here we do take support of the non obstante clause found in Section 29(1) and (6) read with Section 49 which refers to inconsistency in laws. These Sections provide that the provisions of the 1998 Act override or prevail over any other inconsistent provision found in any other enactment except those mentioned in Section 49 of that Act. The High Court has found, which is supported by the learned counsel for the Company, that there is a non obstante provision in Clause I of Schedule VI to the 1948 Act which, if given its due weight, would override the provisions of the 1998 Act. We will now consider that argument. For this purpose it is necessary to extract the relevant portion of Clause I of Schedule VI to the 1948 Act which reads : "Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910) x x x the licensee shall so adjust his x x x" Taking advantage of this part of the provisions which contains the obstante clause, it is argued tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RDB Act, namely, Section 34. A similar situation arose in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. where there was inconsistency between two special laws, the Finance Corporation Act, 1951 and the Sick Industries Companies (Special Provisions) Act, 1985. The latter contained Section 32 which gave overriding effect to its provisions and was held to prevail over the former. It was pointed out by Ahmadi, J. that both special statutes contained non obstante clauses but that the "1985 Act being a subsequent enactment, the non obstante clause therein would ordinarily prevail over the non obstante clause in Section 46-B of the 1951 Act unless it is found that the 1985 Act is a general statute and the 1951 Act is a special one." Therefore, in view of the Section 34 of the RDB Act, the said Act overrides the Companies Act, to the extent there is anything inconsistent between the Acts." We are, therefore, of the considered opinion that we cannot accept the view of the High Court as well as the arguments advanced by learned counsel for the respondents in this regard. Having carefully considered the provisions of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple which the Commission considers to be important, would be beyond its jurisdiction and an encroachment on the power of the Parliament itself, which only it alone can exercise. The principle which we have hereby formulated, might conveniently be understood as the principle of the continued binding nature of the Sixth Schedule on the Commission, and others." The High Court further held: "This is a very important point. We have opined already that notwithstanding the provisions of Section 29, the Sixth Schedule of the Supply Act holds the field, with as much vigour and strength, at least in regard to the private licensees (as opposed to the State Boards), as it did before the passing of the 1998 Act. In view of the above judgment, is our decision right?" Answering the above question posed by itself, the High Court held: "It cannot disregard the Sixth Schedule of the Supply Act unless the Sixth Schedule is repugnant to the 1998 Act and, even if it is repugnant Section 57 of the Supply Act still has to be obeyed here, the non obstante provisions of Section 29(2), notwithstanding." The High Court also held while discussing the same question, this: &quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) to (g) of Sub-section (2) of Section 29 become unnecessary, more so in vie of the non obstante clause in Clause I of Schedule VI. It was also argued that even assuming that it is the Commission which has to determine the tariff under the 1998 Act, even then it is Schedule VI which has to be followed in such determination of the tariff. In the above background, we will now decide whether the High Court was justified in coming to the conclusion that it is Schedule VI and Schedule VI alone which has to be followed in determination of the tariff. While discussing the issue as to the right of determination of tariff by the Commission, we have already negatived the argument of the respondents as also the finding of the High Court that the non obstante clause found in Schedule VI to the 1948 Act does override the provisions of the 1998 Act. If that be so, Section 29(1) which opens with the non obstante clause prevails over all other provisions. This does not, however, mean that the Commission can totally ignore the provisions of Schedule VI to the 1948 Act. That is because the Regulations framed by the Commission make the said principles applicable i.e. Section 57, 57A and Schedule V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion shall lie to any Court from any decision or order of the State Commission. (3) Every appeal under this section shall be preferred within sixty days from the date of communication of the decision or order of the State Commission to the person aggrieved by the said decision or order; Provided that the High Court may entertain an appeal after the expiry of the said period of sixty days if it is satisfied that the aggrieved person had sufficient cause for not preferring the appeal within the said period of sixty days." A perusal of the said Section shows that appeal to the High Court under the said Section is on facts also because it is unlimited. Thus there is no doubt that the power of the High Court as an appellate court is co-extensive with that of the trial court. But then the next question would be: is such power wholly unlimited or in any manner controlled by any principle in law? Learned counsel for the appellants urged that in view of the fact that the appeal to the High Court under Section 27 of the 1998 Act arises from a special forum consisting of expert members, the appellate court, normally, should be hesitant to interfere with the findings of fact because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate court should be slow to interfere with the exercise of that discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate court to interfere with the trial court's exercise of discretion. This principle is well-established; but, as has been observed by Viscount Simon, L.C., in Charles Osenton & Co. v. Johnston (1942 AC 130): "The law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free to independently consider the evidence and satisfy itself whether the findings and conclusions arrived at by the court of the first instance are proper or not. These judgments cited by the learned counsel for the Company also hold that the appellate court is competent to adjudicate all questions of fact and law and record its own findings and that it can reappreciate and re-evaluate the evidence and arrive at its own finding and conclusions. These enunciations of law found in the judgments cited by the learned counsel for the respondent company, in our opinion, in no way conflict with the decisions on which we have placed reliance hereinabove. It cannot be disputed that when the appellate power is not hedged in by an restriction, the appellate court can independently reconsider the evidence, but the line of decisions relied on by us show that the rule of prudence in law is that such appellate power is not to be exercised for the purpose of substituting one subjective satisfaction with another, without there being any specific reason for such substitution. Further, in regard to the exercise of appellate power against the order of expert tribunals, on facts, the appellate court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CEA under Sub-section (3) of Section 44 and, hence, the CEA had no jurisdiction to adjudicate on this dispute. This judgment was taken up in appeal in a Letters Patent Appeal before the Division Bench of the Calcutta High Court, which allowed the appeal upholding the jurisdiction of the CEA. In the said process the Division Bench also held that the said cost as fixed by the CEA should be taken as the cost of the Budge-Budge project while determining the tariff which was then pending before the Commission. The Board challenged the judgment of the Division Bench before this Court and this Court in its judgment which is now reported in the case of West Bengal State Electricity Board v. Calcutta Electric Supply Corporation Ltd. , upheld the authority of the CEA to determine the dispute pertaining to the cost of the project. However, this Court held that it was unnecessary for the Division Bench to have gone into the question of impact of the project cost as determined by the CEA upon the tariff structure, hence, the said observation was set aside. Before the Commission, the Company pleaded that the actual cost of Budge-Budge was ₹ 2681.72 crores and the Commission should tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this process, the Commission will have to take into consideration the findings recorded in collateral proceedings. However, it is not correct to state that the said finding in the collateral proceedings will be ipso facto binding on the Commission. This is because of the fact that the object of determination of the cost of the project by the CEA and the fixation of tariff by the Commission are not entirely the same. There is no obligation on the part of the CEA to take into consideration the efficiency of the Company which is putting up the project, as also the interest of the consumers while determining the cost of the project, whereas the Commission while determining the tariff has to take into consideration these factors also. Therefore, in our opinion, the power of the Commission to determine the correct value, of the factors to be taken note of by it, cannot be restricted by mandating the Commission to be bound by a finding in a collateral proceedings. Such finding is a piece of evidence before the Commission, which even though has a strong evidentiary value, is ipso facto not binding on the Commission. The Commission could for good reason decide to differ from it. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Commission not having given any acceptable reason based on material before it to differ from the finding of the CEA, the figure arrived at by the Commission in regard to Budge-Budge cost by rejecting the finding of the CEA is erroneous. In this view of the matter, we are of the opinion that though the Commission was not bound by the finding of the CEA, still, it having not differed from the said finding for good reasons, the High Court was justified in accepting the figure of ₹ 2295.57 crores as the cost of Budge-Budge project. Transmission & Distribution losses: This is another major issue between the parties. Over the years the Company has been suffering substantial loss by way of T&D losses and while calculating the tariff under the 1948 Act, the entirety of this loss was taken as an expenditure of the Company. So far as the transmission loss is concerned, the Company having made substantial investments in equipments etc. has achieved a reasonable target of nearly 12%, hence, there is not much of a dispute though the same could be further brought down. However, the Company has for the year 2000-02 claimed a distribution loss of nearly 11% over and above the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utable to wrong billing and part of it is due to faulty meters apart from theft. They point out that the Company has not brought on record material to show what part of distribution loss could be attributed to theft from amongst these 3 categories of distribution loss. They also point out that the Company has either been complacent, negligent or might even have been colluding in the theft of energy. They contend that the major part of the supply of the Company is underground and compared to various other metropolitan areas, especially the area catered by the Bombay Electricity Supply Co., the distribution loss of the respondent company is far in excess of acceptable limits. They also point out that as far back as in the year 1993 itself, the Government of West Bengal had called upon the Company to reduce its total T&D especially the distribution loss by 1.5% per year but the Company did nothing of the sort. On the contrary, they point out from the available figures that year after year the distribution loss of the Company has been increasing. This they allege, is because of the fact that prior to the coming into force of the 1998 Act, the Company had the privilege of adding on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cannot be justified and allowed fully into the tariff calculations." However, in the concluding part of the report on this subject the consultant held thus: "The Commission may set a target to bring down the total T&D losses to 15% in the next 5 years from the current 22.36%. To start with Commission may set a loss reduction target of 0.36% for the year 2000-01 as most of the year has elapsed by now and 2% for the year 2001-02 (22 to 20%) and revenue requirement adjusted accordingly." By this, we see that though the consultant ASCI came to the conclusion that the T&D losses in total, claimed by the Company was unjustified, still for no expressed reasons it concluded by saying conditional claim of actual loss of 22.36% (of which 12% is transmission loss) be allowed with a reduction in a phased manner, meaning thereby, the ASCI recommended the acceptance of actual distribution loss without there being any deduction for the contribution of the Company towards this loss for the year 2000-2001. The Commission did not accept this finding of the consultant. In its report after discussing various pros and cons of distribution it held: "We, therefore, feel and dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k that the T&D losses suffered by the Company for the year 2000-01, should be something more than what is allowed by the Commission because of the consequential financial burden on the Company. In this regard, we take note of the fact that it is for the first time after coming into force of the 1998 Act that the Company has realised that it is unable to pass on this loss in its entirety to the consumers. Therefore, there is a need to see that the Company is given some latitude in this regard. We are, thus, of the opinion that for the year 2000-01, the Company should be allowed to claim a T&D loss of 19% i.e. 2.2% more than what is allowed by the Commission, and for the year 2001-02 the same shall be 18% because the Company's documents itself show that for the said year they have been able to curb the loss by 1%. For future years i.e. for the year 2002 onwards, we leave it to the Commission to reconsider the above figures fixed by us based on material available before it while determining the tariff for the year 2002-03. We do notice that there is an element of ad hocism in the fixation of T&D losses by us, but in a situation as is presented to us, an element of ad hocism cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this finding on the ground that the payment of wages including overtime and other welfare benefits was made by the Company under lawful agreement entered with the workmen. Therefore, during the pendency of these agreements, it was legally not possible for the Company to stop these payments. Therefore, the amounts spent towards this purpose namely, towards the employees' cost should not be treated as the amounts not properly incurred. The High Court on this basis allowed the entire expenditure incurred by the Company under this head. We are in agreement with this finding of the High Court. Since it is not disputed that the payments made to the employees are governed by the terms of the settlement from which it will not be possible for the Company to wriggle out during the currency of the settlement, therefore, for the year 2000-01 the actual amounts spent by the company as employee's costs will have to be allowed. However, we agree with the findings of the consultants as also the Commission that the amounts spent towards wages are highly disproportionate to the energy generated as also the amounts paid as overtime to the workmen is wholly unrealistic. We also notice that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts separately. However, on a balanced approach and as a special case we also do not take the negative balance for this year and the next year. The position will be reviewed during 2002-2003." The High Court, however, without properly analysing the finding of the Commission which was arrived at as a special case for 2001-02 and also failing to note that the said finding was arrived at with a view to help the Company, proceeded to recompute the same based on certain materials produced by the Company for the first time before it, and accepted the request of the Company. We think the High Court was not justified in doing the same. It is to be noted, admittedly, the material placed before the High Court was not before the Commission or the Consultants. The Consultants had prepared different alternatives and in that process had found that the request of the Company was not in accordance with the guidelines adopted by the Commission, hence it had projected a positive figure of 10,247 lacs which the Commission though was reasonable but still, with a view to assist the finances of the Company for the year 2001-02, it took a neutral figure of zero and calculated the working capital ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in error in issuing a direction to the Commission, contrary to the object and provisions of the 1998 Act to maintain a tariff structure which was prevailing prior to the Commission's report. It is still open to the State Government if it so chooses to direct the Commission to fix the tariff of supply of the electricity to any class of consumers at a reduced rate provided the State Government itself subsidies the same. Fixation of tariff for 2002-03: The Commission has refused to fix tariff for 2002-03 as prayed for by the Company on the ground that the application for the same was made by the Company beyond the time granted by the Commission. The High Court on the contrary, by the impugned judgment has held that in view of paucity of time, it is futile to send the same back to the Commission. In the said view of the matter, though it held that it has no facts and figures before it and it had no time for detailed fact-finding, still it thought it appropriate that the tariff fixed for the year 2001-02 be made applicable for 2002-03 also. We find no justification for such a direction. Since there was no material available for the High Court to arrive at a proper tariff as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ict with the definition of expenditure 'properly incurred' in Schedule VI to the 1948 Act then it is for the Commission to reconcile this conflict and decide whether to accept the expenditure reflected in the accounts of the company or not. In this process the Commission in our opinion is not bound by the auditors' report. Herein we notice that the objects of the 1948 Act are entirely different from the objects of the 1998 Act. The 1948 Act under Schedule VI does not contemplate taking into account the factors like good performance of the Company as also the consumers' interests in its expenditure while considering a particular expenditure as 'properly incurred expenditure'. While the 1998 Act specifically mandates that these factors also should be taken into account while considering whether a particular expenditure is "properly incurred expenditure" or not, therefore, it is not correct to say that each and every expenditure maintained under the provisions of the Sixth Schedule ipso facto becomes binding on the Commission. The High Court further came to the conclusion that in view of the fact that there is no challenge to the accounts of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to seek suitable relief. Re: Bias: In view of the fact that we have ourselves decided the legal as well as most of the factual issues which have arisen in these appeals, we are relieved of the exercise of deciding the question of bias, and, therefore, do not express any opinion on the merits of the arguments addressed by either side on this issue. However, we think it appropriate to deal with one incidental question which arises from the above arguments. The High Court by its order dated 7.5.2002 has declined to hear the arguments of the appellants in CA No. 4048 of 2002, on the ground that they had alleged bias against the Judges. In a case where an allegation of bias made against the Judges in found to be not proved, it is open to the court to initiate such action against the person who made the allegation of bias, as is permissible in law. That in our opinion would not empower the Court to deny a right of hearing, if the person alleging the said bias is otherwise entitled to. We think denial of hearing which is reasonably due to a party cannot be made on the ground of the conduct of the party attributing bias. The right of audi alteram partem is a valuable right recognised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made for an appeal to a special Appellate Tribunal and thereafter a further appeal to the Supreme Court on questions of law only. We think a similar appellate provisions may be considered to make the relief of appeal more effective. Directions to the Commission: In these appeals we have decided certain contentious legal and factual issues. The High Court in the impugned judgments has also reversed the finding of the Commission on many other incidental questions, primarily basing its finding on the application of law as understood by it. We in this judgment have taken a different view from that of the High Court in regard to many of these while affirming some of them. The views taken by us are likely to affect the finding arrived at by the High Court on these incidental issues also about which we have not given our opinion, therefore, there is a need that these issues decided by the High Court in regard to which we have not given any specific finding be also reconsidered by the Commission in the light of this judgment of ours. Therefore, we remand these matters back to the Commission to fix the tariff for the relevant years in accordance with the judgment of ours and bearing in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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