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TMI Blog1999 (8) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned single Judge DPL filed an appeal before the Division Bench of the High Court which was allowed by the impugned judgment dated June 3, 1998. Writ petitions filed by Graphite were dismissed. Aggrieved Graphite has come to this Court. 3. Facts are not much in dispute. DPL was granted sanction by the State of West Bengal under Section 28(1) of the Indian Electricity Act, 1910 ('Electricity Act' for short) by order dated August 28, 1964 to engage in the business of supplying energy to the public in accordance with the conditions specified therein. Conditions 5, 6 and 9 are relevant and are as under: Now, therefore, in exercise of the power concerned by Sub-section (1) of Section 28 of the Indian Electricity Act, 1910 (Act 9 of 1910), the Government is pleased, after consulting the West Bengal State Electricity Board and with the consent of the local authorities concerned namely, the Faridpur Union Board, Durgapur Union Board, Gopalpur Union Board and Jomua Union Board, to give the said Durgapur Projects Limited (hereafter referred to as the sanction-holder), sanction to engage in the business of supplying energy within the said area, subject to the following con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1995 (w.e.f. February 10, 1995). This led the Graphite to file two more writ petitions in the High Court challenging further revision in tariff. All these three writ petitions were allowed by a common order of learned Single Judge on October 3, 1997. As noted above on appeal filed by DPL the Division Bench of the High Court set aside the order of the learned single Judge and dismissed the writ petitions. 6. In the present appeal filed by Graphite there are four respondents, namely, (1) Durgapur Projects Ltd., (2) State of West Bengal, (3) The Secretary and Controller of Finance and Accounts, Durgapur Projects Ltd. and (4) Damodar Vally Corporation. DPL and the State of West Bengal are the contesting respondents. 7. Before we consider the rival contentions of the parties it may be appropriate to set out the relevant provisions of the Acts which bear upon the controversy in the appeal: The Indian Electricity Act, 1910 Part I 2. Definitions--In this Act, expressions defined in the Indian Telegraph Act, 1885 (13 of 1885) or in the Electricity (Supply) Act, 1948 (54 of 1948), have the meanings assigned to them in either of those Acts, and unless there is anything rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after consulting the State Electricity Board; and (b) except with the consent - (i) in any case where energy is to be supplied in any area for which a local authority is constituted, of that local authority; (ii) in any case where energy is to be supplied in any area forming part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Government for defence purposes, of the Central Government; (iii) in any area falling within the area of supply of a licensee, of that licensee: Provided that except in a case falling under Sub-clause (ii), no such consent shall be necessary if the State Government is satisfied that such consent has been unreasonably withheld. (2) ... The Electricity (Supply) Act, 1948 2. Interpretation In this Act, unless there is anything repugnant in the subject or context, (6) licensee means a person licensed under Part II of the Indian Electricity Act, 1910, (9 of 1910) to supply energy or a person who has obtained sanction under Section 28 of that Act to engage in the business of supplying energy but the provisions of Section 26 or 26 of this Act notwithstanding, does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount of reasonable return: PROVIDED FURTHER that the licensee shall not enhance the charges for the supply of electricity until after the expiry of a notice in writing of not less than sixty clear days of his intention to so enhance the charges, given by him to the State Government and to the Board: PROVIDED ALSO that if the charges of supply fixed in pursuance of the recommendations of a rating committee constituted under Section 57A are lower than those notified by the licensee under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them: PROVIDED ALSO that nothing in this schedule shall be deemed to prevent a licensee from levying, with the previous approval of the State Government, minimum charges for supply of electricity for any purpose. 1A. The notice referred to in the third proviso to paragraph 1 shall be accompanied by such financial and technical date in support of the proposed enhancement of charges as the State Government may, by general or special order, specify. 8. There are various clauses in this Schedule defining capital base, clear profit, debenture capital, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the license of every licensee by virtue of Section 57 of that Act and since the definition licensee includes a sanction-holder the phrase license of every licensee would make the terms and conditions of the Sixth Schedule applicable to sanction as well. Compliance with the Sixth Schedule is thus by force of law an obligation of the sanction-holder. Sixth Schedule has been devised to be a financial discipline of the supplier of energy and a protective provision for the consumer. A consumer whether falling within the area of a licensee or of a sanction-holder should not be exposed to different considerations so far as tariff fixation is concerned. It is the obligation of the sanction-holder before revising the tariff to comply with the provisions of the Sixth Schedule and to obtain approval of the State Government. 3. 60 days clear notice to the State Government before tariff revision is effected, is mandatory. This provision, which is conceived for the benefit of the consumer and in the public interest, has to be held as mandatory and cannot be waived. This provision is not for the benefit of the State Government. It is to enable the State Government to examine the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Sixth Schedule are for the benefit of the consumers and the Government is to act as a watch dog for their benefit in order to ensure that the enhancement of tariff is made within the parameters as laid down in the Sixth Schedule and that it is not framed in a manner which is arbitrary and unreasonable. Provisions contained in Sixth Schedule are made for public good and cannot be waived by the person proceeded against. It has been held that in case of failure to observe procedural provision which is of mandatory character it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. In these circumstances the third proviso to Sixth Schedule is a provision of mandatory nature and the State Government cannot waive the requirement of the notice. It has been rightly observed by the learned single Judge that the notice dated April 9, 1991 by DPL to the State Government is also not in conformity with para (1A) of the Sixth Schedule. Reliance has been placed on two decisions of this Court in State Bank of Patiala and Ors. v. S.K. Sharma (1996)IILLJ296SC and Rajendra Singh v. State of M.P. AIR1996SC2736 . 7. Ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Electricity Act. DPL is not a license holder under Clause (h) of Section 2 of Electricity Act. It has no licence under Part II of that Act. Section 28 under which sanction has been accorded to DPL falls under Part III of the Act which applies to non-licensees. Although under Section 2(6) of the Supply Act DPL becomes a licensee for the purpose of said Act but that Act does not define the term license nor does it prescribe that sanction under Section 28 of the Electricity Act shall be treated as license. Definition of the license as given in Section 2(6) of the Supply Act has to be read as such unless there is anything repugnant in the subject or context. By virtue of Section 57 of the Supply Act Sixth Schedule is incorporated in the license of a licensee. Since DPL is not a holder of license the question of incorporation into the license of Sixth Schedule does not arise. Provisions of Section 57 and the Sixth Schedule do not apply to a sanction-holder under Section 28 of the Electricity Act. These will not, therefore, apply to DPL. 2. Clause (5) of the sanction order dated August 28, 1964 incorporates certain sections of the Electricity Act and Indian Electricity R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he approval and held that once approval is given, all the previous acts done or action taken in anticipation of the approval get validated. 4. Under the Sixth Schedule of the Supply Act no approval of the State Government is necessary at all. Approval of the first revision granted by the State Government may be at a subsequent stage but that ratified all actions taken by the DPL in contemplation of the approval. 5. Letter of the State Government dated August 29, 1986 contains guidelines of the State Government that for uniformity DPL's tariff should be fixed in the line of tariff of WBSEB. There is no allegation that DPL is exceeding tariff rate of the WBSEB or that DPL is making a clear profit in excess of 20% of the reasonable profit. DPL has been regularly suffering losses since 1989. It has been pointed out in the affidavit of DPL in the High Court filed in opposition in the second writ petition that DPL has been meeting losses and there has been no denial of the said factual statements. Relevant considerations were taken into account and this has been explained in the counter affidavit filed by DPL. 6. State Government has power to amend or add to the conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electricity Board and Ors. [1991]2SCR643 ). 14. Concluding his arguments Mr. Reddy said that the Graphite be directed to pay to DPL the amount of electricity charges which DPL could not collect due to interim order of injunction obtained by Graphite in the writ proceedings in the High Court. These charges, he said, amount to ₹ 11,02,90,654.83 with delayed payment surcharge at the agreed rate as stipulated in the existing agreement of supply dated January 21, 1984. 15. Arguments have been in somewhat detail but the issues are not so complex. Broadly the contentions of the appellants are: Statutory requirements of Section 57 of the Supply Act read with Sixth Schedule have not been fulfilled inasmuch as relevant considerations required for the revision in tariff have not been kept in view and extraneous consideration has been taken into account. Relevant consideration is that for revision in tariff there should be reasonable profit and extraneous consideration is that the tariff fixed by WBSEB has been kept in view. For the first writ petition where revision in tariff was effected in 1991, contentions are (a) 60 days clear notice, which is mandatory, was not given, (b) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and general permission , previous approval or prior approval in para 63 held that: We are conscious that the word 'prior' or 'previous' may be implied if the contextual situation or the object and design of the legislation demands it, we find no such compelling circumstances justifying reading any such implication into Section 29(1) of the Act. Ordinarily, the difference between approval and permission is that in the first case the action holds good until it is disapproved, while in the other case it does not become effective until permission is obtained. But permission subsequently granted may validate the previous Act. As to the word 'approval' in Section 33(2)(b) of the Industrial Disputes Act, it was stated in Lord Krishna Textiles Mills Ltd. v. Workmen that the Management need not obtain the previous consent before taking any action. The requirement that the Management must obtain approval was distinguished from the requirement that it must obtain permission, of which mention is made in Section 33(1). 18. This Court then said that approval envisaged is to enable the Parishad, the appellant, to proceed further in implementation of the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if charges of supply fixed in pursuance of the recommendations of a Rating Committee are lower than those notified by the licensee, the licensee shall refund to the consumers the excess amount recovered by him from them. 20. Under Section 28 of the Electricity Act for a person other than a licensee to engage in the business of supplying energy to the public two conditions are required: (1) sanction of the State Government and (2) in accordance with such conditions as the State Government may fix in that behalf. State Government is not free to give sanction except (A) after consulting State Electricity Board, (B) with the consent of local authority the licensee in their respective areas and (C) in case the energy is to be supplied in any area forming part of cantonment, aerodrome, etc. of the Central Government. The Central Government, however, cannot withhold its consent unreasonably. A question arises if the conditions imposed by the State Government while granting sanction are statutory or contractual. 21. Supply of electric energy is governed by two statutes, i.e., The Electricity Act and the Supply Act. A license is the requirement under the Electricity Act for a person t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls for consideration is if the word 'licensee' in Section 57 of the Supply Act would include a sanction-holder. This Section provides that Sixth Schedule shall be deemed to be incorporated in the license of every licensee, not being a local authority and that would be notwithstanding anything contained in any provision of the Electricity Act or terms of the license granted to him under that Act or under any other law. Sixth Schedule of the Supply Act has thus over-riding effect. Sixth Schedule uses the expression 'license' in its various clauses. It would be difficult for us to hold that 'license' would mean 'sanction' as well. We have to see in what context the term 'license' had been used. When sanction was granted to DPL in the year 1964, much after the coming into force of the Supply Act, it was specifically mentioned that certain provisions of the Electricity Act would apply (Clause 5) and Clause 6 of the conditions provided that the rates for supply of energy shall be fixed and adjusted from time to time in conformity with the provisions of the Sixth Schedule to the Supply Act and with the approval of the State Government. If Sixth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96)IILLJ296SC this Court observed that even a mandatory requirement can be waived by the person concerned if such requirement is in his interest and not in public interest. This is how the court said : In the case of violation of a procedural provision, which is of a mandatory character, it has to be ascertained whether the provision is conceived in the interest of the person proceeded against or in public interest. If it is found to be the former, then it must be seen whether the delinquent officer has waived the said requirement, either expressly or by his conduct. If he is found to have waived it, then the order of punishment cannot be set aside on the ground of the said violation. If, on the other hand, it is found that the delinquent officer/ employee has not waived it or that the provision could not be waived by him, then the Court or Tribunal should make appropriate directions (include the setting aside of the order of punishment), keeping in mind the approach adopted by the Constitution Bench in Managing Director, ECU v. B. Karunakar (1994)ILLJ162SC . The ultimate test is always the same, viz., test of prejudice or the test of fair hearing, as it may be called. 25. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sanction holder under the terms of the sanction approval of the State Government is required. We have seen above, approval from the State Government can be retrospective. The bar in the proviso is only to the extent that enhanced charges may not be levied till after the expiry of sixty days notice to the Government. It is not that the State Government is required to grant its approval within 60 days period. As far as sanction holder is concerned, requirement of notice and approval by the State Government are not statutory conditions. These are contractual and could be varied or waived by the State Government. Conditions have been imposed by the State Government and not by virtue of any statute. It would, therefore, appear to us that the requirement of sixty days notice to the State Government is not mandatory. In its counter affidavit dated January 10, 1992 filed in the first writ petition, the State Government took the stand that the DPL before enhancing the tariff with effect from April 8, 1991 did not comply with the necessary formalities as required under the Supply Act read with the Government Order No. 4520 (Power) dated August 28, 1964. Graphite was not informed of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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