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TMI Blog2016 (7) TMI 1649X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Gopala Gowda And Arun Mishra, JJ. CA Nos. 5572-5575 of 2016 @ SLP [C] Nos. 15348-15351/2014, CA Nos. 5576-5578 of 2016 @ SLP [C] Nos. 15356-15358/2014, CA Nos. 5579-5583 of 2016 @ SLP [C] Nos. 15360-15364/2014, CA Nos. 5584-5586 of 2016 @ SLP [C] Nos. 15389-15391/2014, CA No. 5587 of 2016 @ SLP [C] No. 15603/2014, CA No. 5588 of 2016 @ SLP [C] No. 15845/2014, CA Nos. 5589-5598 of 2016 @ SLP [C] Nos. 15878-15887/2014, CA No. 5599 of 2016 @ SLP [C] No. 15891/2014, CA Nos. 5600-5601 of 2016 @ SLP [C] Nos. 15938-15939/2014, CA No. 5602 of 2016 @ SLP [C] No. 15940/2014, CA Nos. 5603-5611 of 2016 @ SLP [C] Nos. 15985-15993/2014, CA No. 5612 of 2016 @ SLP [C] No. 15998/2014, CA Nos. 5613-5618 of 2016 @ SLP [C] Nos. 17138-17143/2014, CA No. 5619 of 2016 @ SLP [C] No. 17469/2014, CA No. 5620 of 2016 @ SLP [C] No. 17495/2014, CA No. 5622 of 2016 @ SLP [C] No. 17509/2014, CA Nos. 5623-5625 of 2016 @ SLP [C] Nos. 17860-17862/2014, 2016 @ SLP [C] No. 18331/2014, CA No. 5671 of 2016 @ SLP [C] No. 18334/2014, CA No. 5672 of 2016 @ SLP [C] No. 18354/2014, CA No. 5673 of 2016 @ SLP [C] No. 18358/2014, CA No. 5674 of 2016 @ SLP [C] No. 18395/2014, CA No. 5675 of 2016 @ SLP [C] No. 18458/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, CA No. 5830 of 2016 @ SLP [C] No. 28606/2014, CA Nos. 5831-5832 of 2016 @ SLP [C] Nos. 29863-29864/2014, CA No. 5833 of 2016 @ SLP [C] No. 28246/2014, CA Nos. 5834-5835 of 2016 @ SLP [C] Nos. 29242-29243/2014, CA No. 5836 of 2016 @ SLP [C] No. 32016/2014, CA No. 5837 of 2016 @ SLP [C] No. 31408/2014, CA Nos. 5838-5839 of 2016 @ SLP [C] Nos. 31800-31801/2014, CA No. 5840 of 2016 @ SLP [C] No. 35438/2014, CA No. 5841 of 2016 @ SLP [C] No. 36224/2014, CA No. 5842 of 2016 @ SLP [C] No. 35460/2014, CA No. 5843 of 2016 @ SLP [C] No. 34650/2014, CA No. 5844 of 2016 @ SLP [C] No. 2689/2015, 2016 @ SLP [C] No. 2841/2015, CA No. 5851 of 2016 @ SLP [C] No. 4478/2015, CA No. 5852 of 2016 @ SLP [C] No. 8551/2015, CA No. 5853 of 2016 @ SLP [C] No. 7102/2015, CA No. 5854 of 2016 @ SLP [C] No. 7096/2015, CA No. 5855 of 2016 @ SLP [C] No. 16494/2015, CA No. 5856 of 2016 @ SLP [C] No. 16617/2015, CA No. 5857 of 2016 @ SLP [C] No. 16487/2015, C.A. No. 8249/2015; CA No. 5858 of 2016 @ SLP [C] No.12607/2015, CA No. 5859 of 2016 @ SLP [C] No. 34088/2015, CA No. 5860 of 2016 @ SLP [C] No. 3063/2016; and CA No. 5861 of 2016 @ SLP [C] No. 3516/2016 For the Appellant : Mr. C. S. N. Mohan Rao, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 9(2) and 54(2) of the Act of 1998, the A.P. Electricity Regulatory Commission (hereinafter referred to as the Commission ) has framed the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 (hereinafter referred to as the Regulations of 1999 ). The Commission has framed Regulation No.8 dated 28.8.2000 called Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) First Amendment Regulations, 2000. By virtue of the aforesaid First Amendment Regulations, provisions contained in the chapter on tariff were incorporated by way of Regulation 45-A specifying expected revenue from charges and tariff proposals and under Regulation 45-B fuel surcharge adjustment formula was prescribed. Regulation 45C was also inserted providing for subsidies as the State Government may consider appropriate. Regulation 45-B was further amended by way of reforms called the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Amendment Regulations, 1 of 2003. They came into force w.e.f. 1.4.2003. The amended Regulation 45-B provided a formula for working out the FSA. Condition No.1 also mentioned that FSA will be distributed among a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters for the period from 2010 to March, 2012 vide order dated 20.9.2012 and vide order dated 2.11.2012 for the first quarter of financial year 2012-13. The orders were also questioned in the writ petition. The Division Bench of the High Court vide order dated 24.2.2014 upheld the vires of the Regulations and on merits left the matter to be agitated in the alternative remedy of appeal. However, writ petitions which were filed were also disposed of in terms of order dated 24.2.2014 hence the special leave petitions have been filed in this Court. Rival Submissions : 6. It was submitted on behalf of the appellants that Regulation 45-B of the Regulations of 1999 is ultra vires the provisions contained in section 26(9) of the Act of 1998 and section 62(4) of the Act of 2003, insofar as it provides for inclusion of any variation other than that arising out of fuel costs alone. It was further submitted that only fuel cost had to be considered and no other charges other than transportation can be included. The FSA formula in Regulation 45B provides for element other than variable cost of all purchases even beyond variation of fuel costs alone and the same transgresses the limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of fluctuation in the cost of fuel. Formula for determining the FSA travels beyond that. 7. It was submitted on behalf of the Commission and the State Government that under section 85(3) of the Act of 2003, the Act of 1998 is saved, in the Schedule at serial No.3. Consequently, the provisions of the Act of 1998 which are not consistent with the provisions of the Act of 2003 shall continue to apply to the State of Andhra Pradesh. The saving provision in the Regulations of 2005 reflects that the Regulations of 1999 framed under the Act of 1998 are still in operation. Regulation 12.4 of Regulations of 2005 provides for levy of FSA. The fuel surcharge has not been defined under the Act of 1998 or the Act of 2003 or in the Regulations of 2005 framed thereunder. The meaning and scope of fuel surcharge is given in Regulation 45-B of Regulations of 1999. The formula contains the components to form part of FSA and had been implemented for the last more than one decade. FSA has been determined as per the formula prescribed under Regulation 45-B. It is incorrect to submit that FSA should be confined to variation of fuel cost. Condition Nos.1, 5, 10 and 11 of Regulation 45-B have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of the licensee s revenue and tariffs by regulations duly published in the Official Gazette and in such other manner as the Commission considers appropriate. Provided that in doing so the Commission shall be bound by the following parameters: (a) the financial principles and their applications provided in the Sixth Schedule to the Electricity (Supply) Act, 1948 read with Sections 57 and 57-A of the said Act; (b) the factors which would encourage efficiency, economic use of the resources, good performance, optimum investments performance of licence conditions and other matters which the Commission considers appropriate keeping in view the salient objects and purposes of the provisions of this Act; and (c) the interest of the consumers. (3) Where the Commission, departs from factors specified in the Sixth Schedule of the Electricity (Supply) Act, 1948 while determining the licensees' revenues and tariffs, it shall record the reasons therefor in writing. (4) Any methodology or procedure specified by the Commission under sub-sections (1), (2), and (3) above shall be to ensure that the objectives and purposes of the Act are duly achieved. (5) Every licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No tariff or part of any tariff required by sub-section (6) may be amended more frequently than once in any financial year ordinarily except in respect of any changes expressly permitted under the terms of any fuel surcharge formula prescribed by regulations. At least three months before the proposed date for implementation of any tariff or an amendment to a tariff the licensee shall provide details of the proposed tariff or amendment to a tariff to the Commission, together with such further information as the Commission may require to determine whether the tariff or amended tariff would satisfy the provisions of sub-section (7). If the Commission considers that the proposed tariff or amended tariff of a licensee does not satisfy any of the provisions of sub-section (7), it shall, within 60 days of receipt of all the information which it required, and after consultation with the Commission Advisory Committee and the licensee, notify the licensee that the proposed tariff or amended tariff is unacceptable to the Commission and it shall provide to the licensee an alternative tariff or amended tariff which shall be implemented by the licensee. The licensee shall not amend any tariff u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matters to be considered in such determination and fixation. 10. The provision contained in section 185(3) of the Central Act of 2003 saves the enactment specified in the Schedule not inconsistent with the provisions of the Act. Relevant portions of section 185(3) and the Schedule are extracted hereunder : 185. Repeal and saving. ( 1) Save as otherwise provided in this Act, the Indian Electricity Act, 1910 (9 of 1910), the Electricity (Supply) Act, 1948 (54 of 1948) and the Electricity Regulatory Commissions Act, 1998 (14 of 1998) are hereby repealed. (2) Notwithstanding such repeal,- (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given under the repealed laws shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the corresponding provisions of this Act; (b) the provisions contained in sections 12 to 18 of the Indian Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not inconsistent with the provisions of the Act of 2003 are in vogue. 11. In the aforesaid backdrop, we proceed to take note of the Regulations of 1999 framed by the Commission under the provisions of sections 9 and 54 of the Act of 1998. The Regulations provide for provisions for conduct of the business. By virtue of the First Amendment Regulations, 2000, the Regulations of 1999 had been amended. Under the heading of tariffs, Regulation 45-B has been inserted providing for fuel surcharge adjustment formula. Regulation 45-B had been substituted in 2003 which is extracted hereunder: 45-B: Unless otherwise agreed by the Commission, the amount eligible for recovery towards the Fuel Surcharge Adjustment (FSA) for the price and mix variations in the quantity of energy to be purchased as per the tariff order during a quarter 1 shall be determined as per the following formula, aggregated for the quarter 1 . Fi = (Pi x Ei +FCi + Z + Ai) Qi Where Pi is the difference in the Weighted Average Variable Cost in Rupees adjusted to four decimal points, of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this account for such quarter. DISCOMS/RESCOs should use actual consumption details of the relevant quarter when levying FSA. (5) The licensee will report data from computing the total cost (split for fixed and variable) for each of the generation stations that has supplied power in the respective quarter for which fuel surcharge adjustment is being computed. The total amount eligible for recovery will be computed on an aggregate basis. (6) Fuel cost data has to conform to the fuel costs to the allowed level and no other charges other than the transportation cost can be included in the fuel cost. Every statement has to be confirmed by the licensee to that effect. The costs arrived at will be compared to the fuel cost indexation which will be developed by the Commission in the future. (7) Penalties are leviable for furnishing wrong data. (8) The licensee shall publish the FSA approved by the Commission in one English and one Telugu daily newspaper with circulation in the area of supply, for general information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one year or until the terms and conditions for tariff are specified under this section, whichever is earlier. 62. Determination of tariff. ( 1) The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for- (a) supply of electricity by a generating company to a distribution licensee: Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity; (b) transmission of electricity; (c) wheeling of electricity; (d) retail sale of electricity: Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity. (2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framed and accordingly, published a draft regulations in the A.P. Gazette on 16.6.2004 seeking comments and suggestions by 26.6.2004. No suggestions for any changes/modifications had been received. Thus, in exercise of power conferred under section 181 and section 61 of the Act of 2003 and other powers enabling the Commission in that behalf, it framed the Regulations of 2004 which came into force with effect from 10.6.2004 and it has adopted the existing Regulations of 1999 as amended from time to time, and they shall continue till new Regulations are notified by the Commission under the Act of 2003. Regulations of 2004 are extracted hereunder : ANDHRA PRADESH ELECTRICITY REGULATORY COMMISSION Regulation No. 9 of 2004 INTRODUCTION Under section 61 of the Electricity Act, while specifying the terms and conditions for the determination of tariff, the Commission has to be guided inter-alia by the Provisions of clauses (a) to (i) thereof. One of the provisions refers to the National Electricity Policy and tariff policy to be notified by the Central Government. As the Central Government has not framed the National Electricity Policy and tariff policy till date, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to the licensed business, for a financial year, which would be permitted to be recovered through tariffs and charges by the Commission. xxx xxx xxx Regulation 3 deals with the extent of application of the regulations. Same is extracted hereunder : 3. EXTENT OF APPLICATION 1. This Regulation shall apply to all the Distribution Licensees in the State for a) Distribution Business and b) Retail Supply Business. 2. In accordance with the principles laid out in this Regulation, the Commission shall determine the Aggregate Revenue Requirement (ARR) for a) Distribution Business and b) Retail Supply Business. 3. The ARR determined for Distribution Business will be the basis for the fixation of the wheeling tariff/charges. 4. The ARR determined for Retail Supply Business will be the basis for the fixation of the Tariff/Charges for retail sale of electricity including surcharges. The expenditure of the Distribution Licensee considered as controllable and uncontrollable has been specified in Regulation 10. The cost of power purchase is uncontrollable. It is also provided in Regulation 10(4) that the Distribution Licensee shall be eligible to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed charge, a charge over and above the usual or current dues. 11. In that case the Orissa State Electricity Board had imposed a uniform surcharge of 10 per cent on the power tariff. It was argued that surcharge was unknown to the provisions of the Electricity (Supply) Act, 1948 and the Electricity Board had no power under the said Act to levy a surcharge. This Court negatived the said contention and in that context, after explaining the meaning of the expression surcharge , it was observed: (SCR p. 311 : SCC p. 170, para 11) Although, therefore, in the present case it is in the form of a surcharge, it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act. 12. Similarly, in CIT v. K. Srinivasan (1972) 4 SCC 526 a question arose whether the term income tax as employed in Section 2 of the Finance Act, 1964, would include surcharge and additional surcharge whenever provided. This Court while tracing the concept of surcharge in taxation laws of our country, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of land revenue from a ryotwari pattadar than what was warranted by the terms of the previous ryotwari settlement. 15. The said decision was approved by this Court in Vishwesha Thirtha Swamiar v. State of Mysore (1972) 3 SCC 246. In that case this Court was considering the question whether the Mysore State legislature was competent to enact the Mysore Land Revenue (Surcharge) Act, 1961. After examining the nature of the levy the Mysore High Court had held that the so-called land revenue surcharge was but an additional imposition of land revenue or a land tax and fell either within Entry 45 or Entry 49 of the State List. This Court agreeing with the view of the High Court held that the surcharge fell squarely within Entry 45 of the State List, namely, land revenue. It was observed: (SCC pp. 249-50, paras 10 and 12) The legislation is but an enhancement of the land revenue by imposition of surcharge and it cannot be called a tax on land revenue, as contended by the learned counsel for the appellant. It is a common practice among the Indian legislatures to impose surcharge on existing tax. Even Article 271 of the Constitution speaks of a surcharge for the purpose of the U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given the legislative power to prescribe the fuel surcharge formula by way of making regulation and to include such factors as it considers appropriate for determination of fuel surcharge. Under Section 61 of the Act of 2003 the Commission has the power to specify the terms and conditions for determination of tariff. It is pertinent to note that under the Act of 2003 Commission has adjudicatory, legislative as well as advisory powers. It has to consider under section 61(b) commercial principles in regard to the generation, transmission, distribution and supply of electricity. Under section 61(d) the Commission has to frame the conditions with regard to safeguarding of consumers interest and at the same time, recovery of the cost of electricity in a reasonable manner. Section 62(4) of the Act of 2003 provides that no tariff or part of any tariff creates an embargo on deviation of tariff frequently more than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified. Section 62 does not deal with the matter to be provided in determination of fuel surcharge formula. The provisions of section 61 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .7 of the tariff Notification, 1978 provided that the consumers of specified category shall be liable to pay fuel surcharge at a rate to be determined every year in accordance with the formula set out in sub-para 2 of said paragraph 16.7. A dispute arose due to raising of the fuel surcharge. One of the questions raised was that the bills were not in accordance with the provisions of tariff notification. The High Court disagreed hence the matter travelled to this Court. This Court answered the question whether the fuel surcharge can only be on the actual cost of fuel consumed in the generating stations. This Court has held that though the nomenclature given to the levy is fuel surcharge , it is really a surcharge levied to meet increased cost of generation and purchase of electricity and this is made absolutely clear in the formula given in para 16.7.2. The formula considered by this Court in Rohtas Industries (supra) and relevant discussion is extracted hereunder : 9. The next argument advanced on behalf of the appellants was that even if the Board is legally entitled to levy the fuel surcharge, that can only be for the purpose of recouping the amounts actually paid by the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The explanation given in respect of Cl is increase in the average unit rate of purchase of energy from D.V.C. during the year for which the surcharge is to be calculated. The said increase to be calculated with respect to the base year 1977-78 . C3 stands for units purchased from D.V.C. during the year . Likewise, El and E3 have been explained as Increase in the average unit rate of purchase of energy from Uttar Pradesh State Electricity Board during the year for which surcharge is to be calculated, the said increase to be calculated with respect to the base year 1977-78 and units purchased from Uttar Pradesh State Electricity Board respectively. 11. We see no force in the contention put forward on behalf of some of the appellants that the words increase in the average unit rate of purchase of energy used in Cl below paragraph 16.7.2 should be interpreted as taking their colour from the contents of paragraph 16.7.3. From a reading of these provisions it is abundantly clear that the entire increase in cost incurred in the purchase of energy from the D.V.C. and the U.P. State Electricity Board has to go into the computation of the surcharge leviable under paragraph 16.7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.1 of the Notification dated 21.6.1993 came up for consideration before this Court. The notification provided payment of operational surcharge at a rate to be determined every year which consists of two elements i.e. fuel surcharge and other operational surcharge. Clause 16.10.3 laid down the formula for determining fuel surcharge. Clause 16.10.4 laid down the formula for determination of other operational surcharge. Following was the formula on fuel surcharge which came up for consideration of this Court : 11. In order to appreciate the facts to be stated hereinafter it would be appropriate to notice the formula for computation of the fuel surcharge laid down in Clause 16.10.3 as under: S1 = A1 A3 + B1 B3 + C1 C3 + D1 D3 + E1 E3 + F1 F3 + G1 G3 + H1 H3 --------------------------- -------------------------------------------------------- (A2 + B2 + C2 + D2 + E2 + F2 + G2 + H2) . Whereas, S1 = Average fuel surcharge per unit in paise applicable during the financial year. A1, B1, C1 = Units generated from PTPS, BTPS and MTPS respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion has specified in its wisdom formula for its calculation in Regulation 45B. It cannot be said to be ultra vires to the aforesaid provisions. We find no breach of the provisions of section 26 of the Act of 1998 and principles enumerated in section 61 and section 62 of the Act of 2003 or any other provisions of the Act of 2003. The Regulations advance the mandate of the provisions of the Act. Reliance has been placed on the provisions which were in vogue in the year 2000 before the impugned provision was inserted in the year 2003 to contend that earlier provision was proper and legal. Question is not of choosing a better Regulation, but of power to frame it. In our opinion, as the Commission has the power to specify the fuel surcharge formula and considering nature of levy, could have taken into consideration the difference in total fixed cost, changes in adjustment as contemplated in the regulation inserted in the year 2003, the Commission has not at all transgressed its limits while carving out the formula. There is no violation of statutory provisions while enacting Regulation 45B in the year 2003. The submission raised that fuel has to be given a specific natural meaning and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We think that unless, by the terms of a particular statute, or order, price fixation is made a quasi-judicial function for specified purposes or cases, it is really legislative in character . A legislative measure does not concern itself to the facts of an individual case. It is meant to lay down a general rule applicable to all persons or objects or transactions of a particular kind or class. 33. In Union of India v. Cynamide India Ltd. (1987) 2 SCC 720 this Court held that except in cases where it becomes necessary to fix the price separately in relation to individuals, price fixation is generally a legislative act, the performance of which does not require giving opportunity of hearing. Following passage from the judgment may usefully be noticed: (SCC pp. 734-35, para 5) 5. legislative action, plenary or subordinate, is not subject to rules of natural justice. In the case of parliamentary legislation, the proposition is self-evident. In the case of subordinate legislation, it may happen that Parliament may itself provide for a notice and for a hearing - there are several instances of the legislature requiring the subordinate legislating authority to give public notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions enumerated under section 178 of the Act of 2003 confer wide powers upon the Commission to frame regulations which cannot be said to be ultra vires. 25. This Court in Association of Industrial Electricity Users (supra) has observed that the court has not to act as an appellate authority and laid down the scope of judicial interference in such matters thus : 11. We also agree with the High Court that the judicial review in a matter with regard to fixation of tariff has not to be as that of an Appellate Authority in exercise of its jurisdiction under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that its decision is on the face of it arbitrary or illegal or contrary to the Act, the court will not interfere. Fixing a tariff and providing for cross-subsidy is essentially a matter of policy and normally a court would refrain from interfering with a policy decision unless the power exercised is arbitrary or ex facie bad in law. 26. No doubt about it that section 26(9) and sections 61 and 62(4) of the Act of 2003 contain an embargo on variation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) also this Court had negatived the submission based upon the classification and held that classification which is legally valid and permissible for grant of concession in the basic rates will equally hold good for the purpose of subsequent scheme of distribution of burden in the form of fuel surcharge and the decision of the Board restricting levy of fuel surcharge to those categories of consumers who were enjoying the benefits of concession in the general rate and in sparing smaller type of consumers such as agriculture, irrigation and commercial consumers being subjected to that burden was upheld. This Court in Rohtas Industries (supra) has laid down thus : 8. The expression licensee means a person licensed under Part II of the Indian Electricity Act, 1910, to supply energy or a person who has obtained licence under Section 28 of that Act to engage in the business of supplying energy - through definition in Section 2(6). Admittedly, the appellants before us are not licensees. They are consumers receiving high tension supply to their factories. For the purpose of tariff fixation, the Board has classified the consumers into 10 categories, viz. domestic , commercial (i) , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The position that obtains under the 1981 tariff which also has been challenged by some of the appellants is substantially similar. In our opinion, the Board was perfectly within its rights in deciding to restrict the levy of fuel surcharge to those categories of consumers who were enjoying the benefit of a concession in the general rate and in sparing smaller type of consumers such as the agricultural, irrigation and commercial consumers from being subjected to that burden, in view of the fact that they were already being subjected to a basic levy at substantially higher rates. The true consequence of the action so taken by the Board is only to effect a reduction in the quantum of concession that was being enjoyed by the consumers belonging to the industrial and railway traction categories. A classification which is legally valid and permissible for the grant of a concession in the basic rates will equally hold good for the purpose of a subsequent scheme of distribution of the burden in the form of fuel surcharge. In this context, it is also relevant to remember that the levy of surcharge was necessitated by reason of the extra expenditure which the Board had to incur in the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Supply Act and in effect, it has merely resulted in a gradual withdrawal of the concessional tariffs provided earlier to the power intensive consumers which do not in its opinion require continuance of the concessional tariffs any longer. In fact, no material has been placed before us to indicate that this assertion of the Board is incorrect or there is any reasonable basis to hold that the upward revision of tariffs applicable to HT consumers is merely with a desire to earn more profits like a private trader and not to generate surplus for utilisation of the funds to discharge other obligations of the Board towards more needy consumers, such as agriculturists, or to meet the needs of expansion of the supply to deserving areas. The argument with reference to statistics that the upward revision of tariffs for the HT consumers results in earning amounts in excess of the cost of generation does not, therefore, merit a more detailed consideration. 27. It was also contended on behalf of the appellants that the generation of electricity by the Andhra Pradesh Electricity Board is both thermal as well as hydro, the quantity from each source being nearly equal and the entire electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the relevant licence. This section has to be read along with Section 11 which sets out the functions of the Commission and, inter alia, provides that amongst the functions is the power to regulate the tariff and charges payable keeping in view both the interest of the consumer as well as the consideration that the supply and distribution cannot be maintained unless the charges for electricity supplied are adequately levied and duly collected. Depending upon the various factors stipulated in Section 26(7), categorisation between industrial and non-industrial, agricultural or domestic consumers can certainly take place. This is precisely what has been done in the present cases. The High Court has at length considered all aspects of the cases and has examined in detail the exercise which was undertaken by the Commission in fixing the tariff and, in our opinion, the view expressed by the High Court calls for no interference. In view of the aforesaid discussion, the submission with respect to favourable treatment and discrimination vis a vis the agricultural sector is hereby repelled. In Re : Variation in cost of Rupee : 32. It was also submitted on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not able to do the complete metering of agricultural services. In our opinion, in the prevailing conditions, in particular plight of agricultural sector and purpose of enactment, it is open to the Commission to make such a wholesome provision carved out in condition No.1. Thus there is no violation of the provisions contained in section 55(1) of the Act of 2003. The consequence of section 55 of the Act of 2003 cannot be that if metering is not achieved within two years the consumption in agricultural sector cannot be provided within the purview of FSA formula. Thus condition 1 did not cease to have effect after 10.6.2005 as submitted on behalf of the appellants. In Re : Subsidy : 35. Coming to submission of violation of section 65, section 65 of the Act of 2003 which enables the State Government to make a provision for subsidy to any consumer or class of consumers. The State Government has to pay in advance in such manner the amount to compensate the person affected by the grant of subsidy. Section 65 is extracted hereunder : 65. Provision of subsidy by State Government.-If the State Government requires the grant of any subsidy to any consumer or class of consume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied under section 61, whichever is earlier. Thus, the tariff regulations framed under the Act of 1998 would remain in force for maximum period of one year and the regulations had been framed with effect from 10.6.2004 and the Transitory Regulations have been enacted vide Regulations of 2004 by the Commission. Regulation 2 of said Regulations of 2004 clearly provides that Regulations of 1999 as amended from time to time under the Act of 1998 shall apply as regulation under the Electricity Act, 2003 and shall remain in force or till new regulations are notified by the Commission under the Act of 2003. Even if earlier Regulations of 1999 came to an end on 10.6.2004 and if it is further assumed without deciding that the Commission had no authority to enact retrospectively, in our opinion, it could have adopted the Regulations of 1999 as amended, framed under the Act of 1998 shall continue, to apply for future. Considering the period in question involved in the matter, it cannot be said to be Regulations of 1999, as amended, are inoperative as they have been adopted vide Regulation No.9/2004. With respect to the fuel surcharge adjustment no provision has been made in the regulations fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to recover or refund as the case may be the charges on account of fuel surcharge adjustment as approved by the Commission from time to time suo motu or based on the filing made by the institution company as the Commission may deem fit. The provisions of the Act provided that the formula has to be specified by the Commission for FSA and this has been specified only in Regulation 45-B which has been adopted in the year 2004 for continuance by the Commission. The Commission had adopted the said regulations and the same continues to be in operation. Conclusion : 42. In our opinion, the challenge made by the appellants is unworthy of acceptance. Fuel surcharge is really a surcharge levied to meet increased cost of generation and purchase of electricity and the scope cannot be circumscribed by its nomenclature. Thus the formula in Regulation 45B and the FSA determined by the Commission would take into consideration various factors which result in the increased cost of generation and purchase of electricity. 43. The appeals are found to be devoid of merits and are hereby dismissed. The appellants are directed to make the deposit along with interest; if no other rate is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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