Electricity Act, 2003 – s.62(3) – Scope of – Tariff notification issued by appellant – Respondents-Self-Financing Educational Institutions (SFEIs) were segregated from State run and State aided private educational institutions and subjected to higher category of tariff – Challenged – Single Judge of the High Court found the tariff order to be valid – Aforesaid order set aside by Division Bench – On appeal, held: No undue preference was given to the State run D and State aided institutions in the tariff notification – No error committed by the appellant in fixing higher tariff for the SFEIs categorising them as commercial entities – Judicial notice taken of the fact that the student profile of State run and State aided institutions is different from those of SFEIs – Students from comparatively modest background go to these institutions –While construing the meaning of the expression “purpose” u/s.62(3), for the purpose of settling the tariff question, who is serving the “purpose” and for whom such “purpose” is being served have to be factored in – Nature of service rendered by them cannot be the sole determinant for the tariff-fixing exercise – The fact that SFEIs F were clubbed together with several commercial service providers wholly unrelated to education becomes insignificant once it is found that purpose of the SFEIs could be differentiated from the State run and State aided educational institutions – Impugned judgment set aside while that of the Single Judge is restored – Principles of Natural Justice – Constitution of India – Art.14.
Principles of Natural Justice – When not breached – SelfFinancing Educational Institutions (SFEIs) segregated from State run and State aided educational institutions and subjected to higher tariff by Kerala State Electricity Regulatory Commission – Challenged inter alia on breach of principles of natural justice contending that the tariff notification did not contain any reason – Held: Commission’s role as a quasi-judicial body or it having trappings of a Court would emerge only if it was called upon to adjudicate a dispute – Having failed to generate any lis on the tariff proposal by not raising any kind of objection, it would not be open to SFEIs to demand disclosure of reasons along with publication of the tariff rates – Thus, tariff notification being unaccompanied by reason cannot be faulted for having breached the principles of natural justice – Electricity Act, 2003.
Electricity Act, 2003 – Tariff fixation – Self-Financing Educational Institutions (SFEIs) clubbed together with commercial service providers and subjected to higher tariff – Challenged – Held: While an educational institution in ordinary perception may not be performing functions similar to the other entities undertaking business ventures, a tariff fixing body is not required to proceed on the basis of such common perception – Duty of such body is to determine which rate an organisation shall pay, and entities working in diverse fields can be clubbed together under a common umbrella to be subjected to a common rate – In that context, for exercise of this nature, the heading “commercial” cannot be constructed to restrict the entities that can come under that head on the basis of the nature of their activities – Selection of heading is an exercise of convenience in fixing tariff rates and not necessarily the controlling factor in choosing the entities included under that heading. Words & Expressions– “Purpose”, “Commercial” – Meaning of, in the context of 2003 Act – Electricity Act, 2003. Allowing the appeals, the Court
HELD: 1. There is a negative mandate of the legislature upon the Commission in sub-section (3) of Section 62, Electricity Act, 2003. While fixing tariff, the Commission cannot show undue preference to any consumer of electricity. The Commission, however, is vested with the power to prescribe differential rates according to the consumers’ load factor, power factor, voltage, total consumption of electricity during any specified period of time at which supply is required. The other permissible differentiating factors are geographical position of any area, the nature of supply and the purpose for which the supply is required. [Para 7][896-B-D]
2.1 The requirement for disclosure of reason however could originate in a case of this nature if there is a lis between the consumer and the Commission. Unless of course, the statutory provision prescribe otherwise. Once the Division Bench observed that publication in the website was sufficient, the respondentswrit petitioners (SFEIs) may not have had forfeited their right to challenge the tariff notification in the Writ Court or the appellate forum. But having failed to generate any lis on the tariff proposal by not raising any kind of objection, it would not be open to them to demand disclosure of reasons along with publication of the tariff rates. The Commission’s role as a quasi-judicial body or it having trappings of a Court would emerge only if it was called upon to adjudicate a dispute. No dispute had been generated by the writ petitioners on the basis of Commission’s proposal which would have required it to undertake some form of adjudicatory exercise. In such a situation, the exercise of fixing tariff has to be undertaken as a quasi-legislative act only, which ordinarily a tariff-fixing exercise is. Issue of the subject tariff notification unaccompanied by reason thus cannot be faulted for having breached the principles of natural justice. The forum of appeal was open to them. But mere existence of an appellate forum in the statute would not require a tariff-fixing body to disclose the reason for stipulating tariff-rate in each individual case. If any appeal is preferred in relation to any specific case, the Commission would then have to justify fixing a tariff rate in such a case. Not having gone to the appellate forum, the writ petitioners approached the Writ Court. Before the Writ Court, such tariff fixation was open to challenge in the same way tariffs fixed in exercise of quasi-legislative or administrative power is subjected to judicial review. In absence of any statutory provision to the contrary, once tariff proposal is published and goes unobjected to before the State Commission, the question of disclosure of reason for such fixation would not arise at the stage of finalisation of tariff. If such tariff orders are later challenged before the appellate forum or the Writ Court, the Commission would have to defend its decision the same way an administrative or quasilegislative decision on fixing of tariff is defended. [Paras 10, 11] [897-G-H][898-B-H]
2.2 SFEIs have been categorised with entities like cinema studios, hotels and restaurants, construction works etc., and heading of LT-VII tariff items is “commercial”. While an educational institution in ordinary perception may not be performing functions similar to the other entities who undertake business ventures, a tariff fixing body is not required to proceed on the basis of such common perception. The duty of such body is to determine which rate an organisation shall pay, and entities working in diverse fields can be clubbed together under a common umbrella to be subjected to a common rate. In that context, for exercise of this nature, the heading “commercial” cannot be constructed to restrict the entities that can come under that head on the basis of the nature of their activities, i.e. whether such activities have commercial attributes or not. Selection of heading is an exercise of convenience in fixing tariff rates and not necessarily the controlling factor in choosing the entities included under that heading. [Para 14][900-F-H][901-A]
2.3 The expression “purpose” means, as per the Concise Oxford English Dictionary, Tenth Edition, published by Oxford University Press:- “1. the reason for which something is done or for which something exists. 2. resolve or determination.” In the given context, the noun “purpose” would fit into the first meaning given in the aforesaid dictionary. The SFEIs have been specifically included under the heading “commercial” and it is not a case where their character is being assessed inferentially, treating their activities as commercial in a general sense of the term. Profiteering is not the sole criteria on the basis of which the Tariff Authorities segregated the two sets of organisations. In the event the tariff fixing body, in this case, being the Commission, can distinguish the purpose of the respective categories, they would be entitled to impose different rates of tariffs for different categories of educational institutions. [Paras 16-18][901-E-F][902A-B][902-D-E] Rohtas industries Ltd. v. Chairman, Bihar State Electricity Board & Ors. (1984) Suppl. SCC 161 : [1984] SCR 59; M.P. Electricity Board & Ors. v. Shiv Narayan & Ors. (2005) 7 SCC 283 : [2005] 2 Suppl. SCR 958– held inapplicable.
2.4 Though the Commission has not demonstrated through factual evidence the facilities provided by these two sets of institutions are different, it is of common knowledge, of which the Court is taking judicial notice, that the student profile of State run and State aided institutions is different from those of SFEIs. Students from comparatively modest background go to the State run or State funded institutions. While the meaning of the expression “purpose” is construed under sub-section (3) of Section 62 of the 2003 Act, for the purpose of settling the tariff question, who is serving the “purpose” and for whom such “purpose” is being served have to be factored in. The nature of service rendered by them cannot be the sole determinant for the tariff-fixing exercise. The State run and State aided institutions are funded by the tax payers, which is also a material factor in making distinction between the aforesaid categories of the institutions. The expression “purpose” has to be understood in the context of the character or feature of the entity which is undertaking the activity of imparting education. [Para 19][902-FH][903-A-B]
2.5 No error was committed by the appellant in fixing higher tariff for the Self-Financing Educational Institutions categorising them as commercial entities. No undue preference has been given to the State run and State aided institutions in the tariff notification. The fact that SFEIs have been clubbed together with several commercial service providers wholly unrelated to education becomes insignificant once it is found that purpose of the SFEIs could be differentiated from the Government run and Government aided educational institutions. [Para 20][903-C-E]
PTC India Limited v. Central Electricity Regulatory Commission (2010) 4 SCC 603 : [2010] 3 SCR 609; State of Gujarat v. Utility Users Welfare Association (2018) 6 SCC 221 – distinguished.
T.M.A Pai Foundation and Anr. v. State of Karnataka and Ors. (2002) 8 SCC 481 : [2002] 3 Suppl. SCR 587; Social SG of Assisi sisters v. KSEB 1988 (1) KLT 1727; Shri Sitaram Sugars Co. Ltd. v. Union of India & Ors. (1990) 3 SCC 223 : [1990] 1 SCR 909; The
Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India (1976) 2 SCC 981 : [1976] Suppl. SCR 489; S.N. Mukherjee v. Union of India (1990) 4 SCC 594 : [1990] 1 Suppl. SCR 44; Kranti Associates Pvt. Ltd. v. Sh. Masood Ahmed Khan SLP(C) No. 12766 of 2008; P.A. Inamdar & Ors. v. State of Maharashtra & Ors. (2005) 6 SCC 537 : [2005] 2 Suppl. SCR 603, Islamic Academy of Education & Another v. State of Karnataka and Ors. (2003) 6 SCC 697: [2003] 2 Suppl. SCR 474; Modern School v. Union of India (2004) 5 SCC 583 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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