M/S Badri Kedar Paper Pvt. Ltd. vs \ U.P. Electricity Regulatory Commn. & Ors.

U.P. Electricity Regulatory Commn. & Ors. ...Respondents

JUDGMENT

S.B. SINHA, J :

1. Leave granted.

2. Validity of an action of withdrawal of a circular letter dated

8.09.2000 issued by the U.P. Power Corporation Ltd. (Respondent No. 2

herein) was the subject matter of ten writ applications filed before the High

Court. The said writ petitions were dismissed.

2 3. The writ petitioners preferred appeals before us upon obtaining

special leave. This Court in LML Ltd. v. State of Uttar Pradesh and Others

[(2008) 3 SCC 128] allowed the appeals against the Corporation. The

appellant before us is against the said common judgment of the High Court.

In LML Ltd. (supra), this Court, inter alia, held:

"50. The proximity of issuance of the circular vis-`-vis notification must also be noticed. The tariff was framed on 7-8-2000 which came into force from 9-8-2000 whereas the Circular was issued on 8-9-2000. The consumers exercised their option on 31-10-2000. The judgment in LML1 was delivered on 25-4-2001. The Circular dated 31-8-2001 undoubtedly was issued in view of the said judgment. The said judgment did not deal with the questions raised before us. In any event if the licensee violates the tariff approved by the Commission appropriate legal action can be taken against it. But it would be too much to contend that for a mistake on the part of the Corporation, the consumers would suffer. In this view of the matter, we are of the considered view that the doctrine of estoppel shall apply in the cases where the promise was made. However, the principle of said doctrine would, however, not be applicable where no such promise was made."

4. Mr. Pradeep Misra, learned counsel appearing on behalf of the

respondent No. 1 - corporation, however, would submit that the said 3

decision should not be followed by us as a review petition had been filed. It

was urged that in any event the said decision requires reconsideration.

The said review petition, we may place on record, has been dismissed

by a Bench of this Court by an order dated 20.02.2008.

5. We, therefore, proceed to deal with the submission of Mr. Misra

before us that the said decision requires reconsideration.

For the purpose of appreciating the said contention, we may notice at

the outset the basic fact of the matter.

Legislature of the State of Uttar Pradesh enacted the Uttar Pradesh

Electricity Reforms Act, 1999 (for short "the 1999 Act") in terms whereof

the U.P. Electricity Regulatory Commission (for short "the Commission")

was constituted. For determination of tariff in terms of the 1999 Act, the

Commission was approached by the respondent No. 2. Tariff was

determined, relevant portion whereof reads as under:

"RATE SCHEDULE HV-2 LARGE AND HEAVY POWER

1. Applicability 4

This rate schedule shall apply to all consumers who have contracted load of more than 75 kW (100 BHP) for industrial and/or processing purposes as well as to Arc/induction, furnaces rolling/re-rolling mills, mini steel plants and to any other power consumers not covered under any other rate schedule.

This rate schedule shall also apply to commercial light, fan and power consumers (LMV-2) and power consumers of Rate Schedule LMV-6, subject to the condition that they opt for this rate schedule.

The contracted demand shall be expressed in whole number only.

2.-3. * * *

4. Rate of charge Description Demand charge Energy charge A. Basic rate (applicable to urban consumers) Rs 130 per kVA/month PLUS 390 paise/kWh Notes.--(a) In respect of consumers who opt for power supply during restricted/peak hours an additional surcharge of 15% on the amount billed at the "Rate of Charge" under Item 4-A above i.e. demand charge and energy charge shall be levied. However, in respect of consumers getting power supply on independent feeders emanating from 400/220/132 kV substations an additional surcharge of 15% on demand and energy charges shall be charged further subject to the condition that these consumers will get an assured supply of minimum 500 hours in a month. In case of shortfall in above guaranteed hours of supply a rebate @ 1% for each 10 hours' shortfall will be admissible on the bill amount computed under "Rate of Charge".

5 (b)-(c) * * *

(d) In respect of supply during peak hours/restricted hours, the consumers shall have to take the permission from UPPCL."

6. A confusion arose as regards interpretation of the purported levy.

The U.P. Power Corporation issued a circular calling for options from the

consumers of electrical energy as to whether they intended to have a

continuous power supply of 500 hours in a month. Pursuant to or in

furtherance of the said circular, appellant along with others exercised an

option stating that they did not intend to have 500 hours of continuous

supply.

Another circular letter was issued by the U.P. Power Corporation Ltd.

on 15.12.2000, the relevant portion whereof reads, thus:

"U.P. Electricity Regulatory Commission in its revised tariff for the year 2000-2001 applicable to HV-2 rate schedule consumers who are getting supply from independent feeders for levy of 15% surcharge on the guarantee of 500 hours of power supply per month.

In this regard, detailed guidelines have been issued by this office vide Letter No. 1423 dated 9- 8-2000.

In this regard, it is directed that those consumers who will exercise option, of not 6

availing 500 hours' guaranteed supply, through a registered letter to Executive Engineer (Distribution) by 31-12-2000, they will not be charged 15% surcharge from the very date of its applicability i.e. 7-8-2000. For consumers, who will submit their option after 31-12-2000, this facility will be applicable from the date of receipt of the application."

The said policy decision, however, was not adopted by other

suppliers of electricity.

7. Indisputably, LML Ltd. filed a writ application before the High

Court. A Division Bench of the Allahabad High Court in a judgment (since

reported in AIR 2001 All 321) inter alia held that the said circular letters

were illegal and, thus, void opining that it was the Commission alone who

could fix the tariff and, thus, the same could not have been modified or

altered by any licensee.

The impugned circular was, thereafter, issued withdrawing the

aforementioned circulars.

8. At the outset, Mr. Pradeep Misra, learned counsel appearing on behalf

of the respondents, would submit that in the writ petition an order of stay

was granted which was later on vacated. However, the appellant herein 7

prayed for payment of dues in instalments which was allowed by an office

memo 16.03.2004, the relevant portion whereof reads as under:

"6. According to the own request of the consumer, he will submit an affidavit to the concerned Executive Engineer (Distribution) that if he gets any order from Hon'ble Court in this case for stay of this amount then also he will continue to pay the installments regularly till the entire payable amount is not paid."

A Director of the appellant - company is said to have affirmed an

affidavit pursuant thereto, stating:

"3. That on my application Managing Director, Pashchimanchal Vidyut Vitran Nigam Ltd., Meerut vide letter No. 1670 dated 16.03.2004 has issued order to deposit the aforesaid outstanding amount in six monthly installments.

4. That besides the conditions mentioned in the aforesaid letter, I further assure that even if we get any stay order regarding the said amount by Hon'ble High Court in the said case, we will continue to pay six monthly installments regularly."

Indisputably, the entire amount of Rs. 21,13,031/- together with

interest amounting to Rs. 10,16,815/- had been deposited in terms of the

said undertaking.

8

9. Mr. Misra would submit that in that view of the matter, this special

leave petition is not maintainable.

The learned counsel would further contend that even otherwise the

judgment of this Court requires reconsideration as it had wrongly been held

in paragraph 43 thereof that the Commission did not take any decision

despite repeated communications by the Power Corporation praying for

modification of the tariff in terms of the provisions of the 1999 Act and the

regulations framed thereunder and in that view of the matter, it was only the

Commission which could not only frame tariff but also make amendments

thereto. It was urged that finding of this Court that Sub-section (6) of

Section 24 of the 1999 Act inter alia empowers the holders of the licence to

modify the tariff is patently incorrect. In support of the said contention

reliance has been placed on BSES Ltd. v. Tata Power Co. Ltd. and Others

[(2004) 1 SCC 195], West Bengal Electricity Regulatory Commission v.

CESC Ltd. [(2002) 8 SCC 715] and Association of Industrial Electricity

Users v. State of A.P. and Others [(2002) 3 SCC 711] 9

10. It was contended that in LML Ltd. (supra), the regulations framed by

the State had inadvertently not been placed; from a perusal whereof it would

appear that it was the Commission only who could amend the tariff.

11. We are unable to agree with Mr. Misra on any of the aforementioned

contentions.

When questioned, Mr. Misra conceded that the affidavit affirmed in

support of the representation filed by the appellant as regards payment of

the amount had not been brought to the notice of the High Court.

Concededly again it had also not been contended before the High Court that

in view of the aforementioned event subsequent to the filing of the writ

application by the appellant, the writ petition became infructuous. Had such

contention been raised before the High Court, it might not have exercised its

discretionary jurisdiction. Such a contention had not only been raised

before the High Court, the respondent No. 1 allowed the High Court to

determine the issues arising therein on their own merit, without any demur

whatsoever.

In our opinion, the respondent No. 1 cannot be permitted to raise such

a contention before us for the first time. Even otherwise in the affidavit, the 10

appellant merely stated that even if a stay order is granted by the High

Court, the six-monthly instalments would be paid regularly. Appellant had

not contended that the writ petition would be withdrawn or even if the writ

petition is allowed, it would not ask for refund of the amount deposited. It

is neither in doubt nor in dispute that such an undertaking had to be given

by the appellant only with a view to avoid disconnection of electrical

energy. If by reason of the circular impugned before the High Court, the

appellant was entitled to maintain a writ application; by reason of such

representation, it did not waive its right.

12. In LML Ltd. (supra), this Court proceeded on the basis that it was the

Commission alone who had the exclusive jurisdiction to determine the

tariff. In view of the provisions of the 1999 Act as also the regulations

framed thereunder, as the law stands now, there cannot be any doubt or

dispute that the Commission alone has the exclusive jurisdiction and even

for the purpose of modification and/ or alteration of tariff, the Commission

must be approached.

13. Submission of Mr. Misra that in paragraphs 43 and 44 of the

judgment this Court had held that sub-section (6) of Section 24 of the 1999

Act empowers the holders of the licence to modify the tariff, is incorrect. 11

The tariff in terms of Sub-section (6) of Section 24 has to be modified by

the licensee albeit in terms of a direction issued by the Commission,

wheretobefore all procedures laid down in that behalf in terms of the

regulations are required to be complied with. The statement made in

paragraph 44 of the said decision cannot be read in isolation.

14. There cannot further be any doubt or dispute in view of the binding

precedent of this Court in Tata Power Co. Ltd. (supra), CESC Ltd. (supra)

and Association of Industrial Electricity Users (supra) that the Commission

has the exclusive jurisdiction to determine the tariff.

15. This Court in LML Ltd. (supra), however, proceeded to hold in

favour of the consumers of electrical energy on the premise that the

respondent No. 1 is bound by the doctrine of promissory estoppel.

The matter as regards fulfillment of the conditions of licence granted

by the Commission in favour of the licensee is a matter between the parties

thereto. If the Corporation fails to comply with any of the conditions laid

down in the licence or violates the tariff, the licence of the licensee may be

revoked. A penal action may also be taken. But the same would not mean

that the licensee can be permitted to take advantage of its own wrong. It can 12

approbate and reprobate, particularly when it is the beneficiary thereof. [See

Halsbury's Laws of England, Fourth Edition, Vol. 16, pages 1012-1013,

Nagubai Ammal v. B. Shama Rao (1956) SCR 451, C. Beepathuma v.

Velasari Shankaranarayana Kadambolithaya (1964) 5 SCR 836 and Ambu

Nair and Kelu Nair (1932-33) 60 Indian Appeals 266 at 271-272] It is

furthermore well known that even a right under a mandatory provision can

be waived. [See Babulal Badriprasad Varma v. Surat Municipal

Corporation & Ors. 2008 (8) SCALE 206] If it had made a representation

pursuant whereto or in furtherance whereof a consumer of electrical energy

had altered its position, the doctrine of promissory estoppel shall apply.

The doctrine of promissory estoppel, it is now well-settled, applies also in

the realm of a statute. [See State of Punjab v. Nestle India Ltd. and Another

(2004) 6 SCC 465 and Southern Petrochemical Industries Co. Ltd. v.

Electricity Inspector & ETIO and Others (2007) 5 SCC 447]

16. It is not the contention of Mr. Misra that in the matter of

implementation of tariff the doctrine of promissory estoppel will have no

application. If it applies, correctness of LML Ltd. (supra) cannot be

questioned.

13

Furthermore, the Allahabad High Court in the first round of litigation

was not required to go into the question as to whether the LML Ltd. could

enforce a circular as against the Kanpur Electricity Supply Company

although it did not make any representation. The question of the tariff

prevailing over such circular did not arise therein as no such circular had

been issued by the Kanpur Electricity Supply Company at all.

17. The circular impugned before the High Court was undoubtedly issued

pursuant to the judgment of the Division Bench of the Allahabad High

Court but then whether having regard to the doctrine of promissory estoppel

the same could have been withdrawn or not, further determination in that

behalf was not warranted.

18. We, therefore, are of the opinion that LML Ltd. (supra) does not

require reconsideration. This appeal shall also be governed by the

aforementioned judgment. The appeal is allowed with the direction to

refund the entire amount within four weeks. Respondent shall bear the costs

of the appellant throughout. Counsel's fee assessed at Rs. 1,00,000/-.

...............................J. [S.B. Sinha] 14

................................J. [Cyriac Joseph]

New Delhi;

December 19, 2008