U.P. Avas Evam Vikas Parishad & Anr vs U.P.Power Corpn Ltd

"REPORTABLE"

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4209 OF 2007

U.P. Avas Evam Vikas Parishad .... Appellant

Versus

U.P. Power Corpn. Ltd. .... Respondent

J U D G M E N T

JAGDISH SINGH KHEHAR, J.

1. The appellant herein, the Uttar Pradesh Avas Evam Vikas Parishad

(hereinafter referred to as, the U.P. Avas Evam Vikas Parishad), is a

statutory body constituted under the U.P. Awas Evam Vikas Parishad

Adhiniyam, 1965. The U.P. Avas Evam Vikas Parishad has been engaged

in development of colonies, residential plots, residential houses, as well as,

commercial plots and complexes throughout the State of Uttar Pradesh

(U.P.).

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2. The U.P. Power Corporation Ltd. (hereinafter referred to as, U.P.

Power Corporation) is the successor of the U.P. State Electricity Board

(hereinafter referred to as, UP, SEB). It has been the statutory duty of the

UP, SEB (and thereafter, the U.P. Power Corporation) to erect

transmission lines, associated distribution sub-stations and L.T. distribution

mains, throughout the State of U.P. The aforesaid activity has also been

carried out by the UP, SEB (and thereafter by the U.P. Power Corporation)

in colonies/multistoried buildings, developed/raised in the State of U.P.

The aforesaid statutory duty is cast on account of the fact, that the said

authorities are "designated licensees", for supply and distribution of

electricity, under section 26 of the Electricity (Supply) Act, 1948. The

aforesaid provision has been re-enacted as a part of section 86 of the

Electricity Act, 2003.

3. The UP, SEB (and thereafter, the U.P. Power Corporation) used to

exclusively carry out its legal obligations, of erection of transmission lines,

associated distribution sub-stations and L.T. distribution mains, throughout

the State of U.P., as a "designated licensee". The aforesaid activity was

also carried out in colonies/multistoried buildings by the aforesaid, again as

a "designated licensee". For carrying out the said activities in

colonies/multistoried buildings, the concerned depleting agency was

required to deposit with the "designated licensee", the estimated cost of

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the transmission lines, associated distribution sub-stations and L.T.

distribution mains. The said work was entrusted to the UP, SEB (and

thereafter, the U.P. Power Corporation) as "deposit work".

4. The State of U.P., in exercise of power vested in it under rule 133 (1)

read with the proviso to sub-rule (1) of rule 45 of the Indian Electricity

Rules, 1956, had issued a Government order dated 2.6.1982 authorizing

the U.P. Avas Evam Vikas Parishad (i.e., the appellant herein) to carry on

by itself, in the colonies/multistoried buildings raised by it, the work of

erection of transmission lines, associated distribution sub-stations and L.T.

distribution mains up to 11 K.V., subject to the conditions envisaged in the

said Government order. A relevant extract of the Government order dated

2.6.1982, which was duly notified, is being reproduced hereunder:-

"The Governor is hereby pleased to provide relaxation under

the provisions of Rule 45(1) of Indian Electricity Rules, 1956

with respect to the works of installations upto 11 K.V. in the

land etc. of complex of Avas Evam Vikas Parishad in

pursuance of the provision of 133(1) of Indian Electricity

Rules, 1956 read with provision of rule 45(1).

1. All the installation of electrification works shall be done

under the supervision of recognized engineer/Junior

Engineer (Electrical), who has got the certificate of

Electrical Supervisor from Electrical Inspector Office.

2. The work of wiring and installation of overhead line shall

be got done by the persons and linemen having the

permit of wireman obtained from Electrical Inspector

Office. Only those persons shall come under the

category of lineman, who have passed the lineman

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trade test from I.T.I. or who have worked on the post of

linemen minimum upto 10 six months in any institution.

3. There must be one Electrical Supervisor, two Wiremen

and two linesmen separately for the execution of

electrification work in every area.

4. Before commencement of construction of overhead

lines and cable laying etc., an approval of drawing

regarding method of construction shall have to be

obtained from Electrical Inspector Office."

A perusal of the aforesaid Government order reveals, that no supervision

charges were prescribed as payable by the U.P. Avas Evam Vikas

Parishad to the UP, SEB.

5. Supervision charges were levied by the UP, SEB for the first time

through an office memorandum dated 17.1.1984. At the aforesaid

juncture, the UP, SEB was pleased to levy 5% of total estimated cost of

the electrification work as supervision charges. The memorandum dated

17.1.1984 prescribing 5% as supervision charges, was applicable for

housing boards, local development authorities and NOIDA who opted to

carry out on their own, the work of erection of transmission lines,

associated distribution sub-stations, and L.T. distribution mains in the

colonies/multistoried buildings promoted/raised by them. The office

memorandum dated 17.1.1984 laid down the following pre-conditions to be

fulfilled by the housing boards/local development authorities/NOIDA who

were desirous to take up the aforesaid electrification activity on their own:-

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"1. Specifications of materials to be used in such

constructions will be approved by the Superintending

Engineer concerned of the U.P. State Electricity Board.

2. The materials to be used in such constructions will be

inspected and approved by an officer of the U.P. State

Electricity Board to be authorized by the Superintending

Engineer concerned of the Board. In case, however,

the UPSEB is satisfied that promoters of a colony have

engaged qualified and experienced Engineers for this

job, this condition may be waived by express written

orders of the Superintending Engineer concerned of the

UPSEB.

3. The quality of the work to be executed will be

supervised by the UPSEB's officer so that there is no

difficulty in taking over of the works of UPSEB.

4. 5% (five percent) of the total estimated cost of

electrification work has been deposited with the UPSEB

towards supervision charges, with provisions for its

adjustment as per final cost when works are completed.

For this purpose, the Housing Board/Local Development

Authority/NOIDA etc. shall first submit detailed estimate

of work proposed to be undertaken by them to enable

UPSEB work out above 5% amount for initial deposit.

On completion of work, they will submit `as executed'.

On detailed account of work to the concerned authority

of the UPSEB."

It is not a matter of dispute, that the appellant herein commenced to

deposit the aforesaid supervision charges at the rate of 5% of the total

estimated cost of electrification work, consequent upon the issuance of the

office memorandum dated 17.1.1984. It would also be relevant to mention,

that the memorandum dated 17.1.1984 provided, that maintenance of such

installations, after the transfer of the electrification works by such

promoters to the UP, SEB (now, the U.P. Power Corporation), would be

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carried out by the UP, SEB. It also provided, that service connections to

individual occupants of colonies/multistoried buildings, would be provide by

the UP, SEB in accordance with its rules and regulations, issued from time

to time.

6. On 24.4.1998, the UP, SEB (presently, the U.P. Power Corporation)

issued another office memorandum, whereby the supervision charges

were revised upwards from 5% to 15%. As per the office memorandum

dated 24.4.1998, the aforesaid supervision charges were payable in

respect of residential/non-residential, single/multi-storied building

complexes and colonies; developed by public enterprises, private builders

and promoters. Based on the memorandum dated 24.4.1998, higher

supervision charges were demanded from the appellant. Disputing the

applicability of the memorandum dated 24.4.1998, the U.P. Avas Evam

Vikas Parishad (i.e., the appellant herein), addressed representations to

the "designated licensee" asserting, that the memorandum dated

24.4.1998 was not applicable to it. The appellant herein claimed, that

supervision charges were recoverable from it, as per the earlier office

memorandum dated 17.1.1984. The various representations made by the

appellant (i.e., the U.P. Avas Evam Vikas Parishad) came to be rejected by

the U.P. Power Corporation on 10.10.2001.

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7. The appellant herein assailed the order dated 10.10.2001 by

preferring an appeal before the Uttar Pradesh Electricity Regulatory

Commission, Lucknow. On 30.7.2002, the Uttar Pradesh Electricity

Regulatory Commission held, that the appeal preferred by the appellant

herein was maintainable. Accordingly, notices were issued to the U.P.

Power Corporation. Thereafter the matter came to be finally adjudicated

on merits, vide an order dated 3.2.2006. The appeal preferred by the U.P.

Avas Evam Vikas Parishad was allowed. The operative part of the order

dated 3.2.2006 is being reproduced hereunder:-

"It is concluded on the basis of said findings that Office

Memorandum No. 209-K/XIV-A/SEB/84 dated 17.1.1984 has

never been superseded, so far as it concerns levy of

supervision charge on the petitioner, in any manner by other

said Office Memorandums on which the respondent has relied

upon. This Office Memorandum has effect till 6th June, 02, the

date prior to `The Electricity Supply Code, 2002' came into

force.

Therefore, the respondent is directed to levy supervision

charges @ of 5% as per Office Memorandum No. 209-K/XIV-

A/SEB/84 dated 17.1.1984 up to 6.6.02 and make

adjustments for the amount recovered in excess from the

petitioner."

Accordingly, inspite of the office memorandum dated 24.4.1998, the U.P.

Avas Evam Vikas Parishad was allowed to pay supervision charges at the

rate of 5%, as were prescribed by the office memorandum dated

17.1.1984.

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8. It, however, emerges from the operative part of the appellate order

dated 3.2.2006, that it had been held that the payment of supervision

charges at the rate of 5% (under the office memorandum dated 17.1.1984)

was permissible only upto 6.6.2002 i.e., upto the date preceding the date

from which the Electricity Supply Code, 2002, came into force. It would be

pertinent to mention that the Electricity Supply Code, 2002 became

enforceable with effect from 7.6.2002. The inference emerging from the

appellate order dated 3.2.2006 was, that supervision charges with effect

from the date of the enforcement of the Electricity Supply Code, 2002,

would be governed by the said Code. This determination at the hands of

the Uttar Pradesh Electricity Regulatory Commission was not acceptable

to the U.P. Avas Evam Vikas Parishad (i.e., the appellant herein). It is,

therefore, that the U.P. Avas Evam Vikas Parishad preferred an appeal

before the Appellate Tribunal for Electricity, assailing the determination of

Uttar Pradesh Electricity Regulatory Commission to the effect, that

supervision charges as prescribed by the office memorandum dated

17.1.1984, would be applicable only upto 6.6.2002. The challenge raised

was that the appellant herein could not be required to pay supervision

charges stipulated under the Electricity Supply Code, 2002. The appeal

preferred by the U.P. Avas Evam Vikas Parishad was dismissed by the

Appellate Tribunal for Electricity on 7.3.2007. Dissatisfied with the order

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dated 7.3.2007, the U.P. Avas Evam Vikas Parishad has preferred the

instant Civil Appeal.

8. It was the vehement contention of the learned counsel for the

appellant, that the Uttar Pradesh Electricity Regulatory Commission's order

dated 3.2.2006, as also, the order dated 7.3.2007 passed by the Appellate

Tribunal for Electricity, were liable to be set aside. It was submitted, that

the aforesaid adjudicating authorities had failed to take into consideration,

that the electrification work carried out by the appellant, i.e., the U.P. Avas

Evam Vikas Parishad, in colonies, as well as, complexes raised by it, were

governed by the office memorandum dated 17.1.1984. It was submitted,

that the aforesaid memorandum had never been rescinded or superseded.

It was, therefore, the contention of the learned counsel for the appellant,

that supervision charges could have been demanded from the appellant,

only at the rate stipulated in the office memorandum dated 17.1.1984. In

conjunction with the aforesaid contention, it was also the contention of the

learned counsel for the appellant that the U.P. Avas Evam Vikas Parishad

(i.e., the appellant herein) was expressly permitted by the State

Government vide Government order dated 2.6.1982, to execute on its own,

electrification work in colonies/complexes developed by it. It was

submitted, that the aforesaid order dated 2.6.1982 had been issued under

rule 133 (1) read with the proviso to sub-rule (1) of rule 45 of the Indian

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Electricity Rules, 1956 and as such, had statutory force. It was, therefore,

the contention of the learned counsel for the appellant, that without the

supersession of the order dated 2.6.1982, there was no justification for the

respondent to claim from the appellant, supervision charges at the rate of

15%. Additionally, it was the submission of the learned counsel for the

appellant, that the adjudicatory authorities had failed to consider the

responsibility vested in the appellant, namely, that the appellant was

engaged in raising colonies/buildings/houses for the general welfare of the

citizens of this country, on a no profit no loss basis; and in case,

supervision charges were raised from 5% to 15%, the eventual effect

would have to be suffered by those who are provided with the buildings

constructed by the appellant i.e., the general public. It was accordingly

submitted by the learned counsel for the appellant, that if the rate of

supervision charges is increased, the eventual cost of construction would

also naturally enhance. It is, therefore, the submission of the learned

counsel for the appellant, that the determination by the adjudicatory

authorities was devoid of genuine and valid consideration.

9. To start with, we shall deal with the Government order/notification

dated 2.6.1982. There is no doubt that the aforesaid Government

order/notification has statutory trappings, inasmuch as, it was issued by

the State Government in exercise of power vested in it under rule 133 (1)

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read with the proviso to sub-rule (1) of rule 45 of the Indian Electricity

Rules, 1956. However, insofar as the present controversy is concerned, in

our considered view, the aforesaid notification dated 2.6.1982 is of no

relevance. The subject matter of consideration in the instant appeal,

pertains to supervision charges claimed by the UP, SEB (and thereafter,

by the respondent U.P. Power Corporation). The Government

order/notification dated 2.6.1982, did not stipulate any supervision

charges. It merely allowed the U.P. Avas Evam Vikas Parishad, by way of

relaxation, the liberty to carry out electrification works which were

exclusively vested with the "designated licensees" (the UP, SEB and

thereafter, the U.P. Power Corporation). The fact that the aforesaid

relaxation granted by the Government order/notification dated 2.6.1982,

had neither been rescinded nor been withdrawn is, therefore,

inconsequential to the present controversy. It is, therefore, not

factually/legally correct for the appellant to contend that the Electricity

Supply Code, 2002, by varying the supervision charges, had

amended/modified the Government order/notification dated 2.6.1982.

Since the Government order/notification dated 2.6.1982 does not make

any reference to supervision charges, it is not possible for us to accept that

the Electricity Supply Code, 2002 in any manner altered the Government

order/notification dated 2.6.1982. Accordingly, the contention advanced at

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the hands of the learned counsel for the appellant based on the

Government order/notification dated 2.6.1982 is devoid of any merit.

10. The office memorandum dated 17.1.1984, as already noticed above,

was the primary basis for the appellant to assail the determination

rendered by the two adjudicatory authorities, on the issue of levy of

supervision charges. According to the adjudicatory authorities, the

supervision charges depicted in the office memorandum dated 17.1.1984

would be applicable upto 6.6.2002. The aforesaid determination was

based on the fact, that the Electricity Supply Code, 2002 would be

applicable with effect from 7.6.2002. As per the determination rendered in

the impugned orders (passed by the adjudicatory authorities referred to

hereinabove), the supervision charges depicted in the office memorandum

dated 17.1.1984, would be applicable till 6.6.2002, whereafter, the same

would be recoverable in terms of the provisions of the Electricity Supply

Code, 2002. We find merit in the determination at the hands of the

adjudicatory authorities. Firstly, the office memorandum dated 17.1.1984

had no statutory force. It was issued as an administrative order passed by

the UP, SEB. The Electricity Supply Code, 2002, on the other hand, has

statutory bearings. It is relevant to notice, that the Electricity Supply Code,

2002 had been drawn to carry out the responsibilities vested with the Uttar

Pradesh Electricity Regulatory Commission under section 10 of the U.P.

13 Electricity Reforms Act, 1999. Section 10 of the Uttar Pradesh Electricity

Reforms Act, 1999 is being reproduced hereunder:-

"S.10. Functions of the Commission

The Commission shall have the following functions;

namely,-

(a) to determine the tariff for electricity,

wholesale, bulk, grid or retail, as the case

may be;

(b) to determine the tariff payable for the use of

the transmission facilities;

(c) to regulate power purchase and

procurement process of the transmission

utilities and distribution utilities including the

price at which the power shall be procured

from the generating companies, generating

stations or from other sources for

transmission, sale, distribution or supply in

the State;

(d) to promote competition, efficiency and

economy in the activities of the electricity

industry to achieve the objects and

purposes of this Act;

(e) to regulate investment approval for

transmission, distribution or supply of

electricity to the entities operating within the

State;

(f) to aid and advise the State Government in

matters concerning electricity generation,

transmission, distribution and supply in the

State;

(g) to issue license for transmission,

distribution or supply of electricity and

determine the conditions of the license;

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(h) to regulate the working of licensees and

other persons authorized or permitted to

engage in the electricity industry in the

State and to make their working efficient,

economical and equitable;

(i) to require licensees to formulate plans and

schemes for the promotion of generation,

transmission, distribution, supply or

utilization of electricity and quality of

service and to device proper power

purchase and procurement process;

(j) to set standards for the electricity industry

in the State including standards relating to

quality, continuity and reliability of service;

(k) to promote competitiveness and make

avenues for participation of private sector in

the electricity industry in the State, and also

to ensure a fair deal to the consumers;

(l) to lay down and enforce safety standards;

(m) to aid and advise the State Government in

formulating power policy for the State;

(n) to collect and record information relating to

generation, transmission, distribution or

utilization of electricity;

(o) to collect and publish data and forecasts on

the demand for, and use of electricity in the

State and to require the licensees to collect

and publish such data;

(p) to regulate the assets, properties and

interest in properties relating to the

electricity industry in the State in such

manner as to safeguard the public interest;

(q) to adjudicate upon the dispute and

differences between a licensee and utility

or to refer the same for arbitration;

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(r) to co-ordinate with environmental

regulatory agencies for evolving policies

and procedures for appropriate

environmental regulation of Electricity

Sector in the State; and

(s) to aid and advise the State Government on

any other matter referred by the State

Government."

The Electricity Supply Code, 2002 which has statutory trappings was

formulated to carry out functions earlier assigned to the U.P. Electricity

Regulatory Commission under Section 10 of the U.P. Electricity Reforms

Act, 1999 (already extracted above). This is apparent from the order of the

U.P. Electricity Regulatory Commission, reproduced hereunder:-

"Electricity Supply Consumers Regulation, 1984, formulated

by the erstwhile U.P. State Electricity Board covers the

conditions of supply of electricity to retail consumers. After the

enactment of U.P. Electricity Reforms Act, 1999, the U.P.

Electricity Regulatory Commission has been assigned

functions under Section 10 of the Act to regulate the

distribution, supply, utilization of electricity, issue licenses to

regulate the working of the licensees and to set the standards

of services for the consumers as well as standards for the

electricity industry in the State."

Since the provisions of the Electricity Supply Code, 2002, has statutory

trappings, the same would override and supersede the stipulations

contained in the office memorandum dated 17.1.1984, which has the force

of merely an administrative order.

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11. We are also satisfied, that the Appellate Tribunal for Electricity, while

adjudicating upon the controversy in question, was fully justified in relying

upon clauses 4.3, 4.5 and 4.45 of the Electricity Supply Code, 2002. The

aforesaid clauses are being reproduced hereunder:-

"4.3 The Licensee is responsible for ensuring that its

distribution system is upgraded, extended and

strengthened to meet the demand for electricity in its

area of supply.

4.5 The cost of extension and upgradation of the system for

meeting demand of new consumers shall be recovered

from the new consumers through system loading

charges as approved by the Commission. In areas

where distribution mains do not exist, the costs for

installation of new distribution mains shall normally be

covered by grant from the State Government or local

body or any collective body of consumers or a

consumer. The Licensee may also install new

Distribution Mains from the surplus available with the

Licensee after meeting all expenditure. The Licensee

shall submit a policy regarding the utilization of surplus

funds and the installation of Distribution Mains to the

Commission for approval. The.....

(a) responsibility of construction of the required

distribution network in case of a new residential,

commercial or an industrial complex with load

exceeding 25 KW shall be that of the body or the

agency (public or private) that constructs such

complex, and

(b) responsibility for laying the distribution network for

street lights on any new road/street shall be that

of the local authority concerned.

4.45 The estimate shall be prepared as per the provisions of

the Indian Electricity Act, 1910 and on the basis of

charges approved by the Commission. The Licensee

shall submit once in two years a proposal to the

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Commission for approval of various charges to be

charged by the Licensee from the consumer in the

estimate. The estimate shall be valid for two months. If

the work is to be done by the applicant, Licensee shall

charge 15% of the estimate as supervision charges that

shall need to be deposited before work begins. In other

cases, Licensee shall commence the work after the

applicant has deposited the full amount of the estimate."

The cumulative effect of the aforesaid statutory provisions leave no room

for any doubt, that the responsibility of erection of transmission lines,

associated distribution sub-stations and L.T. distribution mains, throughout

the State of U.P., was originally exclusively being carried out by the UP,

SEB, and thereafter by the U.P. Power Corporation, as "designated

licensees". The aforesaid activity was also being carried out exclusively in

colonies/multistoried buildings by the aforesaid, again as "designated

licensees". Subsequently, through the Government order/notification

dated 2.6.1982, by relaxing the provisions of the Indian Electricity Rules,

1956, the U.P. Avas Evam Vikas Parishad was permitted, subject to its

complying with certain conditions, the liberty to carry out the aforesaid

electrification works. The delegated work was liable to be carried out in

terms of the prescribed standards. To ensure that works were being

executed as per norms, clause 4.45 of the Electricity Supply Code, 2002,

provided for supervision of the works by the U.P. Power Corporation. The

aforesaid supervision work was liable to be carried out by charging 15% of

the estimated cost of the work. No fault can be found, for having done so.

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12. According to the learned counsel for the appellant, the rate of

supervision charges was hiked from 5% to 15% unauthorizedly, and

without application of mind. The submission was, that the supersession of

the office memorandum dated 17.1.1984 would have an adverse effect on

the public at large, inasmuch as, the eventual cost of construction of

houses offered by the U.P. Avas Evam Vikas Parishad to the general

public would be costlier. The subject matter under consideration is

erection of transmission lines, associated distribution sub-stations and L.T.

distribution mains. The aforesaid activity though indispensable, has

dangerous connotations. If appropriate standards are not maintained and

if adequate safety measures are not adopted, disastrous consequences

are possible. Delegation of such activity has necessarily to be regulated

by supervision, so as to avoid any lapses. Supervision needs inputs which

have to be paid for. The Electricity Supply Code, 2002, stipulates 15% of

the total estimated cost of electrification works as supervision charges. It

is not the case of the appellant, that the aforesaid charges are

disproportionate to the work involved or have been fixed arbitrarily. It is

not as if the appellant has any compulsion of carrying on these works by

itself. It has chosen to do so, by taking the responsibility on itself. If the

supervision charges are unacceptable, the appellant can require the U.P.

Power Corporation to undertake the electrification work by depositing the

estimated cost with the respondent. In our considered view, the fact, that

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the public at large would have to bear the brunt of the hike in supervision

charges, is totally unacceptable, especially in the background of the

position noticed above. The instant contention is even otherwise irrelevant

to the subject matter under consideration. Supervision charges have been

levied, so that the agencies, such as the appellant herein, who decide to

carry out the activities of erection of transmission lines, associated

distribution sub-stations and L.T. distribution mains, on their own, abide by

the minimum prescribed norms. Higher public cost ensuring prescribed

safety measures, would certainly override the cost consideration projected

by the learned counsel for the appellant. We find no merit in the instant

contention as well.

12. Even otherwise, the contention raised at the hands of the learned

counsel for the appellant, that the appellant was not liable to reimburse

supervision charges stipulated under the Electricity Supply Code, 2002,

does not lie in the appellant's mouth. This is so, because the appellant

has unilaterally accepted to pay supervision charges under the Electricity

Supply Code, 2005. The aforesaid Electricity Supply Code, 2005 became

enforceable w.e.f. 18.2.2005. All the pleas raised by the appellant, to

avoid payment of supervision charges under the Electricity Supply Code,

2002, are also available to the appellant to avoid payment of such charges

under the Electricity Supply Code, 2005. If the appellant has accepted the

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enforceability of the Electricity Supply Code, 2005 over and above the

office memorandum dated 17.1.1984, it is not possible for us to understand

why the appellant has failed to accede to abide by supervision charges

levied under the Electricity Supply Code, 2002. For exactly the same

reasons, for which the appellant has accepted the Electricity Supply Code,

2005, it is liable to accept the levy of supervision charges under the

Electricity Supply Code, 2002.

13. For the reasons recorded hereinabove, we find no merit in the

instant Civil Appeal and the same is accordingly dismissed.

..................................J.

(R.M. Lodha)

..................................J.

(Jagdish Singh Khehar)

New Delhi;

October 18, 2011.