# JHARKHAND STATE ELECT.BOARD & ORS v. M/S. LAXMI BUSINESS & CEMENT CO.P. LTD. & ANR

- **Citation:** [2014] 3 S.C.R. 453
- **Court:** Supreme Court of India
- **Decided:** 2014-02-28
- **Case number:** Civil Appeal No. 2909 of 2014
- **Bench:** K.S. Radhakrishnan, A.K. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jharkhand-state-elect-board-ors-v-m-s-laxmi-business-cement-co-p-ltd-anr-29608
- **Pages:** 30

## Headnote

ELECTRIC/TY LAWS:
A
B
Power of Tariff Fixation - Held: Transferred exclusively to c
SERC and State Electricity Board is completely denuded of
this power - Before coming of Electricity Act, 2003, Electricity
Act, 1910 and thereafter Electricity (Supply) Act, 1948 were
in force - It was the Electricity Board in the respective States
which were supplying electricity to the consumers and
D
determining the operation rates at which the electricity was to
be supplied - After the enactment of Electricity Act, 2003,
power to frame tariff is given to the SERC - 2003 Act has
distanced the Government from all forms of regulations,
including tariff regulation which is now specifically assigned E
to SERC - Thus, the State Electricity Boards have no power
whatsoever to frame tariff which is under the exclusive domain
of the SERC - Electricity Act, 2003 - Electricity Act, 1910 -
Electricity (Supply) Act, 1948.
·
Fixation of tariff by SERC - Issue of demand charge from
F
HT consumers - Held: The 1994 HT Agreement was not
saved under Electricity Act, 2003 and the tariff structure - Issue
of demand charge from HT consumers was considered and
given effect to in the Tariff Order dated 27. 12. 2003 which
came into effect on 1.1.2004.
G
Delay/Laches: Delay in filing the writ petitions - Bills
raised by the JSEB on the basis of Clause 4(c) of the 1994
HT Agreement, even after the formulation of 2004 Tariff
453
H
454
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A
Schedule - Payment made under threat of disconnectiun - Writ
petition - Direction by High Court to appellant to refund the
excess amount charged under the bills raised for earlier
period - Challenged on the ground that there was delay in filing
of writ petition by consumers - Held: Delay was duly explained
B - The consumers had paid the amount of bills raised by JSEB
under protest because of the threat of disconnection - While
doing so, they had raised specific plea with the JSEB that it
was now supposed to raise the bills in accordance with the
2004 Tariff Schedule - The matter remained under
c consideration at the level of JSEB which kept approaching the
Court as well as SERC seeking clarification of 2004 Tariff
Schedule.
In the year 1994, HT Agreement was entered into
between Bihar State Electricity Board (predecessor in
D interest of JSEB) and the consumers which, inter-alia,
stipulated the tariff that was to be charged by the JSEB
from the consumers for supply of electricity. In Clause
4(c) of the Agreement, there was a provision for Minimum
Guarantee Charges. In the year 2003, Electricity Act was
E enacted. The power to frame tariff under this Act was
given to SERC. SERC passed order framing the new tariff
schedule (2004 Tariff Schedule) under Section 86 of the
Electricity Act. The grievance of the consumerrespondent was that the JSEB continued to send the bills
F as per the Clause 4(c) referred to in the agreement which
were paid by the consumers under protest. In May 2010,
writ petitions were filed by the consumers for quashing
of the energy bills on the ground that it had wrongly been
raised as per Clause 4(c) of the Agreement which had
G ceased to have any effect on the framing of 2004 Tariff
Schedule by the SERC. The JSEB, however, contended
that the HT agreement entered into with the consumers
still survived as the 2004 Tariff Schedule saved this
Agreement. The High Court allowed the writ petitions.
H
JHARKHAND STATE ELECT. BOARD v. LAXMI
455
BUSINESS & CEMENT CO.P. LTD.
In the instant appeals, the questions which arose for A
consideration were: whether after the enactment of the
Electricity Act, 2003 which came into force on 10.6.2003
and after passing of the new tariff order dated 27.12.2003
by Jharkhand State Electricity Regulatory Commission
(SERC) as per the Act of 2003, the State Electricity Board
B
can still charge a tariff determined by itself; whether the
issue of demand charge to HTS - 1 category of
consumeJ!hhas been left non-considered by the SERC
i1J.t~e,~riff::order dated

## Text

_Characters 0–39,958 of 54,558. This is a partial read: ask again with offset=39958 for what follows._

[2014] 3 S.C.R. 453
JHARKHAND STATE ELECT.BOARD & ORS.
v.
M/S. LAXMI BUSINESS & CEMENT CO.P. LTD. & ANR.
(Civil Appeal No. 2909/2014)
FEBRUARY 28, 2014
[K.S. RADHAKRISHNAN AND A.K. SIKRI, JJ.]
ELECTRIC/TY LAWS:
A
B
Power of Tariff Fixation - Held: Transferred exclusively to c
SERC and State Electricity Board is completely denuded of
this power - Before coming of Electricity Act, 2003, Electricity
Act, 1910 and thereafter Electricity (Supply) Act, 1948 were
in force - It was the Electricity Board in the respective States
which were supplying electricity to the consumers and
D
determining the operation rates at which the electricity was to
be supplied - After the enactment of Electricity Act, 2003,
power to frame tariff is given to the SERC - 2003 Act has
distanced the Government from all forms of regulations,
including tariff regulation which is now specifically assigned E
to SERC - Thus, the State Electricity Boards have no power
whatsoever to frame tariff which is under the exclusive domain
of the SERC - Electricity Act, 2003 - Electricity Act, 1910 -
Electricity (Supply) Act, 1948.
·
Fixation of tariff by SERC - Issue of demand charge from
F
HT consumers - Held: The 1994 HT Agreement was not
saved under Electricity Act, 2003 and the tariff structure - Issue
of demand charge from HT consumers was considered and
given effect to in the Tariff Order dated 27. 12. 2003 which
came into effect on 1.1.2004.
G
Delay/Laches: Delay in filing the writ petitions - Bills
raised by the JSEB on the basis of Clause 4(c) of the 1994
HT Agreement, even after the formulation of 2004 Tariff
453
H
454
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A
Schedule - Payment made under threat of disconnectiun - Writ
petition - Direction by High Court to appellant to refund the
excess amount charged under the bills raised for earlier
period - Challenged on the ground that there was delay in filing
of writ petition by consumers - Held: Delay was duly explained
B - The consumers had paid the amount of bills raised by JSEB
under protest because of the threat of disconnection - While
doing so, they had raised specific plea with the JSEB that it
was now supposed to raise the bills in accordance with the
2004 Tariff Schedule - The matter remained under
c consideration at the level of JSEB which kept approaching the
Court as well as SERC seeking clarification of 2004 Tariff
Schedule.
In the year 1994, HT Agreement was entered into
between Bihar State Electricity Board (predecessor in
D interest of JSEB) and the consumers which, inter-alia,
stipulated the tariff that was to be charged by the JSEB
from the consumers for supply of electricity. In Clause
4(c) of the Agreement, there was a provision for Minimum
Guarantee Charges. In the year 2003, Electricity Act was
E enacted. The power to frame tariff under this Act was
given to SERC. SERC passed order framing the new tariff
schedule (2004 Tariff Schedule) under Section 86 of the
Electricity Act. The grievance of the consumerrespondent was that the JSEB continued to send the bills
F as per the Clause 4(c) referred to in the agreement which
were paid by the consumers under protest. In May 2010,
writ petitions were filed by the consumers for quashing
of the energy bills on the ground that it had wrongly been
raised as per Clause 4(c) of the Agreement which had
G ceased to have any effect on the framing of 2004 Tariff
Schedule by the SERC. The JSEB, however, contended
that the HT agreement entered into with the consumers
still survived as the 2004 Tariff Schedule saved this
Agreement. The High Court allowed the writ petitions.
H
JHARKHAND STATE ELECT. BOARD v. LAXMI
455
BUSINESS & CEMENT CO.P. LTD.
In the instant appeals, the questions which arose for A
consideration were: whether after the enactment of the
Electricity Act, 2003 which came into force on 10.6.2003
and after passing of the new tariff order dated 27.12.2003
by Jharkhand State Electricity Regulatory Commission
(SERC) as per the Act of 2003, the State Electricity Board
B
can still charge a tariff determined by itself; whether the
issue of demand charge to HTS - 1 category of
consumeJ!hhas been left non-considered by the SERC
i1J.t~e,~riff::order dated 27 .12.2003 so that the same may
be'\~qnt~:rl'ued in the manner existed in the State or c
whether th.e same has been considered and given affect
to in the tariff order dated 27.12.2003 which came into
effect from 1.1.2004; what would be the effect of Section
185 (Repeal and Saving Clause) of the Electricity Act 2003
upon the HT supply Agreement entered upon the Board
D
and the Consumer prior to Electricity Act, 2003.
Dismissing the appeals; the Court
HELD: 1. Re.: Power of SERC under Electricity Act
2003.
E
Before Electricity Act, 2003 was enacted, Indian
Electricity Act, 1910 and thereafter Electricity (Supply) Act,
1948 was passed. It was the Electricity Board in the
respective States which were supplying electricity to the
consumers and determining the operation rates at which
F
the electricity was to be supplied. Section 49 of the Act,
1948 empowered the Board to supply electricity to any
person upon such terms and conditions as the Board
thinks fit and made for the purposes of such supply from
time to time and were empowered to frame uniform tariffs
G
for the purpose of such supply. This power to frame tariff
under Section 49(1) of the Act 1948 included the power
to fix minimum guarantee charges. In State of Bihar, such
rates were fixed in the 1993 tariff. It, inter-alia, provided
for tariff for HT consumers. Three categories of HT
H
456
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A consumers were mentioned there. HTS-I, II and Ill. Both
the consumers in the instant appeals were put in HT-I
category. HT Agreement dated 26.4.1994 was entered into
between the Board and the consumers. As per Clause 4
of this Agreement, the consumers were to pay to the
B Board for the energy so supplied and registered or taken
to have been supplied at the appropriate rates applicable
to the consumers according to the tariff framed by the
Board and in force from time to time. It was subject to the
minimum contract demand applicable for the category of
c supply category in which the consumers felt. Clause 4(b)
explained that the maximum demand of the coM\Jmer for
each month shall be the largest total amount of kilovolt
amperes (KVA) that was delivered to the consumers at
the point of supply during any consecutive 30 minutes
0 in the months. As per clause 4(c), JSEB had been raising
energy bills on the basis of 75% of the contract demand.
[Para 6] [463-F-H; 464-A-G]
1.2. After the Electricity Act, 2003 was enacted, power
to frame tariff was given to the SERC. This power was
E statutorily conferred upon the SERC under the Act.
Before the passing of this Act, Electricity Regulatory
Commission Act, 1998 was enacted and under Section
17 of the said Act, Jharkhand SERC was constituted by
the Government of Jharkhand. Its functions and duties
F were notified by the Government as per Section 22 of the
Electricity Regulatory Commission Act. On the passing
of the Electricity Act, 20.03, Electricity Act 1910, Electricity
(Supply) Act 1948 and Electricity Regulatory Commission
Act, 1998 were repealed. At the same time, Act 2003
G recognized the SERCs constituted under the 1998 Act.
2004 Tariff Schedule framed by the SERC was in exercise
of powers conferred upon it under Section 86 (a) of the
Act. The Act, 2003 is an exhaustive code on all matters
concerning electricity which also provides for
H "unbundling" of State Electricity Boards into separate
JHARKHAND STATE ELECT. BOARD v. LAXMI
457
BUSINE$S & CEMENT CO.P. LTD.
utilities for generation, transmission and distribution.
A
Further, Regulatory regime is entrusted to the SERC
which are given vide ranging responsibilities. This Act
has distanced the Government from all forms of
regulations, including tariff regulation which is now
specifically assigned to SERC. It is, thus, beyond the pale
B
of doubt that the State Electricity Boards have no power
whatsoever to frame tariff which is under the exclusive
.
'
domain of the SERC. This legal position has been
judicially recognized. [Paras 7 to 10) [464-G-H; 465-A-C .
and F; 467-D]
c
PTC India Ltd. v. Central Electricity Regulatory
Commission (2010) 4 SCC 603: 2010 '(3) SCR 609; Gujarat
Urja Vikas Nigam Ltd. v. Essar Power Ltd. (2008) 4 SCC 755:
2008 (4) SCR 822; AP. TRANSCO v. Sai Renewable Power
(P) Ltd .. (2011) 11 SCC 34: 2010 (8) SCR 636 - relied on.
D
2. Re: Whether the Agreement dated 26.4.1994 is saved
by the 2004 Tariff Schedule?
. 2.1. The SERC fixed the tariff on the request of the . E
JSEB itself when it approached the SERC for this
purpose. In the Tariff Petition filed by the JSEB before the
SERC, the JSEB did not propose to continue the manner
of 75% of contract demand and the SERC allowed the
demand charge 140-KV-Month. The Tariff Order has
Annexure 5.1 containing the 'Tariff Schedule'. This Tariff
F
Schedule which is the final outcome of the tariff process
is binding on the State as well. However, the JSEB itself
in its application/reference to the SERC did not ask for
fixing any minimum guarantee charges. The JSEB in its
proposal for fixation of tariff for"2003-04, submitted before
G
the SERC indicated both the existing tariff and the tariff
proposed by it in respect of all consumers, including all
categories of HTS (High Tension Service) consumers.
The SERC after undertaking the necessary exercise, fixed
the tariff of all categories. The tariff proposed by the
H
458
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A Board tor HTS-I consumers along with existing tariff was
reproduced in Tables 5.28 and 5.29 of the 2004 Tariff
Schedule which clearly reflected that the aspect of
minimum guarantee charges was duly considered by the
SERC. [Paras 12, 13] [469-C-F; 470-G-H; 471-A]
B
2.2. The tariff order further revealed that the SERC
had even compared the proposal of JSEB with the tariff
prevailing in other States in India and after detailed
analysis thereof, it approved the tariff for HTS consumers
which is mentioned in table 5.31 of the 2004 Tariff
C Schedule. Therefore, it cannot be said that the SERC was
oblivious of the clause relating to minimum guarantee
charges which JSEB was charging from its consumers
as per the earlier agreements entered into with them. The
position would become crystal clear from the discussion
D in the 2004 Tariff Schedule wherein the SCRC gave
specific reasons for revising and approving the tariff for
HTS consumers. The High Court rightly held that the
SERC has considered the proposal of the Electricity
Board with respect to their claim for Demand Charge and
E the manner in which it will be charged. The Board cannot
take help of Clause 5.1. wherein it was observed that
some of the matters have not been dealt with and they
shall continue to be the same as they were in existence
in the State because of the reason that there is a specific
F proposal made by the Electricity Board for the Demand
Charge as well as the manner In which it will be charged
and this proposal was considered by the SERC and
thereafter Tariff Order has been issued. The JSEB had
even filed clarification applications before the SERC
G contending that having regard to the Clause 4(c) of the
Agreement with the HT-I consumers, the maximum
demand charges would be those prescribed under
Clause 4(c) of the Agreement. These applications were
specifically rejected by the SERC. No appeal was
H preferred by the JSEB challenging those orders. It is,
JHARKHAND STATE ELECT. BOARD v. LAXMI
459
BUSINESS & CEMENT CO.P. tTD.
therefore, too late in the day for the JSEB to now argue
A
that this aspect of minimum guarantee charge has not
been dealt with by the SERC in the 2004 Tariff Schedule.
[Para 14 to 16] [473-C-D; 475-G-H; 476-A-E]
3. Re.: Effect of Section 185 of the Electricity Act 2003.
The tariff in force during the per-iod was Tariff Order
dated 27.12.2003 for the period 2003-04 which was having
force of law under the Electricity Act 2003. Thus, even if it
B
is assumed on the basis that the statutory agreements
entered into earlier were saved, the agreement in question
C
stood replaced by 2004 Tariff Schedule. Even the
argument based on Section 185 of the Electricity Act, 2003
would not bring any change to the results of this case.
There was no fault with the judgment of the High Court
appealed against. [Paras 19, 20] [479-F-G; 481-A-B]
D
State of Punjab vs. Mohar Singh 1955 (1) SCR 893;
BSES v. Tata Power Co. Ltd. (2004) 1 SCC 195: 2003 (4)
Suppl. SCR 932 - relied on.
4. It was submitted that there was delay in filing the
E
writ petitions inasmuch as bills raised by the JSEB on the
basis of Clause 4(c) of the 1994 Agreement, even after the
formulation of 2004 Tariff Schedule were being paid by
the consumers and they approached the Court by filing
writ petitions only in the year 2010 and that in such
F
scenario, the High Court at least should not have directed
the appellants to refund the excess amount charged
under the bills raised for earlier period and· it would be
unjust enrichment to the consumers who .would have
recovered the amount from the user of the electricity. In
G
so far as delay in filing the writ petition is concerned, it
appears from the chronology of events that the same
has been duly explained. It is not in doubt that the
consumers had paid the amount of bills raised by JSEB
under protest because of the threat of disconnection.
H
460
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A While doing so, they had raised specific plea with the
JSEB that it was now supposed to raise the bills in
accordance with the 2004 Tariff Schedule. The matter
remained under consideration at the level of JSEB which
kept approaching the Court as well as SERC seeking
B clarification of 2004 Tariff Schedule. The clarification
applications were filed which were dismissed by the
SERC. However, as the JSEB did not judge from its stand
even after the dismissal of these applications, the
consumers approached the Court and filed the Writ
c Petitions. The writ petitioners have thus furnished
satisfactory explanation for approach the Court. The plea
of unjust and enrichment will not be available to the
appellants. In the first place, no such plea was raised
before the High Court either before the S1ngle Judge or
0 the Division Bench. In the Special Leave Petition, this
submission was made for the first time at the time of
hearing of the appeals. Moreover, it is not a case of
payment of tax which is a burden passed on the
consumers. [Paras 21 to 23) (481-B-H; 482-A-B]
E
Himachal Pradesh State Electricity Regulatory
F
G
'H
Commission & Anr. v. Himachal Pradesh State Electricity
Board (2013) 12 SCALE 397; Mafatlal Industries Ltd. vs.
Union of India (1997) 5 SCC 536 - referred to.
Case Law Reference:
2010 (3) SCR 609
relied on
Para 9
2008 (4) SCR 822
relied on
Para 10
2010 (8) SCR 636
relied on
Para 10
(2013) 12 SCALE 397
referred to
Para 17
1955 (1) SCR 893
relied on
Para 17
2003 (4 ) Suppl. SCR 932
relied on
Para 19
JHARKHAND STATE ELECT. BOARD v. LAXMI
461
BUSINESS & CEMENT CO.P. LTD.
(1997) s sec 536
referred to
Para 23
A
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2909 of 2014.
From the Judgment & Order dated 05.07.2011 of the High
Court of Jharkhand at Ranchi in LPA No. 466 of 2010.
B
WITH
Civil Appeal No. 2910, 2911 and 2913 of 2014.
Ajit Kumar Sinha, M.L. Verma, M.S. Mittal, A.K. Ganguly,
C
Ashwarya Sinha, Ambhoj Kumar Sinha, Himanshu Shekhar,
Faisal Khan, M.P. Jha, Ram Ekbal Roy, Harshvardhan Jha,
Dileep Pillai, Kaushik Poddar, Shankar Lal Aggarwal,
Devashish Bharuka, Jasmeet Kuar, Chandan Kumar Rai, Ravin
Dubey for the appearing parties.
The Judgment of the Court was delivered by
A.K. SIKRI, J. 1. Delay condoned.
2. Leave granted.
3. The appellant in both the cases is Jharkhand State
Electricity Board (JSEB), which is aggrieved by the common
judgment dated 5th July 2011 passed by the High Court of
Jharkhand in two appeals. These appeals were preferred by
D
E
the appellant JSEB against the orders dated 17th February
F
2010 passed by the learned Single Judge of that court in the
two Writ Petitions which were filed by M/s. Laxmi Business &
Cement Co. Pvt. Ltd. and M/s. Laxmi lspat Udyog (arrayed as
respondent No.1 in each appeal and hereinafter referred to as
the 'consumers'). These respondents had questioned the
G
validity of the bills raised by the JSEB in those Writ Petitions,
primarily on the ground that the bills were contrary to and in
exces~ of the tariff fixed by the Jharkhand State Electricity
Regulatory Commission (hereinafter referred to as the 'SERC").
Their contention was accepted by the learned Single Judge
H
462
SUPREME COURT REPORTS
[2014] 3 S.C.R.
A and the order of learned Single Judge is affirmed by the
Division Bench as well.
4. To give a glimpse of the controversy involved, in the year
1994 HT Agreement was entered into between Bihar State
B Electricity Board (predecessor in interest of JSEB) and the
consumers which, inter-alia, stipulated the tariff that was to be
charged by the JSEB from the consumers for supply of
electricity to these consumers by the JSEB. In Clause 4(c) of
the Agreement there was a provision of Minimum Guarantee
Charges. In the year 2003, Electricity Act was enacted.
C Indubitably, power to frame tariff under this Act is given to
SERC. SERC passed order dated framing the new tariff
schedule ('2004 Tariff Schedule' for short) under Section 86 of
the Electricity Act (hereinafter referred to as the Act). The
JSEB, however, continued to send the bills as per the Clause
D 4(c) mferred to in the agreement which were paid by the
consumers under protest. In May 2010, Writ Petitions were
filed by the consumers for quashing of the energy bills on the
ground that it had wrongly been raised as per Clause 4(c) of
the Agreement which had ceased to have any effect on the
E framing of 2004 Tariff Schedule by the SERC. The JSEB,
however, contended that the HT agreement entered into with
the consumers still survived as the 2004 Tariff Schedule saves
this Agreement.
F
5. Since the Writ Petitions of the consumers were allowed
and the order of the learned Single Judge is already upheld by
the Division Bench, it is obvious that pleas raised by the JSEB
have not found favour with the High Court. Before us as well,
same very contentions were raised which were raised by the
G JSEB in the High Court. Additionally, it was also contended that
even Section 185 (2)(a) of the Act read with Section 6(8) of
the General Clauses Act categorically protects the previous
opera.tion of the earlier enactment, duly done or saved
thereunder.
H It is, thus, clear that questions which arjse for consideration in
JHARKHAND STATE ELECT. BOARD v. LAXMI
463
BUSINESS & CEMENT CO.P. LTD. [A.K. SIKRI, J.]
these appeals are the following:
A
(i) Whether after the enactment of the Electricity Act, 2003
which came into force on 10.6.2003 and after passing of the
new tariff order dated 27.12.2003 by Jharkhand State Electricity
Regulatory Commission as per the Act of 2003 can the State
B
Electricity Board still charge a tariff determined by itself?
(ii) Whether the issue of demand charge to HTS -
1
category of consumers has been left non-considered by the
State Commission in the tariff order dated 27.12.2003 so that
the same may be continued in the manner existed in the State
C
or whether the same has been considered and given aff'ect to
in the tariff order dated 27.12.2003 which came into effect from
1.1.2004?
(iii) What would be the effect of Section 185 (Repeal and
0
Saving Clause) of the Electricity Act 2003 upon the HT supply
Agreement entered upon the Board and the Consumer prior
to Electricity Act, 2003?
6. While dealing with these questions, we will narrate
further seminal facts and the details submissions of the learned
E
counsel for the parties of either side.
1. Re.: Power of SERC under Electricity Act 2003.
Legal position contained in Act of 2003 is hardly in
dispute. Before this Act was enacted in the year 2003, we had
Indian Electricity Act, 1910 and thereafter Electricity (Supply)
F
Act, 1948 was passed. It is the Electricity Board in the
respective States which were supplying electricity to Jhe
consumers and determining the operation rates at which the Gelectricity was to be supplied. Section 49 of the Act, 1948
empowered the Board to supply electricity to any person upon
such terms and conditions as the Board thinks fit and made
for the purposes of such supply from time to time and were
E'mpowered to frame uniform tariffs for the purpose of such
H
464
SUPREME COURT REPORTS
[20141 3 S.C.R.
A supply. This power to frame tariff under Section 49( 1) of the Act
1948 included the power to fix minimum guarantee charges. In
State of Bihar, such rates were fixed in the year 1993 tariff. It,
inter-alia, provided for tariff for HT consumers. Three categories
of HT consumers were mentioned there. HTS-I, II and Ill. Both
B the consumers in the instant appeals were put in HT-I category.
HT Agreement dated 26.4.197 4 was entered into between the
Board and the consumers. As per Clause 4 of this Agreement,
the consumers were to pay to the Board for the energy so
supplied and registered or taken to have been supplied at the
c appropriate rates applicable to the consumers according to the
tariff framed by the Board and in force from time to time. It was
subject to the minimum contract demand applicable for the
category of supply category in which the consumers fell. Clause
4(b) explained that the maximum demand of the consumer for
D each month shall be the largest total amount of kilovolt amperes
(KVA) that was delivered to the consumers at the point of
supply during any consecutive 30 minutes in the months. Since
the JSEB has worked out the charges as per Clause 4 (c) which
it is demanding, we reproduce the said clause hereinbelow:
E
"4(c) Maximum demand charges for supply in any
month will be based on the maximum KVA demand for the
month or 75 per cent of the contract demand whichever is
higher, subject to provision of clause 13. For the first twelve
months service the maximum demand charges for any
F
month, will however, be based on the actual monthly
maximum demand for that month."
Thus, as per the aforesaid clause, JSEB had been raising
enetgy bills on the basis of 75% of the contract demand.
G
7. As mentioned above, after the Electricity Act, 2003 was
enacted, power to frame tariff is given to the SERC. This power
is statutorily conferred upon the SERC under the Act. However,
it would be relevant to mention herein that before the passing
of this Act, Electricity Regulatory Commission Act, 1998 was
H enacted and under Section 17 of the said Act, Jharkhand State
JHARKHAND STATE ELECT. BOARD v. LAXMI
465
BUSINESS & CEMENT CO.P. L~D. [A.K. SIKRI, J.]
Electricity Regulatory Commission was constituted by the
A
Government of Jharkhand vide Notification No.1763 dated
August 22, 2002. Its functions and duties were notified by the
Government as per Section 22 of the Electricity Regulatory
Commission Act.
8. On the passing of the Electricity Act, 2003, Electricity
Act 1910, Electricity (Supply) Act 1948 and Electricity
Regulatory Commission Act, 1998 have been repealed. At the
same time, Act 2003 recognizes the SERCs constituted under
the 1998 Act. The object clause of this Act reads as under:
"An Act to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity and
generally for taking measures conducive to development
.B
c
of electricity industry, promoting competition therein,
protecting interest of consumers and supply of electricity
D
to all areas, rationalization of electricity tariff, ensuring
transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies, constitution
of Central Electricity Authority, Regulatory Commissions
and establishment of Appellate Tribunal and for matters
E
connected therewith or incidental thereto."
I
9. It is also not in dispute that 2004 Tariff Schedule framed
by the SERC is in exercise of powers conferred upon it under
Section 86 (a) of the Act. In PTC India Ltd. V. Central
Electricity Regulatory Commission (2010) 4 SCC 603 this
F
Court has categorically held that Act, 2003 is an exhaustive code
on all matters concerning electricity which also provides for
"unbundling" of State Electricity Boards into separate utilities
for generation, transmission and distribution. Further,
Regulatory regime is entrusted to the State Electricity
G
Regulatory Commissions which are given vide ranging
responsibilities. This Act has distanced the Government from
all forms of regulations, including tariff regulation which is now
specifically assigned to SERC. Relevant observations, outlining
the scheme of this Act, are reproduced below:
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"The 2003 Act is enacted as an exhaustive code on all
matters concerning electricity It provides for unbundling''
of SEBs into separate utilities for generation, transmission
and distribution. It repeals the Electricity Act, 1910. the
Electricity (Supply) Act, 1948 and t~1e Electricity Regulatory
Commissions Act, 1998. The 2003 Act, in furtherance of
the policy envisaged under the Electricity Regulatory
Commissions Act, 1998 (the 1998 Act), mandated the
establishment of an independent and transparent
regulatory mechanism, and has entrusted wide-ranging
responsibilities with the Regulatory Commissions. While
the 1998 Act provided for independent regulation in the
area of tariff determination: the 2003 Act has distanced
the Government from all forms of regulation, namely,
licensing, tariff regulation, specifying Grid Code, facilitating
competition through open access, etc."[Paragraph 17)
The 2003 Act contains separate provisions for the
performance of dual functions by the Commission.
Section61 is the enabling provision for framing of
regulations by the Central Commission: the determination
of terms and conditions of tariff has been left to the domain
of the Regulatory Commissions under Section 61 of the
Act whereas actual tariff determination by the Regulatory
Commissions is covered by Section 62 of the Act. This
aspect is very important for deciding the present case.
Specifying the terms and conditions for determination of
tariff is an exercise which is different and distinct from
actual tariff determination in accordance with the
provisions of the Act for supply of electricity by a
generating company to a distribution licensee or for
transmission of electricity or for wheeling of electricity or
for retail sale of electricity.
26. The term "tariff' is not defined in the 2003 Act. The term
"tariff' includes within its ambit not only the fixation of rates
but also the rules and regulations relating to it. If one reads
JHARKHAND STATE ELECT. BOARD v. LAXMI
467
BUSINESS & CEMENT CO.P. LTD. [AK. SIKRI, J.]
Section 61 with Section 62 of the 2003 Act, it becomes
A
clear that the appropriate Commission shall determine the
actual tariff in accordance with the provisions of the Act,
including the terms and conditions which may be specified
by the appropriate Commission under Section 61 of the
said Act. Under the 2003 Act, if one reads Section 62 with
B
Section 64, it becomes clear that although tariff fixation like
price fixation is legislative in character, the same under the
Act is made applicable vide Section 111. These
provisions, namely, Sections 61, 62 and 64 indicate the
dual nature of functions performed by the Regulatory c
- Commissions viz. decision-making and specifying terms
and conditions for tariff determination."[Paragraph 25,26]
[Emphasis supplied]
10. It is, thus, beyond the pale of doubt that the State
Electricity Boards have no power whatsoever to frame tariff
D
which is under the exclusive domain of the Commission. This
legal position has been judicially recognized. [See Gujarat Urja
Vikas Nigam Ltd. V. Essar Power Ltd., (2008) 4 SCC 755 and
A.P. TRANSCO v. Sai Renewable Power (P) Ltd. (2011) 11
sec 34.
E
11. Notwithstanding the aforesaid legal position, JSEB
contends that agreement entered into with the consumers in the
year 1994 is saved and the JSEB has right to charge the tariff
as per Clause 4 (c) thereof. According to the JSEB this is the
F
position because of the reason that Clause 1.4 of the 2004 Tariff
Schedule framed by the SERC provides for such a position and
further that even Section 186 of the Act 2003 saves this
agreement. On these twin aspects, we have already framed
question Nos. 2 and 3 above and would now proceed to deal
G
with them.
2. Re: Whether the Agreement dated 26.4.1994 is saved.
by the ,2004 Tariff Schedule?
Mr. Sinha, learned senior counsel for the JSE.B submitted
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A that in the 2004 Tariff Schedule there was no such provision
which is contained in the agreement dated 26.4.19994
particularly in Clause 4(c) and in the absence thereof in the tariff
schedule energy bills raised on the basis of 75 % contract
demand was saved. It was submitted that the Agreement dated
B 26.4.1994 is a statutory agreement as it was under the Act of
1948. The learned senior counsel further submitted that it had
never been the case of consumers that the aforesaid provision
was repealed, repudiated or destroyed. It has not happened
either. For this purpose, Mr. Sinha sought to rely upon
c averments made in the Writ Petitions filed by the consumers
and on the basis it was contended that even the consumers
admitted that the provision of 75% of contract demand is
abs~nt and not provided iri the 2004 Tariff Schedule. He also
placed strong reliance on Clause 1.4 of 2004 Tariff Schedule
D of SERC which reads as under:
E
F
G
"All other Terms and Conditions in respect of Meter Rent,
Supply at Lower Voltage, Capacitor Charge, Electricity
Duty, Rebate, Security Deposit, Surcharge for exceeding
contract demand etc., shall remain the same as existing
in the State."
Further, the tariff order 2003-04, in Clause 5 under the
heading Design of Tariff Structure and Analysis of Tariff,
particularly at Clause 5.4 has dealt with the two part tariff
structure and Minimum Guarantee Charges wherein it was
stated that "Ideally, the fixed/demand charge should be
levied in proportion to the demand placed by an individual
consumer on the system. This is so because it facilitates
the utility in designing an appropriate system to cater to
the supply needs of a consumer and is therefore a just and
fair mechanism for recovering fixed costs of the system."
Mr. Sinha further argued that Clause 4 {c) of the High
Tension Agreement dated 26.8.2004 which the Respondent
Consumer has signed with the Board much after 1.1.2004,
H when the Tariff Order 2003-04 came into effect, clearly specified
JHARKHAND STATE ELECT. BOARD v. LAXMI
469
BUSINESS & CEMENT CO.P. LTD. [AK. SIKRI, J.]
that after commencement of power supply, the respondent shall
A
be liable to pay KV A/Maximum Demand Charges on actual
consumption basis in the first 12 months and after that on the
basis of 75% of the contract demand or recorded demand,
whichever is higher. This is uniformly applied to similarly
· situated all the HTS-1 consumers.
B
12. In order to appreciate this argument, we will have to
construe relevant provision of 2004 Tariff Schedule as framed
by the SERC. It would be pertinent to observe that the SERC
fixed the tariff on the request of the· JSEB itself when it
approached the SERC for this purpose. We find that in the Tariff
C
Petition filed by the JSEB before the SERC, the JSEB did not
propose to continue the manner of 75% of contract demand and
the SERC allowed the demand charge 140-KV-Month. On
perusal of the Tariff Order, it becomes apparent that this is
divided in different sections viz., section 1 is the chapter
D
containing 'introduction', section 2 is the chapter containing
'ARR' i.e. the Annual Revenue Requirement and tariff proposal
submitted by the Board, section 3 is the chapter containing
'objections' received from the stake holders, section 4 is the
chapter containing 'Commission's analysis on ARR', Section
5 is the chapter containing 'design of tariff structure and analysis
of tariff, section 6 is the chapter containing 'Directions to the . ·
JSEB' and finally there is Annexure 5.1 containing the 'Tariff
Schedule'. This Tariff Schedule which is the final outcome of
. the tariff process is binding on the State as well. The relevant
portion of the Annexure 5. 1 of the tariff order wherein the State
Commission has dealt with the tariff applicability upon the High
Tension Service (HTS) consumers i.e. category applicable to
Respondent No.1 is reproduced below:
"Category: High Tension Service (HTS)
1. Applicability
For consumers having contract demand above 100 kVA
2. Character of service
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[2014] 3 S.C.R.
A
50 cycles, 3 Phase at 6.6. KV/11 Kv/33 kV or 132 kV.
3. Tariff
B
c
D
E
F
Tariff for HTS
DESCRIPTION
TARIFF*
RS./kVA/month
DEMAND CHARGE
HTS
140
ENERGY CHARGE
KWh/month
Rs/KWh
All consumption
4.00
Monthly minimum
charge
For Supply at 11 and 33 kV
Rs.250/kVA
For Supply at 132 KV
Rs.400/kVA
13. However, as stated above, the JSEB itself in its
application/reference to the SERC did not ask for fixing any
minimum guarantee charges. It would be relevant to mention
that the JSEB in its proposal for fixation of tariff for 2003-04,
G submitted before the Regulatory Commission, indicated both
the existing tariff and the tariff proposed by it in respect of all
consumers, including all categories of HTS (High Tension
Service) consumers. The SERC after undertaking the necessary
exercise, fixed the tariff of all categories. The tariff proposed
H by the Board for HTS-I consumers along with existing tariff is
JHARKHAND STATE ELECT. BOARD v. LAXMI
471
BUSINESS & CEMENT CO.P. LTD. [A.K. SIKRI, J.l
reproduced in Tables 5.28 and 5.29 of the 2004 Tariff Schedule
A
which will clearly reflect that the aspect of minimum guarantee
charges was duly considered by the SERC. To demonstrate it,
we reproduce the said two tables hereunder:
5.28 Tariff for HTS-II Consumers (Existing/Proposed )
B
DESCRIPTION
I
TARIFF
DEMAND CHARGE
Existing
Proposed
c
Rs./KV A/Month
115
200
ENERGY CHARGE
Rs./KWH
Existing
Proposed
D
All Consumption
1.72
4.30
FUEL SURCHARGE CHARGE
Rs./KWH
2.44
I
Annual Minimum Guarantee (AMG) Charge
E
Subject to minimum
contract demand for
this category,
monthly minimum
demand charge as
per appropriate tariff
based on actual
maximum demand
of that month or
75% of the contract
demand whichever
is higher.
Energy
charges
The following AMG
charge
shall
be
realized from the
consumer as' per
F
appropriate tariff.
AMG Charge based
on load factor of
30%
and
power
factor 0.9 on contract
G
demand payable at
the rate of energy
charge applicable to
HTS-II category.
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A
based on load factor
of 30% and power
factor
0.85
on
contracted demand
payable at the rate
B
of Rs.1.72/KWH
5.29 Tariff for EHTS Consumers (Existing/Proposed)
DESCRIPTION
TARIFF
c
DEMAND CHARGE
Existing
Proposed
Rs./KV A/Month
110
200
ENERGY CHARGE
D
Rs./KWH
Existing
Proposed
All Consumption
4.13
4.15
FUEL SURCHARGE
E [
Rs./KWH
2.44 -
F
G
H
Annual Minimum Guarantee (AMG) Charge
Subject to minimum
contract demand for
this category,
monthly minimum
demand charge as
per appropriate tariff
based on actual
maximum demand
of that month or
75% of the contract
demand whichever
is higher
The following AMG
charge shall be
realized from the
consumer as per
appropriate tariff.
AMG Charge based
on load factor of
50%
and
power
factor 0.9 on contract
demand payable at
the rate of energy
-
JHARKHAND STATE ELECT. BOARD v. LAXMI
473
BUSINESS & CEMENT CO.P. LTD. [A.K. SIKRI, J.]
.
Energy
charges charge applicable to
A
based on load factor
of 50% and power
EHTS category.
factor
0.85
on
contracted demand
· payable af the rate
B
of Rs.1.69/KWH
14. The tariff order further reveals that the SERC had even
compared the proposal of JSEB with the tariff prevailing in other
$tates in India and after detailed analysis thereof, it approved
C
tti'e tariff for HTS consumers which is mentioned in table 5.31
of the 2004 Tariff Schedule. Therefore, it cannot. be said that
thft SERC was oblivious of the clause relating to minimum
guarantee charges which JSEB was charging from its
consumers as per the earlier agreements entered iato with
them. The position would become crystal clear from the
D
following discussion in the 2004 Tariff Schedule wherein the
SCRC gav.e specific reasons for revising and approving the
tariff for HTS consumers.
The SERC has filed its response to these appeals,
E
wherein the provision in this behalf is explained in the
manner noted below: "It is evident from the above' table that
there is no common approach towards minimum charge.
However, if we compare neighbouring States like Orissa,
West Bengal and Madhya Pradesh (supply at less than
F
132 KVA), there is no minimum charge. As mentioned
earlier, the Commission would ideally like to scrap this
charge, but for current year it has retained this charge due
to lack of information and data to ascertain the true impact
of this charge. The Commission has already directed the
G
Board to provide details in this regard in the next petition.
For the current year, the Commission would not like
to increase the burden on the industries on account of
minimum charge and has therefore attempted to keep it
at the existing level. The, Commission has assumed a
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SUPREME COURT REPORTS
[2014] 3 S.C.R
minimum level of supply and a minimum level of
consumption. For this, the Commission has considered
10% load factor for HTS-I and HTS-I I categories
considering an average consumption of two (2) hours in a
day. For EHTS and HT Special load factor of 20% and
30% respectively has been taken by considering an
average consumption of four (4) hours and seven (7)
hours in a day respectively. The Commission observes that
if these categories of industries are not able to maintain
this minimum load factor, than they should reduce their
contracted load. The Commission would like to
explicitly mention that if the consumption exceeds
the mentioned load factor, no minimum charge would
be applicable.
For encouraging consumption, the Commission
has also introduced a load factor rebate for all
industries consumers. For the entire consumption in
excess of this defined load factor, a rebate is
provided on the energy charges for such excess
consumption. The Commission would have liked to align
the tariff structure towards cost of supply during the current
year itself, but it was constrained due to the huge tariff
shock that it would translate into for other consumes and
consequent increase that would have been required in tariff
for other categories. Thus as a principle the Commission
has taken the first step towards reducing this distortion in
the tariff structure. The Commission is conscious of the fact
that HT industry in Jharkhand has borne the brunt of cross
subsidy in the past and the tariff applicable to them is
above the cost of supply. The significance of this step
should not, however, be judged by the quantitative decline
but the signal and intent whereby the Commission intends
to further rationalize the tariff in the future."
15. We would like to reproduce the following discussion
H in the impugned judgment of the High Court, as we are in
JHARKHAND STATE ELECT. BOARD v. LAXMI
475
BUSINESS & CEMENT CO.P. LTD. [A.K. SIKRI, J.]
agreement therewith the observations made in those
A
paragraphs:
" ...... 10.We are concerned with the Demand Charge only,
rather to say not concerned with the Demand Charge itself
but the manner in which the Demand Charge can be
8
calculated for the purpose of raising demand against the
consumer charging of the Demand Charge "has been
allowed in Tariff Order 2003-04@ Rs.140/- as mentioned
at page 141 of the Tariff Order.