# S. NARAYAN IYER v. UNION OF INDIA & ANR

- **Citation:** [1976] Supp. 1 S.C.R. 486
- **Court:** Supreme Court of India
- **Decided:** 1976-04-30
- **Case number:** Civil Appeal No. 325 of 1970
- **Bench:** A. N. Ray, M. H. Beg, R. S. Sarkaria, P. N. Stt!NGHAL, Jaswant Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-narayan-iyer-v-union-of-india-anr-7151
- **Pages:** 3

## Headnote

c
Jurisdiction of courts under Art. 226 of the Constitution in matters of fiscal
planning-Legi'slative judgments are outside the scope of /udicjgl deterniination
-Reasonableness of telephone rates is a matter for legislative judgment.-lndian
Telegrqph Act-Section 7(2) read with Indian Telegraph Amendment Rules,
1966.
The appellant challenged under Art. 226 the reasonableness of the increase
in the telephone rental and call charges brought about by the Indian Telegraph
Amendment Rules, 1966 on the ground that (I) The telephone system is a
public utility service and the charges can be only in the nature of a fee which
must be commensurate with the cost of renderin.g the service; and (2) The
loss incurred by the Government in another establishment service is not a
legitimate ground for raisin& the rates.
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D
The writ petition was accepted and on appeal the judgment was reversed
"'
holding that (I) the High Court could not interfere with the tariff. and (2)
•
the principle upon which the public utility rates regulation as developed in
the United States is not applica\Jle in our country.
Dismissing the appeal by certificate, the Court,
HELD : ( 1) The courts have no jurisdiction under Article 226 to go into
E
the reasonableness of rates. These rates are decided as policy matters in fiscal
planning. There is legislative prescription of rates. Rates are a matter for
legislative judgment and not for judicial determination.
[488A]

## Text

486
A
S. NARAYAN IYER
v.
UNION OF INDIA & ANR.
April 30, 1976
B
[A. N. RAY, C.J., M. H. BEG, R. S. SARKARIA, P. N. Stt!NGHAL AND
JASWANT SINGH, JJ.J
c
Jurisdiction of courts under Art. 226 of the Constitution in matters of fiscal
planning-Legi'slative judgments are outside the scope of /udicjgl deterniination
-Reasonableness of telephone rates is a matter for legislative judgment.-lndian
Telegrqph Act-Section 7(2) read with Indian Telegraph Amendment Rules,
1966.
The appellant challenged under Art. 226 the reasonableness of the increase
in the telephone rental and call charges brought about by the Indian Telegraph
Amendment Rules, 1966 on the ground that (I) The telephone system is a
public utility service and the charges can be only in the nature of a fee which
must be commensurate with the cost of renderin.g the service; and (2) The
loss incurred by the Government in another establishment service is not a
legitimate ground for raisin& the rates.
~
I >
D
The writ petition was accepted and on appeal the judgment was reversed
"'
holding that (I) the High Court could not interfere with the tariff. and (2)
•
the principle upon which the public utility rates regulation as developed in
the United States is not applica\Jle in our country.
Dismissing the appeal by certificate, the Court,
HELD : ( 1) The courts have no jurisdiction under Article 226 to go into
E
the reasonableness of rates. These rates are decided as policy matters in fiscal
planning. There is legislative prescription of rates. Rates are a matter for
legislative judgment and not for judicial determination.
[488A]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 325 of 1970.
From the Judgment and Order dated 28th March 1969 of the
F
Madras High Court in Writ Appeal No. 490/68.
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K. S. Ramamurthy, K. Jayaram and R. Chandrashekhar for the
Appellant.
L. N. Sinha, Solicitor General of India, S. N. Prasad and Girish
Chandra for the Respondents.
The Judgment of the Court was delivered by
RAY C. J.
This appeal is by certificate from the judgment dated
28 March 1969 of the High Court of Madras.
The question in this
appeal is whether the appellant in a writ petition can challenge
the
telephone rates and charges and obtain any relief in that behalf.
•
..
H
The appellant is a retired District Manager (Telephones), Madras.
. '\
He filed a writ petiti~n in the High Court for a writ of prohibition,
directing the General Manager (Telephooos), Madras to forbear from
·-
S. NARAYAN IYER V. UNION (Ray, C.J.)
487
enforcing the revised Telephone Tarifi as per the Indian Telegraph
A
Amendment Rules, 1966.
Under
the rules, the rental and call
"·
charges were increased by 50 per cent and Trunk call charges by about
30 to 35 per cent.
The petitioner alleged that the telephone system is
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..
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1-.
a public utility service and not a Revenue earning establishment and
the charges can be only in the nature of a fee which must be commensurate with the cost of rendering the service.
The petitioner further
alleged that the loss incurred by the Government in another establishB
ment service is not a legitimate ground for raising telephone rates.
The Trial Court held that Telephone Tariff was unjust and unreasonable.
The Trial Court allowed the writ petition.
The High Court on appeal held that the High Court could not
interfere with the Tariff. The High Court said that the principal
upon which public utility rates regulation as has developed in the
United States is not applicable here in our country.
·
It should be said at the outset that there was some discussion in
the judgment on Article 19 but counsel for the appellant properly
abandoned any reference to Article 19.
The appellant's contentions
are three.
First, the expression. "rates" in section 7 (2) of the Indian
Telegraph Act means rates whiclh
are to be determined should be
fair, just and reasonable from the point of view of both the consumer
and the producer.
Second, the Court has jurisdiction to determine
whether the rates fixed by the Government are reasonable.
Third,
the rates are increased expressly for the purpose of off-setting
the
losses in the Post and Telegraph Services. If a proper allocation
is made according to proper commercial accounting it will be found
that there is a wrongful deduction of crores
of rupees as revenue
expense and unla\\ful debit.
These errors in the accounting have
resulted in reducing the profits earned by the Telephones.
There are three principal reasons why the writ petition is incompetent and not maintainable and the appeal should fail. First, when
any subscriber to a telephone enters into a contract with the State,
the subscriber has the option to enter into a contract or not.
If he
does so, he has to pay the rates which are charged by the State for
installation.
A subscriber cannot
say that the rates are not fair.
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No one is compelling one to subscribe.
Second, Telephone Tariff
G
is subordinate legislation and a legislative process.
Under Indian
Telegraph Act, section 7 empowers the Central Government to make
rules inter alia for rates.
These rules are laid before each House of
Parliament.
The rules take effect when they are passed by the
Parliament.
Third, the question of rates is first gone into by the
Tariff Enquiry Committee.
The Committee is headed by nonofficials.
The Tariff rates are plaoed before the House in the shape
H
of Budget proposals.
The Parliament goes into all the Budget
proposals.
The rates are sanctioned by the Parliament.
The rates.
t'herefore, become a legislative policy as well as a legislative process.
A
48 8
SUPREM.E COURT REPORTS
(1976] SUPPLEMENTARY
The Courts have no jurisdiction under Article 226 to go into
reasonableness of rates. These rates are decided as policy matter
in fiscal planning. There is legislative prescription of rates. Rates
are a matter for legislative judgment and not for judical determination.
The appeal is dismissed.
There will be no order as to costs.
B
S.R.
Appeal dismissed.
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