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Kanguda Industrial Works (Private) Limited, Kuppam Represented By Its Managing Director V. Aswathanarayana v/s Andhra Pradesh State Electricity Board, Hyderabad, Chairman

    W.P. No. 7906 of 1963

    Decided On, 30 July 1968

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE BASI REDDY & THE HONOURABLE MR. JUSTICE A. SAMBASIVA RAO

    For the Appearing Parties: B.S. Ram, C. Pattabhi Rama Rao, D. Sudhakar Rao, P. Krishna Reddy, T. Ananta Babu, Advocates



Judgment Text

( 1 ) IN all these writ petitions the petitioners seek a writ of mandamus directing the Andhra Pradesh State Elecricity Board, Hyderabad hereinafter referred to as "the Board", to forbear from enforcing the notification dated 19-11-62, which was published in Part II of the Andhra Pradesh Gazette dated 6-12-62 by this notification, the Board in exercise of the powers conferred by section 49 of the Elccitricity (Supply) Act, 1948 and "all contractual, statutory and other powers hereunto enabling" refixed the terms and conditions for the supply of electricity to the petitioners, the effect of which was an enchancement of the pre-existing rates. In the writ petitions this notification was assailed on various constitutional, legal and equitable grounds; But we may straightway asy that in view of the decision of the Supreme Court in Civil Appeals Nos. 336 of 1967 which was rendered on 8-2- 68, the learned Advocates appearing for the petitioners in these writ petitions did not seriously press those points, and in our opinion, quite rightly. We will, however indicate the points railed in these writ, petitions. The points taken were : (1) That the revised rates have been railed several times over the pre-existing rates arbitrarily and unjustly; (2) That such upward revision unilaterally and indiscriminately offends articles 14 and 19 (1) of the Constitution, as also the principles of natural justice. (3) The rates fixed by the impugned notification are much higher than the rates fixed under the agreements orginally entered into between the parties and the Government. The upward revision by the Board, which has stepped into the shoes of the Government, is bad in law. In answer to the points raised in the writ petitions it is pointed out in the counter-affidavit filed on behalf of the Board that impugned notification is neither illegal nor ultra vires of the constitution, nor is it unjust. That notification was issued in exercise of the powers conferred on the Board by Section 49 of the Electricity (Supply) Act, 1948- The Board was constituted on 1-4-1959 and from that date it took over from the State Government the func tion of supplying electricity, besides taking over all the rights and liabilitie under the agreements entered into by the Government with the concerned parties.


( 2 ) THE circumstances which necessitated the revision of the terms and con. ditions of the supply of electricity was spiralling up. The cost of coal and electrical equipment and installations was steadily on the increase. The Board which is a statutory corporation charged with the obligation of carrying on its operations with out losses, was confronted with a huge deficit budget. The state of Andhra Pradesh was very backward in the field of electricity and a number of schemes had to be undertaken. The demand for power was contantly increasing. The prevailing charges for supply of electricity were unrealistic; Further the merger of portions of the former Hyderabad State with the Andhra State to constitute the State of Andhra Pradesh has resulted in a diversity of tariffs and the prevalance of different terms and conditions of supply in different areas. The Board was bound to rationalise the whole set-up and eliminate differential treatment to the extent possible. Accordingly it revised the terms and conditions of the supply of electricity and issued the impugned notification. The said revision was essential to maintain the production and equitable distribution of electric power which constitutes an essential commodity. The Board exercised the power vested in it under the statute and under contract, and the validity of the proceedings of the Board, is not open to challenge. It does not constitute a restriction, at any rate an unreasonable restriction on the foundamental rights of the petitioner. The petitioner utilised electricity for the purpose of making profit. They have no funda. mental right to purchase electricity at any particular rate. The mere diminution of their profits is not sufficient to characterise the revisions of rates as illegal, arbitrary or capricious. The revision has been necessitated in the public interest. The Board cannot possibly be expected to sell electricity at a loss. The revision was considered essential to enable the Board to carry on its functions of production and sale of electricity. The revision is based on accepted principles, uniformly applicable to each class of consumers and is based on a rational classification. It is true that there has been an enhancement of rates, but that is inevitable having regard to the circumstances stated above. The average increase in revenue over the entire state is only 18 per cent. In spite of this increase, it is doubtful whether the Board can carry on its operations without incurring loss.


( 3 ) THE contention that the Board cannot alter the terms and conditions of the supply stipulated under the earlier agreement is not tenable, because apart from clause 19 A of the agreement which confers such unilateral power on the Board, even if the revised rates are traceable to a statutory power conferred by section 49 of the Act, those rates would prevail over the contractual rates. During the pendency of these writ petitions which were filed in the year 1963 or early in 1964, the Electricity (Supply) Amendment Act 1966 (XXX of 1966) was passed by the Parliament and the Electricity (Supply) Act, 1948 was amended in several particulars. Sections 11 and 24 of Amending Act substituted with retrospective effect a new section in the place of the old section 49, the new section 49 runs as follows: "provision for the sale of electricity by the Board to persons other than licensees. " (1) Subject to the provisions of this Act and of regulations, if any, made in this behalf the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board tb'nks fit and may for the purposes of such supply frame uniform tariffs. (2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely: (a) the nature of the supply and the purposes for which it is required; (b) the co-ordinated development of the supply and distribution of electsicity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee; (c) The simplification and standardisation of methods and rates of charges for such supplies; (d) the extension and cheapening of supplies of electricity to scarsely developed areas. (3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature ef the supply and purpose for which supply is required and any other relevant factors: (4) In fixing the tariff and terms and conditions fo r the supply of electricity, the Board shall not show undue preference to any person. Then section 24 of the Amending Act which validated the imposition af charges under section 49, is as follows:"24. (1) Notwithstanding any judgment, decree or order of any Court, all rates fixed under section 49 of the Electricity (Supply) Act, 1948, for the sale of electricity to any person other than a licensee before the commencement of this Act shall be deemed to have been validty fixed as if the provisions of the said section, as amended by this Act, had been in force at all material times when such rates were fixed and accordingly. (a) no suit or other proceeding shall be maintained or continued in any Court for the refund of any amount collected from any person on the bash of such rates: (b) No court shall enforce any decree or order directing the refund of any amount collected from such person on the basis of such rates; (c) Any amount due from any person on the basis of such rates before the commencement of this Act but not recovered before such commencement may be recovered in the manner provided under the Electr icity (Supply) Act, 1948. "the constitutional validity of Sections 49 and 24 of the Amending Act were challenged before the Supreme Court in Civil Appeals Nos. 335 and 336 of 1967 and their Lordships upheld the validity of those sections. After an exhaustive consideration of the contentions raised pro and contra, their Lordships held that under the new Section 49, which has been given retrospective effect the Electricity Board has ample power to frame uniform tariffs as it had done in the cases before the Supreme Court and the levy was valid. Their Lordships further held that Section 49 is not open to attack on the ground that it is a colourable exercise of taxing power, nor on the ground that the section gave an unguided and abritrary power to the Board to fix tariffs as it likes. Their Lordships pointed out the provisions of the Act have the effect of properly guiding the activity of the Board in its dealings with its consumers including the levy of tariffs and it does not give an unguided and arbitrary power to the Board to fix tariffs as it likes. As regardi section 24 of the Amending Act which validated the levy and collection which had been effected by the Board, their Lordships held that the section does not suffer from any infirmity and that its effect was to validate all the rates and tariffs fixed under section 49 of the Act and to make them immune from attack on any ground whatsoever. It will be seen therefore that by the impugned notification the revised tariffs with regard to the supply of electricity, were not fixed arbitrarily or capriciously. Revision was necessitated by the simple fact that the cost of production of electricity had gone up considerably and the Board had to cut its coat according to the cloth. As a result of the Amending Act, Sections 49 and 24|render the acti

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on of the Board legal and valid and the pre-existing contractual rates have to yield to the revised rates fixed under a statutory power. It follows, therefore, that the revised tariff fixed under the impugned notifications cannot be assailed on any valid grounds. We would, therefore, dismiss all these writ petitions, but in the circumstances, without costs. It is represented on behalf of the petitioners that these writ petitions have been pending in this Court for about four or five years and during this period only part of the enhanced tariffs had been stayed, with the result that large arrears have accumulated, and it would be a hardship to the petitioners to pay off all the arrears in one lumpsum. We would, therefore, direct the a. P. State Electricity Board to collect the arrears due from each of these petitioners in six equal monthly instalments, the first instalment to be recovered on or before the 1st of every succeeding month. In the event of the petitioners committing default in respect of any of the instalments, the Board will be at liberty to collect the balance of the tax in a lumpsum.
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