Try out our Premium Member services: Virtual Legal Assistant, Query Alert Service and an ad-free experience. Free for one month and pay only if you like it.
Punjab-Haryana High Court
Punjab State Power Corporation … vs M/S Arora Iron Steel Rolling Mills … on 26 March, 2021CWP-20161-2020(O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-20161-2020(O&M)
Date of decision: 26.03.2021
Punjab State Power Corporation Ltd.
…….Petitioner
Versus
M/s Arora Iron Steel Rolling Mills Pvt. Ltd. And another
……Respondents
CORAM: HON’BLE MR. JUSTICE ANIL KSHETARPAL
Present:- Mr. Naveen S Bhardwaj, Advocate for the petitioner
Mr. M.S.Saini, Advocate for the respondents
ANIL KSHETARPAL, J.
The petitioner-Company, a public sector undertaking, is a
distribution licensee in the State of Punjab in terms of the Electricity
Act, 2003. It is in the business of supplying electricity to the consumers
in the State of Punjab. The petitioner prays for issuance of a writ in the
nature of Certiorari to set aside the order dated 16.09.2019 passed by
Consumers Grievances Redressal Forum, Ludhiana ordering the refund
of an amount of Rs.2,98,85,000 approximately to respondent no.1.
Before this Court proceeds to adjudicate upon the dispute, a
brief background of the scheme of the Act, the scope of power of the
Punjab State Electricity Regulatory Commission and the Consumer
Grievances Redressal Forum, shall be required to be examined.
Section 82 of Electricity Act, 2003 (hereinafter referred to as the ‘2003
1 of 17
::: Downloaded on – 17-01-2022 00:18:59 :::
CWP-20161-2020(O&M) 2
Act’) provides for constitution of the State Electricity Commission in
each State. The functions of the State Electricity Commission are
provided under Section 86 of the 2003 Act. Section 86 (1) enables the
State Electricity Commission to determine the tariff. Section 86 is
extracted as under:-
86. Functions of State Commission.–
(1) The State Commission shall discharge the
following functions, namely:–
(a) determine the tariff for generation, supply,
transmission and wheeling of electricity,
wholesale, bulk or retail, as the case may be,
within the State:
Provided that where open access has been
permitted to a category of consumers under
Section 42, the State Commission shall
determine only the wheeling charges and
surcharge thereon, if any, for the said category
of consumers;
(b) regulate electricity purchase and procurement
process of distribution licensees including the
price at which electricity shall be procured
from the generating companies or licensees or
from other sources through agreements for
purchase of power for distribution and supply
within the State;
(c) facilitate intra-State transmission and wheeling
of electricity;
(d) issue licences to persons seeking to act as
transmission licensees, distribution licensees
and electricity traders with respect to their
operations within the State;
(e) promote cogeneration and generation of
electricity from renewable sources of energy by
providing suitable measures for connectivity
with the grid and sale of electricity to any
person, and also specify, for purchase of
electricity from such sources, a percentage of
2 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 3
the total consumption of electricity in the area
of a distribution licensee;
(f) adjudicate upon the disputes between the
licensees and generating companies and to refer
any dispute for arbitration;
(g) levy fee for the purposes of this Act;
(h) specify State Grid Code consistent with the
Grid Code specified under clause (h) of sub-
section (1) of Section 79;
(i) specify or enforce standards with respect to
quality, continuity and reliability of service by
licensees;
(j) fix the trading margin in the intra-State trading
of electricity, if considered, necessary;
(k) discharge such other functions as may be
assigned to it under this Act.
(2) The State Commission shall advise the State
Government on all or any of the following matters,
namely:–
(i) promotion of competition, efficiency and
economy in activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganisation and restructuring of electricity
industry in the State;
(iv) matters concerning generation, transmission,
distribution and trading of electricity or any
other matter referred to the State Commission
by that Government.
(3) The State Commission shall ensure
transparency while exercising its powers and
discharging its functions.
(4) In discharge of its functions, the State
Commission shall be guided by the National
Electricity Policy, National Electricity Plan and tariff
policy published under Section 3.”
In accordance with the mandate of Section 82 of the 2003
Act, the State of Punjab has constituted the Punjab State Electricity
3 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 4
Regulatory Commission (hereinafter referred to as ‘the Commission’).
The Commission in exercise of its powers under Section 181 and other
provisions of the 2003 Act has notified the Punjab State Electricity
Regulatory Commission (Forum and Ombudsman) Regulations, 2016.
Under the Regulations, a Forum for Redressal of Grievance of
Consumers has been constituted in accordance with the mandate of
Section 42(5) of the Act of 2003.
The order passed by such Forum has been assailed in the
present writ petition.
In order to understand the controversy involved in the
present writ petition, it would be necessary to notice certain facts. The
distribution licensee faces reduced demand of electricity during
particular hours of the day/night. In other words, the demand for supply
of electricity falls below the electricity production or availability during
lean hours. In order to increase/encourage demand of electricity during
lean hours, the distribution licensee with the prior permission of the
Commission issues sales circulars offering rebate in the tariff of
electricity. In simple words, such rebate being offered can be equated
with the discount offered by the restaurants during lean hours which are
commonly known as “happy hours”. Respondent no.1 is a high end
consumer of electricity. It has got its sanctioned load extended from
2422 kw/2445 kva to 29500 kw/28500 kva on 29.05.2015.
On 05.08.2016, the petitioner issued commercial letter no.
31 of 2016. In this circular, it was provided that the piece tariff rate at
4.99 per kvah shall be permissible to large supply industrial category
4 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 5
consumers who consume power above the threshold limit as per ‘para
A’. This revision of tariff or in other words the offer was for the
financial year 2016-17. It was provided that the threshold limit shall be
calculated on the basis of maximum annual consumption in any of the
last two financial years. In case, the period is less than two financial
years i.e if the connection has been released after 31.03.2014, the
concessional tariff at the rate of 4.99 per kvah shall not be permissible.
However, in case there is reduction or extension in load/demand, the
threshold consumption for the financial year shall be calculated on pro
rata basis.
Pursuant thereto, respondent no.1-Company was refunded
Rs.58,58,563/- in the month of February, 2017 and Rs.72,36,481/- in the
month of March, 2017. However, realizing that the excess amount has
been refunded, respondent no.1-Company was called upon to deposit
Rs.90,45,743/- vide a communication dated 25.11.2017, which was duly
deposited. Thereafter, audit party further raised objection and
respondent no.1- Company was again called upon to deposit
Rs.17,27,337/- which was also deposited.
On 07.03.2018, the Commission issued a clarification for
the financial year 2017-18 regarding calculation of threshold limit in
case of any change in the contract demand and capping of cumulative
effect of DoD rebate and reduced energy charges for consumption
beyond threshold limit as per the provisions of tariff order which reads
as under:-
“PUNJAB STATE ELECTRICITY REGULATORY
COMMISSION, SCO 220-221, SECTOR-34A, CHANDIGARH
5 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 6
To,
The Chief Engineer/Commercial
Fax:0175-2214495
PSEB, Head Office,
The Mall, Patiala
No.PSERC/Tariff/198/2388
Dated: 07.03.2018
Subject: Clarification regarding calculation of threshold
limit in case of change in Contract Demand (CD) and
capping of cumulative effect of ToD rebate and reduced
enerty charges for consumption beyond threshold limit as
per provisions of Tariff order for FY 2017-18.
In reference to your memo
No.175/Clarification dated 16.02.2018 on the subject,
observation/clarification of the commissioner is as
under:-
i) Working out of threshold consumption for a
financial year in case there is reduction or extension
in load/demand.
i) The Commission in the Tariff Order for FY
2016-17 had decided as under:-
“7.4.2…..the commission approves bases tariff
rate of Rs.4.99 per KVAH for Large Supply
industry category consumers, who consume
power above threshold limit as per para 7.4.3.
All other surcharge and rebates as approved by
the Commission and Govt. levies as notified by
the State Government shall be charged extra”.
And, in the Tariff order for FY 2017-18, the
Commission, in order to further encourage the
productive use of surplus power, decided to have
reduced energy charges as under:-
6 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 7
“6.1.3……within Two Part Tariff structure, the
Commission, in order to further encourage the
industry for productive use of surplus power,
decides to have reduced energy charges for FY
2017-18 @ Rs.4.45 per KWH for Small Power
and Rs.4.23 per KVAH for Large
Supply/Medium Supply consumers, for all
categories of ‘Industrial Consumers’ who
consume power above the threshold limit i.e.
for the consumption in excess of the maximum
consumption recorded during the FY 2015-16
and FY 2016-17. However, in case, the period
is less than two financial year i.e. if the
connection has been released after 31.03.2015,
the reduced energy charges shall not be
permissible. All other terms and conditions,
including determining of threshold limit, shall
remain same as approved in the Tariff order for
FY 2016-17 read with order of the Commission
dated 18.10.2016 in Petition No.64 of 2016”.
As may be seen, above decisions of the
Commission contained in Tariff orders does not
provide for any adjustment in current year
consumption due to any reduction/extension in
load/demand.
ii) Further, the methodology for working out the
threshold consumption was specified by the
Commission under para 7.4.3 (i) of Tariff Order for
FY 2016-17 reproduced below for ready reference:-
“It shall be allowed for any consumption
during the financial year exceeding the
consumption worked out on the following
methodology.
7 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 8
The maximum annual consumption in any of
the last two financial years shall be taken as
threshold. In case, period is less than two
financial years i.e. if connection has been
released after 31.03.2014, tariff @ Rs.4.99/-
per KVAH shall not be permissible. Further, in
case, there is reduction or extension in
load/demand, threshold consumption for a
financial year shall be worked out on pro-rata
basis”.
Perusal of the methodology specified under
para 7.4.3 (i) of the Tariff order for FY 2016-
17, reveals that, the provision for adjustment of
consumption on pro-rata basis has been made
only in case of reduction/extension in
load/demand taking place in any of the last two
financial years to work out the threshold
consumption for that financial year i.e. in case
of reduction/extension in load/demand during
any of the two previous financial years, the
consumption of the relevant year shall be
reduced/enhanced on pro-rata basis, as the case
may be, for the purpose of working out of the
threshold consumption of that year.
B. Capping of cumulative effect of ToD and
Lowest Energy Charges limit of consumption
beyond threshold limit.
The Commission, under para 6.1 of the Tariff
order dated 23.10.2017, specified the reduced
energy charges under TPT for FY 2017-18 @
Rs.4.45/-KWH for SP and Rs.4.23/KVAH for
LS/MS consumers for consumption of power
above the threshold limit. Further, under para
8 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 9
6.2.5 the Commission specified the ToD Tariff,
and the capping of cumulative effect of ToD
rebate and reduced energy charges for
consumption beyond threshold limit.
Subsequently, the Commission vide its order
dated 09.11.2017 decided to continue with
Single Part Tariff from 01.04.2017 to
31.12.2017 and according amended the para
6.1 of Tariff Order to have the reduced energy
charges under Single Part Tariff @
Rs.4.99/KVAH for LS/MS and Rs.5.25/-KWH
for SP Industrial consumers.
It may be seen that the Commission in its order
dated 09.11.2017, has only amended the para
6.1 and not touched/revised the para 6.2 of the
Tariff Order dated 23.10.2017 containing the
directions pertaining to capping of cumulative
effect of ToD rebate and reduced energy
charges for consumption beyond the threshold
limit to Rs.4.23/KVAH, as it has been worked
out on the basis of ‘Pooled Cost of Purchase’ of
PSPCL during the year. As such, the capping of
cumulative efect of ‘ToD rebate and reduced
energy charges for consumption beyond
threshold limit’ to the lowest energy charges of
Rs.4.23/- per KVAH specified under para 6.2
holds good for both scenarios i.e. Two Part
Tariff as well as Single Part Tariff, during the
FY 2017-18.
Sd/-
Secretary
CC:
(i) The Chief Engineer/ARR & TR, PSPCL,
Patiala Fax NO.0175- 2302416.
(ii) Nahar Spinning Mills Ltd. Regd. Office 373,
9 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 10
Industrial Area-A, Ludhiana-141003, in reference to
their representations dated 27.12.2017, 10.01.2018,
05.02.2018 and during the public hearings held at
Ludhiana and Chandigarh.”
On the basis of the aforesaid clarification issued by the
Commission, respondent no.1-Company filed a complaint before the
Consumers Grievance Redressal Forum constituted under the Punjab
State Electricity Regulatory Commission (Forum) and Ombudsman)
Regulations, 2016, for re-calculating the rebate for the financial year
2016-17 and refund of the amount to the extent of Rs.3,19,87,000
approximately. The aforesaid application has been allowed by the Forum
vide an order dated 16.09.2019 which is the subject matter of challenge
in this writ petition.
At this stage, it is appropriate to notice that ToD means time
of day. This is in order to indicate the rate of tariff with respect to a
particular time of the day.
In this writ petition, this Court is called upon to interpret the
clarification dated 07.03.2018 issued by the Commission. The Court is
further called upon to decide whether the aforesaid clarification is
applicable to para 7.3, 7.4.3 (i) of tariff order for the financial year 2016-
17 or not?
This Bench has heard learned counsel for the parties at
length and with their able assistance perused the paper book. After
hearing arguments on 04.03.2021, liberty was granted to the learned
counsels to file their written synopsis alongwith the gist of their
arguments. Learned counsel representing respondent no.1 has filed his
written arguments.
10 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 11
Learned counsel representing the petitioner while reading in
extenso the commercial letter no. 31 of 2016, dated 05.08.2016
(Annexure P-4 to the writ petition) and clarification dated 07.03.2018
which has already been extracted submits that the clarification is with
respect to calculation of the threshold limit in case of any change in
contract demand and capping of cumulative effect of ToD rebate and
reduced charges of consumption beyond the threshold limit as per
provisions of tariff order for the financial year 2017-18 and not with
respect to the financial year 2016-17. He, hence, contended that the
Forum was in error in reading clause (ii) of clarification dated
07.03.2018 out of context and therefore, the order is liable to be set
aside.
Per contra, learned counsel representing the respondent has
submitted that the writ petition is liable to be dismissed on the ground of
concealment of facts in as much as the order dated 10.09.2020 passed by
the Commission in a petition filed by the petitioner for clarification has
been withheld from the Court. It is further contended that on reading of
clause (ii) of clarification dated 07.03.2018 it is apparent that the
methodology for working out threshold consumption specified by the
Commission under para 7.3.4(i) of tariff order for the financial year
2016-17 was clarified and therefore, the Forum has correctly ordered the
refund. The respondent also filed a complaint before the Commission
alleging non-implementation of the order passed by the Forum which
was allowed by the Commission with costs of Rs.25,000/-. The Chief
Engineer, Commercial, has vide a letter dated 14.10.2020 directed the
11 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 12
implementation of the order passed by the Forum in favour of
respondent no.1. He, hence, prays for dismissal of the writ petition.
After having considered the arguments of the learned
counsel representing the parties, this Bench now proceeds to critically
analzye the same.
Before proceeding to interpret the communication dated
07.03.2018, it would be appropriate to carefully examine the commercial
letter no. 31/2016 dated 05.08.2016. The caption of this letter is
Revision of tariff (financial year 2016-17) Basic tariff rate for
incremental consumption above the threshold limit for large supply
industrial category consumers. This letter is issued by Deputy Chief
Engineer/Sales II, circulated to all Chief Engineers/Chief Engineers
(Distribution). This commercial letter refers to the order passed by the
Commission in its tariff order dated 27.07.2016 for the financial year
2016-17. The order passed by the Commission has been extracted in the
communication itself. On examination of the part which has been
reproduced, it is apparent that the Commission approved base tariff rate
of Rs.4.99 per kvah for large supply industrial category consumers who
consume power above the threshold limit as per para (a). Para (a)
thereafter defines what is the consumption above the threshold limit.
Now let us turn our focus to clarification dated 07.03.2018,
which has been extracted above. From the reading of the subject, it is
apparent that this clarification is regarding the calculation of the
threshold limit for certain categories of the tariff order for the financial
year 2017-18. It nowhere amends or modifies the tariff order 7.4.3 (i) of
12 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 13
tariff order for the financial year 2016-17. Further on careful reading of
the entire communication/clarification, it is apparent that no doubt a
reference has been made to the financial year 2016-17, however, it is not
provided that the method of calculation of the threshold limit with
respect to the eventuality referred to in the letter would also be
applicable for grant of rebate with respect to the financial year 2016-17.
In para (ii) after reproducing the tariff order, the manner in which it is to
be calculated for the year 2017-18 has been explained. Even in the
concluding para, it is apparent that there is no provision for the refund of
the amount to the consumers with respect to the financial year 2016-17.
There is no direction for the revision of the electricity consumption
bills of the consumers covered by the tariff order no.7.4.3(i) for the
financial year 2016-17. In fact, on careful reading of the order passed
by the Forum, it is apparent that the Forum held that the benefit of
clarification issued vide CC 14 of 2018 and clarification issued by the
office of the Deputy Chief Engineer, Sales II, Patiala, vide a letter dated
26.03.2019 will enure to the benefit of the consumers for the financial
year 2016-17. In the considered view of this Court, the interpretation
is not in accordance with the spirit of the communication dated
07.03.2018.
This matter can be examined from yet another angle. The
financial year 2016-17 has come to an end. These circulars have been
issued in order to encourage consumption of electricity beyond the
threshold limit during the lean period of the day/night. These circulars
have not been issued in order to confer bonanza upon the consumers
13 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 14
subsequently. The object of issuing such circulars is to promote or
encourage the consumption of electricity during the period when there is
reduction in demand of electricity. In such circumstances, the letter
issued on 07.03.2018, particularly, when the financial year 2016-17
came to an end almost one year prior does not subserve the cause.
Still further, this matter can be examined from yet another
perspective. The circular dated 07.03.2018 cannot be made effective
from retrospective date. The circular is in the form of a subordinate
legislation or administrative instructions. In the absence of a provision
in the Electricity Act, 2003 enabling the Commission to issue circulars
with retrospective effect with respect to grant of rebate or concession in
the tariff rate, it would not be appropriate to interpret the circular in a
manner which defeats the very object sought to be achieved.
Now let us examine the arguments of the learned counsel
for the respondent. First point is with respect to interpretation of circular
dated 07.03.2018 which has already been discussed in detail. Second
argument of the learned counsel is with regard to dismissal of the
clarification by the Commission vide an order dated 10.09.2020. This
Court has carefully gone through the order dated 10.09.2020. The
Commission refused to admit the petition with the following
observations:-
“The provisions of the tariff Order read
with clarification issued by the Commission vide
memo No. 2388 dated 02.03.2018 are clear and
unambiguous. Having lost its case in the CGRF,
14 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 15
PSPCL’s request for interpretation of said provisions
of the Tariff Order appears to be an afterthought. As
per prevailing Regulations, PSPCL has no remedy to
invoke the jurisdiction of the Commission against the
Order of CGRF, Ludhiana by asking for the said
clarification. Therefore, jurisdiction of the
Commission is not attracted to entertain the issue
raised in the present petition. The petition is not fit to
be admitted for hearing and is dismissed
accordingly.”
Thus, it is apparent that the Commission refused to examine
the application for clarification on the ground that the tariff order already
issued does not require any further clarification. Therefore, the aforesaid
order cannot be used to reject the writ petition. Next argument of the
learned counsel is with regard to letter issued by the Chief Engineer
(Commercial ) dated 14.10.2020 Annexure R-1/2. On careful reading of
the aforesaid letter, it is apparent that the Chief Engineer (Commercial)
has only informed the officials with regard to the decision of the Forum.
Such letter cannot be taken to be acceptance of the decision of the Forum
and therefore, operate as estoppel against the petitioner.
Next argument of the learned counsel is with reference to
the order passed by the Commission on 08.12.2020, Annexure R-1/3.
By this order, the Commission, disposed of a petition under Section 142
of the Electricity Act, 2003 read with regulation 2.41 of the Regulations
of 2016 filed by the respondent no.1. Section 142 of the Electricity Act
15 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 16
provides for punishment for non-compliance of directions by the
appropriate Commission. It is in the nature of jurisdiction to get the
orders implemented. On careful reading of the order, it is apparent that
the Commission did not examine the order passed by the Forum on
merits. In view thereof, the aforesaid order does not espouse the cause
of respondent no.1.
In the end, learned counsel representing the respondent
while referring to order passed by the Forum on 25.01.2019 submits that
the order already passed in favour of respondent no.1 is being followed
by the Forum. It is apparent from the reading of the aforesaid order that
the order passed by the Forum on 16.09.2019 has been relied upon
which is the subject matter of challenge in this writ petition. Hence, the
aforesaid order does not help the case of respondent no.1.
This Bench has also carefully gone through the relevant
portion of CC 14 of 2018 reproduced at page 40 of the impugned order.
On careful reading of the aforesaid clarification, it is apparent that the
Commission did not amend the base tariff rate for incremental
consumption upon the threshold limit for financial year 2016-17. Even
the sentence which has been printed in bold letters does not provide that
there would be any change in the base tariff rate notified by the
Commission with respect to the financial year 2016-17. Second para of
the reproduced portion of CC14 of 2018 is dealing with a different
eventuality and does not modify the tariff order dated 27.07.2016 issued
by the Commission for the financial year 2016-17.
Keeping in view the aforesaid discussion, this Court is of
16 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
CWP-20161-2020(O&M) 17
the considered view that the order passed by the Forum is not sustainable
and consequently set aside. The writ petition is allowed.
26.03.2021 (ANIL KSHETARPAL)
rekha JUDGE
Whether speaking/reasoned Yes /No
Whether Reportable Yes / No
17 of 17
::: Downloaded on – 17-01-2022 00:19:00 :::
Comments