Sabic Reserch & Technolony Pvtltd vs Gujarat Urja Vikas Nigam Limited
2022 Latest Caselaw 9365 Guj

    C/FA/490/2003                               CAV JUDGMENT DATED: 21/10/2022




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                  R/FIRST APPEAL NO. 490 of 2003
                                With
           R/SPECIAL CIVIL APPLICATION NO. 9166 of 2005

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE N.V.ANJARIA

and
HONOURABLE MR. JUSTICE SAMIR J. DAVE

==========================================================

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the judgment ?

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== SABIC RESERCH & TECHNOLONY PVTLTD Versus GUJARAT URJA VIKAS NIGAM LIMITED ========================================================== Appearance:

MR SP MAJMUDAR(3456) for the Appellant(s) No. 1 MS LILU K BHAYA(1705) for the Defendant(s) No. 1 ==========================================================

CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE SAMIR J. DAVE

Date : 21/10/2022

CAV JUDGMENT (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)

C/FA/490/2003 CAV JUDGMENT DATED: 21/10/2022

The captioned First Appeal and Special Civil Application are interactive in their facts and controversy involved. They were ordered to be notified together and were heard together. Therefore, both are treated together by this common judgement and order.

1.1 Heard learned advocate Mr. Shakti Jadeja for learned advocate Mr. S.P. Majmudar for the appellant and the petitioner in the First Appeal and Special Civil Application respectively and learned advocate Ms. Lilu K. Bhaya for respondent Gujarat Urjha Vikas Nigam Ltd. in both, at length.

2. The First Appeal under Section 27 of the Electricity Regulatory Commissions Act, 1998 by the appellant M/s. Sabic Research & Technology Pvt. Ltd. is directed against the order dated 25.09.2002 of the Gujarat Electricity Regulatory Commission at Ahmedabad in Petition No. 62 of 2002, which was filed before the Commission by the appellant Company.

2.1 On the other hand, in the Special Civil Application, the prayer made by the petitioner Company was to set aside the classification in Commercial Circular No. 767 dated 13.07.2004 wherein the research and development units recognised by the Ministry of Science & Technology came to be included in the category of HTP-I rate.

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2.2 It was further prayed to direct the respondent Gujarat Electricity Board (now Urjha Vikas Nigam Ltd.) to charge the petitioner under HTP I rate since its inception on the ground that the respondent Board had unilaterally changed the classification of the petitioner Company and that since the Company was engaged in research activity, which was included in HTP I rate as per the circular in question.

2.3 The petitioner next prayed to set aside, by inserting prayer by way of amendment, the tariff order dated 25.06.2004 passed by the Gujarat Electricity Regulatory Commission, insofar as it extended the benefit of HTP I rates to recognised research and development units only.

Facts relating to First Appeal

3. In the petition taken out by the appellant M/s. Sabic Research & Technology Pvt. Ltd. before the Electricity Regulatory Commission, it was the case that the appellant Company was running research establishment and was availing electricity supply from the then Gujarat Electricity Board. The Company which was carrying out research in petrochemical field, had entered into agreement with Gujarat Electricity Board for supply of High Tension power supply of 2400 KVA to cater requirement of research activity. As per clause 8(a) of the said agreement dated 27.03.2000, the parties agreed for applying tariff schedule HTP-I.

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3.2 The electricity connection was given from 19.01.2002 to the appellant company. The company was billed for this Tariff HTP-I for the months January and February 2001. it was the case that from March 2001, GEB unilaterally changed the applicable tariff from HTP-I to HTP-II(A). According to their case, this resulted into additional financial burden on the appellant Company. The case of the appellant was that it did not fall within the category of HTP- II(A), which was higher tariff rate, but it fell within the category of HTP-I.

3.2 It was the contention raised before the Regulatory Commission that it had no jurisdiction to deal with the subject matter. It was contended that once the tariff was determined, its applicability was subject matter between the GEB and consumer and that the Commission had no role to play in that regard. It was submitted that release order for electricity supply was already issued and that the company was informed that it would be charged for HTP-II(A) tariff.

3.3 The said stance on behalf of the Board about the absence of jurisdiction and applicability of HTP- II(A) tariff was countered by the appellant Company by filing addenda to the original petition, in which it was firstly contended that the Commission was enjoined to safeguard the interest of the consumers

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under Section 29(2)(e) of the Electricity Regulatory Commissions Act, 1998.

3.4 It was stated that the tariff determination should be fair and non-discriminatory. It was secondly submitted that the regulation 78 of the Gujarat Electricity Regulatory Commission (Conduct of Business) Regulations, 1999, provided that no utility can charge its consumers any tariff without approval of such tariff by the Commission. Regulation 89 was relied on. Thirdly, it was submitted that Section 45 of the Electricity Commission Act, provided punishment when the directions were not complied with or deemed not to have been complied with as per Regulation 89.

3.5 The Gujarat Electricity Regulatory Commission negatived the contention of the jurisdiction to hold that it had the jurisdiction. In that regard, the Commission observed,

"The most important component of the argument is that once the tariff ts determined its applicability is the subject matter between the consumer and the utility and that the Commission has no role to play in the subsequent issues arising there from. This raises important question regarding role of the Commission. The Commission's functions have been laid down in Sections 22(1) and 22(2) of the Electricity Regulatory Commissions Act, 1998. These include the determination of tariff for transmission and supply, to regulate power purchase, to promote efficiency and economy, to regulate operation of power system, to

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regulate the working of licensees and other persons authorized or permitted to engaged in the electricity industry and to promote the working of such persons and licensees in an efficient, economical and equitable manner, among numerous other functions. It will thus, be very: clear that the Commission is not just a tariff determining authority. It has been charged with the functions of regulation not only of the power system of the State, but also of the working of the licensees and other persons engaged in the business of supply of electricity. One of the important components of the regulation is to ensure that the consumers are supplied electric power at the rates determined by the Commission and also the service is efficient and the working is conducted in an economical manner."

3.5.1 It thus held that the provisions under Section 45 of the Act for enforcement of the directions of the commission as well as Regulations 78 and 89 of the Conduct of Business Regulations were framed in such context, inasmuch as the contract of supply entered by the utility are not merely in private domain but they assume significance since public utility has a public accountability. It was finally held that the Commission had jurisdiction to regulate the working of licenses and any issue involved within the ambit of Regulations, which would included whether the tariff is rightly determined or not.

3.6 This court finds no error in the reasoning supplied and view taken by the Commission on the above count.

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3.7 About the aspect whether HTP-I tariff would apply or HTP-II(A) tariff would apply, the Commission observed that it was a research institution in commercial nature and since the research institutions are not mentioned either in tariff rate category of HTP-II(A) or HTP-II(B), it should be governed by rate of category HTP-I tariff.

4. The Electricity Regulatory Commission concluded that since the appellant was engaged entirely in research activity, it would be governed by Tariff HTP-II(A)and the said rate of tariff was correctly applied to it. The case of the appellant that it should be charged in HTP-I Tariff was rejected.

4.1 In coming to such conclusion, the Regulatory Commission traced the applicability of High Tension tariff to observe that it was originally conceived for manufacturing industry, which used to draw power at high tension and with the paying capacity. The high tension tariff, which was made applicable in earlier times only to the industries engaged in the manufacturing activity came to be extended to the other organisations using large quantum of electricity at high voltage.

5. The Commission in its order discussed to state,

"The basic principle for this division was always that those engaged in manufacturing activities will be covered under HTP-I and all others will be covered under HTP-II. This HTP- II was divided into two classes and HTP-II(B) was provided only for township, cantonment and other institutions for specific consideration

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and the HTP-II(A) continued for the rest of the consumers hitherto governed by the rate HTP-II. The HTP-II(A) tariff was thus mainly to cater to all those consumers who were earlier governed by HTP-II tariff. The applicability of HTP-II(A) tariff under the present orders is for hotels, amusement parks, resorts, water parks, military installations, aerodromes, cinemas, auditoriums, banks, studios, offices, film production etc. The word "etc" has been used here to cover all similar consumers and this has to be viewed in the historical context, viz., all those not engaged in manufacturing activity. Indeed, looking at the vastly different consumer base engaged in entirely diverse activities, there is no other thing common among them except that they are not engaged in manufacturing activities. In a classification such as this, it is not possible to mention every Class of consumers specifically and hence the interpretation has to be necessarily in the context in which the tariff ts being successively applied over the years."

6. The Commission in its order finally noticed to observe that other consumers engaged in the research work were applied different tariff rates, therefore, the Commission recommended the Board to take necessary steps to ensure that all similarly situated organisations are governed at HTP-II(A) rate tariff. The relevant observations were as under,

"14. One more aspect of the matter requires our attention. The petitioner company has brought to our notice that a number of other consumers engaged in research work are being governed under the different tariff rates. They also mentioned the names of a few consumers and the respondent also could not counter this argument effectively. We are, of the view that from the announcement of the new tariff on 10.10.2000 all the organizations engaged in research and availing supply at high voltage should be

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governed at the tariff HTP-II(A). To apply them any other rate would amount to discrimination and incorrect application of the tariff rates. We, therefore, direct the Board to now take necessary steps to ensure that all similarly situated organizations are governed by the rate HTP-II(A)."

7. Thus, while holding in favour of the respondent about applicability of tariff to the petitioner Company, the Commission has gone in detail about division applied in determining the tariff. It was finally concluded that since the appellant was engaged in research activity, it would be governed by Tariff HTP-IIA and the said tariff for the month of January and February 2001 came to be upheld. Thereafter, the respondent Board has started to charge the tariff on the basis of HTP-IIA category.

7.1 The reasoning of the Commission, in particular, produced in paragraph 5, could be said to be eminently proper and conclusion arrived at to dismiss the appeal could not be faulted.

Facts in Special Civil Application

8. As stated above, Special Civil Application was filed to challenge the Commercial Circular No. 767 dated 13.07.2004, which was issued subsequently since in this circular, though the units recognised by the Ministry of Science and Technology were included for the purpose of HTP-I Tariff, the petitioner unit stood excluded as it was not recognised by the Ministry of Science and Technology. The petitioner prayed that it should be applied HTP-I rate and should be categorised accordingly.

8.1 In the Special Civil Application, it was contended by the petitioner that differentiation made in the

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circular between the research and development units such as the petitioner company on one hand and research and Government units recognised by the Ministry of Science and Technology on the other hand is arbitrary and irrational and it violated Article 14 of the Constitution. It was submitted that the petitioner Company was similarly placed with other research and development units recognised by the Ministry of Science and Technology. It was submitted that earlier the petitioner company was not classified and it had already put up its case before the Board to add the research and development units in HTP-I category.

8.2 Section 62 of the Electricity Act, 2003 was relied on to contend and submit that as per the mandate of the said provision, the appropriate commission while determining the tariff under the Act is not expected to show undue preference to any consumer of electricity while determining the tariff and that the differentiation can be only on the count of load factor, power factor, voltage, total consumption of electricity, nature of supply and purpose for which the supply is required, etc. It was submitted that the Commercial Circular had overriding effect over Section 62 of the Electricity Act, 2003.

8.3 It was submitted that even otherwise, the petitioner Company was entitled to be considered for HTP-I rate under the agreement and by otherwise classifying the petitioner Company, it will have to shell out huge amount of money. It was further contended that by order dated 25.06.2004, the respondent Board classified recognised

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research and development units for applying HTP-I rates on the ground of difficulties faced by consumers engaged in research and development activities. It was submitted that when the petitioner Company fall under the same criteria, it ought to have been given benefit of HTP-I.

8.4 Opposing the petition and prayers made therein, learned advocate for the respondent Board (now Urjha Vikas Nigam Ltd.) relied upon the affidavit-in-reply filed by it. It was contended that the remedy of appeal under Section 111 of the Electricity Act, 2003 was available to the petitioner and the said alternative remedy ought to have been exhausted. The Circular dated 25.06.2004 was relied upon for its contents that the same was issued to obviate difficulties faced by consumers engaged in research activities and that it was decided by the Commission to cover the research and development unit in HTP-I category and therefore, research and development units recognised by the Department of Scientific and Industrial Research were included to be in category HTP- I.

8.5 It was denied that GERC had shown any undue preference to any consumer of electricity while determining the tariff. It was denied that the petitioner was similarly situated to the research and development unit, which were recognised by the Ministry of Science. It was submitted that the petitioner was differently classified for HTP-II A category.

9. The Commercial Circular No. 767 dated 13.07.2004 issued by the Gujarat Electricity Board pursuant to revision of tariff by the order of the Electricity

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Regulatory Commission is extracted hereunder for its relevant part,

The Gujarat Electricity Regulatory Commission (GERC) vide its Order dated 25.6.2004 has determined the revised tariff for all categories of G.E. Board's consumers (other than licensees/ sanction holders). A copy of 'revised tariff schedule is attached herewith. New tariff schedule will be effective after seven days from the date of publication in Daily News Papers. The Public Notice is published on 13.7.2004 in all leading News Papers. Therefore, the revised tariff shall be effective from 21.7.2004. This circular is issued to convey the instructions for implementations of revised rates. The GERC has also determined new formula for passing of incremental cost on account of increase in price of fuel and price of power purchase (FPPPA). The formula is applicable on quarterly basis starting form July 2004. Accordingly computation of FPPPA for the quarter July 2004 to Sept. 2004 will be intimated to field offices for charging the same in the bills for the month of October, November & December 2004.

Some Special Tariff Rates for few consumers as mentioned in the tabl enclosed herewith are in existence. GERC in its order terminated such special tariff and directed GEB to charge these consumers at rates prescribed by the Commission depending upon the appropriate tariff category to which they should belong. Any other special tariff (e.g. Bricks manufacturer), if any, shall also be discontinued w.e.f. 21.7.2004. The salient features and gist of the revised tariff are narrated below:

RATE HTP-I:

This tariff will be applicable for supply of electricity to HT consumers contracted for 100

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kVA and above for regular power supply and requiring the power supply for the purposes not specified in Rate HTP-II(A) and HTP-II(B). Research & Development Units recognised by the Ministry of Science and Technology, Department of Scientific and Industrial Research and Government, shall pay at HTP-I rates.

9.1 Thereafter, the details of demand charges to be levied, billing method, energy charges, time of use charge, rebate and other relevant aspects were provided in the circular. The Circular recites that the new formula was applicable from July 2004.

9.2 It was given out that in letter dated 15.01.2001 for release of connection addressed to the petitioner, it was clearly mentioned that before releasing the connection, it was clearly mentioned that the petitioner was classified in HTP-IIA category. But at the time of entering into agreement, by oversight and inadvertence, what was stated was HTP-I category. It is the specific case of the respondent that the letter dated 07.02.2001 whereby the petitioner was classified in HTP-I category was a sheer mistake. Now the fact is not in dispute that the petitioner was charged for HTP-I period from 19.01.2001 to 28.02.2001 and from March 2001, the petitioner was charged as per HTP-IIA.

9.3 It is the stand of the respondent that the correct tariff applicable to the petitioner throughout was HTP- IIA. There is no dispute that the petitioner-appellant Company has been paying the tariff at the rate of HTP-IIA category, even subsequent to 2004, i.e., after issuance of the circular. The determination of tariff in Circular dated 13.07.2004 and non-inclusion of the petitioner in

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HTP-I category and the inclusion of research and development units recognised by the Ministry of Science for such tariff is an expert decision based on host of factors considered relevant by the Gujarat Electricity Regulation Commission. It was by order dated 25.06.2004 of the Commission that the revised tariff and categories were determined. The decision is an expert decision and could be said to be in policy realm. It may be noted that the petitioner paid the tariff as per HTP-IIA category from March 2001. Thereafter, till the year 2010, continued to pay in the same category. It is an admitted position that the petitioner has been paying the tariff at the rate applicable to the HTP-IIA category from March 2001 till date.

9.4 The petitioner has filed rejoinder affidavit as well as additional/further affidavit. While in the rejoinder affidavit, the contention about unreasonable classification was raised, in the further affidavit dated 09.03.2021, it was stated that till the year 2009, respondent had been issuing bills as per HTP-IIA tariff rate. However, from 2010, respondent changed the tariff rate from HTP-IIA to HTP-I and had been charging tariff rate as per HTP-I till 2017.

10. Any of the relief prayed for by the petitioner in Special Civil Application could not be granted.

11. For the foregoing reasons and discussion, the challenge in the First Appeal as well as the prayers made in the Special Civil Application, both stand meritless. First Appeal is dismissed and Special Civil Application

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is rejected. Rule discharged in Special Civil Application. No order as to costs.

(N.V.ANJARIA, J)

(SAMIR J. DAVE,J) BIJOY B. PILLAI