Kerala High Court
The K.S.E.B Ltd vs The State Electricity Ombudsman on 26 March, 2025
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WP(C) No. 13420 of 2014
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.M.MANOJ
WEDNESDAY, THE 26TH DAY OF MARCH 2025/ 5TH CHAITHRA, 1947
WP(C) NO. 13420 OF 2014
PETITIONERS:
1 THE K.S.E.B LTD, REPRESENTED BY ITS SECRETARY
(ADMINISTRATION), VYDYUTHI BHAVANAM, PATTOM,
THIRUVANANTHAPURAM, PIN-695004.
2 THE SPECIAL OFFICER REVENUE, THE KERALA STATE
ELECTRICITY BOARD LTD., VYDYUTHI BHAVANAM,
PATTOM, THIRUVANANTHAPURAM, PIN 695004.
BY ADV. SRI.T.R.RAJAN,SC,K.S.E.B.
SRI. B.PRAMOD, SC.
RESPONDENTS:
1 THE STATE ELECTRICITY OMBUDSMAN
PALLIKKAVIL BUILDING, MAMANGALAM-ANCHUMANA
TEMPLE ROAD, OPP KOCHI CORPORATION REGIONAL
OFFICE, EDAPPALLY, KOCHI, PIN 682024.
2 THE CONSUMER GRIEVANCE REDRESSAL FORUM,
ERNAKULAM POWER HOUSE, ERNAKULAM, KOCHI, PIN
682018, REPRESENTED BY ITS CHAIRPERSON.
3 THE DEPUTY CHIEF MECHANICAL ENGINEER
(ELECTRICAL) M/S. COCHIN PORT TRUST,
WILLINGDON ISLAND, KOCHI, PIN 682003.
BY ADVS. SRI.V.ABRAHAM MARKOS
SRI.ABRAHAM JOSEPH MARKOS
SRI.BINU MATHEW
SRI.TOM THOMAS KAKKUZHIYIL
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 26.03.2025, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
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WP(C) No. 13420 of 2014
JUDGMENT
Dated this the 26th day of March, 2025
The Writ Petition is preferred by the Kerala State
Electricity Board (KSEB) and another, against another
instrumentality of the State, i.e., none other than the Cochin
Port Trust being aggrieved by the decision in appeal by the
1st respondent - Kerala State Electricity Ombudsman as per
Ext.P6.
2. It is the case of the petitioner Board that the order
passed by the Ombudsman is without jurisdiction and
authority. It is contended that Ext.P1 notice issued by the
Electricity Board is well within the jurisdiction to rectify its
own mistake.
3. The issue evolved around Ext.P1 notice. Though it is
stated to be a notice, it raised a demand of Rs.20,24,845/-
to be remitted towards the short current charges on or
before 07.10.2010. Such notice was issued as evident from
the 1st reference as well as the first sentence of the notice,
which is based on the audit observation on the basis of the
inspection conducted by the Accountant General for the
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period 2007-2008. Though it is stated that the audit was
conducted for the period from 2007-08, the demand raised
was with effect from 15.05.1999. The notice does not contain
a specific explanation with respect to demanding the charge,
why such demand is raised from 15.05.1999 by reclassifying
the tariff applicable to the 3rd respondent Port Trust from HT
II to HT IV. Since this was a notice without any prior notice
before raising the demand, the 3rd respondent Port Trust
moved the Consumer Disputes Redressal Forum under
Section 42(5) of the Electricity Act, 2003 (for short 'the Act,
2003').
4. By Ext.P5 order, the 2nd respondent has considered
Ext.P3 petition filed by the 3rd respondent. The contention
raised before the 2nd respondent was that the 3rd respondent
was having HT connection at North Tanker Berth, Ernakulam
with Consumer Number 8/815. The contract demand is 300
KVA. The tariff initially fixed was HT II (non industrial, non
commercial with effect from 1993). The major activity of the
Tanker Berth is loading and unloading of cargo from Tanker
Vessels. During an audit, the Accountant General had
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observed that the activities of the 3 rd respondent are
commercial in nature and that should be billed under HT IV
(commercial) tariff. In the light of such audit observation, a
short assessment bill for the period from 05/1999 to 07/2010
amounting to Rs.20,24,845/- was served to the 3 rd
respondent on 22.09.2010 The request of the 3rd respondent
to retain them under HT II tariff was declined.
5. The primary contention taken by the 3rd respondent
before the 2nd respondent was that the reason for grouping
the 3rd respondent along with other commercial consumers
under HT IV is an incorrect one, since the object of pumping
of water to ships is to supplement the maritime industry and
to accomplish safety standards in the Jetties and Berths as
stipulated by the safety authorities. On the other hand, the
consumers who utilize electricity to provide luxury
entertainment by generating profits, fall exclusively under a
different class of consumers than organizations like Cochin
Port Trust. Here, the purpose of utilizing electricity is to
promote the shipping industry of the Country, which is an
essential service.
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6. It is further contended that though the petitioner had
no intention to classify the 3rd respondent under the
commercial tariff, it was done purely based on the advice of
the Accountant General and the competency of the
Accountant General to classify a consumer under a particular
tariff is a matter to be considered.
7. The HT agreement executed between the 3 rd
respondent and the petitioner was for HT II tariff. The
reclassification of the tariff as per Ext.P1, without prior notice
or giving an opportunity to explain or defend their side is
amounts to an arbitrary action. In fact, the petitioner issued
a demand notice at the very first instance itself, but the
challenge is against the capability of the petitioner to raise
demand which is of more than two years old as per the
existing Regulation of Supply Code.
8. The petitioner, on the other hand, contended and
admitted that the Accountant General during its audit for the
period 2007-08 had observed that the Cochin Port Trust is
engaged in commercial activity and as such should be
categorized under HT IV tariff.
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9. The purpose of consumption is mainly for water
pumping in the premises of the tanker jetty and to ship.
Based on the report of Agreement Authority and observation
made in audit, the change of tariff effected to HT IV with
effect from 15.05.1999 is perfectly in order. It is also
admitted that major loads of the system are used for
pumping water to tanker jetty and to ship, on commercial
basis. The pumping of water to ships or tanker jetty is a
different activity from the activity described under HT tariff,
which is commercial in nature. The payment made by the
ships or Refineries to the Port Trust is purely on commercial
basis. Therefore, change in the tariff was justified.
10. On the basis of the version given by the 3 rd
respondent the petitioner has pointed out before the 2 nd
respondent that though the pumping operations are finished,
they are indulged in pumping the refined products like
Naphtha, Petrol and diesel on the basis of commercial
charges. The Cochin Port Trust is collecting wharfage and
vessel related charges from the Cochin Refineries Ltd., on
commercial basis. Further it is pointed out that the power
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supply is mainly used for lighting various office buildings,
walkway of berth and operating the water pumps etc. It is
admitted by the petitioner that the same has been confirmed
during the site inspection conducted on 22.07.2011. The 3 rd
respondent had also requested to reduce their contract
demand to 300 KVA to 150 KVA. Under such circumstances,
already necessary directions were given to them regarding
the procedures to be done for the same. However, Audit
Wing of the Accountant General has categorized the Cochin
Port Trust as a commercial establishment and hence, the
tariff applicable is HT IV- commercial is reasonable and
justified for the petitioner.
11. The 2nd respondent considered the arguments
raised on both sides. However, after analyzing the
arguments, it entered into a decision that the 3 rd respondent
has to be treated under HT IV tariff with effect from the Tariff
Notification dated 27.11.2007 and the issued short
assessment is to be revised to that extent and the interest
during the pendency of the litigation was also to be waived.
Such direction was issued as per Ext.P5 on negating the
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contentions raised by the 3rd respondent to a great extent.
Being aggrieved by Ext.P5, the 3rd respondent approached
the 1st respondent - the State Electricity Ombudsman.
12. The argument raised before the 2nd respondent was
reiterated before the 1st respondent. It is observed by the 1 st
respondent that the dispute is with respect to change of tariff
from industrial rate to commercial rate in the case of an HT
service connection provided to North and South tanker jetty
berths belonging to the 3rd respondent and the short
assessment bill issued with retrospective effect from 1999,
which was at a higher rate of tariff to recover the revenue
loss occurred to KSEB. However, it is also observed that such
reclassification was carried-out on an audit objection of the
Accountant General of Kerala alleging that the Cochin Port
Trust is a commercial establishment and they have to be
assigned HT IV tariff. It is also observed that such
observation of the Accountant General was made without an
inspection of site and is based only on assumption, which
was not a correct procedure to put into effect tariff change of
a consumer.
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13. It is further observed that the tariff has to be fixed
in accordance with the purpose for which electricity is being
utilised and in consistence with tariff rules laid down by the
Regulatory Commission. The 1st respondent also considered
the contentions of the 3rd respondent that the power
allocated is mainly used for lighting purpose and pumping
water for various uses, including drinking. It is also clarified
that earlier they were using fire pumps and other small
pumps for activities like foam filling, fuel filling etc; were now
being switched over to hydraulic system.
14. The authority has also considered the arguments of
the 3rd respondent, that it is a quasi-government institution,
a service organization and its activities are not for
commercial purpose. Therefore, it comes under non
industrial, non commercial category under the State
Electricity Regulatory Commission Tariff plan, which is to be
treated at par with public offices run by Central or State
Governments. Since no specific tariff was assigned
exclusively for seaports either in any of tariff category lists of
Regulatory Commission, the only available tariff is HT II.
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15. The 1st respondent has also observed that no tariff
was assigned exclusively for seaports in the tariff Rules as in
the case of airports. The utilization of electricity in airports
cannot be compared with the electricity utilized at the Cochin
Port Trust berths. It is also observed that the decision to
assign HT IV tariff was purely based on the audit observation
of Accountant General. The decision of the KSEB is based on
the verdict in OPNo. 5930 of 1985 of this Court dated
05.8.1987, wherein it was held that the party has consumed
the electricity with liability for payment of such charges as
are due in law and if there is a mistake in categorization or
there is an under billing, it is always open to the KSEB to
rectify the mistake and to demand the proper charges due
from the consumer. The 1st respondent authority
distinguished the decision rendered by this Court as
aforementioned by stating that, here the issue is not with
respect to rectification of mistake but the change of
classification and consequential issuance of short assessment
bill. Therefore, the issue decided by the 1 st respondent is
whether the activities of the seaport comes under the tariff
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class of non industrial, non commercial or under commercial
tariff and if so from which date it can be charged.
16. After analyzing the arguments of the 3rd
respondent, the authority entered into a finding that the
activity of the 3rd respondent cannot be considered as part of
industrial activity or commercial activity. It also considered
the report dated 23.03.2013 furnished by the Deputy Chief
Engineer, Electrical Circle, Ernakulam after an inspection in
the premises of the Cochin Port Trust. The report revealed
that there were 220 HP motors for pumping fresh water to
ship. In addition to this, there were about 30 numbers of 1
HP motors for operating the valves of crude oil pipes using to
pump crude oil from ship to Refinery. The yard and street
lighting is of approximately 30 KW sodium vapour lamps of
various wattage. There are few offices functioning which
were also electrified from HT connection. Emphasis is
supplied to an observation of the report of the Deputy Chief
Engineer that "no commercial activity apart from crude oil
pumping and allied activities can be found there". It is also
observed in such enquiry report that "earlier there were
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firefighting pumps which were connected to the HT
connection, but now they are dismantled". It is also reported
that as per Regulation 19(5) of the Terms and Conditions of
Supply, 2005 "When there are changes in the contract
demand/connected load, tariff...... the Board (licensee) may
require in writing inform the consumer to execute a fresh
agreement in the form applicable within 30 days of such
change and the consumer shall comply with the same."
17. Considering the report submitted by the Deputy
Chief Engineer of the petitioner, the arguments raised and on
the assessing the evaluation made by the 2 nd respondent, the
1st respondent has taken a decision that electricity energy is
used mainly for pumping water to the ships anchored in the
tanker jetty. The tariff of the said activity will not call for a
commercial tariff and the tariff for pumping water for non
agricultural purpose is given as HT I industrial. But here, the
party has other activities along with pumping water to ships
and in such case of mix of various activities of electric power
usage, higher of the individual tariff is assigned for the
combination, till it is segregated.
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18. The 1st respondent has come to a conclusion, which
reads as follows:
"In this case, the other activities consists of,
connecting and disconnecting of loading arms to ships,
which is a facility arrangement to pump oil (by ship's
motors using its own power) and the lighting provided
to office and jetty walkways. The said activities or
purpose for which electricity is used does not
correspond to any commercial nature. The claim of
the appellant that they are providing essential services
required for the operation of oil jetties seems to be
correct and hence, I am of the view that the consumer
belongs to the category of HT II(non industrial/non
commercial) only."
19. On the basis of above findings, Ext.P5 order of the
CGRF was set aside and directed the petitioner to withdraw
the demand notice issued on 20.10.2011 as per Ext.P6.
20. Ext.P6 order is under challenge. The challenge
raised by the learned counsel for the petitioner is that the
activity of the 2nd respondent is not recognized under the
Kerala State Electricity Regulatory Commission (KSERC). The
activity of the 3rd respondent is purely commercial, since they
are accepting amounts for the service rendered by them to
the Cochin Refinery. An analogy has been drawn by the
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learned counsel for the petitioner that it cannot be
distinguished from the activities carried out in an airport. The
airport is classified by the KSERC under commercial tariff.
Therefore, the activities of the 3rd respondent also cannot be
treated differently from the airport.
21. The other argument raised by the learned counsel
for the petitioner is in the light of reported decision in
Sainalabdeen v. Kerala State Electricity Board [2006
(1) KLT 529]. For fixation of tariff no power is vested with
the Board under the Act 2003. The power to fix a tariff is
vested with the KSERC. However, such decision rendered by
the Division Bench of this Court is with respect to cashew
packing units. After a detailed examination of the activities
carried out in the cashew factory, this Court held, after
coming into force of the Act 2003, it is no longer open to the
Board to unilaterally increase the tariff. Same can be done
only after getting approval from the Commission. No power
has been conferred on the Board under the Act, 2003 to
resolve any dispute with regard to category under which
particular group of establishments falls; either industrial or
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commercial.
22. In response, the learned counsel for the respondent
submitted that the Electricity Act provides a Dispute
Resolution Forum under Sec.42(5). The petitioners issued a
demand notice decades after the power allocation as per
Ext.R3(a) and entered into an agreement for HT connection
as per Ext.R3(b). In Ext.R3(b), the schedule describes the
activities involved in the 3 rd respondent's premises. Against
item 2, it is specified that fire fighting and lighting. As a
matter of fact, these fire fighting activities were completely
abandoned and the category is mentioned as 'industrial' and
the contract demand is 300 KVA at 11000 volt.
23. Ext.R3(c) is the schedule of tariff and terms &
conditions for retail supply by KSEB with effect from
01.12.2007. The high tension connections are distinguished
under HT Industrial, HT II non industrial/non-commercial,
the high tension (HT-III), Agriculture high tension (HT-IV)
commercial and HT V seasonal consumers.
24. On considering the nature of usage and the
connected load, the 3rd respondent was classified as HT II
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non-industrial and non-commercial. Such classification was
effected after conducting necessary inspections by the
authorities of the petitioner and entering into an agreement.
As rightly held by the Ombudsman and in the report of the
Chief Engineer obtained by the Ombudsman as per
Regulation 19(5) of the terms & conditions of Supply, 2005
"When there are changes in the contract demand/ connected
load, tariff.... the Board (licensee) may require in writing
inform the consumer to execute a fresh agreement in the
form applicable within 30 days of such change and the
consumer shall comply with the same." Instead of this the
petitioner Board has straight away issued Ext.P1 order of
demand. Therefore, Ext.P6 order of the Ombudsman is
perfectly justified. Such order was passed after obtaining a
report from one among the Deputy Chief Engineers of the
petitioners themselves. Whereas the audit wing of the
Accountant General had entered into a finding to classify the
petitioner under class HT-IV only under conjectures and
surmises. It is not stated whether they have conducted a
proper inspection. This aspect has also been found by the
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Ombudsman.
25. Since an appeal provision is provided under the Act,
2003 under Section 42 (6) to the Ombudsman against the
order of CGRF, no such dispute can be raised to refer the
matter to the KSERC. In this regard, the 3 rd respondent has
also brought my attention to the definition of 'complaint'
mentioned in the notification issued by the KSERC, where
under 2(f), 'complaint' is defined, which means, grievance
made by the complainant in writing on 7 categories. The
complaint of the 3rd respondent comes under category (iv).
26. On the other hand, Regulation 6 of the said
Regulations describes the jurisdiction of the Forum, which
says subject to the other provisions of these Regulations, the
Forum shall have jurisdiction to entertain the complaints
within the entire area of distribution licensee. If there is more
than one forum in the same licensee area, then the area of
jurisdiction may be decided by the licensee in accordance
with Regulation 3(2). Under regulation 19, the powers and
duties of the Ombudsman is described, which says to receive
the representations against the order of the Forum and
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consider such representation and facilitate their satisfaction
or settlement by agreement through conciliation and
mediation between the licensee and complainant or by
passing an award in accordance with these Regulations.
27. It is further contended that Regulation 24 provides
power of the Ombudsman to call for information. In
compliance with all these provisions, the Ombudsman has
decided, to invoke power under Regulation 24, to call for a
report from the one among the Deputy Chief Engineers of the
petitioner. After conducting inspection and evaluating the
contentions raised before it as well as in the report and
considering the order passed by the 2nd respondent under
Regulation 19, it has taken a decision as per Ext.P6, which
does not have an infirmity.
28. I have heard Sri. B.Pramod, the learned Standing
Counsel for the petitioner and Sri.Isaac Thomas, the learned
Standing Counsel for the 3rd respondent.
29. The primary question to be decided by this Court
is, whether the order passed by the Ombudsman is beyond
its jurisdiction or it is perverse or there is violation of
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principles of natural justice. This issue has already been
considered by the apex court in various decisions, in which
the decision in B.K. Muniraju v. State of Karnataka and
others [(2008) 4 scc 451] it was held in that:
"22. It is settled law that a writ of
certiorari can only be issued in exercise of
extraordinary jurisdiction which is different from
appellate jurisdiction. The writ jurisdiction extends
only to cases where orders are passed by inferior
courts or tribunals or authorities in excess of their
jurisdiction or as a result of their refusal to exercise
jurisdiction vested in them or they act illegally or
improperly in the exercise of their jurisdiction
causing grave miscarriage of justice. In regard to a
finding of fact recorded by an inferior tribunal or
authority, a writ of certiorari can be issued only if in
recording such a finding, the tribunal/authority has
acted on evidence which is legally inadmissible, or
has refused to admit an admissible evidence, or if
the finding is not supported by any evidence at all,
because in such cases the error amounts to an
error of law. It is needless to mention that a pure
error of fact, however grave, cannot be corrected
by a writ."
30. Going by the materials and averments and
analysing the arguments raised across the Bar, it appears
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that Ext.P1 is not at all a notice, but is a demand raised by
the petitioner. It is pertinent to note that it is not on finding
a mistake occurred from the part of the petitioner by its own,
such demand is created. Whereas such demand, as is evident
from the reference of Ext.P1 as well as the first sentence of
Ext.P1, is raised on the basis of audit observations and the
inspections conducted by the Accountant General for the
period 2007-2008. However, I am not convinced with the
power of the Accountant General to direct the petitioner to
classify a consumer under a particular tariff without
conducting an inspection and without the aid of any expert
body. Here, the observation made by the Accountant General
was purely on conjectures and surmises which cannot be
accepted. On the basis of such observation, a demand has
been raised by the petitioner by Ext.P1 even without a prior
notice.
31. However, the demand is raised with effect from
15.05.1999. As it is rightly reported by the Deputy Chief
Engineer of the Electricity Board to the 1 st respondent that as
per Regulation 19 (5) of the terms and conditions of Supply,
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2005 ."When there are changes in the contract
demand/connected load, tariff....... the Board (Licensee) may
require in writing inform the consumer to execute a fresh
agreement in the form applicable within 30 days of such
change and the consumer shall comply with the same".
32. Here Ext.R3(b) is the agreement entered into
between the petitioner and the 3rd respondent as rightly
contended and admitted by the Ombudsman. If the
petitioner wants to change the tariff, this procedure would
have been adopted by the petitioner, instead of straight
away issuing a demand, that too, period much prior to
issuance of notice, without assigning any reason for
demanding the same retrospectively. For this, the
contention of the petitioner was that as per Section 56(2) of
the Act, 2003, the demand will become due for a consumer
only from the date of raising such demand, and two years
period of limitation is to be considered accordingly.
Therefore, no such limitation of two years can be contended.
This argument cannot be countenanced in the light that
Ext.P1 was issued all of a sudden even without prior notice to
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the consumer, which is against Regulation 19(5) and is in
violation of the principles of natural justice.
33. The contention of the petitioner on the strength
of reported decision in Sainalabdeen's case supra cannot
be accepted, because no such assimilation could be drawn
between the functioning of cashew factory and the Cochin
Port Trust. The ratio decided in that is with respect to
decision of tariff, where as in the case on hand it is a decision
to be taken with respect to change of classification from HT
II to HT IV.
34. Going by the provisions of notification issued by
the KSERC as per notification No.1/1/KERC-2005/III dated
06.10.2005, the Ombudsman has jurisdiction to receive the
representation against the order of the Forum and consider
such representation and facilitate their satisfaction or
settlement by agreement, through conciliation and mediation
between the licensee and complainant or by passing an
award in accordance with these Regulations. Moreover,
Section 42(6) of the Act, 2003 entitle an aggrieved consumer
to approach the Ombudsman and to redress their grievance
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against an order passed by the CGRF under Section 42(5).
35. In accordance with the statutory provisions, the
Ombudsman has exercised its power after adducing evidence
by obtaining a report through the Deputy Chief Engineer of
the 1st respondent after conducting an inspection. Therefore,
the order passed by the Ombudsman cannot be termed as
beyond jurisdiction and perverse. Hence, I do not find any
reason to interfere with Ext.P6.
In the aforementioned findings, I cannot accede to
the contention of the petitioner that the Regulatory
Commission is the authority to decide the matters in the case
of such disputes. On the aforementioned circumstances the
writ petition is dismissed.
Sd/-
P.M.MANOJ
JUDGE
das
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APPENDIX OF WP(C) 13420/2014
PETITIONER EXHIBITS
EXHIBIT P1- TRUE COPY OF THE COMMUNICATION DATED
22-09-2010 ISSUED BY THE 2ND PETITIONER TO THE
COCHIN PORT TRUST.
EXHIBIT P2- TRUE COPY OF THE COMMUNICATION DATED
20-1-2011 ISSUED BY THE 2ND PETITIONER TO THE
COHIN PORT TRUST.
EXHIBIT P3- TRUE COPY OF THE COMPLAINT IN CGRF-
CR/COMP. 12/12-13 FILED BY THE 3RD RESPONDENT
BEFORE THE 2ND RESPONDENT.
EXHIBIT P4- TRUE COPY OF THE STATEMENT OF FACTS
SUBMITTED BY THE 2ND PETITIONER IN THE
CGRF-CR/COMP. 12/12-13.
EXHIBIT P5- TRUE COPY OF THE ORDER DATED 20-6-
2012 OF THE 2ND RESPONDENT IN CGRF-CR/COMP.
12/12-13.
EXHIBIT P6- TRUE COPY ORDER DATED 28-6-2013 OF
THE 1ST RESPONDENT IN APPEAL PETITION NO.
P/293/2012.
