ASSOCIATION OF INDUSTRIAL ELECTRICITY USERS versus STATE OF A.P. AND ORS.

Citation: [2002] 2 S.C.R. 273 · Decided: 06-03-2002 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Dismissed

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Judgment (excerpt)

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ASSOCIATION OF INDUSTRIAL ELECTRICITY USERS 
A 
v. 
STATE OF A.P. AND ORS. 
MARCH 6, 2002 
[B.N. KIRPAL, SlIIVARAJ V. PATIL AND 
BISHESHWAR PRASAD SINGH, JJ.] 
Andhra Pradesh Electricity Reforms Act, 1998-Sections 11 and 26. 
Regulatory Commission-Established under the Act-Fixation ofTariiff 
for Licensees under the Act-Section 26(5}and Section 26(9)-Distinction 
between-Explained. 
B 
c 
Classification of Consumers-Industrial and domestic-Taking into 
consideration the functions of the Commission and relevant provisions of the D 
Act for fixation of tarif-Consumers could be ca1egorised as Industrial, Non-
industrial Agricultural or Domestice consumers. 
Constitution of India: 
Article 226-Review Jurisdiction of High Court-Invoking of-Fixing of E 
tariff and providing for cross subsidy are policy matters-Hence should not 
ht! ;nterfered with unless power exercised is shown to be arbitrary or ex-facie 
bad in law. 
·The Electricity Regulatory Commission set up under the Andhra F 
Pradesh Electricity Reforms Act, 1998 had determined tariff for the period 
1st April, 2000 to 31st March, 2001. This Order was challenged and the High 
Court dismissed the Writ Petitions and upheld the tariff as fixed by the 
Commission. Hence these appeals. 
During the pendency of these appeals, the tariff was replaced and the G 
revised tariff not been challenged because no relief could be granted for the 
expired period for which tariff was fixed. Thus the appeals have become 
infructuous. But keeping in view the importance of some of the issues 
pertaining to interpretation of Section 26 of the Act, this Court considered 
the matter further. 
273 
H 
274 
SUPREME COURT REPORTS 
[2002] 2 S.C.R. 
A 
It was contended for the appellants that tariff was required to be fixed 
in terms of Section 26(7) and 26(9) of the Act and accordingly there cannot 
y-
be any classification of consumers of electricity and also no undue preference 
can be given to any consumer of electricity while fixing the tariff. 
B 
Dismissing the appeals, the Court 
HELD: 1.1. There seems to be some overlapping between sub-section 
(S) and sub-section (9) of Section 26 of the Andhra Pradesh Electricity 
Reforms Act. But on a careful reading of sub-section (9), it is found that sub-
section (9) comes into play only when during the financial year an amendment 
c to the tariff or a new tariff is proposed. Reading sub-section (S) and sub-section 
~ 
(9) together, it appears that annual exercise with regard to the fixation of tariff 
has to be undertaken under sub-section (S), but if for any reason there is a 
new tariff which is to be proposed or an amendment is to take place during 
the financial year, then the procedure set out in sub-section (9) of Section 26 
has to be followed. It is for this reason that while under Section 26(5) it is 
D stated that the particulars are to be supplied by the licensee at least three 
months before the ensuingfinancial year, on the other hand under Section 26(9) 
the particulars are to be supplied at least three months before the proposed 
date of implementation. By use of the words 'proposed date ofimplementation' 
in contradistinction to the use of the words 'ensuing financial year' occurring 
E in sub-section (5), the indication clearly is that sub-section (9) will apply only 
in case of amendment during a financial year. For normal fixation of tariff 
with. or without modification, the exercise which has to be undertaken is under 
sub-section (5) of Section 26. [280-F-G-H; 281-A] 
1.2. Sub-section (9) of Section 26 does state that the tariff which is ~ixed 
F shall not show undue preference to any consumer of electricity but then the 
said sub-section itself permits differentiation according to the consumer's load 
factor or power factor, consumer's total consumption of energy during the 
specified period, time at which the supply is required or paying capacity' of 
category of consumers and the need for cross-subsidisation or such tariff as 
G 
is just and reasonable and be such as to promote economic efficiency in the 
supply and consumption of electricity .and the tariff may also be such as to 
:> 
satisfy all other relevant provisions of the Act and the conditions of the 
relevant licence. This Section has to be read along with Section 11 which sets 
out the functions of the Commission and, inter alia, provides that amongst 
the functions is power to regulate the tariff and charges payable keeping in 
H view both the int

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