CHITTOOR ZILLA VY AV ASAY ADARULA SANG HAM versus A.P. STATE ELECTRICITY BOARD AND ORS.

Citation: [2000] SUPP. 4 S.C.R. 363 · Decided: 03-11-2000 · Supreme Court of India · Bench: AJAY PRAKASH MISRA · Disposal: Dismissed

Judgment (excerpt)

.. 
CHITTOOR ZILLA VY AV ASAY ADARULA SANG HAM 
A 
v. 
A.P. STATE ELECTRICITY BOARD AND ORS. 
NOVEMBER 3, 2000 
[A.P. MISRA AND N. SANTOSH HEGDE, JJ.] 
B 
Electricity (Supply) Act, 1948: Sections 49, 59 and 78-A. 
Fixation of tariff-Uniform tariff-Agricultural sector-Policy directions 
regarding-Issued by State Government-Binding nature of-On the State C 
Electricity Board-State Government directed Board to fvc a uniform flat rate 
per horsepower per annum as policy decision-But Board fvced slab rates 
based on consumption of horsepower-Validity of-Held: Policy decision of 
State Government binding on Board only to the extent it sub-serves the 
Board in performing its statutory obligation under Ss. 49 and 50-While D 
implementing the direction of the State Government Board is not required to 
go beyond or act contrary to the mandates of Ss. 49 and 50-!f fixation of 
uniform flat rate per horsepower per annum does not leave such surplus as 
is not less than 3 percent of the revenue after meeting all its expenses, the 
Board is not bound to comply with such direction-Hence, imposition of slab 
rates of tariff not illegal-Further, slab rates not discriminatory-Constitution E 
of India, 1950, Art. 14. 
The appellant was a registered society having farmers in various 
districts of the State as its m&mbers. The State Government in exercise of 
powers under Section 78-A of the Electricity (Supply) Act, 1948 directed the F 
State Electricity Board to revise the electricity tariff at a certain flat rate 
per horsepower per annum. Accordingly, flat rate of tariff was fixed. 
Subsequently, the Board after consultation with the State Government revised 
the impugned tariff. The impugned tariff rates divided the agriculturists into 
multi-groups based on the consumption of horsepower by the pump sets into 
various slabs. The appellant filed a writ petition before the High Court G 
challenging the aforesaid slab rates, which was dismissed. Hence this appeal. 
On behalf of the appellant it was contended that the impugned tariff 
rate was contrary to Government policy under Section 78-A of the Act as, 
it instead of being at flat rate, was based on slab rates; that it was also H 
363 
364 
SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R. 
A discriminatory inter se between the same class of agriculturists; that there 
was no justification to enhance the tariff when the loss of electricity through 
transmission and theft was to the extent of 33% and that the Board could 
have fixed a tariff at Rs. 200, 300 etc. per horsepower per annum in order 
...... 
to overcome its deficit. 
B 
The following questions arose before this Court: 
(a) Whether the Andhra Pradesh State Electricity Board is competent 
to put an end to the policy decision of the State to supply electricity to the 
agricultural sector at subsidised uniform flat rate and convert the same into 
C multi-different tariff rates discarding the principle of fixation of uniform 
tariff as contemplated in Section 59 of the Electricity (Supply) Act, 1948? 
D 
(b) Whether the Board is competent to fix tariff as per use of smaller 
or bigger H.P. motor and whether this fixing has any rational basis, which 
discriminates between one from the other agriculturists? 
Dismissing the appeal, the Court 
HELD : 1. The State Electricity Board and the State Government are 
statutory functionaries under the Electricity (Supply) Act, 1948. They have 
E to perform their obligations within the limits they have been entrusted with. 
Section 78-A of the Act empowers the State Government to issue directions 
to the Board on question of policy; on the other hand the Board has to perform 
its statutory obligations under the Act and with reference to the fixation of 
ta riff it has to act in terms of what is contained in Sections 49 and 50. But 
this field of policy direction is not unlimited. There cannot be any policy 
F direction, which pushes the Board to perform its obligations beyond the limits 
of the said two Sections. Any policy direction, which in its due performance 
keeps the Board within its permissible statutory limitations, would be binding 
on the Board. So, both State and the Board have to maintain its cordiality 
and co-ordination in terms of the statutory sanctions. If any policy direction 
G pushes the Board in its compliance beyond statutory limitations, it cannot 
be a direction within the meaning of Section 78-A. It is signifying that the 
opening words of Section 78-A are, "in the disc

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