FERTILIZERS & CHEMICALS TRAVANCORE LTD. versus KERALA STATE ELECTRICITY BOARD & ANOTHER

Citation: [1988] 3 S.C.R. 925 · Decided: 05-05-1988 · Supreme Court of India · Bench: S. NATARAJAN · Disposal: Dismissed

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Judgment (excerpt)

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FERTILIZERS & CHEMICALS TRAVANCORE LTD. 
A 
V, 
KERALA STATE ELECTRICITY BOARD & ANOTHER 
MAY 5, 1988 
[S. NATARAJAN AND M.N. VENKATACHALIAH, JJ.J 
Electricity Supply Act, 1948: Sections 49( 1), 49(3), 60 and 
79(j)-Electricity Tariff-Protection from unilateral increase--'Period 
factor' in agreement-Enhancement of tariff-When.permissible. 
Kera/a State Electricity Board (General Tariffs) Regulations, 
1965: Regulation 11-Enhancement of rate or tariff for supply of 
power-Validity of. 
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Constitution of India, 1950: Article 14-Allegations of dis-
criminatory treatment-To be specific-Action of Governmental 
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authorities-Presumed to be reasonable and in public interest-Person 
assailing-To plead and prove contrary. 
The Appellant, a company registered under the Companies Act, 
had its registered office at Eloor in the. e.rstwhile State of Travancore. 
On October 21, 1948 the company entered into an agreement (Exhibit-
Pl) with the erstwhile princely State of Travancore for the supply of 
electrical-<!nergy under the terms and conditions particularised i.n the 
agreement. The price was fixed at Rs.110 per K. W .. per annum. Sub-
sequently, the State of Tranvancore merged in, and became part of, 
the Kerala State, and the Electricity Board was constituted for the 
Sta.te. On May JO, 1965 ~supplementary agreement was entered into 
between the appellant and the Electricity ·Board for supply of 
additional power for a period of IO years ·at the rate of Rs.140 per 
K.W. per year. 
On October 28, 1966 the Electricity Board in. exercise of the 
powers under Section 79(j) ofthe Electricity Supply A:ct, 1948 framed 
and promulgated the Kerala State Electricity Board (General Tariff) 
Regulations, 1966 by which the Board empowered itself to prescribe 
higher tariffs for different classes of consumers. Regulation 11 thereof 
empowered the Board to amend-·the terms and conditions of supply 
from time to time. 
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SUPREME COURT REPORTS 
11988] 3 S.C.R. -\ 
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The Board issued a Notification dated July 16, 1968 (Exhibit P-2) 
providing that the rates for supply of power at 66 K. V. to the appellant 
company availed of by them as per the agreement dated October 21, 
1948 be revised to Rs.200 per K.W. per year. The supplemental agree· 
ment with the appellant dated May 10, 1965 which pertained to the 
additional supply of power for a period often years at Rs.140 per K.W. 
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per year was, howev.er, left undisturbed. 
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The appellant in a writ petition before the High Court assailed the 
enhancement in the electricity tariff, contending that the terms for the 
supply of electricity to the appellant's industrial unit were governed by ·J 
the agreement dated October 21, 1948 entered into by the company 
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with the erstwhile Travancore State; that the agreement, in terms or 
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Section 60 of the Electricity Supply Act, should be deemed to have been 
entered into by the Electricity Board and that during the subsistence of 
the said agreement the rates fixed therein were immune from any 
unilateral upward revision even if the purported enhancement was 
pursuant to the statutory regulations made under Section 49(2). It was 
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further contended that the enhancement being selective and discrimi· 
natory, was violative of Article 14 of the Constitution. 
The writ_petition having been dismissed by a Single Judge of the 
High Court, and the Division Bench having confirmed the order of 
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dismissal in appeal, the appellant appealed to this Court hy Special 
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Leave. · 
In the appeal it was contended on behalf of the appellant that the 
agreement, Exhibit P-1, though one entered into prior to the constitu· 
tion of the 'Board' was; by virtue of Section 60 of the Act, one which 
should he deemed to have been entered into by or with the Board, and ~ 
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must also be held to be referable to Section 49(3) of the Act. Relying on I 
the decision of this Court in Indian Aluminium Co. v. Kera/a Electricity 
Board, [1976] 1 SCR 701, it was contended that the agreement must be 
regarded as having been entered Into by the Board In exercise of Its 
statutory powers under Section 49(3) of the Act, and therefore, immune 
from the operation of the Kerala State Electricity Board (General 
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Tariffs) Regulations, 1966. It was also submitted that power under 
Section 49(1) would be available to the statutory-authority enabling an .J. 
unilateral upward revision of the tariff only if the agreement Itself 
enabled such revision,

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