LexKERALA STATE ELECTRICITY BOARD, ETC. versus S.N GOVINDA PRABHU & BROTHERS AND OTHERS ETC.
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A B c D E F KERALA STATE ELECTRICITY BOARD, ETC. / v. S.N, GOVINDA PRABHU & BROTHERS AND OTHERS ETC. AUGUST 26, 1986 IO. CHINNAPPA REDDY AND M.M. DUTT, JJ.] Electriciiy Supply Act, 1948-Section 59-Electricity Board- Formulation of price structure intended to yield sufficient revenue- Examination of by Court-Electricity Tariff-Upward revision- Whether valid. The upward re•ision of Electricity Tariff made by the appeUant- Board in 1980, 1982 and 1984 was challenged in the High Court by the respondents on the ground that the Electricity Board acted outside its statutory authority hy formulating a price structure intended to yield sufficient revenue to offset not merely the expenditure properly charge- able to the revenue account for the year as contemplated by s. 59 of the Electricity Supply Act, 1948, but also expenditure not so properly chargeable and that had s. 59 been strictly followed and had items of expt..tditure not chargeable to the revenue account for the year been excluded, the revised tariff would have resulted in the generation of a surplus far beyond the contemplation of s. 59 of.the Act. The FuU Bench of the High Court struck down the tariff revisions holding that in the absence of specification by the Government, a Board was not entitled to generate a surplus at all and it had acted entirely outside its authority in generating a surplus to be adjusted against items of expenditure not authorised to be met from revenue receipts. The notifications prescribing, revised tariffs were, therefore, struck down. G In appeal to this Court on behalf of the appellant it was con- tended, that the 1978 Amendment of the Electricity Supply Act 1948 did not effectively improve matters as many State Governments did not specify the quantum of snrplus. Parliament bad, therefore, to intervene once again and that was in 1983 to th the statutory minimnm surplus, which was made clear by the 1983 Amendment which stipulated a H minimnm of 3 per cent surplus in the absence of specification by the 628 ' KER. STATE E.B. '· PRA.BHU IREDDY,J.J 629 State Government which. had the liberty to specify a higher percentage than three. It was further contended, by submitting statements, that in the years 1978-79 to 1981-82, which were extraordinary years, but for the boom in the sale of energy to neighbouring States. there would have been a serious deficit in every one of these years and that it is clear that ·the Electricity Board has not been earning huge profits and generating large surpluses as suggested by the. consumers, and consequently ·the upward revision of the electricity tariff was justified. On behalf of respondent-consumers it was contended: ( l) that the Electricity Board was barred from conducting its operations on. com- mercial lines so as to earn a profit; (2) that in the absence of specifica- tions by the State Government the position would be as it was before the 1978 Amendment, i.e. the Board was to carry on its affairs and adjust the tariffs in such a manner as not to incur a loss; (3) that while interest which accrued to be revenue expenditure, arrears of interest which accrued during the previous years and had not been paid could not be so considered; (4) that the 1980 Committee took into consideration the anticipated augmentation of the generating capacity from the proposed new power stations whereas these pro,jects were not commissioned till 1984 and thus the cost structure arrived at by the Committee was viti- ated: (5) that the Committee did not take into account the financial position of the Board as brought out by the year 1978-79 which showed that the Board had no need for enhancing the rates; (6) that the 1980 Committee having taken as the basis the 1982 projected cost, so as to maintain price stability for a period of live years, it was not proper to revise the tariff again in 1982; and (7) that it was not open to the Board to give favoured treatment to Low Tension Domestic and Agricultural Consumers at the cost of the rest of the consumers. Allowing the appeals of the Electricity Board, HELD: I. The judgments of the High Court are set aside and the validity of the notifications revising the tariffs upheld. The Board will reconsider the revised tariff introduced in 1980 in regard to Low Tension Industrial and ·Low Tension Commercial Consumers only, with liberty· to fix separate rates, if necessary for the years 1980 and 1981. [6$9D-E] 2.
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