H. N. NARAYAN, J. ( 1 ) THE appellants are ht consumers of power supplied by the respondent-board. They are availing the energy from the board after they entered into an agreement with the board. The respondent-board revised the tariff rates from time to time. One such tariff revision was issued by the board in 1985 effective from 27-9-1985 and consumers were divided into ht and lt consumers. Ht were again sub-divided into public water supply and sewerage pumping, ht 1a, industrial, non-industrial and commercial purpose. Ht-b1 and ht-b2, irrigation and agricultural farms, rural electric co-operative society, temporary power supply ht-4. Similarly the lt was divided into seven categories as mentioned in detail in the said tariff notification. In 1987 power tariff was revised and the same came into force from 2-5-1987, under which the ht consumers were divided into five categories and the lt consumers were divided into seven categories. Those tariff revisions were in challenge in various writ petitions filed by the ht consumers including the present appellants. The board has further revised the power tariff with effect from 18-7-1992. The board has made several changes both in the tariff schedule and also in general conditions. The ht in 1992 tariff is bifurcated into six categories. Ht-1a deals with public water supply and sewerage pumping installation. Ht-2 deals with industrial, non-industrial, commercial and non-commercial. Ht-2b deals with industrial, non-industrial, commercial and non-commercial. Ht-2b deals with commercial. Ht-3 deals with irrigation and agricultural farms. Ht-4 deals with rural electric co-operative societies and ht-5 with temporary power supply. ( 2 ) BATCH of writ petitions were filed being aggrieved by there vised power tariff in the year 1992 challenging the validity of revised tariffs and also the constitutional validity of the said revision on the ground of arbitrariness. The main contentions canvassed before the learned single judge were that power factor bonus or higher voltage rebate is abolished as a result affecting the business of the petitioner which has altered the position to their disadvantage. In the electric power tariff of 1990 a separate schedule had been set down in respect of colonies attached to any industry and petitioners were charged at a different rate for the bulk supply to the colony and bringing the residential area under ht-2 is arbitrary and discriminatory and residential colonies cannot be treated as ht consumers. In the electric power tariff of 1990 a separate schedule had been set down in respect of colonies attached to any industry and petitioners were charged at a different rate for the bulk supply to the colony and bringing the residential area under ht-2 is arbitrary and discriminatory and residential colonies cannot be treated as ht consumers. The tariff was enhanced without regard to the Provisions of Section 49 of the Electricity (Supply) Act, 1948 ('the act' for short ). It was also canvassed that categorisation of electricity consumers as separate and distinct is discriminatory and violative of article 14 of the Constitution of india. ( 3 ) IT was canvassed on behalf of the board that fixation of rates of power tariff is a legislative act and no Rule of natural Justice is applicable to any such action. The board has revised tariffs having regard to cost of production, cost of maintenance, increase in wages and a surplus of at least 3% of the value of fixed assets of the board as provided in Section 59 of the act. It was also contended that classification of consumers is to arbitrary and violative of article 14 of the constitution. Separate schedule to residential area and ht-2 consumers is within the powers of the board and is not arbitrary and discriminatory. ( 4 ) THE learned single judge was persuaded to accept this argument on behalf of the board and therefore all the writ petitions were dismissed. The orders of dismissal passed by the learned single judge are in challenge in these appeals. ( 5 ) SRI r. Gururajan, learned counsel appearing for the appellants raised similar contentions before us also. His main grievance is that the committee on power tariffs, 1990 recommended for enhancement of tariffs for 3 years till 1993, but the revision was made within that period in a matter of 1 year and that the petitioners were not aware of the considerations which weighed with the increase in the tariffs in such a short period. He further submitted that it was not justifiable for the board to withdraw power factor rebate and the revised tariffs granted to the ht consumers without notice and without regard to the object and purport for granting such rebate with regard to the purpose for which such rebate was granted. The board has no basis for revising the tariffs. He further submitted that it was not justifiable for the board to withdraw power factor rebate and the revised tariffs granted to the ht consumers without notice and without regard to the object and purport for granting such rebate with regard to the purpose for which such rebate was granted. The board has no basis for revising the tariffs. The board has failed to place sufficient material before the court as to how and on what basis the revision was sought for justifying the increase in tariffs except the file which was approved by the cabinet sub-committee. According to him, the board has shown undue preference to other consumers under the revised tariffs at the cost of ht consumers. The abnormal increase in tariff rates would not only increase the inflationary trends but would result in several major industries becoming sick on account of power cost alone. He further submitted that there is no justification for the board to include industrial colony in ht category since the colony stands on a different footing; therefore submitted that the learned single judge has not considered these contentions in correct perspective and erroneously rejected the writ petitions. ( 6 ) HOWEVER, Sri s. g. sundaraswamy, learned senior counsel appearing for the board submit that the tariff is a price. What is challenged in the writ petitions is revision of tariffs. The validity of 1990 tariff is upheld by this court in writ petition No. 22257 of 1990 which view was confirmed in the appeals. Special leave petitions preferred by the petitioners before the apex court were dismissed. Therefore, the said question is no longer res integra. He further submitted that tariff revision is not a matter which the court can address itself to. Tariff fixation is a legislative function though delegated and rate of tariffs is rationalised in such a way to earn a surplus of at least 3% of the value of fixed assets of the board as provided under Section 59 of the act and also in accordance with the guidelines issued by the world bank which lends loan to the board. His further submission is that the revision was made having regard to the escalation in the price of electricity supplied to Karnataka electricity board increase in wages, maintenance charges, increase in production of electricity, transmission charges etc. His further submission is that the revision was made having regard to the escalation in the price of electricity supplied to Karnataka electricity board increase in wages, maintenance charges, increase in production of electricity, transmission charges etc. Increase in the tariff was after by consulting the committee having regard to the overall fiscal condition of the board. The rebate once given to ht consumers is now reduced to a period of five years only to new industries which act is not arbitrary. Therefore, submitted that tariff is a legislative act and unless the act is ultra vires, the courts will not interfere. As in the ultimate analysis, the mechanics of price fixation has to be left to the judgment of executive unless it is patently discriminated. It is in this view of the matter the learned senior counsel justified the dismissal of the writ petitions by the learned single judge. ( 7 ) WE have given our anxious considerations to the secontentions. After hearing the learned counsel appearing for the parties, we find most of the contentions canvassed before us are not new which require reconsideration by us and in our opinion there is no merit in the contentions raised by the appellants. We now give our reasons for our opinion. ( 8 ) THE Karnataka electricity board is a body established by the state government under Section 5 of the act. It is "an act to provide for the rationalisation of the production and supply of electricity, and generally for taking measure conducive to (electrical development" ). Section 18 of the act lays down the powers and duties of the electricity board and one such duty is the transmission and distribution of electricity in the most efficient and economical manner. Section 49 of the act authorises the board to supply electricity to any person not being a licensee upon such terms and conditions as the board thinks fit and may for the purposes of such supply frame uniform tariffs. Section 49 of the act authorises the board to supply electricity to any person not being a licensee upon such terms and conditions as the board thinks fit and may for the purposes of such supply frame uniform tariffs. In fixing the uniform tariffs, the board shall have regard to all or any of the following factors, namely:" (A) the nature of the supply and the purposes for which it is required; (b) the co-ordinated development of the supply and distribution of electricity within the state in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee; (c) the simplification and standardisation of methods and rates of charges for such supplies; (d) the extension and cheapening of supplies of electricity to sparsely developed areas". Section 49 (4) further provides "in fixing the tariff and terms and conditions for the supply of electricity, the board shall not show undue preference to any person". ( 9 ) SO far as general principles for board's finance are concerned, Section 59 (1) enumerates that "the board shall, after taking credit for any subvention from the state government under Section 63, carry on its operations under this act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues, including operating, maintenance and management expenses, taxes (if any) on income and profits, depreciation and interest payable on all debentures, bonds and loans, leave such surplus, as the state government may, from time to time, specify". ( 10 ) THE first relief sought in the writ petitions is to declare that the electric power tariff of 1992 framed by the Karnataka electricity board ('k. e. b. ' for short), as illegal, unsustainable and is in violation of Section 49 of the electricity supply act and thereby to strike down the tariff of 1992 insofar as ht 2 is concerned. ( 11 ) INCIDENTALLY it is canvassed by the learned counsel for the appellants that there is discrimination among ht consumers which is violative of article 14 of the constitution. The challenge in the writ petitions is the revision of tariff for a period from 18-7-1992 to 1-8-1993. The fact that tariff is a price charged for supply of electricity is a settled question. The challenge in the writ petitions is the revision of tariff for a period from 18-7-1992 to 1-8-1993. The fact that tariff is a price charged for supply of electricity is a settled question. The validity of 1990 tariff is upheld by this court in writ petition No. 22257 of 1990 which was upheld by a division bench of this court. Special leave petitions filed by the petitioners were not entertained by the apex court. Hence, tariff is not a matter which the court has to go in. Electricity is goods and tariff is the price fixed for the goods sold. The rate schedule in 1990 was as follows: demand charges: Rs. 50. 00 per k. v. a. per month of billing demand. Plus energy charges: 115 paise per unit for all the units consumed in the month. The revision tariff under 1992 rate schedule is as follows: demand charges: Rs. 75/- per k. v. a. per month of billing plus demand. Energy charges: 125 paise per unit upto 1 lakh units consumed in the month. 150 paise per unit above 1 lakh units and upto 2 lakhs units consumed in the month. 160 paise per unit for balance of units consumed in the month. There is a general note appended to the rate schedule. ( 12 ) WE have to consider whether this revision is arbitrary and unreasonable. It is true that there was no recommendation by the committee on power tariffs to revise the rates in the year 1992. The challenge in the writ petition is particularly to the mode and procedure adopted by the board in issuing the revision tariff rates. However, it is contended on behalf of the board that the said committee appointed to examine the tariff committee recommendation has given a go by and there is no material as to why the said committee has rejected the report of the tariff committee and made altogether a different recommendation. Sri s. g. sundaraswamy, learned senior counsel submitted that there is no obligation that tariff committee should recommend for revision. It is not a statutory obligation. The matter is examined by the consultative committee which view is considered by the tariff committee revised in 1992. It is further contended that fixation of rates for power tariff is a legislative act and no Rule of natural Justice is applicable. It is not a statutory obligation. The matter is examined by the consultative committee which view is considered by the tariff committee revised in 1992. It is further contended that fixation of rates for power tariff is a legislative act and no Rule of natural Justice is applicable. On this question, the Supreme Court in M/s. Shri Sitaram Sugar Company Limited and another v Union of India and others , has held as under:"price fixation is in the nature of a legislative action even when it is based on objective criteria founded on relevant material. No Rule of natural Justice is applicable to any such order. It is nevertheless imperative that the action of the authority should be inspired by reason. The government cannot fix prices on extraneous considerations". it is further held that:"power delegated by statute is limited by its terms and subordinate to its objects. The delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts. All his decisions, whether characterised as legislative or administrative or quasi-judicial, must be in harmony with the Constitution and other laws of the land. They must be "reasonably related to the purposes of the enabling legislation". It is further held that: the doctrine of judicial review implies that the repository of power acts within the bounds of the power delegated and he does not abuse his power. He must act reasonably and in good faith". thus the Supreme Court lays down that:"the true position, therefore, is that any act of the repository of power, whether legislative or administrative or quasi-judicial, is open to challenge if it is in conflict with the Constitution or the governing act or the general principles of the law of the land or it is so arbitrary or unreasonable that no fair-minded authority could have made it". ( 13 ) THE factors borne in mind for revision of tariffs were to rationalise the rate tariffs and to earn a surplus of at least 3 per cent of the value of fixed assets of the board as provided in Section 59 of the act. Admittedly, there is no tariff committee constituted before making the revision in 1992. Respondents have put forth the reason that the cost of generation and distribution of power has increased. The increase in wages and other incidental charges are also added to their cost. Admittedly, there is no tariff committee constituted before making the revision in 1992. Respondents have put forth the reason that the cost of generation and distribution of power has increased. The increase in wages and other incidental charges are also added to their cost. It is submitted on behalf of the board that the quantum of energy generated within Karnataka is about 42 million units per day, while the demand is about 62 million units and in order to make good the deficiency thereof, the board had to purchase additional energy from central projects in addition to the state's entitlement of energy therefrom and the cost of purchase has not remained static and has been escalating due to the increase in fuel and other generation costs. The cost of distribution has also been on the increase. The main supplier of power of the board is the Karnataka power corporation. The board has to meet additional cost of energy purchased by them, the cost of generation of electricity and the cost to be paid to the Karnataka power corporation plus the wage bill. ( 14 ) IN order to convince the court about the reasonableness of increase, the board produced necessary files before the learned single judge. The learned single judge in his judgment at para 13 has stated as follows:"perusal of the same (files) would reveal that the proposals made to the government set out in detail the factors borne in mind by the board in increasing the tariffs". it is no doubt true that while revising the tariffs in 1990, the government stipulated that the tariffs would be in force upto 31-3-1992 and the board could undertake annual revision with the approval of the state government and therefore the existing tariffs were due for revision in 1992-93. The board could increase the tariffs under Section 59 after taking credit for any subvention from the state government under Section 63 and adjust its tariffs so as to ensure that the total revenue in any year of account, after meeting all expenses, shall leave the surplus of not less than 3% or higher as the state government may specify in that behalf, of the value of the fixed assets of the board in service at the beginning of the year. It is noticed that the financial covenant fixed by the world bank under the loan agreement to the effect that the Karnataka electricity board should achieve the statutory minimum of 3% of the value of the fixed assets of the board, failing which the world bank would suspend the loan assistance and the same would have an adverse effect on the Karnataka electricity board. The learned senior counsel for the Karnataka electricity board produced all the relevant materials showing the expenditure and income and the resultant deficit on the basis of which the board has worked out its tariff rates. Incidentally it was noticed that the board had to meet the additional burden arising out of free supply of power to i. p. set etc. The learned single judge has taken these factors into consideration while rejecting the contentions. The contention that the learned single judge has not considered the entire material in reaching the conclusion, in our opinion, is not correct. We have ourselves perused the records and we do not find any merit in the submission. ( 15 ) IT is noticed from the statistics produced by the board which are taken into consideration by the learned single judge that the board was incurring loss to the tune of more than 100 crore rupees and found it unable to manage itself. The board was selling energy at the rates which were lower than the actual cost incurred by it. Therefore, there is absolutely no basis for the contention that the tariff revision effected by the board suffers from vice of arbitrariness and is liable to be interfered with on that ground. So far the contention that the courts have to examine the details of mechanism of the tariff fixation effected by the board, the Supreme Court in M/s. Rohtas Industries Limited and another v Chariman, Bihar state electricity board and others , has stated as follows:"some of the appellants have endeavoured to persuade us to go into the minutest details of the mechanism of the tariff fixation effected by the board in an endeavour to demonstrate in relation thereto that a factor here or a factor there which ought to have been taken into account has been ignored. We have declined to go into those factors which are really in the nature of matters of price fixation policy and the court will be exceeding its jurisdiction if it is to embark upon a scrutiny of matters of this kind which are essentially in the domain of the executive to determine, subject, of course, to the constitutional limitations". In Prag Ice and Oil Mills v Union of India , it is pointed out by the Supreme Court as under:"in the ultimate analysis, the mechanics of price fixation is necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of persons, the processual basis of price fixation is to be accepted in the generality of cases as valid". therefore, the argument that the board has arbitrarily acted in fixing the tariff rates is devoid of merit and is rejected. ( 16 ) THE other contention raised by the learned counsel for the appellants is that the power tariff does not give due bonus to the power factor even it comes within the chapter vi of the Karnataka electricity board (electric supply) regulations, 1988 and particularly when there is an obligation on the part of the board to prescribe such bonus if a higher power factor is maintained by the consumer. ( 17 ) THE power factor is a ratio of useful power to the to talpower and the total power has got two components viz. , active component and reactive component. The vector sum of the active component and the reactive component is the total power and the reactive component could be reduced by installation of capacitors and it is canvassed on behalf of the appellants that capacitors are installed by the factory owners to maintain the useful power to its optimum. Power factor bonus was introduced in order to promote and reduce transmission losses so as to encourage the industries to invest in the installation of capacitors and to increase generation output. It is submitted that on account of installation of capacitors, supply and consumption of power was economically made vse of and therefore the board should not have adopted the policy of discontinuing the bonus or rebate given in respect of power factor. Reference is also made to maintain the power factor of not less than 0. 85 lag etc. It is submitted that on account of installation of capacitors, supply and consumption of power was economically made vse of and therefore the board should not have adopted the policy of discontinuing the bonus or rebate given in respect of power factor. Reference is also made to maintain the power factor of not less than 0. 85 lag etc. The recommendation made by the committee on power tariffs is extracted by the learned single judge at para 3. We feel it unnecessary to extract and repeat it in our judgment. The committee was of the opinion that the bonus concept be done away with for the reasons stated therein. The committee was also of the opinion that this will incidentally simplify the tariff structure too. ( 18 ) THE tariff committee has also considered in detail as to the continuation of high voltage rebate to all the ht consumers except for five years to new industries as the committee was of the opinion that question of rebate in that case would not be valid as most of the sub-stations have been installed by the concerned industries or factories for their own convenience several years ago at a relatively low cost and with the tariff escalating almost every years, the proportion of rebate in relation to the investment on sub-station has been steadily increasing and in many cases, costs of tariff have been fully recovered. The government of Karnataka while accepting the recommendations of the tariff committee for 1990 has stated as follows:" xx xx xx xx xx xx. 4. Government have also examined the recommendation of the board regarding reduction of rebate for extra high voltage consumers and have ordered that these benefits should be allowed only in respect of new industries for a period of five years and that in case of other industries which have availed the benefit for more than 5 years, the benefit should be discontinued". the argument of the learned counsel for the appellants is that this new policy of the government causes great hardship to the ht consumers. However, it is not pointed out by the learned counsel as to how the policy adopted by the government would infringe any of their rights. The appellants cannot find fault with the policy of the government in encouraging new industries while discontinuing such benefit to others. However, it is not pointed out by the learned counsel as to how the policy adopted by the government would infringe any of their rights. The appellants cannot find fault with the policy of the government in encouraging new industries while discontinuing such benefit to others. Incidentally we have noticed that the consumer who maintains a higher power factors, derives the benefit of reduced demand charges and consequently it becomes commercially beneficial to him to install capacitor. Therefore, the contention of promissory estoppel raised by the appellants has no merit. ( 19 ) THE other contention of the appellant before us is that electrical power tariff of 1990, a separate schedule had been set down in respect of colonies attached to any industry. The petitioners were charged at a different rate for the bulk supply to the colony and it is contended that bringing the residential area under ht 2 is arbitrary and discriminatory and residential colonies cannot be treated as ht consumers. It is submitted before us that the colonies consist of only residential houses and power is being used only for domestic purpose and they cannot be charged at higher rates. It is further submitted that the housing colonies coming under ht industrial consumers form a class by themselves and cannot be compared with ordinary residential consumers unattached to factories as these colonies are supplied by ht lines and such supplies have advantage of better quality of power and uninterrupted supply. ( 20 ) IT is true that in the power tariff prescribed in 1990, tariff schedule lt-2 (b) refer to colony bulk supply as being applicable to colonies and residential quarters of the industries, factories and workshops. The energy charge was fixed at 90 paise per unit for all the units consumed in the month and power supply to colonies is availed of on ht basis independently and a rebate of 3 paise was allowed on lt-2 tariff. But, the present rate includes all residential colonies both dependently and independently serviced and the rate of tariff for non-commercial, combined lighting and heating is fixed charges at Rs. 5 per k. w. or part thereof sanctioned load subject to a minimum of Rs. 15 per month plus energy charges at 100 paise per unit upto 200 units; 150 paise per unit above 200 units and upto 400 units; 200 paise per unit for the balance of the units. 5 per k. w. or part thereof sanctioned load subject to a minimum of Rs. 15 per month plus energy charges at 100 paise per unit upto 200 units; 150 paise per unit above 200 units and upto 400 units; 200 paise per unit for the balance of the units. The present rates are different in ht-2 wherein the demand charges plus energy charges is Rs. 75/- per k. v. a. per month of billing demand and energy charges range from 135 paise to 160 paise. A comparison of these rates itself would disclose that it cannot be said on the face of it that the present rates are in any way discriminatory and disadvantageous to the categories coming under colonies attached to industries or workshops and residential units. In regard to housing colony, the tariff applicable from 27-7-1985 to 1-5-1987 was ht. In 1987 also it was classified as ht-1b. In 1990 it became lt. In 1992 it again became ht. It is noticed that in 1990 though supply was ht rate collected was lt rate. Classification of colonies attached to industries as separate and distinct from ordinary residential units has been upheld by the Andhra Pradesh high court in nava bharat ferro alloys Limited, Hyderabad v Andhra Pradesh State Electricity Board, Hyderabad. The Andhra Pradesh high court at para 29 has stated as follows:"in our view, these townships formed by industrial houses, form a separate category by themselves. The board adopted a uniform tariff rate for all such consumption in the township area. It is so to say a comprehensive package agreement. The tariff rates for ht energy availed of by the ht consumers for factory purposes is lower than the rates payable by several other lt categories falling under part-b. No doubt the township tariff is slightly higher than the tariff charged by the board from a few other lt categories grouped in part-b. All such lesser rates are fixed for lt consumers in the agricultural Section, cottage industries, public lighting and small poultry farming units. The ht consumers cannot, therefore, be permitted to retain the advantages of a lesser tariff rate for ht power availed of by them for their factory purposes and permitted to challenge the tariff for the township merely because such tariff is in excess of tariff of some lt categories, set out above. The ht consumers cannot, therefore, be permitted to retain the advantages of a lesser tariff rate for ht power availed of by them for their factory purposes and permitted to challenge the tariff for the township merely because such tariff is in excess of tariff of some lt categories, set out above. When the board decided to leave the modalities of distribution to these ht consumers, they are no longer concerned as to whether the ht consumers would make available the lt supply to the residents in a township area for a domestic, non-domestic or commercial, industrial or public lighting purposes or for a charge of free of cost. In our view, the board is not concerned, if the ht consumer is making a large number of units available in the township for commercial or non-domestic purposes, carrying a higher tariff rate. We are, therefore, of the clear view that there is no hostile discrimination made by the board against these ht consumers, in fixing the uniform tariff for the township". we fully agree with the view expressed by the Andhra Pradesh high court and reject the contentions raised by the appellants. ( 21 ) ONE another contention raised by the appellants is regarding fuel adjustment charges or fuel escalation charges. It is submitted on behalf of the board that levy of fuel adjustment charges and recovery of the same from ht consumers alone has been upheld by the Supreme Court in mis. Hindustan Zinc Limited, Etc. V Andhra Pradesh State Electricity Board. It is further submitted that the said levy is made by the board to pay to national thermal power corporation and other suppliers for the energy supplied by them. In the light of the ruling of the Supreme Court cited supra, the contention has no merit and the same is rejected. ( 22 ) WE propose to conclude by quoting the ruling of the Supreme Court in Kerala State Electricity Board v M/s. S. N. Govinda Prabhu and brothers and others wherein it is stated as under:"a state electricity board created under the Provisions of the electricity supply act is an instrumentality of the state subject to the same constitutional and public law limitations as are applicable to the government including the principle of law which inhabits arbitrary action by the government. The board is a public utility monopoly undertaking which may not be driven by pure profit motive not that profit is to be shunned but that service and not profit should inform its actions. It must manage its affairs on sound economic principles. It must be able to pay interest on the loans taken by it, discharge its debts, give efficient and economic service, and continue the due performance of its services by providing for depreciation, etc. And provide for the expansion of its services. For this purpose sufficient surplus has to be generated. The position will not become different from what the board would necessarily do if it was an ordinary commercial undertaking properly and prudently managed on sound commercial lines, merely because the board is a public utility undertaking or because of the Provisions of the electricity supply act. It appears from sections 18 (a) and 49 (2) (b) of the act that the principles of efficiency and economy are not forsaken but resolutely emphasised by the act". ( 23 ) WE have taken into consideration all the contentions raised by the learned counsel for the appellants. We find that the contentions have no merit. Therefore, we fully agree with the judgment of the learned single judge and dismiss these appeals, however without costs. --- *** --- .