Research › Search › Judgment

Orissa High Court · body

2010 DIGILAW 175 (ORI)

Ferro Alloys Corporation Ltd. v. State of Orissa

2010-03-16

B.P.RAY

body2010
JUDGMENT B.P. RAY, J. : In all these writ petitions, the nature of dispute being similar, they are heard together and are disposed of by the following common judgment. The petitioners, in all these writ applications, who are manufacturers of chrome based ferro alloys challenge the impugned tariff order dated 20.3.2008 for the financial year 2008-09 passed by the O.E.R.C., vide Annexures-5 & 4 respectively. 2. The petitioners submit that the impugned tariff order dated 20.3.2008 has been passed in violation of the provisions of Section 61(g) and Section 62 of the Electricity Act, 2003 and Regulation 7(c)(iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004 framed under Sections 61 and 62 of the Electricity Act, 2003 and the National Tariff Policy framed under Section 3 of the Electricity Act, 2003. 3. It is contended that the tariff fixed by the OERC for the year 2008-09 in respect of Ferro Alloy Industry is Rs.2.95 per unit. It has filed a memo on 14.09.2009 enclosing Form Nos. 9 and 13 filed by NESCO before the OERC in its Annual Revenue Requirement in course of tariff proceeding for the year 2008-09, wherein, the cost of supply of power during the said year by NESCO to E.H.T. consumers like the petitioners has been calculat¬ed at Rs.1.26 per unit. It is, therefore, submitted that the petitioners are paying cross subsidy of Rs.1.69 per unit. 4. The petitioners contended that Section 61(g) of the Electricity Act, 2003 mandates that the OERC is under statutory obligation to fix tariff, which progressively reflects the cost of supply of electricity and also reduces cross subsidy in the manner specified by the appropriate commission. Even though in every annual tariff proceedings, the petitioners have been re¬questing the OERC to comply with the said requirement, but the same is not being considered. The commission has not specified the manner in which cross subsidies are to be reduced. Conse¬quently, the petitioners are being compelled to pay cross subsidy which is more than the cost of supply of power to them. It is submitted that the guidelines for determination of cross subsidy have been set out in Regulation 7(c) (iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004. Conse¬quently, the petitioners are being compelled to pay cross subsidy which is more than the cost of supply of power to them. It is submitted that the guidelines for determination of cross subsidy have been set out in Regulation 7(c) (iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004. For complying with the said statutory provision, it is necessary that cost of supply to LT, HT and EHT consumers needs to be determined. The petitioners, therefore, submitted that although determination of tariff is a statutory function, but in view of the aforesaid fact, the statutory provi¬sions are not being complied with by the OERC while fixing tariff for each year. In the circumstances, it is stated that it would only be just and appropriate, if the Court would be pleased to direct OERC to comply with the said statutory requirement while fixing tariff for the year 2010-11 for which proceedings are pending before the OERC. 5. The opposite parties have contested the writ applica¬tions on the ground that the period for which tariff was fixed i.e. financial year 2008-09, has already expired and therefore, the tariff order dated 20.3.2008 is no more available to be quashed. The petitioners have already paid the electricity dues as per the said order. In the meanwhile, the period for which tariff fixed for the subsequent year has already been passed and has not been challenged. Accordingly, the present writ applica¬tion has become infructuous. Furthermore, the correctness of determination of tariff cannot be called in question in a writ application. This Court does not have the technical expertise to sit in appeal over a tariff dispute. In any event, all the ques¬tions raised by the petitioners in such present proceedings, can be urged before the OERC in the tariff proceeding for the year 2010-11; which is in progress. 6. The petitioners in reply stated that even though the writ applications were filed on 30.4.2008 challenging the tariff order dated 20.3.2008, the Orissa Electricity Regulatory Commis¬sion filed its counter affidavit after a period of fifteen months i.e. on 15.7.2009, only with a view to render the present writ applications infructuous. 6. The petitioners in reply stated that even though the writ applications were filed on 30.4.2008 challenging the tariff order dated 20.3.2008, the Orissa Electricity Regulatory Commis¬sion filed its counter affidavit after a period of fifteen months i.e. on 15.7.2009, only with a view to render the present writ applications infructuous. It is further contended that in view of the subsequent developments, all that the petitioners seek from this Court is a direction to the Orissa Electricity Regulatory Commission to fix the tariff for the financial year 2010-11, for which the statutory exercise has already begun by strictly fol¬lowing the statutory provisions contained in Sections 61 & 62 of the Electricity Act, 2003 and Regulation 7(c) (iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004 which are not being followed by the OERC while fixing the tariff every year. It is contended that this Court can always mould the relief by taking into consideration the subsequent events to do complete and sub¬stantial justice. 7. It is well settled that this Court does not act as an appellate authority with regard to fixation of tariff in exer¬cise of its jurisdiction under Article 226 of the Constitution of India. Nonetheless, the Court has to be satisfied that the Orissa Electricity Regulatory Commission has followed the proper proce¬dure and the decision regarding fixation of tariff should be taken by complying with the various statutory provisions. Sec¬tions 61(g) and 62 of the Electricity Act, 2003 provide as fol¬lows :- “Sec. 61. Tariff regulations,- The appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely :- xxx xxx xxx (g) that the tariff progressively reflects the cost of supply of electricity and also reduces cross-subsidies in the manner specified by the Appropriate Commission. Sec.62. Sec.62. Determination of tariff.- (1) xxx xxx xxx (2) xxx xxx xxx (3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer’s land factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required.” Similarly, Regulation 7(c)(iii) of Orissa Electricity Regu¬latory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004 speaks as follows :- “7(c)(iii)- For the purpose of computing cross-subsidy, the difference between cost to serve of that category and average tariff realization of that category shall be considered.” 8. It is not in dispute that fixation of tariff is a statutory exercise. The OERC undertakes the said exercise every year and tariff is fixed for each financial year. A conjoint reading of Sections 61(g) and 62 of the Electricity Act, 2003 and Regulation 7(c)(iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004 would make it clear that for implementing the said provi¬sions, OERC is required to determine the cost of power supply to LT, HT and EHT consumers. It s also required to indicate the cost to serve each category of the consumers and determine the extent of cross subsidy for the tariff year in question and the manner in which it seeks to reduce over a period of time. 9. It is the admitted position that the petitioners have paid their electricity bills for the year 2008-09 in accordance with the tariff order dated 20.3.2008. The tariff period is over since long. This Court, therefore, without expressing any opinion on the contentions raised by the petitioners does not think it appropriate to interfere with the impugned order dated 20.3.2008. 10. However, in order to avoid multiplicity of litigations and taking into consideration the entire facts of the case, including subsequent developments, namely, pendency of tariff proceeding for the year 2010-11 before the OERC, this Court directs the OERC to strictly comply with the requirement of Sections 61 and 62 of the Electricity Act, 2003 and Regulation 7(c)(iii) of Orissa Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulation, 2004 while fixing the tariff for the financial year 2010-11. Further, the Orissa Electricity Regulatory Commission is also directed to fix the cost of supply at various voltage i.e. EHT, HT, LT and the Orissa Electricity Regulatory Commission shall also indicate the cost of tariff for each category and indicate the extent of cross subsidy existing and the plan of action to reduce it over a period of time as envisaged in Section 61(g) of the Electricity Act, 2003 and Regulation 7(c)(iii) of Orissa Electricity Regula¬tory Commission (Terms and Conditions for Determination of Tar¬iff) Regulation, 2004. With the aforesaid directions, the writ applications are disposed of. Applications disposed of.