PETITIONER:
S.NARAYAN IYER
Vs.
RESPONDENT:
UNION OF INDIA & ANR.
DATE OF JUDGMENT30/04/1976
BENCH:
RAY, A.N. (CJ)
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SARKARIA, RANJIT SINGH
SHINGAL, P.N.
SINGH, JASWANT
CITATION:
1976 AIR 1986 1976 SCR 486
1976 SCC (3) 428
ACT:
Jurisdiction of courts under Art. 226 of the
Constitution in matters of fiscal planning-Legislative
judgments are outside the scope of judicial determination-
Reasonableness of telephone rates is a matter for
legislative judgment.-lndian Telegraph Act-Section 7(2) read
with Indian Telegraph Amendment Rules,1966.
HEADNOTE:
The appellant challenged under Art. 226 the
reasonableness of the increase in the telephone rental and
call charges brought about by the Indian Telegraph Amendment
Rules. 1966 on the ground that (1) The telephone system is a
public utility service and the charges can be only in the
nature of a fee which must be commensurate with the cost of
rendering the service; and (2) The loss incurred by the
Government in another establishment service is not a
legitimate ground for raising the rates.
The writ petition was accepted and on appeal the
judgment was reversed holding that (1) the High Court could
not interfere with the tariff. and (2 ) the principle upon
which the public utility rates regulation as developed in
the United States is not applicable in our country.
Dismissing the appeal by certificate, the Court,
^
HELD: (I) The courts have no jurisdiction under Article
226 to go into the reasonableness of rates. These rates are
decided as policy matters in fiscal planning. There is
legislative prescription of rates. Rates are a matter for
legislative judgment and not for judicial determination.
[488A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 325 of
1970.
From the Judgment and order dated 28th March 1969 of
the Madras High Court in Writ Appeal No. 490/68.
K. S. Ramamurthy, K. Jayaram and R. Chandrashekhar for
the Appellant.
L. N. Sinha, Solicitor General of India, S. N. Prasad
and Girish Chandra for the Respondents.
The Judgment of the Court was delivered by
RAY J. This appeal is by certificate from the judgment
dated 28 March 1469 of the High Court of Madras. The
question in this appeal is whether the appellant in a writ
petition can challenge the telephone rates and charges and
obtain any relief in that behalf.
The appellant is a retired District Manager
(Telephones), Madras. He filed a writ petition in the High
Court for a writ of prohibition, directing the General
Manager (Telephones), Madras to forbear from
preferred to the Appellate Tribunal but that too proved
abortive. The Tribunal, however, referred the following
question of law for the opinion of the High Court:-
———————–
(1).[1966] 60 I.T.R. 293.
487
enforcing the revised Telephone Tariff as per the Indian
Telegraph Amendment Rules, 1966. Under the rules, the rental
and call charges were increased by 50 per cent and Trunk
call charges by about 30 to 35 per cent. The petitioner
alleged that the telephone system is a public utility
service and not a Revenue earning establishment and the
charges can be only in the nature of a fee which must be
commensurate with the cost of rendering the service. The
petitioner further alleged that the loss incurred by the
Government in another establishment service is not a
legitimate ground for raising telephone rates.
The Trial Court held that Telephone Tariff was unjust
and unreasonable. The Trial Court allowed the writ petition.
The High Court on appeal held that the High Court could
not interfere with the Tariff. The High Court said that the
principal upon which public utility rates regulation as has
developed in the United States is not applicable here in our
country.
It should be said at the outset that there was some
discussion in the judgment on Article 19 but counsel for the
appellant properly abandoned any reference to Article 19.
The appellant’s contentions are three. First, the
expression. “rates” in section 7(2) of the Indian Telegraph
Act means rates which are to be determined should be fair,
just and reasonable from the point of view of both the
consumer and the producer. Second, the Court has
jurisdiction to determine whether the rates filed by the
Government are reasonable. Third, the rates are increased
expressly for the purpose of off-setting the E losses in the
Post and Telegraph Services. If a proper allocation. is made
according to proper commercial accounting it will be found
that there is a wrongful deduction of crores of rupees as
revenue expense and unlawful debit. These errors in the
accounting have resulted in reducing the profits earned by
the Telephones.
There are three principal reasons why the writ petition
is incompetent and not maintainable and the appeal should
fail. First, when any subscriber to a telephone enters into
a contract with the State, the subscriber has the option to
enter into a contract or not. If he does so, he has to pay
the rates which are charged by the State for installation. A
subscriber cannot say that the rates are not fair. No one is
compelling one to subscribe. Second. Telephone Tariff is
subordinate legislation and a legislative process. Under
Indian Telegraph Act, section 7 empowers the Central
Government to make rules inter alia for rates. These rules
are laid before each House of Parliament. The rules take
effect when they are passed by the Parliament. Third, the
question of rates is first gone into by the Tariff Enquiry
Committee. The Committee is headed by non officials. The
Tariff rates are placed before the House in the shape of
Budget proposals. The Parliament goes into all the Budget
proposals. The rates are sanctioned by the Parliament. The
rates. therefore, become a legislative policy as well as a
legislative process.
488
The Courts have no jurisdiction under Article 226 to go
into reasonableness of rates. These rates are decided as
policy matter in fiscal planning. There is legislative
prescription of rates. Rates are a matter for legislative
judgment and not for judicial determination.
The appeal is dismissed. There will be no order as to
costs.
S.R. Appeal dismissed.
489