IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 1064 of 2009()
1. SR.CELINE,MANAGER,KANIKKAMATHA CONVENT
... Petitioner
Vs
1. STATE OF KERALA REP.BY THE SECRETARY TO
... Respondent
2. THE KERALA STATE ELECTRICITY BOARD REP.
3. THE KERALA STATE ELECTRICITY REGULATORY
For Petitioner :SRI.K.B.GANGESH
For Respondent :SRI.C.K.KARUNAKARAN, SC FOR KSEB
The Hon'ble MR. Justice P.R.RAMAN
The Hon'ble MR. Justice P.BHAVADASAN
Dated :17/08/2009
O R D E R
P.R. RAMAN & P. BHAVADASAN, JJ.
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W.A. NOS. 1063, 1064, 1073, 1075, 1076,1079,
1080, 1083, 1084, 1100, 1115, 1116, 1121, 1122,
1123, 1179, 1180, 1191, 1192, 1202, 1204, 1205,
1207, 1208, 1210, 1211, 1212, 1213, 1218, 1219,
1224, 989, 994, 1233, 1243,1244, 1248, 1254,
1269, 1274, 1283, 1287, 1285,1288, 1306, 1316,
1321, 1280, 1329, 1349, 1351, 1356, 1348, 1355,
1311, 1370 & 1373 OF 2009.
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DATED THIS, THE 17TH DAY OF AUGUST, 2009.
J U D G M E N T
Raman, J.
These appeals are directed against the common judgment rendered by
the learned Single Judge in a batch of writ petitions filed challenging the
tariff modification issued by the Kerala State Electricity Regulatory
Commission in the matter of fixation of tariff for the Self Financing
Educational Institutions under Sections 62 and 86 of the Electricity Act,
2003 (hereinafter referred to for brevity “the Act”). The appellants are Self
Financing Educational Institutions either in the school level or in the college
level. Some of the schools are under State Syllabus and some others under
the CBSE. Besides there are Industrial Training Institutions also. As per
the new tariff notification Self Financing Educational Institutions are
classified under LT VIIA as commercial institutions and the notification is
effective from 1.12.2007.
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2. Under this notification aided private educational institutions and
Government schools are classified under LT VII category. The challenge
was made on several grounds. The contentions raised were that the source
of revenue cannot be the basis of the discrimination between the educational
institutions since all the educational institutions irrespective of whether Self
Financing Institutions or aided or Government educational institutions, are
engaged in imparting education, that the notification was issued without
affording an effective opportunity to the petitioners to raise their objection
to the introduction of the new tariff and therefore, the remedy under the
Act vide Section 110 of the Electricity Act cannot be a bar, being not an
effective alternate remedy, that there was total lack of materials to justify
the discrimination meted out to the Self Financing Educational Institutions
by treating them as commercial tariff consumers as against the other
educational institutions, that the provisions contained in Section 62 of the
Electricity Act which provides the factors, based on which alone, any
differentiation could be made, is totally absent and the Kerala State
Electricity Regulatory Commission has traversed beyond the very provision
contained in Section 62 of the Act in this regard, that the Self Financing
Educational Institutions are prohibited from profiteering by the relevant
statutes and also by the decision of the superior courts, that there is also no
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material available to show that there is any profiteering by the Self
Financing Educational Institutions and that the Educational Institutions
cannot be characterized as commercial establishment. Reference was also
made to the decision in M.P. Electricity Board & Others vs. Shiv Narayan
And Another (2005(7) SCC 283). It was pointed that students coming
under the ITI category were generally drawn from the poorer sections and
therefore, the mere fact that such ITI Institutions are Self Financing
Educational Institutions does not mean that the student studying in such
Institutions are better placed in life and the purpose of consumption of
electricity in the Educational Institutions irrespective of whether it is aided
or unaided or Self Financing Institution, is the same. Incidentally, it was
also contended that the Commission has no suo motu power for initiating
any action for revising the tariff.
3. The Kerala State Electricity Regulatory Commission and the
Kerala State Electricity Board sought to justify the tariff notification, inter
alia contending that the consumers, if at all they are aggrieved by the
notification, has got an effective alternate remedy by way of an appeal to the
Appellate Tribunal and thereafter, an appeal to the Apex Court. They also
contended that there is no violation of the principles of natural justice in this
case, that the Commission had issued Ext.R3(a) notice inviting objections/
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suggestions from the public consumers and other stake holders in various
newspapers and that in Ext.R3(a) it was mentioned that the details were
available in the web site of the Commission as also on request. Ext.R3(c)
is the detailed draft, Ext.R3(d) is the press release on the publication of the
draft schedule and Ext.R3(e) is yet another press release extending the time
for receiving objections. The draft schedule was discussed by the State
Advisory Committee and public hearing was held; but the petitioners did
not appear in the public hearing. It was also pointed out that the Electricity
Board forwarded the proposals on the draft schedule to be effective from
1.6.2007 requesting that the tariff schedule be notified by the Commission
with appropriate modification and that was accepted and treated as a
petition filed by the Electricity Board – the Supplier. The notification is
based on rationalisation principles, that educational institutions, were
included in the earlier notification, as part of non domestic LT VI B as also
commercial institutions were included in this category. It is the case of the
Commission that Self Financing Educational Institutions have their own
fees structure, wage structure etc. which are absent in a Government/Aided
private school and that Self-Financing Educational Institutions are run on
business prospects. Reference was made to Sections 61 and 86 of the Act to
contend that though the Commission has started the process of revising the
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tariff initially suo motu, subsequently the Board has filed a petition and
therefore, the Commission was within its legal limits in issuing the tariff
order. Besides the Kerala State Electricity Board Regulatory Commission
(Conduct of Business) Regulations, 2003 provides for service of notice and
vide Regulation 27 publication in news papers or in any other manner is
an accepted service form of notice. Regulation 27(8) specifically provides
for service of notice and process issued by the Commission and that
publication required to be done cannot be deemed to be invalid by reason of
any defect in the name or description, provided the Commission is satisfied
that such service is in other respect sufficient. Regulation 40 prescribes
the procedure for publication of a petition. It is contended that the
Commission has followed all these procedural regulations and notification
issued is in full conformity with the requirements. On behalf of the Kerala
State Electricity Board, the learned counsel contended that Section 62(3)
of the Act is on the same lines as Section 49 of the Electricity Supply Act,
1948, that Self Financing Educational Institutions are by themselves a class
and further, sought to justify the difference in tariff on the basis of nature
and purposes of supply. It is contended that considering the higher fee
structure and facilities in Self Financing Educational Institutions, they
cannot be equated with the aided or Government Institution.
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4. The learned Single Judge framed five issues for consideration , ie.
(i)whether the matter should be considered under Article 226 of the
Constitution of India, in the light of Section 111 and 127 of the Act , (ii)
whether the impugned tariff order is vitiated on account of non observance
of the principles of natural justice, (iii) Whether the tariff order is issued
beyond jurisdiction and whether the Commission has power to determine
the tariff suo motu, (iv) whether the Self-financing Educational Institutions
can be treated as “commercial” and (v) whether there is violation of Section
62(3) of the Act and whether there is valid classification.
5. The learned Single Judge found that the plea of violation of
principles of natural justice is not a ground in many of the writ petitions.
Reference was made to Ext.R3(a) and found that in the extract published,
there is mention regarding the demand charge and energy charge and that
details will be available in the web site and that there is mention that the
present tariff rates are continued for certain categories. But at the same
time, the court found that in some cases, there are pleadings and in many
cases counter affidavits are not filed. The documents produced by the
Commission indicate that the draft tariff schedule is available with the
Commission on the web site and also in its Office; but the extract would
not give any impression about the proposal to include Self-Financing
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Education Institutions in the commercial tariff (emphasis given), but at
the same, it cannot be overlooked that the objections were invited to the
draft tariff schedule and not to the extract of the draft tariff schedule, that
the draft tariff schedule was available on the web site which indicates the
proposal to include Self Financing Institutions in the “Commercial”
category and in such circumstances, it was incumbent on those petitioners
who allege violation of principles of natural justice to have pursued the
matter before the Commission to peruse the draft tariff schedule either from
the web site or from the office of the Commission in which case they would
have become aware of the inclusion of Self-Financing Institutions in
Schedule VII A. Therefore, it was concluded that there was no violation of
the principles of natural justice.
6. Turning to the contention regarding the power to act suo motu by
the Commission, it was pointed out that though initially the Commission
was proceeding suo motu, thereafter the Board had filed a petition which
included the proposal to modify the proposal and the tariff order was passed
on the basis of the suo motu petition and the petition filed by the Board.
After referring to Sections 62, 64 and Section 86 (4) it was held that the
statutory regulation made under the Act empowers the Commission to
initiate suo motu action. Reference was also made to Regulation 22 of the
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Kerala State Electricity Regulatory Commission (Conduct of Business)
Regulations, 2003 in this regard. The learned Single Judge then turned to
the issue as to whether Section 62(3) of the Act is breached and he did not
accept the contention of the petitioners and distinguished the decision in
M/s. Rohtas Industries Ltd. and another v. The Chairman, Bihar State
Electricity Board and Others (AIR 1984 SC 657) which held that the
capacity to pay cannot be the basis for differentiation. The differentiation
based on the capacity to pay will be bad if the differentiation is between the
consumers falling in the same category and for that matter Self Financing
Educational Institutions are to be treated as not falling in the same
category. Referring to the contention that differentiation factors are nature
of supply, purpose of supply and the consumption pattern, the learned
Single Judge observed that there appears to be substantial difference in the
consumption pattern of Self Financing Institutions and Government
Institutions; but it does not appear to contain the consumption pattern of
Aided Educational Institutions. It was held thus:
“Further, under the head “purpose of supply”, it is
to be noted that the respondent has a case that
Self-Financing Educational Institutions have their
own fees structure, wage structure, student and
employee welfare measures and they operate on
business prospects.
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One way of looking at the premise relating to
“purpose of supply” is to consider whether if a
question is posed as to whether the purpose of
supply to Government Educational
Institutions/Aided Educational Institutions on the
one hand and Self-Financing Educational
Institutions on the other hand is the same, it could
be said that the purpose is to supply connection to
Educational Institutions which are providing
education. However, it is also possible to
consider whether, having regard to the differences
between Government Educational Institutions and
Aided Educational Institutions on the one hand
and Self-Financing Educational Institutions on the
other hand, it could be said that there is a
difference in the purpose for which the supply is
sought. In other words, if it could be found that
there are substantially distinguishing features,
they could be treated as falling in two different
categories. ”
It was observed that it is not the source of funds, but the extent of the
funds available that makes the difference and finally, repelling all the
contentions raised by the writ petitioners, the writ petitions were dismissed.
7. We have referred to the finding of the learned Single Judge for the
limited purpose of appreciating the fact that though an issue was raised as
to whether the petition under Article 226 is maintainable, the writ petitions
were not dismissed on the ground of alternate remedy. The contention on
merits as to whether the tariff notification is justified under Section 62(3) of
the Act was considered elaborately and negatived the contention of the
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petitioners. That being the position, the question of maintainability of the
writ petition can no more be an issue before us. If the writ petitions are
dismissed on the ground of alternate remedy, then there is no scope for
considering the contentions on its merits. Once the court considered the
various contentions on their merits and negatived the contentions,
thereafter the parties cannot be relegated to the appellate forum. Hence we
proceed to consider the contentions which were pressed at the time of
hearing the appeal before us.
8. Though a contention was raised that the tariff notification
differentiating the Self-Financing Educational Institutions from the other
Educational Institutions is irrational and does not stand the test of Article
14 of the Constitution of India, the said contention was not pressed before
us. So also, the contention whether the Regulatory Commission has got
suo motu power or not is only academic in the factual situation and based
on the subsequent development. The licensee namely, the Kerala State
Electricity Board themselves have made a proposal later which was treated
as a petition as contemplated under the Act, though initially suo motu
power was invoked by the Commission, subsequently, it was based on the
petition that further proceedings were taken. Hence this contention also is
not seriously pressed.
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9. However, the learned counsel appearing for the appellants
contended that in so far as Section 62(3) of the Electricity Act, 2003
exhaustively provides the grounds on which the consumer could be
differentiated for the purpose of tariff notification, the Regulatory
Commission being a statutory authority cannot go beyond the same and the
notification issued by the Commission has to be tested with reference to
Section 62(3) of the Act alone and if there are no valid grounds as
envisaged under Section 62(3) of the Act, the differentiation of Self-
Financing Colleges from the rest of the Institutions for the purpose of tariff
is to be held to be bad. In other words, whether Self-Financing
Educational Institutions themselves form a class or not generally is not
relevant in so far as the classification or differentiation for the purpose of
tariff fixation must be decided within the frame work of the Statute and
not beyond or dehors the provisions contained therein. In this context
reference was made to Section 49 of the 1948 Act and the corresponding
section, namely, Section 62(3) of the present Act and contended that while
under Section 49 differentiation could also be made on any other grounds
that is consciously omitted in the new Act. So much so, the intention of
the legislation was clear that the condition or the grounds on which
differentiation could be made for the purpose of tariff fixation must strictly
W.A. 1064/09 & CON. CASES :12:
be on the parameters fixed under Section 62(3) of the Act alone. In this
case, it is shown that even according to the respondents, the nature and
purpose are the factors justifying the Self-Financing Educational
Institutions to be treated differently from other Educational Institutions. If
so, it is contended that, the nature and purpose of supply of energy to an
educational institution being the same, irrespective of source of fund,
cannot be treated differently. It is contended that the Self-Financing
Educational Institutions, as per the averments made in the counter affidavit,
is a new class emerged which is factually incorrect. The averments made in
the additional counter affidavit that Self-Financing Educational Institutions
are run on business profit is totally denied and it is pointed out that it is not
sought to be supported by producing the files containing any such
materials. In other woods, the Commission has not made any enquiry
regarding these aspects and there is total lack of application of mind and
merely based on surmise and conjunctures it is held that all Self-Financing
Educational Institutions are run as a business.
10. We have heard the arguments of the learned counsel appearing
on behalf of the appellants Sri. Gangesh, Sri. Kurian George
Kannanthanam, Sri. Wilson Urmese, Sri Rajit, Sri. Ashik K. Mohammed
Ali, Shri. Nagaresh, Sri. Tom Jose P., Sri. M.A. Thomaskutty, Sri. T.P.
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Ibrahim Khan and Sri. Paul K. George and the learned Standing Counsel
Smt. Sreedevi Kailasanath, appearing on behalf of the Kerala State
Electricity Regulatory Commission and Sri. C.K. Karunakaran, learned
Standing Counsel for the Electricity Board.
11. The Electricity Act, 2003 is an Act to consolidate the laws
relating to generation, transmission, distribution, trading and use of
electricity and generally for taking measures conducive to development of
electricity industry, promoting competition therein, protecting interest of
consumers and supply of electricity to all areas, rationalisation of electricity
tariff, ensuring transparent policies regarding subsidies, promotion of
efficient and environmentally benign policies, constitution of Central
Electricity Authority, Regulatory Commissions and establishment of
Appellate Tribunal and for matters connected therewith or incidental
thereto. Section 2(64) of the said Act defines the “State Commission” as
follows:
“State Commission” means the State
Electricity Regulatory Commission constituted
under sub-section (1) of Section 82 and includes a
Joint Commission constituted under sub-section
(1) of section 83.”
12. Section 82 deals with the Constitution of a State Commission.
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There is a proviso to Section 82(1) to the effect that the State Electricity
Regulatory Commission established by a Government under Section 17 of
the Electricity Regulatory Commissions Act, 1988 and the enactments
specified in the Schedule, and functioning as such immediately before the
appointed date shall be the State Commission for the purposes of this Act
and the Chairperson, Members, Secretary and officers and other employees
thereof shall continue to hold office, on the same terms and conditions on
which they were appointed under those Acts. Section 86 enumerates the
various functions to be discharged by the State Commission and
determination of tariff for generation, supply, transmission and wheeling of
electricity, wholesale, bulk or retail within the State is one such function.
It is in exercise of the said function that the State Regulatory Commission
has issued the new tariff which is impugned in the writ petition to the extent
where Self Financing Educational Institutions are included under Tariff VII
A as commercial and treating them differently from the other
Aided/Government Educational Institutions retaining them under Tariff VI.
Section 61 empowers the appropriate Commission to specify the terms and
conditions for the determination of tariff and in so doing, it shall be guided
by the factors mentioned under Clause (a) to (i). Section 62 empowers the
appropriate Commission to determine the tariff in accordance with the
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provisions of the Act and Section 62(3) clearly provides that the appropriate
Commission shall not, while determining the tariff under this Act, show
undue preference to any consumer of electricity but may differentiate the
consumers on the basis of the factors enumerated thereunder. We may
extract for easy reference Section 62(3) of the Act as follows:
“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
load 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.”
Section 49 of the Electricity (supply) Act, 1948 corresponds to Section 62
(3) of the Electricity Act, 2003. We may extract the said provision also as
hereunder:
“49. Provision for the sale of electricity by
the Board to persons other than licensees.–(1)
Subject to the provisions of this Act and or
regulations, if any, made in this behalf, the Board
may 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 framed uniform tariffs.
(2) In fixing the uniform tariffs, the Board
shall have regard to all or any or the following
factors, namely,–
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(a) the nature of the supply and the purposes
for which it is required;
(b) the co-ordinated development of the
supply ad 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 ad standardization
of methods and rates of charges for such supplies;
(d) the extension and cheapening of
supplies of electricity to sparsely developed areas.
(3) Nothing in the foregoing provisions of this
section shall derogate from the power of the
Board, if it considers it necessary or expedient to
fix different tariffs for the supply of electricity to
any person not being a licensee, having regard to
the geographical position of any area, the nature of
the supply and purpose for which supply is
required and any other relevant factors.
(4) In fixing the tariff ad terms and
conditions for the supply of electricity, the Board
shall not show undue preference to any person.”
13. It may be noticed that though Section 62(3) and Section 49(2) of
the Act may appear to be similar, by virtue of Section 49(3) of the earlier
Act, the Board, if it considered necessary or expedient, can fix different
tariffs for the supply of electricity to any person not being a licensee having
due regard to the geographical position of any area, the nature of the supply
and purpose for which supply is required and any other relevant factors.
Therefore there could be any other relevant factors which may weigh with
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the Board to justify differentiation other than the factors specifically
mentioned in the Section. In other words, the board has got a wider power
and the Section is not exhaustive as regards the factors based on which
differentiation could be made since there may be other factors which may
justify differentiation for the purpose of tariff fixation. But while enacting
the new law, The electricity Act, 2003, the legislature has consciously
omitted the word “any other relevant factors” occurring in sub-section 3 of
Section 49, thereby the differentiation factors for tariff fixation must
necessarily be factors specifically mentioned under Section 62(3) of the Act.
In other words, the Act is exhaustive with reference to the factors based on
which differentiation could be made to fix different tariffs among the
consumers. What factor weighed with the Regulatory Commission to
differentiate the Self-Financing Educational Institutions from other
educational Institutions in the matter of fixation of tariff rates is a matter to
be guessed since the averments in the counter affidavit and additional
counter affidavit do not lend support to their contention that the nature and
purpose are the factors of differentiation. The State Electricity Regulatory
Commission, in their notification dated 7.9.2009, has published an extract of
the tariff petition filed by the Kerala State Electricity Board for inviting
objections. The notification says that detailed tariff proposal is available in
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the Commission’s web site. In the extract of the notification, under HT-
EHT Category item 5 reads thus:
(5) “The Seafood processing and milk
chilling and processing units to be retained under
the Commercial Category.”
Under the head “B”, L.T. categories item (5) reads thus:
“Freezing plants, cold storages, Bakeries,
CD recording/duplication, computer consultancy
services, software development with or without
SSI registration, data processing activities, desk
top publishing, floriculture activities, marble
cutting, colour photo printing, tissue culture,
audio/video/CD recording/duplication units to be
classified as LT VII (A) Commercial.”
The notification containing the schedule of tariff and terms and conditions
for retail supply by Kerala State Electricity Board with effect from
1.12.2007 is produced as Ext.P4 in the writ petition. In the notification,
Low Tension – VII (LT VII A) Commercial reads thus:
VII(A) Tariff for commercial consumers
such as display lights, cinema studios, commercial
premises, hotels and restaurants (having connected
load exceeding 1000 W), showrooms, business
houses, private hostels/lodges/guest/rest houses,
freezing plants, cold storages, milk chilling plants,
bakeries (without manufacturing process),
Audio/video cassette recording/duplication units,
CD recording units, self financing educational
institutions (including hostels),
petrol/diesel/LPG/CNG bunks, Automobile service
W.A. 1064/09 & CON. CASES :19:
stations, all construction works, installations of
cellular mobile communications/cable TV
networks, satellite communications,
offices/exchanges of telecom companies, Offices or
institutions of AIR, Doordarshan, radio stations,
insurance companies, call centers and marble
cutting units.”
There is nothing in the extract as rightly held by the learned Single Judge to
suggest that the proposal is to include the Self Financing Educational
Institutions under LT Commerce Tariff. May be the details are available in
the web site in the draft Tariff. But it can not be said that the petitioners
were on default for not raising any objection because the purpose of the
publication of the extract as could be seen from the item extracted above
indicates the proposal to retain the other consumers, for Example- the
seafood processing and milk chilling and processing units under the
Commercial Category. Under the LT category – Commercial, there are
indication to show in the extract as to which are the establishments likely
to be retained under LT VII A. Dairy farms/ milk chilling plants with or
without chilling/freezing/cold storage activity is included under industrial
category provided the chilling/freezing/cold storage load is limited to 20%
of the total connected load and if it exceeds 20%, LT VII(A) tariff is
applicable. Again, in the case of freezing plants, cold storages, bakeries,
CD recording/duplication, computer consultancy services, software
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development with or without SSI registration etc. there are indication to
bring them under LT VII (A). In the wake of this notification and in the
absence of any indication that Self Financing Educational Institutions are
also to be included, how can it be said that there is a failure on the Self
Financing Institutions to file their objection.? On the other hand, the non
mentioning of the Self Financing Educational Institutions, while various
establishments are made mention of, may indicate otherwise. At any rate,
when the extract itself contains the details of various types of consumers to
be included or retained under LT VII(A), the specific omission to mention
Self Financing Educational Institutions certainly is an indication that the
Electricity Board has not made any suggestion in their proposal to include
Self Financing Educational Institutions under Commercial category and it is
this proposal that has been converted as a petition as contemplated under the
Act. True that the manner in which notice could be issued being prescribed
under the Regulation adherence to that provision by publishing in the web
site or in the notice board may be sufficient. But all that we wish to say is
that there is no justification for the respondents to say that the petitioners
did not make any objection and they can be non suited on that ground. It
must be noticed that it is for the first time that the Self Financing
Educational Institutions are treated differently from other educational
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institutions for the purpose of electricity tariff. Hitherto till the impugned
notification all the educational institutions were treated alike. If so, a
proposal to delink them from the existing tariff item and to treat them
differently and to bring them under a different tariff rate is a matter on
which indication should have been made in the extract of the Tariff
notification before the petitioners could be alleged as defaulters in raising
objections and if only the petitioners did not raise any objection the matter
would have been different. In so far as that is not done, it cannot be said
that there is any effective opportunity for the petitioners to raise their
objection before appropriate authority before publishing the notification in
question.
14. Coming to the issue regarding justifiability or otherwise of
treating the Self Financing Educational Institutions under commercial
category and to treat them differently from the Aided/Governmental
Educational Institutions, the only reason advanced by the Regulatory
Commission in their counter is extracted in para 21 of the judgment under
appeal, the crux of which is that the Self Financing Institutions are treated as
operating on business prospects, running on non-objective of social uplift,
that they accommodate only students belonging to the class, having paying
capacity, that Government has no control over the fixation of fees by those
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Institutions, which are fixing up their own fees ad establishment charges and
that the motive of such Institutions is only business under the guise of
service. In the additional counter affidavit, it is stated that since the revision
of tariff in 2002 there are new generation of consumers emerged such as
call centers, software development units, palliative care centers, HIV
rehabilitation centers, self financing institutions etc. which are to be
classified properly and the Commission has initiated tariff rationalization
process in the tariff order effective from 1.12.2007. In para 7 of the
additional counter affidavit extracted at Page 45 of the judgment under
appeal, it is seen that the further contention is that it is only for the purpose
of determining tariff, Self Financing Educational institutions are classified
as LT VII (A) category considering the high usage of the electricity and the
Commission has not branded them as “Commercial”.
15. Though in the judgment under appeal, in page 57, a reference is
made to the argument note wherein it is stated that electricity is being
consumed by the Self Financing Educational Institutions not only for the
purpose of education, but also for providing luxurious amenities, like high
powered lights, lifts, air conditioned class rooms, hostels, canteens etc.
whereas the Government Institutions have only few lights and fans in the
class rooms and that is why the huge variation in the consumption of
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Government or Private Aided Institutions were compared to Self Financing
Educational Institutions and the same is well revealed by the table which
provides for per student consumption. We are afraid that the statement of
facts contained in the argument note cannot be treated as part of the
pleading and we refuse to refer to such statements and there is also no
supporting materials placed on record. The learned Single Judge rightly
found that there cannot be any quarrel with the proposition that the capacity
to pay cannot be a differentiating factor under Section 62(3) of the Act. In
this connection, we may refer to the decision of the Apex Court in M/s.
Rohtas Industries Ltd. v. Chairman, B.S.E.B. (AIR 1984 SC 657). The
Apex Court, after referring to Section 49(3) of the Electricity Supply Act,
1948, held in para 14 as follows:
“Yet another point urged on behalf of the
appellants was that under Section 49 of the Act,
while exercising the power of framing uniform
tariffs, the Board was under a duty to apply its
mind to all relevant factors but there had been an
omission to discharge the said mandatory duty in
as much as the capacity of the concerned industry
to pay for the energy at the rate proposed to be
fixed, which is a highly relevant factor, had not
been taken into account at all. Clauses (a) to (d)
of sub-sec. (2) of Section 49 enumerated the
various matters which the Board shall have
regard to in fixing the uniform tariffs and the
capacity of any particular industry to bear the
energy charge at the proposed rate of levy is notW.A. 1064/09 & CON. CASES :24:
included in the said enumeration (Emphasis
given). Under the scheme of the tariff fixation
incorporated in the section, the tariff is to be
uniform subject to the classification of consumers
into different categories. Under sub-section 3 of
the said section, the classification of the consumers
into such different categories is to be made only
with reference to the nature of the supply, the
purpose for which supply is required the
geographical position of any area and other like
relevant factors. It is not contemplated by the
said section or any of the other provisions of the
Act that as amongst consumers falling within a
specified category different rates are to be
charged depending upon the financial capacity of
the particular consumer to pay(Emphasis given).
On the other hand, the very core of the scheme of
Sec. 49 is that the tariff should be uniform in
respect of each class or category. Hence the attack
levelled against the tariff fixation on the aforesaid
ground, that a relevant factor, namely, that the
financial capacity of individual industrial
consumers had not been taken in to account, is
devoid of force.”
16. From the above, it can be seen that the criteria in differentiating
one consumer from the other must be the factors as specified in the
provision, in this case, Section 62(3) of the Act. If the capacity to pay is a
relevant factor, certainly, it can be justified in differentiating one consumer
from the other. We have extracted Section 62(3) of the Act in extenso and
we do not think “capacity to pay” is a differentiating factor among the
consumers. Further, there is hardly any material placed on record as to
W.A. 1064/09 & CON. CASES :25:
what is the capacity in general of the various Self Financing Educational
Institutions compared to the other Educational Institutions. The contention
that Self Financing Educational Institutions are run on business prospects
or that it is profiteering is only a vague statement made unsupported by any
material produced. If the Regulatory Commission had collected any
materials for the purpose of enquiry before the notification was issued,
they would have very well placed the same on record. No such enquiry
has been made undisputably and in the absence of any such materials
placed on record and in the absence of any reference as to how the
inference was drawn, it is not possible to accept a bald statement in the light
of the specific denial of the same by the respondents. Further, even in the
case of professional colleges, the Kerala Professional Colleges or
Institutions (Prohibition of Capitation Fee, Regulation of Admission,
Fixation of Non-exploitative Fee and Other Measures to ensure Equity and
Excellence in Professional Education) Act, 2006, clearly provides that the
Self Financing Professional Colleges cannot collect a fee beyond what has
been fixed by the statutory committee and in fixation of the fee to be
collected various factors will have to be taken in to account. Thus, there is
control in the matter of fees to be collected. Whether or not factually any
college is collecting any amount more than what is fixed is a matter to be
W.A. 1064/09 & CON. CASES :26:
pleaded and proved, as an inference cannot be made as to what is prohibited
by law. Therefore, this contention also fails. While the Self Financing
Institutions are treated as non domestic as in the case of other Educational
Institutions, now they are treated under the head “Commercial”. At the
same time, it is admitted by the third respondent in the additional counter
affidavit that they could not be treated as “Commercial” which means that
by bringing them as “Commercial” the counter affidavit admits the fact that
they are not “Commercial”. If so, there is no justification to treat them
along with other consumers who are “Commercial” in nature. In other
words, even among the class under LT VII(A), if Self Financing
Educational Institutions are, as admitted in the additional counter affidavit,
not “Commercial” in character, they cannot be associated with other
Commercial establishments or consumers and treat them alike. It is already
pointed out that yet another contention that Self Financing Educational
Institutions is a new class emerged after 2002 itself is factually incorrect.
It is a known fact that there were Self Financing Educational Institutions
even prior to 2002. Further, the recognized schools’ fee structure can only
be as prescribed under Rule 29 of Chapter XII of the Kerala Education
Rules. “Private school” has also taken within its ambit both aided and
recognized schools under Section 2(7) of the Kerala Education Act. It is
W.A. 1064/09 & CON. CASES :27:
also to be pointed out that Rule 8 of Chapter V specifically mandate fee and
other income to be used for any other purpose not connected with the
school. Rule 29 only sanction collection of two type of fee – one Tuition
Fee and (2) Special Fee and no other fee is permitted to be collected. I In
the light of the above provisions and in the absence of any additional
materials placed on record, this Court cannot accept the contention that
generally all Self Financing Educational Institutions are run on business
motive or that they are indulged in profiteering. The only other factor
which is pointed out in the counter affidavit for justifying the inclusion of
Self-Financing Educational Institutions differently is the nature and purpose
for which the supply is required. When the supply is to an educational
institution, irrespective of whether it is self-financing or aided or
Governmental purpose, cannot be different, as education means to impart
knowledge. Education in ancient times was not connected with earning.
Free education is what was accord in Dharma. Education ought to be the
resource for tradition, loyalty to culture and ideals of service to society. We
cannot, in the absence of materials and evidence, simply accept that
educational institutions, though self financing, are profiteering or run as
business. There are also absolutely no materials placed on the question as
to whether electricity is consumed by the Self Financing Educational
W.A. 1064/09 & CON. CASES :28:
Institutions for any other purpose. The vague statement that building is air
conditioned without specifying how many institutions are having air
conditioned buildings or apparatus having high consumption of electricity
etc. are not matters on which specific pleas with reference to details are
made available. We may, at the risk of repetition, say that we are only
examining the justifiability of treating Self Financing Educational
Institutions with reference to other institutions – aided/Governmental – from
the point of view of electricity consumption as borne out by the affidavits
filed before this Court and we have in that attempt considered the factors
pleaded by them and found to be unsustainable.
18. Nextly it was contended that there are some procedural
irregularities and reference was made to Sections 62 and 64 of the Act. We
may, in this connection, refer to an order passed by the Regulatory
Commission on the petitions TP 23/2006 and T.P. 30/2007, dated 26th
November, 2007. As per the said order, the State Electricity Regulatory
Commission scrutinized the petition filed by the Electricity Board on ARR
& ERC, 2007-08 as also Tariff Petition dated 4th July, 2007 and after
consulting the advisory committee and considering the written objections
filed by the stakeholders and the subsequent written and oral submissions of
Kerala State Electricity Board, the views of the stakeholders/objectors,
W.A. 1064/09 & CON. CASES :29:
and other documents and materials on record, passed the order which
clearly shows that it was the petition filed by the Electricity Board which
was considered and orders passed.
19. It may, in this connection, be noticed that even the order issued
by the Kerala State Electricity Regulatory Commission shows that freezing
plants, cold storage, bakeries, C.D. recording/duplication, computer
consultancy services etc. are to be classified as LT VII(A) Commercial.
On a mere glance of the various other consumers included in this category,
it can be seen that it admits of no doubt that they are commercial
establishments and there cannot be two opinion on that. It is along with
such commercial establishment that Self Financing Educational Institutions
are also brought in. As we have already stated, when it is admitted by the
respondents that they are not commercial, there is no justification for
treating and including them under LT VII Tariff as commercial. The
decision of the Commission at para 8.5 of the said order shows that the
Commission has recognized the Self Financing Educational Institutions,
seafood processing, milk chilling plants and call centres as new consumer
groups and included them under appropriate Commercial Category.
Therefore, the averments in the counter affidavit that they are not treated as
commercial goes contrary to the decision of the Commission contained in
W.A. 1064/09 & CON. CASES :30:
the order. It only shows that at the time of inclusion of the Self Financing
Educational institutions, they were only on the point as to whether they
should be treated as commercial or not and even gone to the extent of
saying that there is a new class emerged after 2002. Therefore, the basis on
which the Self Financing Educational Institutions are treated as commercial
are clearly illegal and are not sustainable.
20. We may, in this connection, refer to the decision of a learned
judge of this Court in N.S.S. Hindu College v. K.S.E.B. (2007(4) KLT
779) wherein it is held as follows:
“A hostel is a place where educational institution
provides food and accommodation to staying
students and canteen attached to the college also
provides similar facility, ie. providing food to the
students and staff, who do not stay in the campus.
The only purpose in both the cases, is to provide
facility to the students in the college campus.
Obviously, hostels and canteens are not run by
educational institutions to make profit but are run
for the benefit of the students and staff. It is a well
known fact that only moderate charges are levied in
college canteens. Therefore, the object of running
a canteen is not to make profit and prima facie it
cannot be said to be commercial activity to be
billed at commercial tariff. …. .. . . . . .. .. . . . . . “
21. Even in a case where a canteen is not to be treated as a
commercial establishment because it is not running on profit basis, there is
W.A. 1064/09 & CON. CASES :31:
no basis for the contention that the educational institutions are commercial
in nature. Probably, finding it difficult to sustain the Self Financing
Educational Institutions as commercial in nature, the additional counter
affidavit came with an admission that the Commission has not treated them
as commercial. But as already pointed out, it is only treating them as
commercial that the notification is issued, treating them on par with the
other commercial establishments.
22. For the various reasons stated as above, we declare that inclusion
of Self Financing Educational Institutions under LT VII(A) as a commercial
consumer is bad in law in so far as such differentiation is not for any of the
grounds specified under Section 62(3) of the Act. Accordingly, we allow
all the writ appeals and the writ petitions. They will be treated like falling
under Tariff VI until any new notification is issued in accordance with law.
All the Self Financing Educational Institutions were being paid at
Tariff LT VI during the pendency of the writ petition. In the appeal, we
made a slight modification in the interim order and directed them to pay off
at the current rate. Since we have allowed the appeal, the amount paid by
the appellants will be adjusted as against the future dues and instead of
adjusting the entire amount in one month we think it will be appropriate to
direct that such excess amount be adjusted in four months’ period so that
W.A. 1064/09 & CON. CASES :32:
one fourth of the excess amount be adjusted in every month until the same
is wiped off.
P.R. RAMAN, JUDGE.
P. BHAVADASAN, JUDGE.
KNC/-