ORDER
Jeevan Reddy, J.
1. These Writ Appeals are preferred against a common judgment of a learned single Judge, G. Radha-krishna Rao, J., partly allowing a batch of writ petitions filed by a number of industries. The writ petitioners are consumers of electricity. They fall in the category of High Tension (Industrial) Consumers. They challenged the revision of tariffs in B.P. Ms. No. 671, dated 10-6-1987 (with effect from 15-7-1987), as well as the further revision of tariffs in B.P. Ms. No. 353, dated 15-4-1989 (given effect from 1-6-1989). Both the respondent-Electricity Board and the writ-petitioners have filed appeals against the judgment of the learned single Judge.
2. The A. P. State Electricity Board is constituted under Section 5 of the Electricity (Supply) Act, 1948 (hereinafter referred to as 'the Act'). Section 49 empowers the Board to classify/categorize the consumers having regard to the several factors mentioned in sub-section (2) thereof, and to fix different tariffs for them. From the very beginning the Board has been categorising the consumers into more than one category and has beencharging them at different rates. For purposes of these appeals it is sufficient if we commence our consideration from the year 1981 onwards.
3. Under B. P. Ms. No. 418, dated 2-6-1981 the tariff rates for several categories of consumers were revised upwards. We shall refer to this as the 'first revision'. In B.P. Ms. No. 1014 dated 13-12-1983 there was another revision of tariffs, which was brought into force with effect from 15-1-1984. We shall refer to this as 'second revision'. In the year 1987 the Board issued B.P. Ms. No. 671 dated 10-6-1987, revising the tariffs once again with effect from 15-7-1987. We shall refer to this revision as 'third revision'. In the year 1989 again the Board revised the tariffs under B. P. Ms. No. 353, dated 15-4-1989 with effect from 1-6-1989 (hereinafter referred to as the 'fourth revision'). Validity of the third and fourth revisions was questioned in the batch of writ petitions, from which these Writ Appeals arise.
4. In the year 1982, two significant developments took place, which have a crucial relevance herein. On 30-7-1982 the Board issued B. P. Ms. No. 589 introducing the concept of 'Fuel Cost Adjustment' (F.C.A.) by amending part A, H.T. Tariffs, notified in the first revision (B.P. Ms. No. 418 dated 2-6-1981). By these proceedings the existing Condition 11 under Part A, H.T. Tariffs was renumbered as Condition 12, and a new Condition No. 11 was intoruced. Condition 11 so introduced read as follows:--
'11. Fuel Cost Adjustment:
The above tariffs are applicable so long as the average cost of coal and oil Ex. Board's Tharmal Generation Stations do not exceed Rs. 175/- per Metric Tonne and Rs. 2.440/-per Kilo litre respectively. If the cost of coal and/ or oil increases beyond the limits specified above. All consumers availing H.T. supply of electricity shall pay additional amounts for the energy consumed as indicated below.!
(a) For every increase of Rs. 10 per Metric Tonne in the average coal of cost Ex-Board's Generating Stations, over and aboveRs. 175/- Metric Tonne, an additional charge of 0.10 paise per unit of energy consumed will be levied.
(b) For every increase of Rs. 10/-per Kilo- litre in the average cost of oil Ex-Board's Thermal Generating Stations over and above Rs. 2440/- Kilolitre, an additional charge of 0.02 paise per unit of energy consumed will be levied. These additional charges will be applicable for the consumption for September, 1982 and onwards.'
5. This concept of Fuel Cost Ajustment was introduced with a view to off set the constant rise in the price of coal and oil. Instead of revising the tariff every time the price of coal and oil goes up, they introduced this concept, according to which an additional amount, called 'Fuel Cost Adjustment' is levied upon H.T. Consumers every time there is a rise in the price of coal and oil beyond the prescribed limit. The H.T. Consumers have to pay the prescribed tariff and the amount representing Fuel Cost Adjustment in additional thereto. FCA was not made applicable to other categories of consumers. The FCA charge is notified from time to time.
6. The other important development in the year 1982 was in the introduction of 'flat rate tariff system' for the electricity consumed by motor pumps used for agricultural purposes. In exercise of the power conferred upon the State Government under Section 78A of the Act, the Government directed the Electricity Board to 'revise the electricity tariffs for irrigation wells to Rs. 50/- per H.P. per annum.' Then directed further that 'this rate shall take effect from 1-11-1982'. The direction is contained in the letter dated 15-12-1982 from the Secretary to Government, Energy, Environment, Science and Technology Department. Government of Andhra Pradesh Addressed to the Secretary, A.P. State Electricity Board. It would be appropriate to set out the said letter in its entirety :--
'While agriculturists owning lands under flow irrigation from major projects for both reliable and cheap irrigation, farmers depend-ing on ground-water based irrigation, most of whom are small and marginal farmers, have to incur relatively higher expenditure in lifting water, besides being vulnerable to recurring drought resulting in lowering of the water table in the wells. Moreover, in rural areas maintenance of electricity meters and the billings of individual farmers based on meter reading is be set with administrative defects leading to loss of revenue, hardship to the farmers and high collection cost. Keeping all the above factors in view, the Government feel that the present power tariff for agricultural pump sets needs rationalisation and that a flat rate system based on the horse-power of each pump-set would be more appropriate in such cases. Government have therefore, decided that with effect from 1st November, 1982 the revised power tariff for agricultural pumpsets in the State should be a flat rate of Rs. 50/- per H.P. per annum.
2. With a view to mitigating hardship to small and marginal farmers depending solely on well irrigation and to give a fillip to agricultural production in the State, the Government under Section 78A of the Electricity (Supply) Act, 1948 direct that, in supersession of the instructions issued in the letter cited (dated 20-1-1982), the APSEB shall revise the electricity tariff for irrigation wells to Rs. 50/- per H.P. per annum, and that this rate shall take effect from 1-11-1982.
3. The A. P. Slate Electricity Board is requested to take immediate necessary action accordingly.'
7. Bound as it felt by the direction of the Government the Board introduced the system of flat rate tariff for agricultural pump-sets with effect from 1-11-1982.
8. It may be noted that the aforesaid two significant developments took place after the first revision. Therefore, when the second revision took place (B-P. Ms. No. 1014, dated 13-12-1983 with effect from 15-1-1984), both the concept of FCA, and the flat rate tariff system were affirmed and made a permanent feature. So far as FCA is concerned, the amount charged on that account was merged in the tariff notified for H.T. consumers and afresh formula introduced by way of Condition 11 in Part A of the Tariffs. Clause 11 now provides that, for every increase of Rs. 1/- per Metric Tonne in the average cost of coal Ex-Board's Generating Stations over and above Rs. 204/- Metric Tonne, an additional, charge of 0.10 paise per unit of energy consumed will be levied, and further that, for every increase of Rs. 10/- per kilolitre in the everage cost of oil over and above Rs. 2,886/-kilolitre, an additional charge of 0.02 paise per unit of energy consumed will be levied.
9. In the year 1984 a batch of writ petitions was filed in this Court questioning, inter alia, the levy of FCA only upon H.T. consumers, and the fixation of Flat Rate Tariff for agriculturists. The writ petitions were filed by certain units described as 'Power Intensive Units'. A Bench of this Court negatived the several contentions urged by the petitioners, including the aforesaid two contentions. The revision of tariffs effected in second revision was upheld. It was specifically held that there is nothing irrational or unreasonable in passing on the burden of rise in fuel-cost only to H.T. consumers, and that since it is a question of policy which is better left to the administrators and experts in the field, this Court cannot, in exercise of its jurisdiction under Art. 226, suggest any alternate policy. It was observed that, if the Board had revised the tariffs instead of introducing a separate concept of FCA to meet the rise in the fuel-cost the petitioners could not have made a legitimate grievance against it. For the mere circumstance that, with a view to avoid frequent tariff revisions, the Board has evolved a working formula which can automatically adjust the escalation charges -- it was observed -- the H.T. consumers cannot be permitted to complain against the validity of the FCA. So far as the attact upon the flat rate tariff system for agricultural pump-sets is concerned, that was also repelled holding that the State, in formulating its socio-economic policies, is entitled to show some concession in favour of one or the other category of consumers, and that being a policy decision, the Government was perfectly within its jurisdiction in directing the Board to supply power to agricultural pump-sets at a flat rate. Thebench also repelled specifically the contention that the power of of giving directives under S. 78k cannot extend to fixation of teriffs and therefore the Government's directive dated 15-12-1982, in so far as it specified the tariff for agricultural pumpsets, is beyond its power. The Bench held, following the decision of the Supreme Court in S. Narayan v. Union of India : AIR1976SC1986 that even the rates of tariff are policy matters and, there-fore, within the purview of S.78a-- We are told that appeals against the said Bench judgment are now pending in Supreme Court. The validity of third and fourth revisions is under challenge in this batch of writ petitions/writ appeals.
10. According to the teriffs notified in third revision (B.P.Ms. No. 671, dated 10-6-1987 with effect from 15-7-1987), the categorisation of consumers is as follows:-
H.T. Category-I
This was mainly intended for industrial consumerswho segregate lights and fans load in the factory, as well as residentialcolony consumption. For these consumers a two-part tariff was prescribedbased upon demand charges and energy charges.
H.T. Category-II
This was meant for all H.T. consumers other thanthose covered under other H.Y. categories. These consumers were also billedon the basis of two-part tariffs.
H.T. Category-III (for Power intensiveindustries.)
This was a new category introduced underwere notmany in number were charged in a particular manner, which it is not necessaryto set out herein.
Category- V (a) : H.T. Supply for agriculturalconsumers availing supply at 11 KV and above :-
Charges levied on the basis of consumption,subject to prescribed fixed charges. There are very few consumers in thiscategory.
L.T. Category- I (Domestic)
Tariff was on the basis of units consumed.
L.T. Category-II (Non-Domestic and Commercial).
On the basis of consumption
L.T. Category-III (Industrial)
On the basis of units consumed, subject toprescribed minimum charges.
L.T. Category-IV (Cottage Industries)
On the basis of units consumed, subject toprescribed minimum charges.
Category-V(b) (L.T. Agricultural Consumers).
Flat Rate Tariff Rs. 50/- per annum per H.P. ofcontracted demand or connected load whichever is higher
Category-V(c) (Polutry Farming)
prescribed fixed charges.
Category-VI (Public Lighting)
Charge was on the basis of each fuxture.
Catogery-VII
This was applicable to places of Worship, Churches, TemplesMosques. Gurudwaras, Educational Institutions, Students' Hostels CharitableInstitutions, and recognised service institutions. On the basis of unitsconsumed, subject to prescribed minimum charges.
H.T. Consumers have to pay FCA charges in addition to notified tariff. High Tension Consumers not only include industries, but also commercial establishments, besides a few agricultural consumers. The non-industrial H.T. Consumers fall under H.T. Category-II, and the tariff rate for them has always been higher than the rate applicable to industrial-consumers who fall under H.T. Category-I, or H.T. Category-III. For the sake of convenience, we may set out the tariff rates for several categories of consumers as obtaining under the aforesaid four tariff revisions.
First RevisionSecond RevisionThirdFourth Revision
1. H.T-Category-I (Industial)
Rs.25/-.per KVA per month + 40 paise per unit
Rs.30/- per KVA + paise per unit
Rs. 36/- per KVA + 67 paise per unit
Rs. 42/- per KVA + 95 paise per unit
2. Power intensive tariff (Industrial)
32 paise per unit
45 paise per unit
83 paise per unit
113 paise per
3. H.T. Category-II (Non-industrial)
Rs. 30/- per KVA per month + 47 paise per unit
Rs. 30/-per KVA + 56 paise per unit
Rs. 36/- per KVA + 80 paise per unit
Rs. 42/- per KVA + 110 paise per unit
4. H.T. (Agriculture)
Rs. 16/- paise per unit + Fixed Charges Rs. 20/- H.P. per month
16 paise per unit + Fixed Charges Rs. 2/-per H.P. per
20 paise per unit + Rs. 2/- per H.P. per month
41 paise per unit + Rs. 6/- per H.P.
per month
5. L.T. Category-I (Domestic)
45 paise up to 100 units and 50 paise there-afther (monthly mini mumRs. 5/-
45 paise up to 100 units and 50 paise thereafter (monthly minimum Rs. 5/-
50 paise per unit up to 100 60 paise per unit above 100 units
60 paise up to 100 and 70 paise thereafter
6. L.T. Catetory-II (Non-Domestic & Commercial)
95 paise per units (monthly minimum charges Rs. 15/-
95 paise per unit (monthly minimum charges Rs. 15/-)
110 paise per unit (monthly minimum charges Rs. 25/-for single phaseRs. 75/- for 3 - phase.)
130 paise per unit (monthly minimum charges remain the same)
7. L.T. Category-Ill (Industrial)
50 paise per unit + monthly charges Rs. l2/- per H.P.
55 paise per unit + monthly
charges Rs. 12/ -pet H.P.
75 paise per unit + monthly minimum charges Rs. 13/- per H.P.
50 paise per unit + monthly
charges Rs. 20 per H.P.
8. L.T. Category-IV (Cottage Industries)
35 paise per unit (monthly charges Rs. 5/-)
35 paise per unit monthly minimum charges Rs. 5/-
35 paise per unit (monthly charges Rs. 5/-)
41 paise per unit (monthly charges Rs. 6/-)
9. L.T. Category-V (Agricultural) with effect
Rs. 50/- per H.P.
Rs. 50/- per H.P. per annum
Rs. 50/- per H.P. per annum
Rs. 50/- per H.P. per annum .
11. The learned single Judge has recorded the following Findings:--
(i) Writ-petitioners have failed to establish that revenue derived by revised tariffs is yielding a surplus of 17%.
(ii) The revised tariffs (third and fourth revisions) are not bad in law for the reason that the State Electricity Consultative Council was not consulted before revising the tariffs. Such consultation is not mandatory.
(iii) The Board is entitled to categorize the consumers into several categories and to fix different tariffs for them. The flat rate tariff system for agricultural pump-sets is not bad.
(iv) However, the levy of FCA charges only upon H.T. consumers is unreasonable The factual situation which constituted the basis for Division Bench judgment of this Court in Nava Bharat Fepro Alloys Ltd. v. A.P.S. Electricity Board AIR 1985 AP 299, is no longer valid. During the period 1984 to 1989 there has been a tremendous increase in the number of agricultural pumpsets and the connected load for them, whereas the rise,if any, in the consumption of H.T. Industrial Units is only marginal. In other words, the consumption by H.T. Industrial Consumers has fallen below 50% of the total power consumption. This change in factual situation makes the levy of FCA only on H.T. consumers unreasonable and bad, though it may have been found reasonable in the year 1984. Similarly, the freezing of flat rate tariff for agricultural pumpsets at Rs.50/- per H.P. per annum, from the year 1982 onwards, notwithstanding substantial rise in the tariffs for other categories of consumers, calls for a fresh look.
On the above findings, the following directions have been given by learned Judge:--
(i) The Board is at liberty to collect the enhanced tariffs notified in third revision, excluding FCA charges.
(ii) 'The Board is also entitled to distribute the Fuel Cost Adjustment on all the categories on the basis of consumption that has been made by the respective consumers. In the case of L.T. Agricultural Consumers on account of the flat rate system, if the Board incurs loss, it is left open to the Board and the Government to decide that matter in such manner as it thinks fit; but that amount should not be distributed among the other categories.' (B.P.Ms.No.671, dated 10-6-1987 is quashed to the extent indicated in (i) and (ii) above.)
(iii) 'The Board is directed to estimate the tariffs on the basis of the increased rates of 1987 and the appointment of FCA on the basis of the consumption and issue the revised bills with regard to the arrears within twomonths from today. The petitioners are directed to pay the said amount within one month from the date of service of the bill, and if any excess is paid, the same shall be adjusted in the future bills.'
(iv) 'In 1989 revision also enhancement of tariff has been made on the basis of previous enhancement only and the Board has not taken into consideration the Fuel Cost Adjustment charges and also the lowering of the rates of L.T. Agricultural Consumers at 0-04 paise per unit. Therefore, the revision that has been made in the year 1989 under B.P.Ms. No. 353 dated 15-4-1989 has to be struck down completely.'
12. Both the consumers and the Board have filed appeals questioning the aforesaid findings, in so far as they are against them.
13. For the sake of convenience we shall refer to the parties as 'petitioners/consumers' and as 'Board' respectively.
14. Sri S. Parvatha Rao, learned counsel for the petitioners/consumers, urged the following contentions:
(i) The directive issued by the Government in its letter dated 15-12-1982 is invalid and inoperative for more than one reason, viz.,:--
(a) While issuing the said direction, theGovernment has not kept in mind the legislative injunction contained in S. 59 of the Act, which obliges the Board to earn a minimum surplus of 3%. The direction to charge tariff at the rate of Rs. 50/- per H.P. per annum in respect of agricultural pumpsets disables the Board from complying with the said legislative command, with the result that it has correspondingly increased the tariff rates for other consumers, and in particular H.T. Industrial Consumers;
(b) The power to give directives under S.78-A must be exercised reasonably. The said directive has the necessary effect of enhancing the tariff rates of other consumers, in particular the H.T. Industrial Consumers, to an unreasonable level, putting their very survival at peril;
(c) The power to give directives cannot, and does not include the power to prescribe a particular tariff for a particular category of consumers. The directives can only be in the nature of guidance on policy matters.
(ii) Even if the said directive was good and reasonable when it was issued, it is no longer so. During the period of seven intervening years, the consumption on account of agricultural pumpsets has gone up enormously and their share of consumption in the total State consumption has increased substantially. Thepower consumption by agricultural pumpests today is in the region of 40% of the total consumption. The cost of generation per unit in the year 1986-87 itself is more than 27 paise per unit, and the cost of supply overall is more than 53 paise per unit, whereas the rate prescribed for agricultural pump-sets is working out, in the year 1989, to 41/2 paise per unit. In other words, the rate charged to agricultural consumers is far far below the cost of generation, which naturally means that the entire burden is being shifted on to other consumers, and in particular, the H.T. Industrial Consumers. This is neither reasonable nor just. In effect the H.T. Industrial Consumers are made to subsidize the agriculturists, inasmuch as the Government has failed to make any subventions or grants to the Electricity Board over these years.
(iii) The Tariffs cannot be totally unrelated to the cost of generation of electricity. There must be a reasonable relation between both. From this point of view, the extraordinarily low rate charged to agricultural consuming and the extraordinarily high tariff charged to H.T. Industrial Consumers, are both bad. All this shows that the ver concept of flat rate tariff system for agriculturists has itself become bad. Several Expert Committees have recommended against such flat rate tariff system for agriculturists.
(iv) The cost of supply of energy at L.T. level (Lower voltage) is more, whereas the cost of supply at H.T. level (higher voltage) is less. Even within H.T. level (higher voltage) is less. Even within H.T. supply, the cost of supply of energy is less, in the case of energy at 11 KV A; still lower in the case of 33 KVA, and even lower in the case of supply at 132 KVA. Notwithstanding this difference all the H.T. consumers are being charged at a uniform rate. Indeed, where a consumer fails to receive the energy at the stipulated level, a penal rate has been prescribed, though the sting of this provision has been remedied to some extent by the decision of the Supreme Court in Hyderabad Engineering Industries Ltd. v. A.P.S.E. Board (3) : [1988]3SCR159 .
(v) Over the last several years, a cut isimposed upon the consumption of electricity by H.T. consumers--. The cut has ranged from 50% to 80%. This had a debilitating effect upon the industries, leading to sickness, among many. On account of the power-cut, they are unable to operate at an optimum level of production, and are thus unable to pass on the burden of higher tariffs and the FCA to the purchasers/consumers; and
(vi) the levy of FCA charges only upon H.T. Industrial consumers, whose consumption has gone below 50% of the total consumption, is unreasonable. The burden must be distributed among all categories of consumers. In this context the fixing of the flat rate tariff for agricultural consumers at Rs.50/- per H.P. per annum, is totally unreasonable, inasmuch as it is resulting in the lower consumers, in particular the H.T. Industrial consumers, bearing the brunt. The Government ought to make subventions and grants to the Board to off-set the loss resulting from its directives, but it cannot ask the other consumers to bear that burden. Indeed, according to the literature published by the Board, the agricultural consumption is expected to go up sharply in the coming years, and the freeze on the rate of supply to them will only result in constant addition of burden upon other consumers, in particular the H.T. Industrial Consumers. Such a situation cannot be countenanced by this Court. Added to this is power-cut imposed year after year over the last three years.
15. On the other hand, Sri V. R. Reddy,the learned counsel for the Board, submitted that the power of categorisation of consumers, and the power to levy different tariff rates for them, is beyond question today. Similarly, the proposition that the power to give directives, conferred upon the Government by S. 78A, includes the power to fix a particular tariff for a particular category of consumers, is also beyond question. The concessional rate of supply prescribed for agricultural pumpsets, has also been upheld by a Division Bench of this Court in Nava Bharat Ferro Alloys Ltd. v. Apseb Hyderabad, (2) AIR 1985 AP 299. The principle of the said judgment is valid and effective eventoday. The learned single Judge held the principle of the said judgment no longer valid and effective only on the ground that the consumption of H.T. Industrial consumers has fallen below 50% of total consumption. This assumption is not correct. The learned Judge ought to have seen that the fall in the consumption of H.T. Industrial Consumers during the years 1987-88 and 1988-89 is on account of the power-cut imposed during those years. Power-cut is not a permanent feature and, therefore, cannot be taken into account. According to the connected load, and according to the actual consumption, the share of consumption of H.T. Industrial Units is more than 50% Even apart from the above, the Board was justified in prescribing flat rate tariff for agricultural pumpsets no doubt in pursuance of the Government's directive, having regard to the fundamental importance of agricultural in our national economy. Andhra Pradesh is primarily an agricultural State; the importance of food production needs no emphasis; food is indispensable. Having regard to the rising population. The food production requires to be constantly augmented, and it is from this point of view that the Board has been following policy of charging a substantially lower rate of tariff for agricultural consumption. Tariffs have been revised not only for H.T. Industrial consumers, but for all other categories of consumers over the last decade. Indeed, the H.T. Industrial consumers have been enjoying a concessional rate of supply from the very begining. Indeed, even among the H.T. consumers the non-industrial consumers are charged at a rate higher than the rate applicable to H.T. Industrial Consumers. All the petitioners are H.T. Industrial Consumers only. None of them belongs to H.T. Non-industrial category. No grievance is made by H.T. Non-industrial consumers. Besides the agriculture, the Board consistent with its social commitment and its commitment to public good, has been prescribing substantially lower tariffs for other categories of co sumers, like cottage industries, public lighting, general purposes, Railways, and so on. Even the domestic consumers are paying substantially high tariffs. The Government,on account of its tight financiali situation has not been making any subventions or grants to the Board. The Board is, by law, obliged to conduct its affairs in such manner as to leave a minimum of 3% surplus every year. The surplus earned by the Board has never been unreasonably high. Up to the year 1984-85 it was contantly suffering losses. For the first time in the year 1985-86 it earned a surplus of 1.58%. The surplus during the subsequent year is 0.83% (1986-87),2.51%(1987-88), and 1.31% (1988-89); which shows that the Board has not been able to reach even the statutory minimum surplus. Further, the cost of generation alone cannot be taken, or made a basis for raising a contention of unreasonableness. The cost of generation is only one of the components. What must be looked to is the cost of supply, which includes cost of generation, transmission, distribution, transmission losses and so on. No doubt, since last two years cuts are being imposed on H.T. consumers, but this is only a passing phenomenon; cuts are imposed on other categories of consumers also. Even though there is no cut in consumption by agricultural users, there are inherent limitations upon their use. The low water table, the constrictions on the area of cultivation, nature of crops raised, and the power-load situation restrict their use of energy to a substantial extent. It cannot, therefore, be said that the tariff rates prescribed for H.T. Industrial Consumers, or the loading of FCA on to H.T. Consumers. H.T. Consumers alone is either unreasonable, or unjust. The learned Judge was, therefore not right in allowing the writ petitions partly.
16. The A.P. State Electricity Board is a statutory public Corporation. S. 18 of the Act imposes upon it, inter alia, the duty 'to arrange...... for the supply of electricity thatmay be required within the State and for the transmission and distribution of the same in the most efficient and economical manner with particular reference to those areas which are not for the time being supplied, or adequately supplied with electricity';...... as also the duty 'to prepare and carry out schemes for transaction, distribution, and generally for promoting the use of electricitywithin the State.......' Section 49 empowers the Board to notify the terms and conditions of supply of electricity, and to fix uniform tariffs in that behalf subject, of course, to the provisions of the Act and the Regulations, if any, made thereunder. Sub-section (2) empowers the Board to fix uniform tariffs taking into account the several factors mentioned therein. Sub-section (3) empowers the Board to enter into a special agreement with any consumer for supply of electricity, having regard to the geographical position of any area, the nature of supply, the purposes for which supply is required, and any other relevant factors. Sub-section (4) then declares that in fixing the tariffs and the terms and conditions for supply of electricity, the Board shall not show undue preference to any, person. It would be appropriate to set out Section 49 in its entirety:--
'49. Provision for the sale of Electricity by the Board to persons other than Licensees:
(1) Subject to the provisions of this Act and of 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 frame uniform tariffs.
(2) 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.
(3) Nothing in the foregoing provisions of this section shall derogate from the power ofthe 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 and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.'
17. In our opinion, sub-section (2) itself Empowers the Board to classify the consumers into more than one category, having regard to the factors mentioned therein. The power to classify consumers is inherent in the sub-section. When the sub-section says that in fixing the uniform tariffs the Board shall have regard to (i) nature of the supply, (ii) purposes for which supply is required, (iii) co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner with particular reference to development of areas not being served, or inadequately served, (iv) simplification of methods and rates of charges for supply, (v) standardisation of methods and rates of charges for supply, (vi) extension and cheapening of supplise of electricity to spare-sely developed areas, it follows that the Board can fix different tariff rates for different categories of consumers having regard to the aforesaid factors. Sub-sec. (3) is also to the same effect. It expressly empowers the Board to fix special tariffs for consumers if the geographical position of the area, the nature of the supply, the purposes for which supply is required, and other relevant factors warrant the same. (See M.S.E. Board v. Kalyan Municipality (3A), AIR 1968 SC 993 and Kerala State Electricity Board, : [1986]3SCR628 sub-sec. (4) which has been held by the Supreme Court in Indian Aluminium Co. v. Kerala State Electricity Board (5) : [1976]1SCR70 as controlling the action of the Board under sub-s. (3) but not its power under sub-ss. (1) and (2) is in truth a reiteration of the obvious. The Board being a statutory public corporation, and being a 'State' within the meaning of Art. 12, is subject to thediscipline of parts III and IV of the Constitution. Art. 14 requires it to act in a manner reasonable and fair, which itself implies a duty to act fairly, and a duty to treat the several consumers in each category, uniformly. Art. 14 also obligates that the classification of consumers made by the Board should be reasonable. It goes without saying that the power to fix uniform tariffs has also got to be exercised in a reasonable manner.
18. Section 59 lays down the general principles which the Board must keep in mind and comply with in the conduct of its affairs. Section 59 has been amended more than once. The decision of the Supreme Court in Kerala State Electricity Board v. M/s. S. N. Govindaparbhu, : [1986]3SCR628 sets out in a tabular form. Section 59 as it obtained prior to 1978, Section 59 as further amended by Act 16 of 1983. At present it reads as follows at page SC 2002 and 2003 of AIR 1986:--
'59. General Principles for Board's finance : (1) 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 is not less than three per cent or such higher percentage, as the State Government may by notification in the Official Gazette specify in this behalf, of the value of the fixed assets of the Board in service at the beginning of such years.
Explanation : For the purposes of this subsection, 'value of the fixed assets of the Board in service at the beginning of the year' means the original cost of such fixed assets as reduced by the aggregate of the cumulative depreciation in respect of such assets calculated in accordance with the provisions of this Act and Consumers' contributions for service lines.
(2) In specifying any higher percentage under sub-section (1) the State Government shall have due regard to the availability of amounts accrued by way of depreciation and the liability for loan amortization and leave-
(a) a reasonable sum to contribute towards the cost of capital works; and
(b) where in respect of the Board, a notification has been issued under sub-section (1) of S. 12A, a reasonable sum by way of return on the capital provided by the State Government under sub-section (3) of that section and the amount of the loans (if any) converted by the State Government into capital under subsection (1) of Sec. 66A.'
19. Section 59 thus obliges the Board to carry on its operations and adjust its tariffs so as to ensure that the total revenues in any year of account yield a surplus of not less than 3% or such higher percentage as the State Government may specify in that behalf. The experience snowed that the State Electricity Boards and State Transport Corporations all over the country were incurring losses at a substantial rate, which had to be made good from public exchequer in one form or the other. In view of the tight financial situation of the Central and State Governments, subventions or grants to Boards had become practically impossible. Hence the statutory obligation to earn a minimum surplus of 3%. After all, the Board carries on a business. It should act on business principles. At the same time, however, it is not in the nature of a private individual or a corporation whose primary concern would be the profit motive. The Board is a statutory public corporation with a social commitment; it is committed to public goods, and it must conduct its affairs in such a manner as to advance public interest. It has to keep the national interest and the overall health of the nation's economy, in mind. These several considerations have to be balanced, and still a minimum surplus of 3% ought to be earned by the Board.
20. Section 78-A empowers the Government to issue directions to the Board on questions of policy, and the Board is to beguided by such directions in discharge of its functions. Section 78-A reads as follows:--
'78-A. Directions by the State Government:
(1) In the discharge of its functions, the Board shall be guided by such directions on questions of policy as may be given to it by the State Government.
(2) If any dispute arises between the Board and the State Government as to whether a question is or is not a question of policy it shall be referred to the Authority whose decision thereon shall be final.'
21. It is in the light of the above provisions that we have to deal with, and answer the several contentions urged by the petitioners/ consumers.
Contentions (i) and (ii):
Validity of the directive issued by the Government on 15-1-1982.
22. Section 78-A empowers the Government to issue directions to the Board on questions of policy. It further declares that the Board shall be guided by such directions in discharge of its functions. If, however, any dispute arises between the Board and the State Government as to whether a particular direction pertains to a question of policy or not, such dispute has to be referred to and decided by the Authority (created under Sec. 3), whose decision shall be final. It is obvious that this power conferred upon the Government is neither absolute, nor unguid-ed. Any direction given shall be consistent with the provisions of the Act and the Rules, if any, made thereunder, and must be within the frame-work of the Act. (See Laker Airways, 1977 (2) All ER 182 (CA) and Bromley London Borough Council, 1982 (1) All ER 129 (HL) : (1973) 227 EG 659). Indeed, the provisions of the Act themselves furnish a guidance to the Government in the matter of issuance of directions. Any direction issued by the State Government contrary to any particular provisions of the Act, or the Rules, would be outside the purview of Section 78-A. At the same time, however, it must be conceded that the Government is entitled to lake into consideration the public interest and the interest of the economy of the State and the nation while giving such directions, Directions actuated by such considerations cannot be said to be either contrary to the provisions of the Act or outside the framework of the Act. As emphasized hereinbefore, the Board is not like any other private individual, or corporation; it is a statutory public corporation with a commitment to social good and to public welfare. Now, food is a basic necessity.
23. It is well known that in '50s our, country had to import large quantities of foodgrains from other countries at a huge costs in terms of foreign exchange. Dependence on other countries for food is bound to affect our national policies and priorities. Having regard to the large population of this; country, the overriding obligation is to be! self-sufficient in food. The population has been growing at an alarming rate. Over the last three decades the population has practically doubled. All this emphasizes the importance and significance of the food production. We are not saying that industry is any the less important. We cannot afford to be a backward agricultural country. We have to advance on the industrial front as well. But among the two, agriculture is bound to be given a preferential place. Anything can be dispensed with, but not food and a nation cannot always depend upon others for such a basic necessity, required in such huge quanti-ties.
24. Apart from the above, the Board experienced difficulties in maintenance of electricity meters and billing of individual farmers, based on meter readings. These administrative difficulties led to loss of revenue and high collection costs, besides resulting in hardship to farmers. These factors are clearly recited in the Government's directive dated 15-12-1982.
25. The above considerations it may be noted, are relevant within the meaning of sub-sec. (2) as well as sub-section (3) of S. 49. The nature of supply, the purposes for which supply is required, simplification and standardisation of methods and rates of charges, asalso extension and cheapening of electricity to sparsely developed areas, empower the Board to classify the consumers into different categories and to fix different tariffs for them. We have already held that classification is inherent in sub-section (2) itself, though this power has to be exercised reasonably. It must, therefore, be said that treating the agricultural pumpsets as a separate category for the purpose of supply of electricity and fixing a separate tariff rate for them, is permissible under Section 49. Indeed, the power to charge a concessional rate to such category, having regard to its basic importance to the national economy is also beyond question. The difficulties recited in the Government's directive dated 15-12-1982 clearly empower the Board to devise a flat rate tariff system for agricultural pumpsets. It has been held by a Bench of this Court in Nava Bharat Ferro Alloys Ltd. v. A.P.S.E. Board, AIR 1985 AP 299. Following the decision of the Supreme Court in Rohta Industries, : [1984]3SCR59 , that fixation of a particular tariff is also within the power conferred upon the Government by Section 78-A.
26. There is also no basis, in our opinion, for saying that while issuing the impugned direction the Government did not keep in mind Section 59 of the Act, or that the said direction amounts to an unreasonable exercise of power. While issuing the said direction the Government did not say that the Board should not comply with the requirements inSection 59, or that it should not increase the tariff upon other categories of consumers if it is found necessary for complying with Section 59. Nor can we say that any such direction should be accompanied by a subvension, or a grant. The power under Section 78-A cannot be qualified by any such condition. According to the statistics published by the Board for the year 1988-89 (Power Development in Andhra Pradesh Statistics -- 1988-89) the pattern of electricity consumption during the years 1980-81 to 1988-89 is as follows :--
Share As Percentage to TotalSl. No.Category During 1980-81During 1984-85During 1985-86During 1986-87During 1987-88During 1988-89
1.Domestic10.6911.1211.5911.9213.1313.442.Commercial4.233.403.303.193.383.083.Agriculture17.9325.5124.9128.4634.1134.484.Industry65.8958.8159.0555.3548.1947.785.Others1.26
1.16
1.15
1.08
1.19
1.22
Total100.00
100.00
100.00
100.00
100.00
100.00
27. It is true that if we look to the figures of connected load, the share of agricultural connections is even higher than the connected load of H.T. consumers; but, it is an undeniable fact that an agriculturist does not use the electricity all the year round. In the rainy season he does not use it. Moreover, once the crops are ready for harvest, he did not require energy for pumping out water. We are, therefore, of the opinion that it would be misleading to take the connected load figures and say that the agriculturists are taking away a lion share of energy generated in the State. The more appropriate source would be to take the actual consumption figures -- which we have already set out hereinabove --according to which the consumption, of agriculturists has been ranging from 17.93 of the total consumption, to 34.48, whereas the consumption of electricity by industries ranges between 63.89% (in 1980-81) and55.35% (in 1986-87). It appears that the learned single Judge was impressed by the fact that during the years 1987-88 and 1988-89 the consumption of electricity by industries fell to 48-19% and 47.78%, respectively. But, as rightly explained by the learned counsel for the Board, during these two years there was a power-cut imposed upon H.T. consumers, and it is because of the said cut, which ranged from 15% to as high as 80% the consumption by industry has recorded lower figures. He submits that the figures shown in the above table for the years 1987-88 and 1988-89 should be understood in the light of the said cut. The particulars of power-cut mentioned at page 68 of the said book show that the cut varied from consumer to consumer, depending upon his connected load. Higher the connected load, higher was the power-cut. Between 14-3-1988 and 29-7-1988 the cut imposed upon industries having a connected load of 10,000 KVA and above, was 80% of course, it is not as if the cut was imposed over the entire two-years period. The cut was imposed only during certain periods and at different percentages, the details of which are mentioned at page 68 of the said book.
28. It must, therefore, be said that, when the direction was issued in December 1982, it was a perfectly reasonable direction having regard to the several relevant circumstances. The consumption by agriculturists was about 20%, whereas the consumption by industry was in the region of 60% to 65%. Having regard to the large number of rural connections and the difficulties in the way of billing and connections, the fixation of a flat rate tariff cannot be said to be an unreasonable direction.
29. Now coming to the rate prescribed for agricultural pumpsets, the Government's directive itself sets out the difficulties faced by the agriculturists. It is stated that most of these agricultural pumpsets are owned by small and marginal farmers, that they have to incur substantial expenditure in lifting the water, and that they are vulnerable to recurring drought, resulting in lowering of the water table in the wells. In this connection, we may also refer to the fact that the policy of theState over the last decade has been to keep the prices of foodgrains under check and not to allow them to rise beyond a particular limit. This is, no doubt, done in the interest of stability of economy and in the interest of common man as such; but, at the same time, it is clear that market forces have not been allowed to operate freely in this sector. Be that as it may, having regard to the basic and undeniable importance of agriculture, the fixation of flat rate tariff at Rs.50/- per H.P. per annum cannot be said to be unreasonable.
30. Mr. S. Parvatha Rao, learned counsel for the petitioners, brought to out notice that several committees, including 'Rajadhayak-sha Committee, recommended against the introduction of flat rate tariff for agriculturists, and also against prescribing a very low rate for them. He also pointed out that, according to their recommendations, where such low rate is prescribed resulting in loss to the Board, such loss should be made up by the Government by giving subventions and grants, and that the said burden should not be shifted on to other categories of consumers. It is also pointed out that even in the year 1982 the recommendation was to prescribe a flat rate tariff of Rs. 80/- or Rs. 90/- per H.P. per annum, and that in spite of such recommendations, the Government chose to fix it at Rs, 50/-. We are not impressed. Firstly, the recommendations of Expert-Committees are only recommendations, and do not preclude the Government from taking into account the other relevant considerations while deciding upon the action to be taken on the basis of such recommendations. May be that, in other States, the flat rate tariff fixed for agriculturists is little higher; but, such a comparison does not lead us anywhere. Nor can such comparison be a basis for upholding the plea of unreasonableness or discrimination. We are, therefore, of the opinion that when issued, the directive of the Government contained in its letter dated 15-12-1982 was neither impermissible in law, nor was it unreasonable.
31. The next question is, whether the developments that have taken place since the issuance of the said direction, have made thesaid direction unreasonable? The petitioners' case is that, since 1982, there has been a substantial growth in the agricultural consumption, while there has been a corresponding decrease in the industrial consumption, and that supply of energy at a totally unrealistic rate to such large number of agriculturists is bound to result in corresponding increase in the burden/tariffs upon other consumers. It is pointed out that FCA is being levied only upon H.T. consumers and that, this adds further to the woes of H.T. Industrial Consumers. This argument has to be examined in the light of the revenues yielded by various categories of consumers over the last several years.
32. According to the figures furnished by the Board (see 'Annual Accounts 1987-88' published by the Board) the income to the Board for the year ending 31-3-1988 from various sources, is the following:--
On account of supply to irrigation and agricultural purposes (Category-V) and income was Rs. 18,78,55,295/-, whereas for the year ending 31-3-1987 it was Rupees 16,31,26,477/-.
Whereas the income on account of supply to H.T. Industrial Consumers, including power-intensive consumers, is more than Rs. 355 Crores (for the year ending 31-3-1988) and about Rs. 377 Crores for the year ending 31-3-1987.
In such a situation, even if the flat rate tariff for agricultural pumpsets had been raised from Rs. 50/- to Rs. 100/- (one hundred) per H.P. per annum during the two relevant years aforesaid, the income therefrom would have been about Rs. 37 Crores and Rs. 33 Crores, respectively. The increase in revenue would have been so negligible that it would not have meant any significant relief to other categories of consumers. Even if the said relief was given only to H.T. consumers, even so the relief would have been insignificant. It must also be remembered that during these two years power-cuts were imposed on H.T. Consumers, which would have naturally resulted in loss of revenue to Board also. In a normal year, we are sure the income fromindustrial consumers would be far higher. If so, any relief they would get by doubling the flat rate tariff for agricultural pumpsets would be too meagre to make any real difference. It is not suggested that the flat rate tariff should be increased beyond Rs. 100/-. It is evident that, in the present circumstances it is unrealistic to increase the flat rate tariff for agricultural pumpsets beyond a particular limit at Rs. 50/ - over the last eight years does not appear to be reasonable, we cannot make any definite direction in this behalf. It must be noted that FCA itself is 24 Paise per unit in the year 1989. FCA is in addition to the tariff rate which is in the region of 100 paise or more, per unit.
33. In this connection, we must also say that no material has been placed before us to show that in the year 1982-83, when flat rate tariff was introduced, there was a sudden increase of burden upon H.T. Consumers. The particulars mentioned hereinbefore show that, whereas the H.T. Industrial Consumers were charges in the year 1981 at the rate of Rs. 25 / - per KVA + 40 paise per unit consumed, the revised tariff rate in 1984 was Rs. 30/-per KVA + 48 paise per unit consumed. This rise is consistent with, and is in the same level as the rise in the tariff rates for other categories of consumers, except of course, agriculturists. There is, therefore, no basis for saying that either in the year 1982-83 or to day, the loss resulting from supply of energy to con-sumers at a low rate is being borne by H.T. Industrial consumers. Moreover, as we have emphasised hereinbefore, among the H.T. consumers the non-industrial consumers pay more than the H.T. industrial consumers. They have not chosen to make any grievance on this account.
34. May be that the present costs of supply to agriculturists has come down to 4.5 paise per unit, whereas it is in the region of 100 paise or more in the case of industrial consumers. It may be equally true that the cost of generation is far higher than the costs of supply to agriculturists; but, there is nothing to substantiate the petitioner's contention that the low cost supply to agriculturists is being done at the cost of H.T. industrialconsumers. We see no substance in the petitioners' argument that H.T. industrial consumers are, in effect, made to subsidize the supply to agriculturists. The material set out hereinabove does negative such a proposition. If at all, the burden of low cost supply to agriculturists is being borne by all other categories. The mere fact that FCA charges are levied only upon H.T, consumers also does not prove that the H.T. industrial consumers are in effect subsidizing the agriculturists. The grievance, if at all, must be against all the L.T. consumers and not merely against one section thereof, namely agriculturists.
35. In the circumstances, contentions (i) and (ii) urged by Sri Parvatha Rao, are rejected. However we cannot but observe that the Board and the Government shall examine the desirability and advisability of revising the flat rate tariff for agricultural pumpsets, in the light of all the relevant circumstances, and the observations made hereinabove.
Contentions (iii) and (iv).
36. Nexus between tariffs and costs of generation. In the case of Electricity Board it would not be realistic to take the costs of generation along to test the reasonableness of the tariffs prescribed. Cost of generation is only one component the other components being cost of distribution, supply, transmission losses, and the expenses incidental thereto. In short, what is relevant is the cost of supply, and not costs of generation. We agree that tariffs must bear a reasonable relation to the costs of supply. But it would be incorrect to state that tariffs prescribed for each and every category of consumers should be tested on the said basis. Once it is agreed that the Board has the power to classify consumers into various categories having regard to the factors mentioned in sub-s. (2) of S. 49, it follows the from that some cases the tariffs may be lower than the cost of supply. S. 18 casts aduty upon the Board to provide supply to 'areas which are not for the time being supplied or adequately supplied with electricity. Similarly, S. 49(2) empowers the Board to take into consideration the development of areas not for the time being served, or adequately served. Now, it is indisputablethat the costs of supply to undeveloped or, sparsely developed areas is substantially higher than the costs of supply to developed areas. If supply is to be made to undeveloped areas, including far-flung the Board has to incur a substantial cost in laying lines, esta-Wishing power Stations and transformers, whereas the costs of supply to industrially developed areas or to industries situated around major cities may be far less. Indeed S. 49(2) empowers the Board to take into consideration the 'extension and cheapening of supplies of electricity to sparsely developed areas'. This cannot be done if it is insisted that the tariffs should never go below the cost of supply. We may reiterate that the Board is not a mere commercial, or business concern; it is a statutory public corporation with a social commitment, and under an obligation to promote public good and nation's welfare. All this may call for supply of electricity to some at a rate lower than the cost of supply, and to others at a rate higher than the cost of supply. In this view of the matter, the third contention of the petitioners cannot be countenanced, We have already held, while discussing contentions (i) and (ii) that there is no truth in the petitioner's grievance that the H.T. industrial consumers are being made to subsidize the supply to agriculturists. Since the Board is under an obligation to so conduct its affairs as to yield a minimum statutory surplus of 3% it is obvious in the above situation that some categories of consumers have to pay more than the others. It would not be correct to say, in such a situation, that the categories paying higher tariffs are subsidizing the other categories. There is no question of one category subsidizing the other. The question has to be examined from the point of view of the duties and obligations of the Board and the powers conferred upon it, as well as the directives, if any, issued by the Government u/S. 78-A. Looked at from the above stand point, the tariffs prescribed for H.T. industrial consumers cannot be said to be high, having regard to the cost of supply.
37. For H.T. industrial consumers, charges are levied applying the two-part tariff. It is, therefore, difficult to say, what is the average tariff rate for these consumers. Wecan, however, refer to the figures mentioned at pages 18 and 19 of 'Annual Accounts 1987-88' (published by the A.P. State Electricity Board) which mention such figures evidently on an approximate basis. During the year 1986-87 the supply to H.T. industrial consumers was 71-65 paise (for segregated unit Category-I) and 82-79 (for non-segregated and commercial units category II). For power intensive consumers it was far less, viz., 61-27 Whereas the overall cost of supply is 53-26 paise per unit during this year i.e. 1986-87 (see page 102 of 'Statistics at a Glance-1987-88' published by A.P. State Electricity Board). It is true that the cost of supply to L.T. consumers is more than the cost of supply to H.T. Consumers but, as pointed out by Mr. Parvatha Rao himself, even within L.T. consumers the cost of supply varies, depending upon the level at which they receive the supply. If the power is received at 33 KV, the cost of supply to the Board is less than the cost where the energy is supplied at 11 KV. Similarly, the cost of supply to the Board at 132 K V is still lower than the cost of supply at 33 KV. This court cannot enquire into these details. It is sufficient to mention that overralt cost of supply to the Board is 53.26 paise per unit during the year 1986-87. If we compare the tariff rate (Approximated in terms of paise per unit) for industrial consumers, mentioned above, it cannot be said that the tariffs prescribed for H.T. industrial consumers is unrelated to the cost of supply we may mention that the figures for subsequent years are not available.
We have already held, while discussing contention (i) and (ii), that flat rate tariff is permissible in law, and that the reports of the Experts' Committees cannot prevail over the statutory power conferred upon the Board by S. 49. Accordingly, contentions (iii) and (iv) urged by Sri Parvatha Rao are rejected.
Contention (v)
The effect of power cut upon the economics of the petitioners-industries.
38. It is true that power-cut has been imposed upon H.T. consumers during the years 1987-88, 1988-89 as well as for thecurrent year, and this is bound to have an adverse impact upon the economies of the petitioners-industries. At the same time, it is necessary to clarify that the cut have not been imposed throughout these years Nor is the cut uniform for all industries. The details of the power-cut during these years are mentioned at page 68 of the book 'Power Development in Andhra Pradesh Statistics 1988-89 (published by the APSEB).Accoriding to it, the following are the particulars of power-cut during the years 1987-88 and 1988-89;
PeriodCategory of consumer% of Energy Restriction% Demand Restriction
1.2.3.4.
H.T. Consumers.15-4-87 to 15-7-87(a) below 1000 KVA15%15%(b) 1000 KVA & above60%60%16-11-87 to 19-11-87(a) 1000 KVA to 10000 KVA35%35%(b) 10000 KVA and above40%40%20-11-87 to 25-2-88below 1000 KVA15%15%25-2-88 to 29-7-88(a) below 1000 KVA15%15%(b) above 1000 KVA and below 2000 KVA35%35%(c) above 2000 KVA & below 10000 KVA50%50%(d) 10000 KVA and above60%60%14-3-88 to 29-7-8810,000 KVA and above80%60%30-11-88(a) up to 200 KVA30%__(b) above 200 KVA30%25%01-01-89(a) up to 200 KVA15%__(b) above 200 KVA15%25% upto 200 + 30% from 201
This year again a power-cut is imposed. The particulars of this power-cut are specified in B.P.Bs. No. D/-23-12-1989. Railways and public services are exmpted from the cut. The cut is imposed on consumption of H.T. category of consumers, which include industrial and commercial units, including power intensive units. Industries with a contracted load of 500 K VA and less are again exempted. The cut imposed varies depending upon the contracted load.
39. While recognizing the adverse impact the power cut has upon the petitioners-industries, we cannot fail to mention that the precise loss suffered on this account by the petitioners-industries is not placed before us. None of the petitioners are 'power intensive industries'. The petitioners have not supplied the value-component of energy vis-a-vis other raw materials/inputs required by them. We can take note of the industrial sickness in this State. But it is difficult to attribule the sickness to power-cut alone. There is no material to say so. There may be several reasons for industrial sickness. Power cut may be one of them, but need not necessarily be the sole cause.
40. For the above reasons, we must hold that the power-cut imposed during the last two years, and this year which, we hope, is only a passing phenomenon is not relevant on the question of reasonableness of the tariff rates prescribed for H.T. consumers, though we are not happy at the cuts imposed. The only consoling factor is that the cuts were inevitable having regard to the failure ofmonsoons, and other unavoidable causes during these years.
Contention (vi)
Validity of levy of FCA charges only upon H.T. Industrial Consumers.
41. The factual assumption of this contention is not correct. FCA charges are not levied only upon industrial consumers among the H.T. consumers. They are levied on all H.T. consumers. We may reiterate that the tariff rate prescribed for non-industrial consumers (H.T. category-II) is higher than the tariff rate prescribed for industrial consumers (cate-gory-I) Even the power intensive industries are subject to this levy. All the petitioners belong to H.T. category-I. No other categoryof H.T. consumers have chosen to make any grievance of the said levy. Moreover, levy of FCA charges only upon H.T. consumers have been upheld by a Bench of this court in Nava Bharat Ferro Alloys Ltd. v. APSED, AIR 1985 AP 299. The said Bench decision is binding upon us. Nor can we say that there has been such a radical or basic change in the factual situation that the said decision should be held to be no longer binding. The learned single Judge was mainly influenced by the fact that, according to the figures of 'pattern of electricity consumption' (given at page 67 of 'power Development in Andhra Pradesh-Statistics 1988-89' published by APSEB) the share of consumption in the State has fallen below 50%. The learned judge was of the opinion that the Division Bench in NavaBharat Ferro Alloys, AIR 1985 AP 299 sustained the levy of FCA charges only upon H.T. consumers on the ground that their share of consumption is more than 50%. He observed that since their share of consumption has fallen below 50% the principle of the said decision is no longer valid. Indeed, we find that the learned single Judge has adopted the figures from 'Pattern of Electricity Consumption All India', mentioned at page 120 of 'Statistics at a Glance-1987-88 (published by APSEB), instead of adopting the figures relevant to the State, mentioned at page 67 of the book 'Power Development ia Andhra Pradesh -- Statistics -- 1988-89' (Published by the Board). The Pattern of figures of All India Consumption are different from the pattern of figures for Andhra Pradesh State, and adopting the wrong figures also has vitiated the judgment of the learned single Judge.
42. Yet another circumstance which we must mention in this behalf which we have already mentioned hereinbefore in another connection is that during the years 1987-88 and 1988-89 power-cut was imposed upon industries, and that is why their share of consumption in the total consumption has fallen below 50%. Had there been no power-cut during those years, it is evident that the share of industrial consumption would be definitely above 50%. Moreover, the Bench decision in Nava Bharat Ferro Alloys (supra) did not adopt the 50% share of consumption as a sort of magical figure, much less as an inviolable rule. The learned Judges mentioned the said fact in the course of their discussion. A reading of the decision does not lead us to the conclusion that the Bench justified the levy of FCA upon H.T. consumers on the only ground that their share of consumption was more than 50%.
43. It is then argued that the share of consumption by agricultural pumpsets is likely to go up during the coming years. In support of this statement, reliance is placed upon certain information furnished by the Board in a brochure published by it under the title 'APSEB -- In the Service of Agriculture.' This brochure appears to have been published in the year 1989. The brochurestates that during the 90s the Board proposes to energize 70,900 pumpsets every year. Mr. Parvatharao says that this is bound to increase substantially their share of consumption which, in turn, would correspondingly reduce the share of consumption by H.T. industrial consumers. This argument presupposes that there will be no augmentation in power generation during the 90s. We see no basis for such assumption. We presume that generation of power will also go up during the 90s. Indeed, great emphasis is being laid upon power generation by both the Central Government, and the State Govt. If so, it cannot be said that increasing the number of connections to agricultural pumpsets would have the necessary result of descreasing the share of consumption by industries. If the power generation goes up, everybody will be supplied more energy, and not merely agriculturists. We have also no reason to believe that the government and the Board would not consider the desirability of revising the flat rate tariff prescribed for agricultural motor-pumps even during the coming years. We have already stressed the desirability of re-examination of the said aspect.
44. Subsidiary submissions:
a) Mr. Parvatharao, learned counsel for the petitioners, made an attempt to point out certain mistakes in the preparation of Annual accounts for the year 1987-88 by the Board. Learned Counsel stated, relying upon the observations made by the Accountant-Gene-ral (Audit-II) at pages 79 and 80 of the book 'Annual Accounts 1987-88' (Published by APSEB) that the Board has prepared the accounts wrongly, as a result of which the surplus for the year 1987-88 is shown at a low figure. He submitted that, if an accounting is correctly taken, the surplus would be higher than 3%. At page 79 the Accountant-General has pointed out that depreciation on certain assets claimed by the Board for the said year, and certain other minor items ought not to be claimed, according to Schedule VII to the Act. In particular, he pointed out that depreciation has to be claimed not in the same year in which the assets are installed, but in the following year, are per item 2 of Schedule VIIto the Act, whereas the Board has claimed depreciation for certain assets in the same year. But, the amount involved is slightly above 6 Crores. Where the Budget is in the order of 700 crores, the said mistake, if any, does not make a significant difference. Learned Counsel wanted to point out ceriain other mistakes on the basis of the Accountant-General's report, but we are not inclined to discuss all of them. Firstly, we do not known whether these mistakes have been corrected by the Board and the surplus for the year 1987-88 arrived at after such rectification. Secondly, the total amount represented by the said mistake is not significant to make any marked difference to the surplus earned during the said year. The surplus earned during 1987-88, as pointed out herein before, is 2.91%. Even if the said mistakes are taken into account, it may not be significantly above 3%. In the decision of the Supreme Court in Kerala State Electricity Board v. M/s. S. N. Govinda Prabhu and Brothers, : [1986]3SCR628 it is observed that, where the revision of tariffs is found neither arbitrary nor the result of application of a wrong principle, the court will not examine the price structure in minute details. The principle of this decision applies even in this context.
b) Another submission made by Mr. Parvatharao learned counsel for the petitioners, is that the directive of the Government dated 15-12-1982 was issued before the second revision. According to him, the said directive ceases to be effective and operative once there is a revision of tariffs. In asmuch as there have been three revisions since the said directive, learned counsel says, the said directive not being effective, ought not to have been followed by the Board. We are unable to agree. The language of the directive, which we have set out in ful herein before, does not indicate that it was meant to be effective only till the next revision of tariffs. It was a directive relating to a policy matter, and it was meant, and understood by all concerned, as a directive to be followed till it is expressly revoked, or modified. We therefore, see no substance in this submission.
45. For the above reasons, the WritAppeals filed by the Board are allowed, and the Writ Appeals filed by the petitioners are dismissed. In the circumstances of the case, there shall be no order as to costs. Govt. Pleader's fee Rs. 2,500/- consolidated.
46. Counsel for the petitioners consumers make an oral request for leave to appeal to Supreme Court under Art. 133 of the Constitution of India. We do not, however think that these cases involve any substantial question of law of general importance which in our opinion needs to be considered by the Supreme Court. The oral request is accordingly rejected.
47. The counsel for the petitioners-consumers make a further request to either stay or give some accommodation in the matter of payment of arrears of electricity charges, in respect of which they obtained slay pending the writ petitions and which stay continued pending the writ appeals. It is slated that pending the writ petitions this court had granted stay to the extent of 50% of the enhanced tariffs. In view of the fact that over the last two years as well as this year a fairly substantial power-cut has been imposed upon industrial consumers, we are inclined to give some accommodation in the matter of payment of the said arrears. It is accordingly directed that the arrears of electricity charges which have not been paid by the consumers in the light of the stay orders granted by this court shall be paid in six equal monthly instalments. The first such instalment shall be paid on or before 1st June 1990 and thereafter each instalment before the first of every succeding month. It is made clear that so far as payment of future tariffs are concerned commencing from today there shall be no stay.
48. Ordered accordingly.