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PETITIONER:

CHITTOOR ZILLA VYAVASAYADARULA SANGHAM

Vs.

RESPONDENT:

A.P. STATE ELECTRICITY BOARD & ORS.!Rythu SamakhyaVs.Govt. of A.P. & Ors.

DATE OF JUDGMENT: 03/11/2000

BENCH:

N. Santosh Hegde.

JUDGMENT:

MISRA, J.

L...I...T.T.......T.......T.......T.......T.......T.......J

Leave granted in all the special leave petitions.

The questions raised in these appeals are:

(a) Whether the Andhra Pradesh Electricity Board

(hereinafter referred to as the Board) is competent to

put an end to the policy decision of the State to supply

electricity to the agricultural sector at subsidised

uniform flat rate and convert the same into multi different

tariff rates discarding the principle of fixation of

uniform tariff as contemplated in Section 59 of the

Electricity (Supply) Act, 1948. (b) Whether the Board is

competent to fix tariff as per use of smaller or bigger@@

JJJJJJJJJJ

H.P. motor and whether this fixing has any rational basis@@

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which discriminate between one from the other

agriculturists.

The present appeals are directed against the orders of

the Andhra Pradesh High Court dismissing appellants writ

petitions, holding that the Board decision in fixing

different rates based on the capacity of motor is neither

arbitrary nor discriminatory.

In order to appreciate the controversy we are herein

giving short matrix of facts. The appellant is a

registered society having farmers in various districts of

Andhra Pradesh as its members. According to the case of

the appellant, a farmer-consumer of electricity for his

agricultural purpose is classified by the respondent-Board

as a low tension consumer entitled for a subsidised price

in the light of the policy of the State Government. In

pursuance to the same, the Board reduced the tariff rates

for a very short period, in the light of the assurance

given on the Floor of the Assembly in January, 1995 by the

then Chief Minister. Accordingly the tariff was reduced to

Rs.50/- per H.P. per annum with effect from 1.4.1995 under

B.P.Ms. No.110, dated 5.6.1995. Subsequently the Board

after consultation with the State revised the impugned

tariff. The question raised is, whether revision of this

tariff could be justified when it runs counter to the said

policy decision of the State, based on the assurance of the

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Chief Minister and in view of the social and statutory

obligation, both on the Board and the State to supply

electricity economically towards its subject. The revised

new tariff rate through B.P.Ms. No.32, dated 29.7.1996

was:

Tariff rate @@

IIIIIIIIIIIII

year

i) Upto 3 H.P. Rs.250/- per H.P. per year

ii) Between 3 H.P. to 5 H.P. Rs .350/- per H.P. per

year

iii) From 5 H.P. to 10 H.P. R s.450/- per H.P. per

unit

iv) 10 H.P. and above Metered supply @ Rs.0.50 per per

of Rs.600/- subject to a minimum H.P. per year.@@

IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

Thereafter on the representation from the farmers this

tariff was reduced, first through B.P.Ms. No.35, dated

14.8.1996:

Tariff rate

i) Upto 3 H.P. Rs.200/- per H.P. per year

ii) Between 3 H.P. to 5 H.P. Rs.300/- per H.P. per

year

iii) From 5 H.P. to 10 H.P. Rs.400/- per H.P. per@@

JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ

year

iv) 10 H.P. and above Rs.500/- per H.P. per year

Finally, came the impugned revised rates as per B.P.Ms.

No.40, dated 3.9.1996 which is:

Tariff rate DPAP Area Others@@

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i) Upto 3 H.P. Rs.100/- per H.P. per yearRs.150/-@@

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ii) Between 3 H.P. to 5 H.P. Rs.200/- per H.P. per

yearRs.250/-@@

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iii) From 5 H.P. to 10 H.P. Rs.300/- per H.P. per

yearRs.350/-@@

IIIIIIII

iv) 10 H.P. and above Rs.400/- per H.P. per

yearRs.400/-@@

IIIIIIII

Before reaching this stage, it is necessary to give

some historical background of the imposition of the tariff

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from the year 1982 till the date of the impugned tariff.

The TDP Government headed by Mr. N.T. Rama Rao in

exercise of powers under Section 78A of the aforesaid Act,

directed the Board, through letter dated 15.12.1982 from

the Secretary to the Government of Energy, Environment,

Science and Technology Department to revise the electricity

tariff for Borewell/Tubewell pumpset to Rs.50/- per H.P.

per annum without installation of meters. The relevant

portion of the said letter is quoted hereunder:

While agriculturists owning lands under flow

irrigation from major projects for both reliable and cheap

irrigation, farmers depending 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.

With a view to mitigate 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 78-A 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.

Accordingly the Board fixed the tariff at Rs.50/- per

H.P per annum.

After the change of the Government the tariff were

again revised. Thereafter when again Government of Mr.

N.T. Rama Rao came into power, it gave assurance to the

State Legislature on 20.1.1995, as aforesaid that the

farmers in the State would be supplied with power @ Rs.50/-

per H.P. per annum. Based on this assurance, followed by

the communication of the Government dated 27th May, 1995

the Board issued B.P.Ms. No.110, dated 5.6.1995, revising

tariff to Rs.50/- per H.P. per annum for all pumpsets upto

75 H.P.. At that point of time B.P.Ms. No.147 dated

18.11.1992 issued by the Board was in operation as amended

from time to time through B.P.Ms. No.100, dated

29.12.1992, B.P.Ms. No.471, dated 15.3.1994, through

B.P.Ms. No.64 dated 24.4.1995, B.P.Ms. No.70 dated

8.5.1995 and through B.P.Ms. No.72 dated 9.5.1995.

With the change of the Government again the present

impugned B.P.Ms. No. 40, dated 3.9.1996 was issued.

Submission for the appellant is, this impugned B.P.Ms.

has divided the agriculturists into multi groups, based on

the consumption of the horse power by the pumpsets into

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various slabs which runs contra to the uniform tariff as

contemplated under Section 49 of the Act.

Learned Senior counsel Mr. P.P. Rao appearing for the

appellant submits, the impugned tariff rates are contrary

to the Government policy issued under Section 78A, in

pursuance to the assurance given by the Chief Minister, as

it instead of being at flat rates, is based on slab rates

and is also discriminatory inter se between the same class

of agriculturists. He also submits, even otherwise the

revision of rate is based on factual misrepresentation by

showing deficit to the Board for 1996-97, the year in

question, wherein as per figures placed before the public

in the Power Development in Andhra Pradesh (Statistics)

1997-98, shows surplus for the same year. In fact this

inconsistency was placed before the High Court by some of

the connected appellants through review petition but the

High Court without application of mind rejected the same.

In support of the first part of submission, it is submitted

that the policy decision of the State cannot be changed by

mere consultation. The change could only be broughtforth

by the issuance of fresh policy order by the State under

Section 78 A and communicating the same. He submits under

General Clauses Act (Central) and also under Section 15,

State General Clauses Act, a thing can only be undone in

the same way as it was done earlier. In other words, when

there is an order under Section 78A based on the assurance

of the Chief Minister there has to be another such order by

the State withdrawing the same under the same Section. In

the present case, submission is, admittedly even as per

Board there was no such order passed. He also referred to

Section 49 to show that Board while supplying the

electricity has to frame uniform tariffs and while fixing

such tariffs it has to take into consideration what is

stated under sub-section (2).

He also laid emphasis that justification to enhance the

tariff cannot be sustained when admitted losses of

electricity through transmission and theft etc. are to the

extent of 33%. He fairly admits, under Section 78A

direction by the State Government would be confined to the

policy decision only and the fixation of rate of tariff is

within the domain of the Board.

On the other hand, learned senior counsel for the

respondent-Board Mr. Shanti Bhushan submits, the impugned

tariff does not suffer from any illegality and have been

validly revised. In fixing the tariff, the Board has kept

in view, Sections 49 and 50 of the Act. For ready

reference Sections 49 and 50 are quoted hereunder:

Section 49.

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

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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 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 and terms and conditions for

the supply of electricity, the Board shall not show undue

preference to any person.

Section 59:

59. General Principles for Boards 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) or 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 year.

Explanation For the purposes of this sub-section,

value if 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

section 12A, a reasonable sum by way of

return of 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

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capital under sub-section (1) of section

66A.

Board supplies electricity and fixes tariff from time

to time under Section 49. In doing so, it has classified

the consumers into low tension consumers and high tension

consumers. Under low tension consumers among the 7

categories the agriculturists is category no.5 (to which we

are concerned) and under high tension consumers fall

factories, industries and also agriculture of high tension

consumers. Different tariff rates are being fixed from the

very inception by the Board for each class or category.

The impugned tariff revision was undertaken by the Board

keeping in view its statutory responsibility it has to

undertake in terms of Section 59. In doing so, it has to

ensure that the total revenue in any year, after meeting

all expenses properly chargeable including operation,

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 3%, or such high percentage as State

Government may, by notification in the official Gazette,

specify. It is one of the statutory obligation cast on the

Board. It is also relevant to reproduce Section 78 A

hereinunder to properly test the scope of the direction of

the State. Section 78 A: 78A. 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.

The submission for the Board is, the communication by

the Government dated 27.5.1995 cannot be construed to be a

direction issued under Section 78A of the Act. Any

direction under Section 78A could only be for the

furtherance to discharge its function by the Board. Any

direction which makes Board travel outside such Sections 49

and 59 cannot be covered by Section 78 A. The Board in

order to honour the assurance given by the Chief Minister,

notwithstanding it not to be a direction under Section 78A,

through B.P.Ms. No.110 as aforesaid, brought the tariff to

Rs.50/- per H.P. per annum to all the pump sets upto

Rs.75/- H.P. But later, in consultation with the State

Government, once again revised the tariff to bring it

within the norms as envisaged by Section 59. Thus

submission for the Board is, firstly issuance of letter

dated 27.5.1995 is not a policy direction issued under

Section 78A and even if such direction could be read

implicitly as a policy decision then subsequent revision of

the impugned tariff after consultation with the Government

has also to be construed implicitly as withdrawal of the

said policy direction. He submits, so far the Government

policy of supply of electricity to the Ryots

(agriculturists) at a cheaper and subsidised rates is still

maintained by the Board and the impugned revision is still

in consonance within the same. He has also placed figures

before us, about which we shall be referring later, to show

that the supply of power to the agriculturists, even as per

the impugned tariff, the average supply is at the

subsidised rate of about 90%. The actual cost incurred by

the Board in generation and supply of the electricity is

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Rs. 1.77 per unit.

It is denied that any misrepresentation was made by the

Board before the High Court. The submission is, that in

the counter affidavit filed by the Board in the High Court

it is true - it records projected losses for 1996-97

showing revenue deficit of Rs.1,533/- crores. These

projected losses are shown with reference to the tariff if

imposed at the rate of Rs.50/- per H.P. per annum. This

figure is not actual loss. It is only to overcome these

projected losses, the tariff has been revised. Hence in

the statistics of 1997- 98 rightly for 1996-97 surplus is

shown. This surplus is still within 3% as referred in

Section 59.

For the appellant it is submitted that the subsidies

tariff @ Rs.50/- per H.P. per annum fixed by the Board in

1982 and also on 5.6.1995 was by way of implementation of

the directions issued by the State Government under Section

78A which is binding on the Board. It is relevant here to

record the assurance of the Chief Minister, dated 20.1.1995

in the Andhra Pradesh Legislative Assembly:

We have assured that electricity will be supplied for

cultivation to Ryots at the rate of Rs.50/- per horse power

per annum. I once again respectfully reiterate the

assurance that for the development and welfare of Ryots

electricity will be supplied at the rate of Rs.50/- only.

It is our responsibility to ensure that according to

the Government policy Ryots are supplied electricity at the

rate of Rs.50/- per H.P. per annum.

This was followed by a letter dated 25.5.1995 from the

Secretary of the State Legislature to the Member-Secretary

to the Government of Andhra Pradesh referring to the

assurance given by the Chief Minister and this was followed

by letter dated 27.5.1995 from the Joint Secretary of

Government to the Member-Secretary of the Board. It

records:

Sub: A.P. Leg. Assembly Assurance regarding supply

of power at the rate of Rs.50/- per one House power to the

Agriculturists implementation report

Ref: From Secy. To Legislature, Lr. No.1959

(assu/95-1, dt: 20.5.95. --- I am directed to enclose

herewith a copy of the reference cited, together with

Assurance No.1959, dt: 20.1.95, regarding supply of power

at the rate of Rs.50/- per one horse power to the

Agriculturists and request you to send the implementation

report, immediately.

The question is whether such letter could be an order

under Section 78A and to be such as to bind the Board for

its compliance. Strong reliance has been placed by Mr.

Rao on the certain observations made by this Court in Real

Food Products Ltd. And Ors. Vs. A.P. State Electricity

Board & Ors., 1995 (3) SCC 295. The reliance is on the

following observations:

It does appear that the view expressed by the State

Government on a question of policy is in the nature of a

direction to be followed by the Board in the area of the

policy to which it relates

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In the present case, the flat rate per H.P. for the

agricultural pump-sets indicated by the State Government,

appears to have been found acceptable by the Board as

appropriate particularly because it is related to the

policy of concessional tariff for the agriculturists as a

part of the economic programme.

The submission is, this decision holds State Government

policy direction has to be followed by the Board and flat

rate of charging tariff is part of the policy of the State

Government. Hence, the letter dated 27.5.1995 is a

direction of the State Government under Section 78A

according to which the rate of tariff has to be Rs. 50/-

per H.P. per annum which is binding on the Board. The

Board notwithstanding this, when it revised its tariff

upwards is in contravention of this direction hence liable

to be quashed. Emphasis is that fixation of flat rate,

namely, in the present case Rs. 50/- per H.P. per annum

is a part of the policy though it is open to the Board to

escalate the rate, viz., it may be Rs. 100/- per H.P. per

apnnum, Rs. 200/- per H.P. per annum but it cannot vary

the policy from flat rate to slab rate.

It is necessary first to examine the periphery of the

statutory fields within which the Board and the State

Government has to function. Admittedly both are statutory

functionaries under the Central Act. They have to perform

their obligations within the limits they have been

entrusted with. Section 78 A empowers the State Government

to issue directions to the Board on question of policy, on

the other hand the Board has to perform its statutory

obligations under the said Act and with reference to the

fixation of tariff it has to act in term of what is

contained in Sections 49 and 50. But this field of policy

direction is not unlimited. There cannot be any policy

direction which pushes the Board to perform its obligations

beyond the limits of the said two sections. Any policy

direction, which in its due performance keep the Board

within its permissible statutory limitations would be

binding on the Board. So, both State and the Board have to

maintain its cordiality and co- ordination in terms of the

statutory sanctions. If any policy direction pushes the

Board in its compliance beyond statutory limitations, it

cannot be a direction within the meaning of Section 78 A.

It is significant that opening words of Section 78 A is,

in the discharge of its functions, the Board shall be

guided by such directions. So, the direction of the State

is for the guidance to the Board, in the discharge of its

functions. Thus this direction has also limitation to give

such direction which will subserve in performing its

statutory obligation. We would be returning later to test,

if direction to charge tariff at the rate of Rs. 50 per

H.P. per annum would have been followed by the Board,

whether it would have travelled beyond Section 59.

Now, we proceed to see to what extent the Board as per

impugned revised rates is charging the tariff from

agriculturists. Learned counsel for the Board has placed

before us the rate per unit charged from the

agriculturalists in question from 1983-84 till 1997-98. It

is said in spite of this upward revision of tariff, even

now the rate is heavily subsidised.

Year Flat rate per unit

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Charged

1983-84 9.20 Paisa.

1984-85 6.12 P.

1985-86 5.57 P.

1986-87 4.87 P.

1987-88 4.72 P.

1988-89 4.27 P

1989-90 4.29 P.

1990-90 2.87 P.

1991-92 3.27 P.

1992-93 8.10 P.

1993-94 6.40 P.

1994-95 5.27 P.

1995-96 2.81 P.

1996-9 13.51 P.

1997-98 16.18 P.

Submission is this chart shows, in spite of increase in

the cost escalation in every field, even in the impugned

tariff for 1996-97, the year in question, the Board is

merely charging 13.51 per unit when the cost of production

is Rs.1.77 per unit. In other words, it is subsidised

approximately 90% of the average cost. On the other hand,

if the same tariff, in terms of the letter dated 27th May,

1995 would have been charged there would have been heavy

loss to the Board and thus compliance of the same would

have resulted in contravention of Section 59 of the Act.

Now, we proceed to examine what this Court held in the

Real Food Products Ltd., (supra). This Court examined the

nature and effect of the direction given by the State

Government under Section 78-A. It was examined in the

context of charging a flat rate per H.P. for agricultural

pumpsets. It holds, view expressed by the State on a

question of policy to be followed by the Board in the

context of Boards function under Sections 49, 59 and other

provisions of the Act. This Court held, that the flat rate

per H.P. for the agricultural pump set was found

acceptable by the Board. What does, acceptable to the

Board means? It only means, it to be within the parameters

of Sections 49 and 59 of the Act. In other words, Board

has not to travel outside its obligations under Section 59.

This decision records: However, in indicating the

specific rate in a given case the action of the State

Government may be in excess of the power of giving a

direction on the question of policy, which the Board, if

its conclusion be different, may not be obliged to be bound

byif the view expressed by the State Government in its

direction exceeds the area of policy, the Board may not be

bound by it unless it takes the same view on merits itself

At any rate, there is no material in the present case

to indicate that the flat rate indicated by the State

Government for the agricultural pump- sets was so

unreasonable that it could not have been considered

appropriate by the Board.

Thus it is clear Board would not be bound to follow

every policy directions. According to the Board, if tariff

was charged at the rate of Rs.50/- per H.P. per annum, as

per the direction in question, loss to the Board would have

been to the extent of Rs.1,553 crores for the year 1996-97.

This would have gone contrary to the obligation cast on the

Board under Section 59. Section 59 mandates the Board to

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leave such surplus not less than 3% of the revenue, after

meeting all its expenses referred to therein. This Board

has not to supply electricity at such rate to be in

deficit, leaving no hope for its extensions for the benefit

of persons living in an uncovered area. It is for this and

other reason statute mandates Board to maintain this

surplus in every year. If it has to perform this statutory

obligation, how can it do so, if it follows any such

direction which takes it away from it. It is true

government can to cater to the popular demand in order to

earn its legitimate favour, give any such policy direction,

but it should have to be within permissible limit.

It seems Board initially, in order to maintain

cordiality and cohesion in functioning did honour the said

assurance by issuing B.P.Ms. No. 110 dated 5.6.1995 and

reducing the tariff to Rs. 50/- per H.P. with effect from

1.4.1995. However, subsequently, in view of the aforesaid

facts, the Board it seems did bring it to the notice of the

State by consulting it and thereafter issued the aforesaid

impugned increased tariff B.P.No.40 dated 3rd September,

1995. On the facts of this case the policy decision by the

State Government, for the year in question, can only be

construed to mean to supply the electricity to ryots at the

subsidised and concessional tariff rates. The other part

of the assurance, namely, to supply electricity at the rate

of Rs. 50/- per H.P. per annum which results into the

aforesaid loss to the Board cannot be construed to be part

of the policy direction under Section 78 A. The reliance

by Mr. Rao that in Real Food Products Ltd. (supra) the

flat rate of charging tariff has been held to be a policy

decision cannot be construed to be so on the facts of the

present case. In that case first we find there is clear

order under Section 78 A, which leaves no room of doubt it

to be so. The relevant portion of the same is quoted

hereunder:

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 78-A 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.

But even this direction was only approved by this Court

because such direction of the State was held to be

acceptable by the Board, as there was no material in that

case to indicate that the flat rate @ Rs.50/- per H.P. per

annum was so unreasonable that it could not have been

considered appropriate by the Board. In the present case,

the Board has accepted broadly the policy of the State

Government to supply electricity to the Ryots at the

subsidised and concessional rate but could not have

accepted the rate @ Rs.50/- per H.P. per annum as it would

have run contra to Section 59. In the present case, for

the year 1996-97, according to the Board its fixed assets

were Rs. 135 crores and after taking into consideration of

all the expenses, as aforesaid, the net amount to be

harnessed by the Board was to the tune of Rs.1,668/- crores

in terms of Section 59, which could not have been achieved

if the aforesaid direction is question was applied.

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In fact, if flat rate as a policy was to be charged,

the submission of Mr. Rao is, the Board could have fixed

at 200, 300 etc. H.P. per annum in order to overcome the

deficit then it would have been in consonance with policy

decision. This submission lacks merit. If this would have

been implemented, it would have put heavy burden on small

farmers who are using minimum electricity and would have

run contra to the central theme of the policy. Even

submission of Mr. Rao, the small agriculturist who get

water at the deeper level has to consume more electricity

than bigger farmers who get water at higher level, thus

consuming more electricity and paying more in slab system,

though at the first look is attractive but cannot be

accepted. Big farmers have to irrigate larger area than

small farmers and have to consume more electricity. There

may be small range of farmer, in the situation as submitted

but for this there are no material on the records to

sustain such a submission. The imposition, on the facts of

this case, of the slab system is in keeping the interest of

small farmer to pay less for consuming less electricity

hence is reasonable and cannot be faulted. In doing so, it

also does not violate Section 49 as submitted, by not

framing uniform tariff. Firstly, the pattern of tariff

fixed is uniform, even otherwise in terms of sub-section

(3) of Section 49, Board could make departure from it, for

any relevant factor. Hence we do not find any illegality.

So, we may conclude, on the facts of this case, the

aforesaid letter of the Government following assurance of

the Chief Minister, could not be construed to be a binding

direction under Section 78 A, except to the extent which is

implicit, to supply electricity to the Ryots at the

subsidised and concessiosnal rate, which the Board has

followed.

Another submission on behalf of the appellant is, High

Court committed error, when it decided by accepting the

misrepresented figures placed by the Board. According to

the learned counsel, the figure accepted by the High Court

for the year 1996-97 was deficit of Rs. 1,533 crores while

the very Board while issuing its statistics published

through Power Development in Andhra Pradesh (Statistics)

1997-98 it showed the figure of Rs. 1,049 crores and Rs.

1,777.48 crores for the years 1996-97 and 1997-98

respectively as surplus. We have considered this

submission and as per the submission for the Board, the

figure recorded by the High Court was based on the figures

in the counter affidavit filed by the Board, which showed

these figures as projected loss, not actual loss. The

submission is this projected loss was shown in case if the

assurance of charging tariff at the rate of Rs. 50/- per

H.P. per annum would have been accepted, while in the

1997-98 statistics published the actual figure is shown to

be in surplus. This resulted on account of upward revision

of tariff. The relevant portion of the said counter

affidavit is reproduced below:

The projections for 1996-97 have revealed a revenue

deficit of Rs. 1,533/- crores with reference to the

revenues expenses to be met as per provisions under

Section. 59 of Supply Act. Further the said section

refers to a three per cent return on the fixed assets for

which another R. 135/- crores have to be earned as

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revenue. Thus an amount of Rs. 1,668/- crores have to be

mobilised through tariff revision to achieve the three per

cent statutory surplus prescribed in the Act.

For the said reason the submission for the appellant

has no force. We do not find any mis-representation made

by the Board before the High Court.

The last submission by Mr. Rao with vehemence is that

the loss incurred by the Board is on account of theft and

transmission loss which is as high as 33% on average and

Board if not able to control this, the burden should not be

passed on to the consumers including the poor

agriculturists. It is true transmission losses by theft is

on high side. It is a matter of concern. It is an onerous

duty of the Board to be vigilant and keep on guard and

check such transmission losses. The Board must take steps

at the highest level to see these transmission losses of

such high order does not take place in future, as this high

percentage of loss is bound to have impact on the rate of

tariff and the total revenue of the Board. The person

found responsible should be dealt with strictly so that

there is no future reoccurrence. However, such losses

itself would not be sufficient for this Court to strike

down the impugned tariff.

So, out of the two questions posed, to the first

question (a), we hold, the Board has not put an end to any

policy decision of the State. In fact, it has followed

such direction falling under Section 78A, by supplying

electricity to the Ryots at subsidized and concessional

rate, and imposition of tariff based on slab system cannot

be said to be illegal. To the second question (b), we

hold, this slab system applied by the Board on the facts

and circumstances of this case is not discriminatory but

has rationale behind it in the interest of smaller farmers.

Taking into consideration the overall facts and

circumstances of the present case, in view of the findings

we have recorded, we hold the impugned revised increase

tariff to be valid and uphold the order of the High Court,

for the reasons stated above by us. Accordingly, the

aforesaid appeals are dismissed with costs.