advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Wednesday, February 11, 2015

"Since the issue of diversion of funds is interlinked with other issues namely RSD cost allocation, subsidy, high rate of interest on Government loans etc., the controversy relating to the extent of interest which can be allowed as a pass through cannot be resolved unless the other issues are also decided by the Commission as directed by us. The resolution of these issues are bound to take time and cannot be decided without relevant data. Therefore, relief can only be given to the consumers for the future years. In view of the foregoing, we direct that for the year 2006-2007 the issue relating to the extent of interest which can be allowed as a pass through shall be determined and resolved by the Commission alongwith the determination of the issue relating to RSD cost allocation, subsidy and high rate of interests on Govt. loans. This shall be accomplished during the truing up exercise for the year 2006-2007."

                                             NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                       CIVIL APPEAL  NO. 4510 OF 2006



PUNJAB STATE POWER CORPORATION    ...   APPELLANT (S)
LIMITED

                                   VERSUS
PUNJAB STATE ELECTRICITY
REGULATORY COMMISSION & ORS.      ...    RESPONDENT (S)




                               J U D G M E N T

RANJAN GOGOI, J.

1.    This appeal, against the  judgment  and  order  dated  26.05.2006  and
25.07.2006 passed by the  Appellate  Tribunal  for  Electricity,  New  Delhi
(hereinafter referred to as the "Appellate Tribunal")  was  initially  filed
by the Punjab State  Electricity  Board  (PSEB).  Pursuant  to  a  statutory
scheme of transfer, vide notification dated 16.04.2010, the  PSEB  had  been
unbundled and the functions  of  generation  and  distribution  came  to  be
vested in the Punjab State  Power  Corporation  Limited  (Corporation).   By
order  dated  03.09.2014  the  Corporation  has  been  substituted  as   the
appellant in place of the PSEB.

2.    Before the learned Appellate Tribunal the tariff orders of the  Punjab
State Electricity Regulatory Commission (Commission)  dated  30.11.2004  and
14.06.2005 for the  financial  years  2004-2005  and  2005-2006  were  under
challenge.  Such challenge was both by the  present  appellant  as  well  as
various industrial consumers.  By the impugned judgment  while  the  appeals
filed by the present appellant have  been  dismissed,  those  filed  by  the
industrial  consumers  have  been  disposed  of  with  certain   directions.
Aggrieved, the instant appeal has  been  filed  under  Section  125  of  the
Electricity Act, 2003 (for short "the Act")  against  the  aforesaid  common
order of the Appellate Tribunal.

3.    Section 125 of the Act contemplates filing of an appeal to this  Court
against an order of the Appellate  Tribunal  on  any  one  or  more  of  the
grounds specified in Section 100 of Code  of  Civil  Procedure,  1908.   The
scope of an appeal to this Court under the aforesaid provision  of  the  Act
was considered in DSR (Steel) Pvt. Ltd. Vs. State of  Rajasthan[1]  holding,
inter alia, that :
"14.   An  appeal  under  Section  125  of  the  Electricity  Act,  2003  is
maintainable before this Court only on the grounds specified in Section  100
of the Code of Civil Procedure. Section 100 CPC in turn  permits  filing  of
an appeal only if the case involves a substantial question of law.  Findings
of fact recorded by the courts below,  which  would  in  the  present  case,
imply the Regulatory Commission as the  court  of  first  instance  and  the
Appellate Tribunal  as  the  court  hearing  the  first  appeal,  cannot  be
reopened  before  this  Court  in  an  appeal  under  Section  125  of   the
Electricity Act, 2003. Just as the High  Court  cannot  interfere  with  the
concurrent findings of fact recorded by [pic]the courts below  in  a  second
appeal under Section 100 of the Code of Civil Procedure, so also this  Court
would be loath to entertain any challenge  to  the  concurrent  findings  of
fact recorded by the Regulatory Commission and the Appellate  Tribunal.  The
decisions of this Court on the point are a legion. Reference to  Govindaraju
v. Mariamman[2], Hari Singh v. Kanhaiya  Lal[3],  Ramaswamy  Kalingaryar  v.
Mathayan Padayachi[4], Kehar Singh v. Yash Pal[5]  and  Bismillah  Begum  v.
Rahmatullah Khan[6] should, however, suffice."

The challenge in the present appeal, therefore, will have to  be  considered
keeping in mind the principles laid down in DSR (Steel) Pvt. Ltd. Vs.  State
of Rajasthan (supra) enumerated above.

4.    Before proceeding any further it would require a mention  that  though
several issues arise from the judgment and order of  the  learned  Appellate
Tribunal, counsel for the appellant has confined his arguments to only  four
of  such  issues  dealing  with   the  specific  claims  made  by  the  PSEB
thereunder in the application for determination of tariff under  Section  62
of the Act.  The aforesaid four issues are:-

      (i)   Cost of supply and cross subsidy

(ii)  Disallowance of interest cost  on  account  of  alleged  diversion  of
funds

      (iii) Disallowance of Employees Cost and

      (iv)  Coal transit losses.


5.    Having regard to the issues calling for an answer, at  the  outset,  a
reference to the statement of objects and reasons for enactment of  the  Act
would be appropriate.  The  objects  and  reasons  are  self-explanatory  as
would be evident on a plain reading of para 1.2, 1.3 and paragraph  3  which
are reproduced hereinbelow:

"1.2 The Electricity (Supply) Act, 1948 mandated the  creation  of  a  State
Electricity Board.  The State Electricity Board has  the  responsibility  of
arranging the supply  of  electricity  in  the  State.   It  was  felt  that
electrification which was limited to cities needed to  be  extended  rapidly
and the State should step in to shoulder  this  responsibility  through  the
State Electricity Boards.  Accordingly the State Electricity Boards  through
the  successive  Five  Year  Plans  undertook  rapid  growth  expansion   by
utilizing Plan funds.

1.3    Over  a  period  of  time,  however,  the  performance  of  SEBs  has
deteriorated substantially on account of  various  factors.   For  instance,
though power to fix tariffs vests with the State  Electricity  Boards,  they
have generally been unable to take decisions on tariffs  in  a  professional
and independent manner and tariff determination in practice  has  been  done
by  the  State  Governments.   Cross-subsidies  have  reached  unsustainable
levels.  To address this issue and to provide for distancing  of  government
from determination of tariffs, the Electricity Regulatory  Commissions  Act,
was  enacted  in  1998.   It  created  the  Central  Electricity  Regulatory
Commission  and  has  an  enabling  provision  through   which   the   State
Governments can  create  a  State  Electricity  Regulatory  Commission.   16
States  have  so   far   notified/created   State   Electricity   Regulatory
Commissions either under the Central Act or under their own Reform Acts.

3.    With  the  policy  of  encouraging  private  sector  participation  in
generation, transmission and distribution and the  objective  of  distancing
the regulatory  responsibilities  from  the  Government  to  the  Regulatory
Commissions, the need for harmonizing and rationalizing  the  provisions  in
the Indian Electricity Act, 1910, the Electricity  (Supply)  Act,  1948  and
the Electricity Regulatory Commissions Act, 1998  in  a  new  self-contained
comprehensive legislation arose.  Accordingly it became necessary  to  enact
a new legislation for regulating the  electricity  supply  industry  in  the
country which would replace the existing laws, preserve  its  core  features
other  than  those  relating  to  the  mandatory  existence  of  the   State
Electricity Board and the responsibilities of the State Government  and  the
State Electricity Board with respect  to  regulating  licensees.   There  is
also need to provide for newer concepts like power trading and open  access.
 There is also need to obviate the requirement of each State  Government  to
pass its own Reforms Act.  The Bill has progressive features and  endeavours
to strike the right balance given the current realities of the power  sector
in India.  It gives the State enough  flexibility  to  develop  their  power
sector in the manner they consider appropriate.  The Electricity Bill,  2001
has been finalised after extensive discussions and  consultations  with  the
States and all other stake holders and experts."


6.    Chapter VII of the Act deals with tariff.  While Section  61  provides
for the principles on basis of which tariff is to be determined, Section  62
contemplates that such determination will be at  the  point  of  generation,
transmission and wheeling as well as retail supply to  the  consumers.   The
basic principles on which tariff  is  to  be  determined  as  laid  down  in
Section 61 of the Act are that  generation,  transmission  and  distribution
and supply of electricity should  be  conducted  on  commercial  principles;
factors which would encourage competition,  efficiency,  economical  use  of
resources, good performance and optimum investments are to be kept in  mind.
 The interests of the consumers are to  be  safeguarded,  and  at  the  same
time, balanced with recovery of cost of electricity in a reasonable  manner.
 Of particular significance to the  present  case  would  be  the  principle
enshrined in  Section  61(g)  of  the  Act  (as  originally  enacted)  which
provides that the tariff shall progressively reflect the cost of  supply  of
electricity and also reduce and eliminate cross-subsidies within the  period
to be specified.  By Act No.26 of 2007, Section 61(g) has been  amended  and
the word 'eliminate'  has  been  omitted.   The  significance  of  the  said
amendment will be noticed separately.

7.    Section 62  of  the  Act  provides  for  determination  of  tariff  at
different stages i.e. generation and supply; transmission; wheeling as  well
as retail sale of electricity.  Section 62(3) of the Act, which  would  also
have some significance to the  present  appeal,  visualise  that  while  the
Regulatory Commission shall not show any undue preference  to  any  consumer
in fixing the tariff, the Commission may  at  its  discretion  differentiate
according to the  consumer's  load  factor,  power  factor,  voltage,  total
consumption of electricity, geographical area, nature of supply etc.  For  a
fuller appreciation, the entire of the provisions of Sections 61 and 62  may
be quoted hereinbelow:

"61. Tariff regulations.-The Appropriate Commission shall,  subject  to  the
provisions  of  this  Act,  specify  the  terms  and  conditions   for   the
determination of tariff, and in doing so, shall be guided by the  following,
namely:-

(a)   the principles and methodologies specified by the  Central  Commission
for determination of the  tariff  applicable  to  generating  companies  and
transmission licensees;

(b)   the generation, transmission, distribution and supply  of  electricity
are conducted on commercial principles;

(c)   the factors which would encourage competition, efficiency,  economical
use of the resources, good performance and optimum investments;

(d)   safeguarding of consumers' interest and at the same time, recovery  of
the cost of electricity in a reasonable manner;

(e)   the principles rewarding efficiency in performance;

(f)   multi-year tariff principles;

(g)    that  the  tariff  progressively  reflects  the  cost  of  supply  of
electricity and also reduce cross-subsidies in the manner specified  by  the
Appropriate Commission;

(h)   the promotion of co-generation  and  generation  of  electricity  from
renewable sources of energy;

(i)   the National Electricity Policy and tariff policy:

Provided that the terms and conditions for  determination  of  tariff  under
Electricity (Supply) Act, 1948 (54  of  1948),  the  Electricity  Regulatory
Commissions Act, 1998 (14 of 1998)  and  the  enactments  specified  in  the
Schedule  as  they  stood  immediately  before  the  appointed  date,  shall
continue to apply  for  a  period  of  one  year  or  until  the  terms  and
conditions for  tariff  are  specified  under  this  section,  whichever  is
earlier.

62.   Determination  of  tariff.-(1)  The   Appropriate   Commission   shall
determine the tariff in accordance with the provisions of this Act for -

(a)   supply of electricity  by  a  generating  company  to  a  distributing
licensee:

      Provided that the Appropriate Commission may, in case of  shortage  of
supply of electricity, fix the minimum and maximum  ceiling  of  tariff  for
sale or purchase of electricity in pursuance of an agreement,  entered  into
between a generating company and a licensee  or  between  licensees,  for  a
period not exceeding one year to ensure reasonable prices of electricity;

(b)   transmission of electricity;

(c)   wheeling of electricity:

(d)   retail sale of electricity:

Provided that in case of distribution of electricity in  the  same  area  by
two or more distribution licensees,  the  Appropriate  Commission  may,  for
promoting  competition  among  distribution  licensees,  fix  only   maximum
ceiling of tariff for retail sale of electricity.

(2)   The Appropriate Commission may require  a  licensee  or  a  generating
company to furnish separate details, as  may  be  specified  in  respect  of
generation, transmission and distribution for determination of tariff.

(3)   The Appropriate Commission shall not,  while  determining  the  tariff
under this Act, show undue preference to any  consumer  of  electricity  but
may differentiate according to the consumer's  load  factor,  power  factor,
voltage, total consumption of electricity during  any  specified  period  or
the time at which the supply is required or  the  geographical  position  of
any area, the nature of supply and the  purpose  for  which  the  supply  is
required.

(4)   No tariff or part of  any  tariff  may  ordinarily  be  amended,  more
frequently than once in  any  financial  year,  except  in  respect  of  any
changes expressly permitted under the terms of any  fuel  surcharge  formula
as may be specified.

(5)   The Commission may require a  licensee  or  a  generating  company  to
comply with such procedure as may be specified for calculating the  expected
revenues from the tariff  and  charges  which  he  or  it  is  permitted  to
recover.

(6)   If any licensee or a generating company recovers  a  price  or  charge
exceeding the tariff determined under this section, the excess amount  shall
be recoverable by the person who has paid such price or  charge  along  with
interest equivalent  to  the  bank  rate  without  prejudice  to  any  other
liability incurred by the licensee."

 8.   We  may  now  proceed  to  consider  the  four  issues  as  enumerated
hereinabove which have been raised before us.

9.    Cost of Supply and Cross Subsidy

The statement  of  objects  and  reasons  for  the  enactment  of  the  Act,
extracted above, would indicate a legislative  realisation  that  the  power
sector in the country was in dire straits.   This was largely on account  of
implementation of policy decisions to  provide  free  or  highly  subsidised
power to certain classes of consumers.  In a regime  wherein  tariff  was  a
matter  of  governmental  dictation  and  directives   providing   free   or
subsidised power to one section at the cost of another or others and a  host
of such related decisions divorced from  commercial  and  prudent  practices
had plunged the power sector into uncertainty and darkness.  To  remedy  the
situation, the Act of 2003 was enacted which, inter-alia, vested  the  power
of fixation of tariff in the Regulatory  Commissions  with  the  Legislature
itself clearly enunciating the principles for such determination as  are  to
be found in Section 61 details of which has  already  been  noted.   Section
61(g), as originally enacted, contemplated a progressive journey  to  reduce
and ultimately eliminate cross-subsidies by identifying the cost  of  supply
to the consumer.  The vision of each consumer fully  paying  for  the  power
drawn by such consumer was to be reached over a period of time.  In fact  in
the tariff policy notified under Section 3 of  the  Act  it  was  visualised
that by the end of the year 2010-2011 tariff should be within  20 per  cent
of the average cost  of  supply  (average  cost).   The  aforesaid  National
Tariff Policy was published in the year 2006.  Clause 2 thereof which  deals
with the above aspect of the matter is in the following terms:-

"2.   For achieving the objective that  the  tariff  progressively  reflects
the cost of supply of electricity, the SERC would notify roadmap within  six
months with a target that latest by the end of year  2010-2011  tariffs  are
within  20% of the average cost of supply.  The road map  would  also  have
intermediate milestones, based on the approach of  a  gradual  reduction  in
cross subsidy.

For example if the average cost of service is Rs. 3 per unit, at the end  of
year 2010-2011 the tariff for  the  cross  subsidised  categories  excluding
those referred to in para 1 above should not be  lower  than  Rs.  2.40  per
unit and that for any of the  cross-subsidising  categories  should  not  go
beyond Rs.3.60 per unit."

10.   Section 61(g), as earlier noted, was amended by  Act  No.26  of  2007.
The amended Section omitted the word  "eliminate"  the  effect  whereof  was
that cross-subsidies were  destined  to  remain  for  the  present  and  the
emphasis  was  on  attainment  of  minimum  levels  of  such  subsidy.   The
determination of  "cost  of  supply"  and  reduction/elimination  of  cross-
subsidies is closely interlinked.  The difference in the intent and  purport
of Section 61(g) before and after its amendment would not be very  relevant.
 The reduction of cross subsidy was contemplated by  the  unamended  section
as the first step leading to elimination.  The change of legislative  intent
to put on hold, if not  to  abandon,  the  elimination  of  cross  subsidies
occurred during the period of transition itself.  This is so because of  the
close proximity of time between the original enactment  and  its  amendment.
Besides, the road map  visualised  by  the  National  Tariff  Policy  itself
contemplated the continuance of cross subsidy even  in  the  year  2010-2011
whereas the amendment to Section 61(g) came about in the year 2007.

11.   The Commission while considering  the  fixation  of  tariffs  for  the
years 2004-2005 and 2005-2006 based its determination on  the  average  cost
of supply which plainly is to be worked  out  by  taking  into  account  the
total volume of electricity produced and the total  cost  incurred  in  such
production.  The industrial consumers in  the  appeal  before  the  Tribunal
contended that the cost of supply should be  the  voltage  cost  of  supply,
namely, the cost at which the consumer receives electricity at a  particular
voltage as a higher voltage would mean a lower price on  account  of  lesser
amount of distribution losses.  As the industrial consumer  receives  supply
of electricity at a high voltage, the average cost of supply,  according  to
the  industrial  consumers,  were  to  their  detriment  and  was  thus  not
contemplated under the Act.  The Appellate Tribunal on an interpretation  of
Section 61(g) and 62(3) particularly in the absence of  any  prefix  to  the
expression "cost of supply" in Section 61(g) took the view that it  is  more
reasonable to advance towards a regime  of  voltage  cost  of  supply  which
would provide a more actual/realistic basis for dealing with  the  issue  of
cross subsidies.  However, as the progress to a regime of  voltage  cost  of
supply by reduction/elimination of cross-subsidies is  to  be  gradual,  the
learned Appellate Tribunal  held  that  no  fault  can  be  found  with  the
determination of the average cost of supply made by the Commission  for  the
financial years in question.  However, keeping in  view  what  the  Tribunal
understood to be the ultimate object of the Act it  had  directed  that  the
relevant data with  regard  to  voltage  cost  should  be  laid  before  the
Commission and for the future the  Commission  would  gradually  proceed  to
determine the voltage cost of supply.

12.   We have considered the perspective adopted by  the  learned  Appellate
Tribunal in  seeking  an  answer  to  the  issue  of  cost  of  supply/cross
subsidies that had arisen for decision by it.  The  provisions  of  the  Act
and the National Tariff Policy requires determination of tariff  to  reflect
efficient  cost  of  supply  based  upon  factors  which   would   encourage
competition,  promote  efficiency,  economical  use   of   resources,   good
performance and optimum investments.  Though the practice  adopted  by  many
State Commissions and utilities is to consider the average  cost  of  supply
it can hardly be doubted that actual costs of supply for  each  category  of
consumer would be a more accurate basis for determination of the  extent  of
cross-subsidies that are prevailing so as to  reduce  the  same  keeping  in
mind the provisions of the Act and also the requirement of fairness to  each
category of consumers.  In fact, we will not be  wrong  in  saying  that  in
many a State the departure from average cost of supply to voltage  cost  has
not only commenced but has reached a fairly advanced stage.   Moreover,  the
determination of voltage  cost  of  supply  will  not  run  counter  to  the
legislative intent to continue cross subsidies.  Such subsidies,  consistent
with executive policy, can always be reflected in  the  tariff  except  that
determination of cost of supply  on  voltage  basis  would  provide  a  more
accurate barometer for identification of  the  extent  of  cross  subsidies,
continuance of which but reduction of the  quantum  thereof  is  the  avowed
legislative policy, at least for the present.   Viewed  from  the  aforesaid
perspective, we do not find any basic infirmity with the  directions  issued
by the Appellate Tribunal requiring the Commission to  gradually  move  away
from the principle of average cost of supply to a determination  of  voltage
cost of supply.




13.   Disallowance of Interest cost on account of alleged
      diversion of funds


      The Commission disallowed a total  of  Rs.100  crores  on  account  of
interest paid on borrowed funds on the ground that  the  loans  obtained  to
meet capital expenditure were diverted by the Board (PSEB) to  meet  revenue
expenditure.  The bulk of the interest (except Rs.100 crores) was,  however,
allowed by the Commission on the ground that the same is  a  consequence  of
the events in force prior to the coming into  existence  of  the  Commission
and that if the Board is asked to bear the burden of the entire interest  it
will have a crippling effect on its resources.   In  considering  the  issue
the Commission further came to the finding that  the  total  assets  of  the
Board would be of the value of Rs.9.431.06 crores out of  which  the  assets
created with the funds available from consumers'  contribution,  grants  and
subsidy towards capital assets etc. works out to Rs. 1784.48 crores  leaving
the balance assets at Rs.7646.58 crores.  As  against  this,  the  PSEB  has
availed loans and equity amounting to Rs.11828.48  crores  upto  the  period
ending March 31, 2004.  The  Commission  accordingly  recorded  the  finding
that the Board had availed loan  to  the  extent  of  Rs.4181.90  crores  in
excess of its capital assets.  Obviously, the  entire  of  the  said  excess
amount was diverted towards meeting revenue  expenditure  which  is  against
all canons of acceptance.   Therefore, the amount on this loan paid  by  the
PSEB cannot be shifted to the consumer.  Despite the said findings, for  the
reasons already noticed,  the  Commission  had  disallowed  interest  of  an
amount of       Rs.100 crores only allowing the balance  to  be  charged  on
the consumers through the tariff.  The Appellate  Tribunal  taking  note  of
the facts mentioned above did not interfere with  the  limited  disallowance
made by  the  Commission  and  instead  remanded  the  issue  for  a  fuller
consideration of the Commission, in the  determination  for  the  subsequent
years, in the following terms :

 "Since the issue of diversion of funds is  interlinked  with  other  issues
namely RSD cost allocation, subsidy, high rate  of  interest  on  Government
loans etc., the controversy relating to the extent of interest which can  be
allowed as a pass through cannot be resolved unless  the  other  issues  are
also decided by the Commission as directed by us.  The resolution  of  these
issues are bound to take time and cannot be decided without  relevant  data.
Therefore, relief can only be given to the consumers for the  future  years.


In view of the foregoing, we direct that for the year  2006-2007  the  issue
relating to the extent of interest which can be allowed as  a  pass  through
shall  be  determined  and  resolved  by  the   Commission   alongwith   the
determination of the issue relating to  RSD  cost  allocation,  subsidy  and
high rate of interests on Govt. loans.  This shall  be  accomplished  during
the truing up exercise for the year 2006-2007."

The conclusion of the learned Tribunal  being  on  a  consideration  of  the
facts  and  circumstances  noted  above,  we  can  only  approve  the  views
expressed.



14.   Disallowance of Employees Cost

      The Board had projected employees cost at  Rs.1605.40  crores  in  the
ARR for 2004-2005 and at Rs.1700 crores for 2005-2006.   The  Commission  in
its tariff order for financial year 2002-2003 had allowed employees cost  of
         Rs.1274.66 crores with  the  rider  that  for  the  next  year  the
employees' cost will be capped.  However, the employees cost  for  financial
year 2003-2004 and 2004-2005 had remained capped. The Commission  allowed  a
cumulative increase of 15.6% for the year 2005-2006 by taking  into  account
the increase in wholesale price index taking the financial year  2002-03  as
the base year.  The approved level  of  employees'  cost  of  the  Board  of
Rs.1274.66 crores for the year 2002-2003,  consequently,  stood  allowed  to
the extent of Rs.1473.63 crores.

15.   In the appeal before the Appellate Tribunal, the Board contended  that
the capping of the increase of employees cost for  the  year  2004-2005  was
not justified and that the  increase  allowed  by  the  Commission  for  the
financial year 2005-2006 is not adequate.  The employees of  the  Board  are
governed  by  the  Punjab  State  Electricity   Service   Regulations   1972
whereunder the employees are given parity with the pay scales of  the  State
Government employees.  As the Board had adopted the  recommendation  of  the
5th Pay Commission a higher pay scale  was  required  to  be  given  to  its
employees.  The Board also placed before the Tribunal  the  details  of  the
efforts made by it to contain the employees cost including reduction in  the
number of its employees.

16.   The Appellate Tribunal took the view that what was obligatory  on  the
Board was to provide parity of pay scales of its  employees  with  those  of
the State Government at the time when the transfer of the Electricity  Board
took place.   Grant  of  higher  pay  scale  without  linking  the  same  to
performance would, according to  the  Tribunal,  defeat  the  provisions  of
Electricity Act 2003.  The Tribunal further held that the  measures  pointed
out by the Board to cut the employees cost were cosmetic.   In  this  regard
the Tribunal observed that though the Board had claimed to have reduced  its
employees from 91224 in the year 2000-2001 to 82494  in  the  year     2003-
2004 appointment on contract basis as well as in the exigencies  of  service
continued to be made on no known basis.  The Tribunal found  that  even  the
voluntary retirement scheme which could have been a viable  option  was  not
adopted on the ground that the State Government was not  in  a  position  to
provide the expenses.   In  this  regard  the  Tribunal  in  its  order  has
specifically found that :

(i)   The number of consumers of electricity in the State of Punjab  is  the
least as compared to the other six States referred to in the charts;

(ii)  PSEB 0.24 MU per employee, which puts the Board in the  second  lowest
position in the matter of sale of energy per employee;

(iii)       Each employee of the PSEB caters to 59 consumers  in  the  State
of Punjab.  This ranking is the lowest amongst the seven SEBs;

(iv)  PSEB has the highest percentage of establishment cost  to  total  cost
as it constitutes 56 paise/Kwh cost  of  energy  sold,  which  is  also  the
highest compared to other six States and

(v)   The Boards per employee cable line circuit is the  lowest  being  2.95
Km/ckt cost against 7.84 Km/ckt in respect of Gujarat State.

17.   It is in the light of the aforesaid facts that the Appellate  Tribunal
came to the conclusion that the employees cost computed and claimed  by  the
PSEB at 1700 crores for the financial  year  2005-2006  cannot  be  allowed.
However, the Tribunal taking into account the fact  that  for  the  previous
two years 2003-2004 and 2004-2005 no increase in employees  cost  have  been
allowed thought it proper to allow the cumulative increase permitted by  the
Commission i.e. 15.61% over and  above  the  employees  cost  of  Rs.1274.66
crores in the year 2002-2003 which, on  proper  calculation,  works  out  to
Rs.1473.63 crores.

18.   The eventual conclusion of the learned Appellate Tribunal having  been
arrived at in the manner indicated above and being on due  consideration  of
the facts relevant to the issue we are of the view that no  interference  in
exercise of the limited jurisdiction of this Court under Section 125 of  the
Act would be justified.

19.   Coal transit losses

For the year 2004-05 the Tribunal had allowed transit loss of 2% as  against
3% allowed in the previous year i.e. 2003-04.  The  Tribunal  also  directed
the PSEB to bring down the level of transit loss to 1% in the next  3  years
with yearly reduction target of 0.33%.  For  the  year  2005-2006,  however,
the learned Tribunal had approved the allowance  of  transit  loss  of  0.8%
allowed  by  the  Commission.   Though  there  appears  to   be   a   slight
inconsistency in the above view of  the  Tribunal,  as  the  same  has  been
prompted by the necessity to bring down losses by the utilities by  adopting
appropriate and prudent measures we do not think that any interference  will
be justified particularly when what has been allowed  is  as  per  the  CERC
norms (0.8%).  The Tribunal had also taken  the  view  that  excessive  loss
reflected inefficiency and must therefore be eliminated.  If  the  Appellate
Tribunal, on consideration of the above fact  had  for  the  year  2004-2005
allowed transit loss to the extent of 2% as against the prescribed  norm  of
0.8% and for the year 2005-2006 had kept such allowance at 0.8%, we  do  not
see how interference with the above directions would  be  justified  in  the
present appeal under Section 125 of the Act.

20.   For all the reasons stated above  we  find  no  ground  whatsoever  to
interfere  with  the  impugned  judgment  and  order  dated  26.05.2006  and
25.07.2006 passed by the  Appellate  Tribunal  or  any  part  thereof.   The
appeal is, therefore, dismissed without any order as to cost.
                                        ..................................J.
                                           [RANJAN GOGOI]


                                        ..................................J.
                                         [R.K. AGRAWAL]

New Delhi;
February 10, 2015.
-----------------------
[1]
      [2] (2012) 6 SCC 782
[3]
      [4] (2005) 2 SCC 500
[5]
      [6] (1999) 7 SCC 288
[7]
      [8] 1992 Supp (1) SCC 712
[9]
      [10] AIR 1990 SC 2212
[11]
      [12] (1998) 2 SCC 226

-----------------------
26


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.