Before the
MAHARASHTRA ELECTRICITY REGULATORY COMMISSION
World Trade
Centre, Centre No.1, 13th floor, Cuffe Parade, Mumbai 400 005.
CASE No. 24
of 2001
In the matter of MSEB Tariff
rate applicable to streetlight services for
Murbad and Additional Murbad Industrial Areas and
differential tariff recovery through supplementary bill raised by the MSEB.
Shri P. Subrahmanyam, Chairman
Shri Jayant Deo, Member
Dr Pramod Deo, Member
ORDER
Dated: February 11, 2003
The Maharashtra
Electricity Regulatory Commission, in exercise of the powers vested in it under
Section 29 of the Electricity Regulatory Commissions (ERC) Act, 1998 and all
other powers enabling it in this behalf, has vide its Order dated 5th
May 2000, in Case No. 1 of 1999, determined the tariff for the supply of
electricity to various categories of consumers, after considering the proposal
submitted by the Maharashtra State Electricity Board (MSEB). Since then the Commission has also passed
its second Tariff Order dated 10th January 2002 in Case No.1 of 2001
for the MSEB.
2. The Deputy Engineer,
MIDC Sub-Division, Murbad submitted an application under affidavit dated
11.10.2001 and further supplemented on the date 9.11.2001 in the matter of
Tariff rate applied by the MSEB to its streetlight services in Murbad and
Additional Murbad Industrial Areas. The matter was admitted and heard before
the Commission on 8th August 2002.
3. The MIDC submitted
that it provides all the infrastructure facilities such as streetlights, water
supply, roads, post office, MSEB office, Telephone office, etc., Streetlights
are provided along the internal roads in Murbad and additional Murbad
industrial areas those are in the jurisdiction of `Grampanchayats’.
4. The
energy bills for these street lights so far i.e. till April 2000, were being
charged at a tariff applicable as per the MSEB tariff, under class LD-6
(a) of the Tariff Schedule and MIDC has been paying the same
regularly. Recently the MSEB informed
vide its letter-dated 4.7.2001 that the MIDC is not categorised under
the `Grampanchayats’ but it is a corporate body. Therefore the tariff is
being charged for the street light category ‘others’ as per applicable
rate of tariff. The contention of the
MIDC is that the said areas fall under the limits of the Gram Panchayat and the
Tariff rate for street lights need to be charged under class LD-6 (a) of MSEB
tariff schedule only as has been done in the past.
5. The Applicant
further submitted that the Corporation regularly paid the MSEB bills and there
never had been any arrears. He further
submitted that the MSEB has, without any intimation or notice, raised a bill
dated 12.3.2001 including arrear amount of Rs.3.48 lakhs for the
period of September 1992 to December 2000. He further submitted that the MIDC collects service charges,
which itself is subsidized, for providing water, roads and streetlights &
its maintenance, from its consumers as per the applicable rate approved by it’s
HQ and it is now very difficult for the MIDC to collect this arrears for the period
September 1992 to December 2000.
6. On
a query from the Commission, the Applicant submitted that out of the total
plots, about 70-80% are functioning in Murbad / Addl. Murbad MIDC areas. The rate for service charges is Re.1 per sq.
meter per annum and which is applicable throughout the State and normally
revised once in 3-4 years. To another
query, as to whether the other MIDC areas are also facing similar problems, the
MIDC official expressed unawareness on his part. MIDC Head Quarters
representative also expressed his inability to throw any light in this matter.
7. The Applicant
submitted that the issues have been discussed at various levels since April
2001 without any solution.
Unfortunately, the MSEB even refused to accept payment under protest and
resorted to thoughtless disconnection on 29th
September 2001 leaving the area under darkness for more than 3-1/2 months. Under this coercion the MIDC had to pay the
bill, while approaching the Commission for its decision in the matter.
8. The Applicant further reinforced his
submission by putting forward that:
·
There has been a complete non-application of
mind on the part of the MSEB in consideration of issues raised by the MIDC
·
The failure on the part of the MSEB to put
MIDC to notice including statutory notice in respect of disconnection effected.
·
It is denied that the MSEB can recover
retrospectively amounts by levying tariff rates unreasonably and
retrospectively, though the MIDC has regularly paid the electricity bills.
9. In
compliance to the Commission’s directives inviting parawise remarks on the
application of the MIDC, the MSEB submitted its say vide its letter dated 21st
January 2002.
10. The MSEB
representative while deposing submitted that there are three basic issues:
a.
Tariff Applicability: Whether the tariff
applicable to the Gram Panchayat areas can be made applicable to the MIDC,
providing the services of streetlights.
As per approved tariff order and subsequent tariff schedule along with
Commercial circular, it gets established that the applicability of the tariff
depends upon the use and type or class of the authority providing the said
services as a civic amenity and not on the basis of its geographical
location. In this case the MIDC is
providing it for the benefit of its industrial consumers / entrepreneurs and
hence they are charged under the rate, that is appropriate, justified and needs
no reconsideration. Further the Honourable Commission approved the tariff,
effective since May 2000. The
contention of the Applicant to be categorised based on their location,
therefore, is not sustainable and justified.
b.
Issue of Arrears: He submitted that during
the internal audit in 1996 by the MSEB the auditors pointed out the anomaly in
the rate charged to the MIDC since November 1992 to March 1996. Accordingly the
revised bill was raised from that period onwards. The matter was clarified to the MIDC officials, who disagreed
with the arrear bill, during a meeting held on 23.10.2001. On their failure to
settle the arrear due, the supply was disconnected on 29th September 2001 and
restored after payment of both supplementary bill and other dues on 12.12.2001
– 13.12.2001.
c.
Issue of Time Limitation: He submitted that MIDC
cannot raise the issue of validity of the said supplementary bill, on the
ground of time limitation, before the Honourable Commission and if so desired
can opt to initiate other appropriate remedy in this regard [ref. Point No.12 of MSEB letter
No.PR-3/Tariff/MERC/22619 dated 21.1.2002].
11. On
a query regarding similar problem in other MIDC areas in the State, he
submitted that no such case has been registered with the MSEB so far and,
therefore, it is presumed that they have been charged as per the tariff
directives of the Commission. The MSEB
official further submitted that the entire matter was earlier discussed on
several occasions with the MIDC authorities for amicable resolution but to no
avail.
12. The
Commission enquired with the MSEB on (a) Why it took another four years (!) to
raise the revised bill, which was pointed out in 1996 by the internal auditors,
and (b) What is the internal check system to avoid such lapse and fix
accountability? The MSEB official admitted a lapse on their part.
13. The Commission
pointed out that as per the MSEB’s Conditions of Supply, it cannot recover
arrears with retrospective effect for more than six months in case of metering/billing
dispute, as well as the built-in system for periodic check of the meter is
lacking. The Commission further observed that while in this case the matter was
not that of metering error and consequent billing dispute but of an
administrative lapse on the part of the Board, who is expected to function in
commercially oriented manner, to detect in time whether the rate applied is
correct or not. Even after delayed detection by the audit team the respective
department took four long years to take a corrective action that affects its
revenue earning and consequent cash flow. Such matters cannot be so easily
condoned simply on the basis of the MSEB admitting lapse on their part. It will
be unfair and unjust to make the hapless consumer to face the inconveniences
under duress of the MSEB.
14. On the question of non-acceptance
of payment from the MIDC `under protest’, the Board representative
further submitted that he would investigate the matter to take corrective
measures in future. The Commission observed that this is another manifestation
of the highhanded approach of the Board officials in the field, which may be
unknown to the top management, making the customer repent but still continue in
absence of any alternative. A patient hearing and willingness to address the
genuine grievances of the consumer is all that the customer wants, which in
fact can be the basis of success for the Boards business.
15. Observing the
involvement of substantive legal points, which were not sufficiently argued
during the hearing, the Commission vide its letter dated August 14, 2002
directed the MSEB to submit its comments on the issue of `period of limitation’
and the legal comments thereof in view of
(i) section 26(6) of the Indian Electricity Act, 1910 “Where any
difference or dispute arises as to whether any meter referred to …during such
time, not exceeding six months, as the meter shall not, … be conclusive proof
of such amount or quantity” and (ii) Civil Procedure Code restricting the Period of Limitation to three years.
16. In compliance to the
Commission’s letter dated 14th August 2002, the MSEB has submitted
its response vide letter No. PR-3/MERC/Tariff/35653 dated 1st October
2002 submitted that
(a)
“Neither the Limitation Act, 1963 nor
any other relevant statutory provision prohibits or prevents the Board from
claiming escaped billing from any consumer with retrospective effect,
pertaining to the period which may extend beyond the period prescribed under
the Limitation Act, 1963.”
(b)
The Civil Procedure Code does not
prescribe any period of limitation, whereas the said provision exists in the
Limitation Act, 1963 and as far as the Electricity Boards are concerned, the
Section 60-A of the Electricity (Supply) Act, 1948 is more relevant in this
regard.
(c)
The Action of the Board to issue
supplementary bill having retrospective effect for valid reasons, like
escaped billing, wrong application of tariff, etc., therefore cannot be
declared as illegal, only on the ground that the period of such supplementary
bill extends beyond the period permissible under the Limitation Act, 1963.
(d)
Even if, jut for the sake of arguments
but without admitting the same, it is presumed for the time being that the
Board cannot raise any supplementary bill pertaining to a period beyond the
period prescribed under the Limitation Act, 1963, then also under Section 24 of
the Indian Electricity Act, 1910, the Board has the right to disconnect power
supply of the said consumer who has been issued such supplementary bill.
(e)
Such powers are vested with the Board
under Section 24 of the Indian Electricity Act, 1910 and the Hon’ble Supreme
Court in its judgement dated 24/01/1997, in the matter of M/s Swastic
Industries v/s M.S. Electricity Board (Special Leave Petition Civil No.765 of
1997, A.I.R. – 1997 S.C; page no.1101) has clearly upheld these powers. The Hon’ble Supreme Court in the said
judgement has specifically stated that, even though a claim might have been
barred by Law of Limitation for which the Board cannot initiate recovery
proceedings, but can always disconnect the power supply in exercise of power
under Section 24 of the said Act of 1910.
(f)
In the said judgment, the Hon’ble
Supreme Court has also observed that, issuing a supplementary bill for escaped
billing cannot be considered a deficiency in service.
17. The MSEB, further
while citing the High Court judgement (AIR 1978, BOM 369 – M/s Bharat Barrel
& Drum Manufacturing Co. Pvt Ltd v/s The Municipal Corpn. of Greater
Mumbai) brought out that:
“The right to discontinue the supply of electricity is without
prejudice to the licensee’s right to file a suit to recover the amounts, since
the reason of disconnection of the supply the licensee will not necessarily
obtain the amounts due from the consumer.
It became necessary therefore to protect the licensee’s right to recover
such amounts by ordinary civil action the defendant to the suit i.e. the
consumer may have the defense of limitation open to any portion of the claim
would not warrant such considerations being applied to the licensee’s right of
discontinuance of supply for non-payment of the amounts owed to the
licensee. The provision contained in
Section 24(1) which enables the licensee to discontinue electric supply to a
particular consumer is mainly by way of relieving the licensee of the
obligation on him to be found contained in S. 22 viz. to make supply of
electricity on application to all consumes within the area of supply.”
18. The MSEB further submitted [ref. para 10 of
letter dated 1st October 2002] that:
“The Section 26(6) of the Indian Electricity Act, 1910 will
have no relevance as far as the issue under consideration of the Hon’ble
Commission is concerned, since the said provision is applicable only in such
cases, where there exists a dispute (between the Board and the consumer) about
correctness of the meter. In such cases
also, no time limitation regarding reference to be made to an Electrical
Inspector has been prescribed, however once such reference is made, the
Electrical Inspector can determine the assessment only for a period not
extending beyond 6 months. In this
regard, it is further to state that the Hon’ble Supreme Court in one of the
matters have expressed that the said period of 6 months also needs to be
increased by appropriate amendment to the said Section.”
19. The Commission
observed that the following issues needed to be answered effectively while
deciding on merit of this case:
i)
Whether the MSEB is within its legal right to
issue supplementary bill having retrospective effect for varied reasons like
escaped billing, wrong application of tariff, etc., for an unlimited period and
not bound by the Limitation Act, 1963.
ii)
In case Limitation Act, 1963 prohibits or
prevents the Board from claiming escaped billing from any consumer for
retrospective effect, what should be the period, and whether the same is
further limited by any of the provisions in Civil Procedure Code, besides
Section 60 (A) of the Electricity (Supply) Act, 1948.
iii)
Does Sections 49 and 52 of the ERC Act 1948
give sufficient empowerment to the Commission to decide on the period of
escaped billing pertaining to a period beyond the period prescribed under the
Limitation Act, 1963 or the period prescribed under Section 26(6) of the IE
Act, 1910.
iv)
For a bill disputed under the Period of
Limitation, whether the MSEB still enjoys the right under the IE Act 1910 to
disconnect the supply to its consumers who has been regularly meeting it’s
obligations.
20. The Commission noted
that the facts of the cases for the judgments cited by the MSEB are in the
specific context of the Board’s legal right to raise supplementary bill arising
out of the escaped billing due to error in meter or in billing
and to disconnect the power supply as a legal means to exert pressure on the
intentional defaulter for clearing his dues to a public utility. Whereas here
is the case where the customer has not failed in settling his bill raised from
time to time based on the classification as per prevailing tariff schedule, and
merely protested to a supplementary bill due to reclassification by the Board.
In fact the gesture of paying “under protest” clearly reflects the intention of
the customer. But the MSEB on the other hand after failing to put their house
in order takes the high-handed approach of threatening the customer with
disconnection and collect the dues in dispute under duress. The MSEB clearly
fails in meeting its executive obligation and making the concerned accountable
when it fails to raise supplementary bill for four long years in spite of audit
team having reported the anomaly which in any way should have been detected by
the commercial section as a part of its routine activity check.
21. The Commission sees
the point in the argument of the applicant that it is not possible for the
Board’s consumer to recover such arrears dues from his customers after such a
long unreasonable span of time. It observes that the concept of “Period of
Limitation” follows from such situation. The Commission also observes that the
prevailing Law in electricity is silent on such time period of limitation to be
considered under such cases where the utility has failed to perform its duty on
time and expects the consumer to face the inconveniences and pay up silently
under coercion i.e. the threat of disconnection to avoid further halt to his
activity. The Commission observes that the section 52 of the ERC Act, 1998
sufficiently empowers it to deal in such matter.
22. The
Commission does not see any merit in the applicants argument that he should be
offered a tariff category based on his geographical location and therefore
upholds the contention of the Board that the applicability of the tariff is
based on the purpose for which the electricity is being used and not otherwise.
23. In light of the above
observations the Commission directs the following:
No retrospective
recovery of arrear can be allowed on the basis of any abrupt reclassification
of a consumer even though the same might have been pointed out by the
Auditor. Any reclassification must
follow a definite process of natural justice and the recovery, if any, would be
prospective only as the earlier classification was done with a distinct
application of mind by the competent people.
The same cannot be categorized as an escaped billing in the strict sense
of the term to be recovered retrospectively.
With the setting up of the MERC, order of the Commission will have to be
sought as any reclassification of consumers directly affects the Revenue
collection etc. as projected in its Tariff Order. The same could be done either at the time of the tariff revision
or through a special petition by the utility or through a petition filed by the
affected consumer. In all these cases,
recovery, if any, would be prospective from the date of order or when the
matter was raised either by the utility or consumer and not retrospective.
24. Accordingly, the bill
issued to the MIDC should be corrected to ensure prospective recovery of dues
from the date of communication about the reclassification.
| Sd/- | Sd/- | Sd/- | |
| (Jayant Deo) | (Dr Pramod Deo) | (P. Subrahmanyam) |
|
| Member | Member | Chairman, MERC |
|
Sd/- |
|||
| (Sanjay Kumar) | |||
| Secretary, MERC | |||
|
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