HARYANA ELECTRICITY REGULATORY COMMISSION
S.C.O. 180, SECTOR 5, PANCHKULA. HARYANA-134109
 FILING NO. 61 OF 2000
 Date of Order : 28.03.2001

Order

Haryana Vidyut Prasaran Nigam Ltd. (hereinafter referred to as HVPNL)is the holder of Transmission and Bulk Supply as well as Distribution and Retail Supply of electricity licences granted under Section 15 of the Haryana Electricity Reform Act, 1997 (Act 10 of 1998), hereinafter referred to as ‘the Act’, by the Haryana Electricity Regulatory Commission, hereinafter referred to as the Commission, vide its order dated 4th February, 1999.  HVPNL is subject to regulation by the Commission pursuant to the licence conditions as well as in accordance with the provisions of the Act.  Under Section 26(5) of the Act, HVPNL is required to file before the Commission at least three months before the ensuing financial year full details of its calculations for that financial year  of its Expected Aggregate Revenue.  HVPNL was thus required to file its Annual  Revenue Requirement (A.R.R.) for the financial year 2001-2002 by 31st December, 2000 as stipulated under the aforesaid Section 26(5).

HVPNL filed an application on 29th December, 2000 before Haryana Electricity Regulatory Commission for extension of time for filing of Annual Revenue Requirement (A.R.R) for the financial year 2001-2002 for its licensed businesses (Transmission and Bulk Supply and Distribution and Retail Supply) and relaxation of stipulated dead line from 31st December, 2000 to 31st March, 2001.  The application was received by the Registrar of the Commission at 4.35 P.M. on 29th December, 2000 which was a Friday.  30th and 31st December, 2000 being Saturday and Sunday the office of the Commission was closed.   31st of December, 2000 being the last date for filing of the Annual Revenue Requirement for the financial year 2001-2002 as prescribed under section 26(5) of the Act , the Commission had no time to consider the application of the licensee.

On 30th December, 2000 the Govt. of Haryana , Power Department issued an order bearing No. SO 145/HA.10/98/S.51/2000 dated 30th December, 2000 detailing  the reasons given by the licensee in its application to the Commission as the reasons for exercising power conferred by Section 51(1) of the Act and all other enabling powers in this behalf.  Govt. of Haryana granted extension of  time to HVPNL till 31st March, 2001 for submission of A.R.R. for financial year 2001-2002,  in view of the difficulties being faced by HVPNL in  the submission of Annual Revenue Requirement to be  filed in terms of sub section 5 of Section 26 of the said Act subject to the following conditions:-

(i)  HVPNL shall submit Annual Revenue Requirement for its licensed businesses for the financial year 2001-2002 within aforesaid time frame; and
(ii) The order shall be laid before the State Legislature in its next session.

The Commission Suo-moto issued a public notice which appeared in the Tribune and The Indian Express on 23.2.2001 to determine whether the Govt. of Haryana had jurisdiction under Section 51(1) of the Act to issue the order in question and also to determine whether the word ‘difficulty’ used in Section 51(1) of the Act related to ‘individual’ difficulty specific to a licensee in complying with a provision of the Act or the rules, regulations, scheme or order made thereunder to implement them.  Individual notices to the Govt. of Haryana Power Department and HVPNL were also issued on 2.3.2001

The first hearing was held on 7th March, 2001.  Shri Amarjeet Singh,  Addl. Advocate General of Haryana appeared on behalf of the State Govt. and HVPNL was represented by Advocate Shri Amit Kapoor. The Additional Advocate General requested for time to study the various  issues involved.  Accordingly, the next hearing was fixed for 19th March, 2001.  The Commission heard the arguments of the  Additional Advocate General.  He promised to give written arguments within a week but no communication has been received from him till date.

The main arguments advanced by the Addl. Advocate General Haryana were:-

(i)  The Govt. of Haryana is fully competent to remove any difficulty under section 51(1) of the Act and hence the notification issued by the Govt. was valid in law.

(ii)  Even if  the Govt. has exceeded its jurisdiction under section 51(1), the notification has been placed before the Legislature under section 51(2) of the Act and, therefore, it is deemed to have been approved by the Legislature.  It was also argued by the Addl. Advocate General that the said order issued by the Govt. of Haryana amounts to subordinate legislation under the Act and it is beyond the powers of the Commission under the Act to question Subordinate Legislation made by the Govt. under the Act.

 Before we proceed further to examine the arguments advanced by the Addl. Advocate General we consider it worthwhile to look at the functions of the Commission as contained in the Act.  The functions of the Commission as given under section 11 of the Act interalia include:-

(i)  issuing licences in accordance with the provisions of the Act and determining the conditions to be included in the licences.

(ii)  regulating the working of the licensees and  promoting their  working in an efficient, economical and equitable manner.

The Commission had in February, 1999 issued two licences to HVPNL, one for Transmission and Bulk Supply Business, and the other for Distribution and Retail Supply Business of electricity.  Condition No.21(1) of Transmission and Bulk Supply licence and condition No.22.2(a) of the Distribution and Retail Supply licence granted by the Commission to HVPNL clearly lay down that each year not later than 31st December the licensee shall prepare and submit to the Commission a report of its expected aggregate revenues and cost of service for its separate businesses for the next succeeding financial year in the  manner and form prescribed by the Commission from time to time.  The Commission has separately through its tariff regulations called Haryana Electricity Regulatory Commission (Tariff )Regulations 1999 and Guidelines for filing Annual Revenue Requirement and Tariff proposals prescribed  the manner and form for submission of Annual Revenue Requirement and tariff proposals.

Condition No. 4(1) of these Licences lays down that the licensee shall comply with the directions issued by the Commission from time to time and shall act in accordance with the terms of the Licence; except where the Licensee obtains the approval of the Commission for any deviation of such directions and terms.  It, therefore, follows that under the terms and conditions of the licence granted by the Commission to the Licensee, the Government has no power to allow any deviation from the licence conditions and grant extension of time for filing the Annual Revenue Requirement beyond 31st December, 2000.

 We shall now examine the arguments advanced by the  Addl. Advocate General :-

 (A)  The Additional Advocate General has argued that the Govt. of Haryana is fully competent under Section 51(1) of the Act to remove any difficulty arising in giving effect to the provisions of the Act or the rules, regulations, scheme or orders made there under by passing an order to make such provision not inconsistent with the provisions of the Act and, therefore, the notification issued by the Govt. is valid in law.

 To examine the scope and object of Section 51 of the Act, it is necessary to reproduce it:-

“51(1) – If any difficulty arises in giving effect to the provisions of this Act or the rules, regulations, scheme, or orders made thereunder, the State Government may by order published in the official Gazette make such provision, not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty.”

(2) Every order made under this Section shall, as soon as may be after it is made, be laid before the State Legislature.

As a general principle relating to Rule of literal construction of Statutes, ‘words’ must be interpreted in their natural and ordinary meaning unless it can be shown that legal context in which words are used require a different meaning.  The Commission is of the opinion that word ‘difficulty’ used in section 51(1) does not refer to a difficulty peculiar to any individual licensee.  It seems to the Commission that exercise of power by the Govt. under section 51(1) appears to relate to ‘difficulty’ arising out of legal interpretation or general implementation of the provisions of the Act which is general in nature and not specific to a particular licensee.  In our opinion the power to remove difficulty under section 51(1) cannot be used for curing default or delays on the part of any licensee in fulfilling the requirements of the Act particularly when there is no Force Majeure situation. The power to remove difficulty would be rightly exerciseable by the Govt. only when there are genuine difficulties in implementing any provisions of the Act on account of circumstances which could not be envisaged at the time, the Act was enacted.

Further section 26(5) of the Act provides for a requirement that a licensee furnish to the Commission 3 months before the ensuing financial year full details of the calculations for that financial year of the expected revenue from charges.  The State Govt. cannot cure such default on the part of the licensee by exercising its powers under section 51.  Any such order passed by the State Government in exercise of power under section 51 would be inconsistent with the provisions of section 26(5) of the Act.  Section 51(1) of the Act clearly says that order issued by the Govt. and published in the official gazette in exercise of the power under section 51(1) is not to be inconsistent with the provisions of this Act.  In the instant case, exercise of power under section 51 is inconsistent with a provision of section 26 of the Act. In matters where specific provisions are contained in the Act and there is no inherent difficulty in implementing them, the power to remove difficulties cannot be exercised by the Government.

If the licensee fails to file Annual Revenue Requirement before 3 months of the ensuing financial year it does not mean that the licensee loses the right to file the revenue requirement or ask for tariff increases thereafter.  The delay in filing would in substance only mean that the licensee has to continue with the existing tariff till such time the Commission has an opportunity to examine the proposal and give a ruling.  The idea to file Annual Revenue Requirement 3 months before the ensuing financial year is to enable the Commission to decide the matter as far as practicable before 31st March every year so that revised tariff could be implemented from 1st April. The date of 1st April for implementation of ‘tariff’ is convenient from the point of view of accounting but it is not mandatory that a tariff be implemented from that date only.

In case where a licensee fails to file Annual Revenue Requirement  application by 31st December  and the Commission is of the view that licensee had done it because he is having a windfall from the existing tariff the Commission can give notice to the licensee and revise the  tariff.  This situation is, however, not prevalent today in the State of Haryana.

The Commission has also power to direct the licensee to file the Annual Revenue Requirement application and tariff proposal at the earliest and proceed against the licensee for default, if the Commission is of the opinion that there is no justification for the delay.  If the Commission is satisfied with  the justification given by the licensee for the delay, the Commission can  condone the delay as would appear from the provisions of section 31(1) of the Act.  Under Section 31(1) of the Act the Commission has already notified the regulations for fines and charges under Haryana Electricity  Regulatory  Commission ( Fines and Charges) Regulations, 2000.  These regulations are sufficient for dealing with a  situation in which the licensee has not been able to comply with the provisions to file A.R.R. by the date prescribed.  Section 31 of the Act empowers the Commission to impose such fines and charges as may be prescribed by the Commission in the Regulations for non-compliance or violation on the part of the Generating Companies, Licensees  or other persons, of the provisions or requirements of the Act and Rules and Regulations framed thereunder and direction and orders of the Commission made from time to time.  It is  the express intention of the Act to give exclusive  jurisdiction to the Commission in the matter of dealing with non-compliance or violation of the provisions of the Act or Rules or Regulations framed there under. Such being the  express intention of the Act it will be too farfetched to argue that the State Govt. enjoys a comprehensive   jurisdiction under section 51 to deal with the cases of non-compliance of the provision of the Act, rules & regulations thereunder by issuing an order which will make explicit non-compliance disappear or remedy it.

In this connection we would also like to mention that HVPNL is a company fully owned by the State Govt. of Haryana and an order passed by the State Govt. to free HVPNL from the stigma of non compliance of provisions under section 51 of the Act is a  case of Govt. helping itself by exercising its powers under the Act.  This will be a bad precedent and in our opinion exercise by the  Govt. of its powers, if any,  under the Act in favour of a company fully owned by the State Govt. is inappropriate.  We are of the considered view that instant case is precluded from the scope of Govt. jurisdiction under section 51 as it is well covered under conditions of the licence granted to HVPNL and also under section 31 of the Act which prescribes the jurisdiction of the Commission in such matters.  Needless to mention, power of the Commission to impose fines and charges carries with it the  power to condone the delay on genuine grounds.

(B) We now come to the second argument advanced by the  Addl. Advocate General that even if the Govt. has acted beyond its  jurisdiction  in issuing the said  notification, the notification has been placed before the Legislature under section 51(2) of the Act, and, therefore, it is deemed to have been approved by the Legislature.  According to him the order issued by the Govt. amounts to subordinate legislation and the Commission has no power under the Act to question the subordinate legislation made by the Govt. under the Act.

We find it difficult to agree with this view of the Additional Advocate General.  In this connection, we would like to refer to section 55 of the Act which deals with the Rules to be made by the State Govt. to carry out its functions under the provisions of the Act.  Section 55(2) enumerates matters on which Rules may be made by the State Govt.  Section 55(3)  reads as follows:-

“Every Rule made under this Section shall be laid, as soon as may be after it is made, before State Legislature while it is in Session for a total period of 30 days and if before expiry of above period the State Legislature agrees in making any modification in the rule, the rule shall thereafter have the effect only in such modified form, however, that any such modification shall be without prejudice to the validity of anything previously done under that rule “.

It is our view that section 55 and not section 51 of the Act deals with Subordinate Legislation under the Act.  The difference in the  language of section 51(2) and section 55(3) of the Act also shows that  it is not the  intention of the Act to confer the status of  subordinate legislation on the orders passed by the Govt. under section 51(1).  Under Section 51(2) an  order passed by the Govt. under section 51(1) is required to be placed before the State Legislature but  the language of section 51  suggests that by doing so, the Govt.  order under Section 51(1)  does not acquire the attributes of subordinate legislation nor does  it get the approval of the Legislature thereby.  We, therefore, do not agree that  the present notification dated 30th December, 2000 issued by the Govt. of Haryana containing  the order of the State Govt. under section 51(1)  enjoys the status of subordinate legislation and  has acquired the approval or concurrence  of  the State Legislature.  In our view, it is an executive order beyond the jurisdiction of the State Govt. for reasons mentioned above.

The Act as stated in the Legislative Department Notification No. Leg.11/98 of 10th March, 1998 was to provide for the constitution of an Electricity Regulatory  Commission, restructuring of the electricity industry, rationalisation of the generation, transmission and distribution and supply of electricity, avenues for participation of private sector entrepreneurs in the electricity industry and generally for taking measures conducive to the development and management of the electricity industry in an efficient, economic and competitive manner and for matters connected therewith or incidental thereto.

The main legislative intent behind the enactment was to take away the power of regulation of electricity industry out of the control of the Govt. and entrust it to the Regulatory Commission as the Electricity Boards which were under the control of the State Govt. had reached a stage where their efficient functioning had been seriously impaired, T&D losses had increased beyond acceptable limits, realisation of electricity bills was tardy, tariffs were not sustainable, the Board had huge receivables, and adequate funds were not available for investment to improve the availability of adequate power of quality to Consumers. The present order issued by the Government is in the nature of a regulatory action which is outside the powers of the Govt. as the regulation of the licensees has been entrusted to the exclusive jurisdiction of the Commission under the scheme of the Act. In this connection, we would like to refer to the Supreme Court orders in K.Ramanathan Vs. State of Tamil Nadu (Civil Appeal No.11417 of 1983 decided on February 27, 1985) which says that the word ‘regulation’ has different shades of meaning and must take its colour from the context in which it is used having regard to the purpose and object of legislation and the Court must necessarily keep in view the mischief which the Legislature seeks to remedy.

The Commission is of the view that the present order contained in Notification No. SO 145/HA.10/98/S.51/2000 dated 30th December, 2000 passed by the Govt. of Haryana under section 51(1) of the Act is without jurisdiction and runs counter to the scheme of the Act entrusting powers of regulating the working of the licensees to the Commission under the Act and is in conflict with the terms and conditions of the Licence granted by the Commission to HVPNL for its Transmission and Bulk Supply Business and Distribution and Retail Supply Business separately.

The Commission therefore holds that the said order passed by the State Govt. of Haryana vide Notification No.SO.145/HA.10/98/S-51/2000 dated 30th December, 2000 is without jurisdiction and therefore null and void in so far as it relates to the Licensee HVPNL’s obligation to file A.R.R. for Financial Year 2001-2002 by 31st December, 2000 in terms of its Licence conditions and in terms of Section 26(5) of the Act.

Dated: 28th March, 2001
Place: Panchkula