Fuel Surcharge Adjustment (FSA) and AP Electricity Regulatory Commission

BACKGROUND

The Andhra Pradesh Electricity Regulatory Commission entertained a Fuel Surcharge Adjustment (FSA) claim made by the Andhra Pradesh Power Co-ordination Committee on behalf of the four Distributing Companies (DISCOMS) in the State for the financial year 2008-09 and by its proceedings dated 05.06.2010 permitted them to levy FSA charges as indicated therein on all consumers, except LT agricultural consumers, for the four quarters of that financial year. The proceedings dated 05.06.2010 came to be challenged before this Court in a batch of writ petitions by aggrieved consumers.

The writ petitioners are however aggrieved by the finding of the learned Judge that the Commission can condone the delay in the filing of FSA applications by the licensees beyond the specified period by exercising powers under Regulation 59 of the Andhra Pradesh Electricity Regulatory Commission (Conduct of Business) Regulations, 1999 (hereinafter, ‘the Business Regulations’). Hence, these appeals.

At the time of admission of these appeals, the Court was informed that proceedings had been initiated afresh before the Commission pursuant to the order under appeal. The Commission was accordingly permitted to go on with the said proceedings up to the stage of passing a final order but was directed not to give effect to the same.

ISSUES Discussed

  • Whether the Commission has the power under Regulation 59 of the Business Regulations to condone the delay and entertain FSA applications filed by the licensees beyond the time prescribed under Regulation 45-B(4) thereof.

Appellants (Contented): The scheme and structure of the legislations and the Regulations framed there under are aimed at maintaining certainty of the tariff during the year so as to prevent the consumer from being subjected to constant variations in the price that he has to pay for electricity.

However, the amendment of the Business Regulations (2000) by the Commission clearly spelt out its intention to see that a temporal control is placed upon the licensee even in this regard so that the consumers are not mulcted with belated accumulated demands on the count of FSA. The amended Regulation 45-B(4) of the Business Regulations would have to be given full effect as per its clear language and the purport thereof could not be defeated by resorting to the general Regulations which were there in the statute book long prior to its insertion.

The default clause in Regulation 45-B (4) demonstrates in clear and unambiguous terms that after the stipulated period of 30 days, the APTRANSCO/DISCOMS/RESCOs would forfeit any future FSA claims for that quarter. The Commission could not therefore exercise powers under Regulation 59 to extend the time beyond the stipulated 30 days and the said Regulation has no application to Regulation 45-B(4).

The learned Judge therefore erred in permitting the Commission to entertain applications from the licensees for the purpose of exercising powers under Regulation 59 of the Business Regulations and the order under appeal needs correction to that extent.

Commission (Countered): There is no conflict between Regulations 45-B(4) and 59 of the Business Regulations. It is only in the case of such conflict that the question of considering whether a special rule would prevail over the general rule would arise. Limitation prescribed by law is only a matter of procedure and the right, by itself, would not stand extinguished.

Regulations 55 and 59 are akin to Sections 151 and 148 of the Code of Civil Procedure (CPC) respectively. Regulation 45-B(4) dilutes the statutory right of the DISCOMS under Section 61(d) of the Act of 2003 to recover the cost of electricity and to that extent it must be read down by allowing the Commission to exercise powers under Regulation 59.

Appellants (Counter): The formula prescribed under the amended Regulation 45-B involves several variable parameters and it is not correct to equate the same to a mere arithmetical exercise. Determination of FSA founded on incomplete and belated data provided by the licensee would be detrimental to the consumer. There must therefore be contemporaneity in the timely determination and levy of FSA. Section 61(d) of the Act of 2003 requires the Commission to balance the interest of the consumers while safeguarding the right of the licensee to recover the cost of electricity.

Regulation 59 cannot be equated with Section 148 CPC in the context of Regulation 45-B (4) which spells out the consequences of failure to comply with the stipulated temporal requirement. The forfeiture clause is a later introduction in the legal fabric, as Regulation 45-B (4) came to be amended only in the year 2003. Thus, Regulation 59 has no role to play in the context of Regulation 45-B (4). The learned Judge erred in holding to the contrary.

Section 9(2) of the Act of 1998 makes it clear that the Commission has exclusive power to make Regulations for the conduct of its proceedings and the discharge of its functions. The only requirement is that such Regulations should first be published in the Official Gazette.

Upon a detailed analysis, the learned Judge unequivocally held that Regulation 55 does not enable the Commission to entertain an application for claiming FSA beyond the time prescribed in Regulation 45-B(4). In the absence of an independent appeal or challenge by the respondents, this conclusion of the learned Judge which has attained finality does not warrant examination or interference.

Observation:

The issue presently is whether the Commission can entertain fresh FSA claims from the DISCOMS for that period by condoning the delay in their submission in the context of Regulation 45-B (4) by exercising powers under Regulation 59.

Regulation 45-B (4) mandates that the DISCOMS must file with the Commission all information required for calculation of the FSA within 30 days of the end of the respective quarter, failing which they would forfeit any future claim on this account for such quarter.

The power under Regulation 59, as is explicit from the language used therein, is subject to the provisions of the Act of 2003. Subject to this limitation, the Commission is armed by this Regulation to extend or abridge the time prescribed by the Regulations or by an order of the Commission for doing any act. The power of extension can be exercised by the Commission irrespective of whether the time prescribed has already expired or not.

Chapter IV-A of the Business Regulations came to be inserted, there was no mention in Regulation 45-B as to any adversity flowing from delay on the part of the licensees in furnishing information for determination of FSA.

Court is not impressed with the submission advanced by learned counsel for the Commission that there is no friction between Regulations 45-B (4) and 59 of the Business Regulations. The consequences of the failure to abide by the time stipulation in Regulation 45-B(4) being clear, the question as to whether such failure can be brushed aside by condoning the delay under Regulation 59 clearly puts the two Regulations in conflict.

Learned counsel for the Commission relied upon the Principles of Statutory Interpretation by Justice G.P.Singh, Eight Edition 2001, wherein the learned Author stated that a statute must be read as a whole and that one provision of the Act should be construed with reference to other provisions in the same Act so as to make a consistent enactment of the whole statute and that such a construction has the merit of avoiding any inconsistency or repugnancy either within a Section or between a Section and other parts of the statute.

In this context, the learned Author said that it was the duty of the Courts to avoid ‘a head on clash’ between two Sections of the same Act and, whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonize. It may however be noticed that the learned Author thereafter referred to the maxims ‘Generalia specialibus non derogant‘ and ‘Generalibus specialia derogant‘ and stated that if a special provision is made on a certain matter, that matter is excluded from the general provision.

The Latin maxim Generalibus specialia derogant means that special things derogate from general things. One of the applications of the Rule of Harmonious Construction is that when there is a law generally dealing with a subject and dealing particularly with one of the topics comprised therein, the general law is to be construed as yielding to the special in respect of the matters contained therein. The principle that the particular or special rule must control or cut down the general rule is however inapplicable where the two provisions do not relate to the same subject [BENGAL IMMUNITY CO. LTD. v. STATE OF BIHAR]

In the light of the above principle, it would have to be seen whether Regulation 45-B (4) would submit to Regulation 59 or would operate independently. In MAYA MATHEW v. STATE OF KERALA, the Supreme Court summed up the legal position as under:

  • When a provision of law regulates a particular subject and a subsequent law contains a provision regulating the same subject, there is no presumption that the latter law repeals the earlier law. The rule-making authority while making the later rule is deemed to know the existing law on the subject. If the subsequent law does not repeal the earlier rule, there can be no presumption of an intention to repeal the earlier rule;
  • When two provisions of law – one being a general law and the other being a special law govern a matter, the court should endeavor to apply a harmonious construction to the said provisions. But where the intention of the rule-making authority is made clear either expressly or impliedly, as to which law should prevail, the same shall be given effect.
  • If the repugnancy or inconsistency subsists in spite of an effort to read them harmoniously, the prior special law is not presumed to be repealed by the later general law. The prior special law will continue to apply and prevail in spite of the subsequent general law. But where a clear intention to make a rule of universal application by superseding the earlier special law is evident from the later general law, then the later general law, will prevail over the prior special law.
  • Where a later special law is repugnant to or inconsistent with an earlier general law, the later special law will prevail over the earlier general law.

These decisions reiterate the position that if the intention of the rule- making authority is to make a later general rule to apply to all services in the State, for which different earlier special rules exist, then the existing special rules will give way to such later general rule.

A law enacted by the legislature is to be enforced in the proper perspective. The provisions of a statute, including every word, have to be given full effect keeping the legislative intent in mind in order to ensure that the projected objective is achieved. In order words, no provision can be treated to have been enacted purposelessly. The Court should not give such an interpretation to the provision which would render the provision ineffective or odious [BALWANT SINGH v. JAGDISH SINGH].

Applying the above principle, in AMCHONG TEA ESTATE v. UNION OF INDIA, the Supreme Court held that the period of limitation prescribed under Section 35 of the Central Excise Act, 1944 would override the general law of limitation and therefore the appellate authority under the Central Excise Act, 1944 had no power to condone the delay beyond the prescribed period by invoking Section 5 of the Limitation Act, 1963.

Earlier, in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE v. HONGO INDIA PRIVATE LIMITED, the Supreme Court dealt with the question whether the High Court had the power to condone the delay in presentation of a reference under Section 35(H) (1) of the Central Excise Act, 1944 by applying Section 5 of the Limitation Act.

The general rule to be followed in the case of a conflict between two provisions is that the later abrogates the earlier one (Leges posteriors priores contrarias abrogant). To this general rule there is a well known exception, namely, Generalia specialibus non derogant (general things do not derogate from special things). In other words, a prior special law would yield to a later general law, if either of the two following conditions is satisfied:

(i) The two are inconsistent with each other.
(ii) There is some express reference in the later to the earlier enactment

In the present case, as the special law, by way of the amended Regulation 45-B(4), made its advent into the Business Regulations long after the conferment of the general power on the Commission under Regulation 59 to enlarge/abridge the time stipulated, there can be no doubt that the later Regulation would prevail in the event of inconsistency. The special rule framed subsequent to the general rule would undoubtedly prevail.

As the amended Regulation 45-B (4) makes it explicit that failure to abide by the time stipulation contained therein enjoins forfeiture of future claims by the DISCOMS in that regard, it cannot be placed on par with the other Regulations which contain simple time stipulations unhindered by adverse consequences flowing from failure of compliance. The power of the Commission under Regulation 59 to enlarge time even after expiry of the stipulated time cannot therefore be extended to a situation covered by Regulation 45-B(4).

Logical consequence would be that the power of the Commission under Regulation 59 would be eclipsed to that extent and situations covered by Regulation 45-B (4) stand excluded.

Judgment

On the above analysis, Court is of the opinion that in a situation covered by Regulation 45-B (4), it is not open to the Commission to step in and undo the irreversible consequence of the failure to abide by the time stipulation therein, i.e., forfeiture of future FSA claims by the DISCOMS for such period, by taking recourse to Regulation 59 of the Business Regulations. The Commission has no such power and must necessarily give effect to the forfeiture clause stipulated in the Regulation.

In the result, Court hold that the Andhra Pradesh Electricity Regulatory Commission has no power under Regulation 59 of the Business Regulations to enlarge the time stipulated in Regulation 45-B (4) thereof for the purpose of entertaining applications from the DISCOMS for determination of FSA.

Read Complete Judgment of M/s Jairaj Ispat Ltd. v. AP Electricity Regulatory Commission

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