This project is a detailed analysis of the case, Case Analysis on- State of Himachal Pradesh v Gujarat Ambuja Cements Lt. (2017) 9 SCC 601. We can understand the difficulties that a state faces during acute power shortages. Also, we can see that there can be times when the state has to go to different sources for supplying power in the state and that for such a supply, it would resort to extra tariff from consumers who are buying power during the peak hours. Thus, this a beautiful case where the judgement of the Supreme Court tries to make us understand the fact that there should be a difference between the normal dispensation and special dispensation of power. This case is from the state of Himachal Pradesh where the respondents tried to get reimbursements from the state board of electricity for getting power during the peak hours. The following project is an IRAC on this particular case.

Facts
1. This appeal in the Supreme court is against the order of the High Court of Himachal Pradesh, where the court said that the respondent in this case are entitled to the benefit of power tariff freeze, which would also include the reimbursement of the Peak Load Exemption Charge paid by them to the state electricity board.

2. On 23/1/1990 the respondent had got the permission to set up their factory in the state of H.P. According to the Revised Rules Regarding Grant of Incentives to Industrial Units in H.P (herein referred to as Incentive Rules in this project), 1990 granted the respondent the title of a prestigious unit. The commercial production of this cement manufacturing unit started from 26/9/1995. At that point of time, these respondent were entitled to a power tariff freeze, which meant that for a period of four years, if there was any kind of increase in the power tariff then these respondent would be reimbursed the money which was paid by them as extra, over and above the rate of power supply which they had agreed to initially.

3. Before the commencement of the unit commercially, on 28/1/1994, the respondent were informed by the Chief Engineer of the H.P state electricity board, through a letter, that the amount of power supply required by the respondent was very high i.e. 21,000 KW. And that as the state was undergoing acute power supply shortage hence the state would have to observe peak load hour restrictions. Through the letter, the timings of peak load hours was mentioned for summer and winters, and thus the respondent were informed about such an action that was taken by the state electricity board.

4. Under section 49 and 59 of the Electricity supply act, 1948, the H.P state electricity board wherein they brought in force, the schedule of electricity tariff known as the H.P state electricity board of electricity tariff, 1994 where they defined the word peak load hour supply.

5. In this definition the board clearly mentions that during the peak load hour supply, some of the industries as mentioned in the schedule will not get power supply during the peak hours and that if these industries want the supply then they would have to enter into an agreement with the board.

6. On 23/8/1995, the chief engineer of the board, issued an order that allowed the respondent to have power supply during the peak hours.

7. After the respondent started its commercial production on 30/10/1995, then again the board, gave out an order (notification) under section 49 and 59 of the Electricity supply act, 1948 under which they mentioned the various categories of consumers in the state regarding the supply of electricity which would come into effect on 1/11/1995. Again, in that schedule for defining the word peak load hour supply, the state said that during the peak hour, some of the industries would not get power supply, but if they want it, then they would have to get into a special agreement with the board and that they will have to pay an extra tariff on it.

8. In Part II of the said notification, the Board defined what they meant by Peak Load Exemption Charge. It said that all those units who have applied for power supply during the peak hours under the said notification dated 30/10/1995 would have to pay extra charge of Re 1 on every unit consumed over and above the normal charges.

9. In the year 1996, after a year the respondent started their commercial production, the Incentive Rules were amended. The revised rules now said that the power freeze tariff would not include any kind of reimbursement like any surcharge/charge/peak load charge/fuel adjustment charge etc as may be levied by the competent authority. These incentive rules were made applicable to all the new industrial units with effect from 1/10/1996. And according to the definition of the new industrial units, the respondent were to be considered as a part of it.

Issues
The issue in this case is only one and that is-
1. Whether the respondent are entitled to the PLEC (Peak Load Exemption Charge) reimbursement under the power tariff freeze?

Rules Applied
All the legislations that the court has relied on are-
Section 49 and 59 of the Electricity (Supply) Act, 1948-
Section 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 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 standardization 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- General principles for Board’s finance
Clause (m) of the Himachal Pradesh State Electricity Board Schedule of Electricity Tariff, 1994-
(m) PEAK LOAD HOUR SUPPLY- Supplies under Schedule Agriculture pumping (A.P.), Small Industrial Power (S.P), Medium Industrial Power Supply (Schedule M.S.), Large Industrial Power Supply for Mini Steel Mills etc. and for others (Schedule L.S.-1 and L.S.-2) and Water and Irrigation pumping (Schedule W.I.P.) shall not be available during the peak load hours as may be notified by the Board from time to time. However, in the case of continuous process industries, or where a particular industrial consumer wants to run his industry during the peak load hours for any special reasons, a separate agreement shall have to be entered into with the Board.

Clause (1) of the Notification dated 30/10/1995 regarding the schedule of tariff and general conditions for supply of electricity to various categories of consumers in Himachal Pradesh-
1) PEAK LOAD HOUR SUPPLY- Supplies under Schedule Agriculture pumping (A.P.), Small Industrial Power (S.P), Medium Industrial Power Supply (Schedule M.S.), Large Industrial Power Supply for Mini Steel Mills etc. and for others (Schedule L.S.-1 and L.S.-2) and Water and Irrigation pumping (Schedule W.I.P.) shall not be available during the peak load hours.

The duration of peak load hours in summer and winter shall be as under:
i) Summer (April to Oct) 6 PM to 9 PM
ii) Winter (Nov. to March) 5.30PM TO 8.30PM
However, in the case of continuous process industries, or where a particular industrial consumer wants to run his industry during the peak load hours for any special reasons, a separate agreement shall have to be entered into with the Board. Such consumers shall be billed for additional charge as specified in the relevant schedules of tariff

Part II of the Notification dated 30/10/1995 defining Peak Load Exemption Charge under the Schedule of Tariff-
5. Peak Load Exemption Charge (PLEC)- The consumers availing special dispensation or exemption during evening peak load hours stipulated under Part-I General of this notification shall be billed at extra charges of Rs.1/per unit over and above the normal tariff. For this purpose, time of the day (T.O.D.) meters shall be provided. Till such time, these meters are provided, the monthly peak load exemption charges shall be Rs.70/- per KVA of exemption/relaxation sought.

Clause 1.2(a) of the Revised Incentive Rules (which came into force with effect from 1/10/1996) dealing with eligibility of New Industrial Units-
1.2 Eligibility (a)- New Industrial units as defined in these rules, shall be eligible for grant of incentives as provided for under these rules. Units which have commenced commercial production before the appointed day will continue to be governed for grant of all incentives under the Revised Rules regarding Grant of Incentives to Industrial Units in HP-1991 as amended from time to time, unless otherwise provided in these rules. Such industrial units will be eligible for incentives, concessions and facilities only if they meet the minimum employment criteria as laid down under these rules.

Clause 2(s) of the aforesaid Revised Incentive Rules (of 1996) defining the word New Industrial Unit-
2(s) New industrial unit- means a registered SSSBE, tiny, small, ancillary, medium or large scale industrial unit as defined in clauses 2(x) and 2(za) of these rules, located within the State of Himachal Pradesh which commences commercial production on or after the appointed day and includes any existing unit which is eligible to get fresh registration as per the guidelines provided by the Development Commissioner, Small Scale Industries, Govt. of India, from time to time.

Analysis
After going through the judgement of this case, what we can understand is that the Supreme court has agreed with the arguments that have put forth by the counsel appearing for the state. This counsel had put forward 2 principal issues and these were that when the cement unit was setup, it was during that time only, that the state electricity board, had through the letter informed them that there will be power shortage and thus, they won’t be able to supply it. And that if the units due to any reason, wanted the power supply during such peak hours, then they would have to get into a special agreement. And the second principal is that this tariff of PLEC was introduced after the commencement of the commercial production of the cement unit i.e. the respondent. Thus, the state board would not be able to reimburse the respondent for their payment of PLEC. Thus, the counsel says that this supply of power during the peak hours is like a special dispensation. And that the respondent was informed at an early stage that if they wanted power supply during the peak hours then there would be a special surcharge to be paid over and above the normal tariff rate and that there would be a special meter too for calculating the amount of units consumed during those hours.

The counsels for the respondents say that, there should be no dispute regarding this issue, as this PLEC is not a normal tariff rate, and that as the state needs to procure the power supply during the peak hours from different sources hence it leads to extra payment of tariff, which means that it should be part of the power tariff freeze and that the respondents should be reimbursed. The counsel even goes on to say that the word ‘tariff’ has not been defined in the acts neither Electricity Supply Act, 1948 nor Electricity Act, 2003. Thus, they have used the object and effect test to understand the purpose of Power tariff freeze scheme and then come up with the understanding that such an incentive was being offered by the state because they wanted to attract more investments in the state. The counsel also goes on to say that if the PLEC is not be considered as part of the power tariff freeze then the state will always come up with such other tariffs which would not be a part of the power tariff freeze and thus, they would exploit and cheat such consumers of power.

When we read the judgement we can see that the court is laying emphasis on the fact of series of events and on the fact of power supply shortage in the state. They very clearly mention that even though the PLEC is an additional charge on the normal tariff rates of the power supply rates. But, they have them concentrated on the series of events and thus come up with the conclusion that the cement unit was informed that during the peak hours if they wanted the power supply then they would have to pay some extra amount. And that now they cannot up with the argument that they are entitled to such power tariff freeze especially for PLEC. The court then goes on to say that it was because of the fact that there was acute shortage of power in the state and this was why, they had to come up with such peak hours power supply at a special tariff rate. The court also says that, the respondents were already informed about this extra charge as according to the Notification and letter dated 31/5/1994, the state board says clearly that if the manufacturing units wanted power supply during the peak hours then they would have to get into a special agreement with the state board. The court also, concentrates on the fact that during such power supply during the peak hours, the state had to procure from other sources and thus, the respondents could not just compare a normal increase in the tariff and a special surcharge in tariff rates due to peak hour power supply.

Regarding the confusion of meaning of the word ‘tariff’, the Supreme Court says that even if there is no particular definition of this word in the legislations regarding electricity supply. But then they would have to read the word ‘tariff’ according to the particular situations and in this case, they would have to read it in the context of ‘power tariff freeze’. Thus, when read it in that context, then we can understand that PLEC is not be considered as a tariff rather it is in the nature of the charge imposed i.e. PLEC has to be understood keeping in mind that supply of power during the peak load hours was an exception; a special dispensation involving a special arrangement i.e. procurement from other sources[1].

Thus, in the end where the court has said that they don’t appreciate the judgment of High Court and thus they set it aside they give the explanation that the incentive provided under the Incentive Rules would not include PLEC and the respondents – writ petitioners would not be entitled to reimbursement towards the PLEC paid for availing power supply by way of special dispensation in force[2].

We need to understand the fact that we India, are part of the UNFCC and the Kyoto Protocol, and thus we have to make sure that we are reducing our greenhouse gas emissions, and on top of that, we are a country which suffers from power supply shortage[3]. Thus, if the state electricity board comes up with a scheme in which the consumers are getting power supply even during such peak hours that too on a special charge then, we should not give them exemption or reimbursement for such an extra charge as it is towards the state finance for procuring the power from different sources. Also, the manufacturing cannot expect the fact that they would reimbursement for a charge that they are paying for using power even during the peak hours when the whole of the state suffers from power supply shortage.

Conclusion
What we can learn from this case, is that the court sometimes without going into the legal aspects, rather it tries to concentrate on the series of events. It also, concentrates on the fact that due to such acute power shortage in the state, thus the state has to get power from different sources, thus, if they are charging extra payment for such a supply, then it is the duty of the consumers to pay such extra tariff. They cannot compare normal and special dispensation of power and its tariff and cannot equivate the normal increase in the tariff rates for normal dispensation of power and extra payment of money for special dispensation of power.

In this case, the respondents should have tried to understand the fact that the state board was trying to provide then with power even during the peak hours and thus, they should have appreciated it and tried to not make this an issue as they should have understood that the whole of the state is suffering from acute power shortage and that they are enjoying the power supply just because of the fact that they are able to afford it. Whereas there are consumers of power that are not able to afford it, and that such an exemption is only for those small manufacturing units and not for Gujarat Ambjua Cements which is a huge unit with a huge capital money.

End-Notes
[1] Para No. 17 of the case- State of H.P v Gujarat Ambuja Cements Ltd, 2017 (9) SCC 601
[2] Para No. 18 of the case- State of H.P v Gujarat Ambuja Cements Ltd, 2017 (9) SCC 601
[3] Nawneet Vibhaw, Energy Law and Policy in India, Page 39-42, 2014