Bajrang Tea Manufacturing Company (P) Ltd. and Others Vs The Assam State Electricity Board and Others

A. Raghuvir, C.J.@mdashThe subject-matter in this group of cases is the tariff imposed on consumption of electricity in Assam. The generation and supply of electricity in the State is regulated by two Central enactments -- one is called the Indian Electricity Act 9 of 1910 and the other is the Indian Electricity (Supply) Act 54 of 1948. There is also one State enactment called The Assam Electricity Duty Act, 1964 which covers the tariff. In all the States of India Electricity Boards are Constituted u/s 5 of the Act 34 of 1948. The Board in Assam is called the Assam State Electricity Board (the Board) With a Chairman as its administrative head. The Board in Assam has the capacity to generate 500 MW but as on today generates only 220 MW in six Units but there are some Units out of the six are sick Units. The Kathalguri Unit generates energy by natural gas, Chandrapur, Galeky, Bongaigaon, Namrup, Lakwa Units generate energy by coal.

2. The demand for energy in Assam is 350 MW. Thus there is deficit of 130 MW. The Board to cover the deficit imports 130 MW from Loktak, Khandog, Kapili, NHPC Units from the neighouring States. Yet the deficit is 70 MW for past few years. The cost of production in Assam is Rs. 2.06 paise per Unit whereas in an average, tariff per Unit is Rs. 1/-. The totalsales of the Board is 1260.30 million Units. The loss is Rs. 1.06 p. per Unit and the over-all loss is Rs. 130.68 crores. These figures speak for themselves. The Board is passing through rough weather for the past few years as coal, gas, fuel and oil suffered heavy spurt in prices. The Board in turn found itself in the debt of Rs. 40 crores. It is said the Assam Board has no capital, loans are its capital. These facts are necessary to know for these cases as these facts form the foundation for all the issues that are raised in these cases.

3. In 1981 the Board imposed tariff and enforced it from January 1, 1981. In that tariff consumers were divided in twelve categories. A common "billing" system was evolved to suit all the twelve categories of consumers. The system worked well for six years. Due to escalation of prices in raw materials the Board revised the tariff on August 18, 1986 with effect from July 1, 1986. On the notification of the tariff a general protest ensued. The Government of Assam received memoranda from all types of consumers to annul the revision of tariff. The State Government on November 26, 1986 stayed the revision of tariff. On November 29, a High Power Committee of seven persons was appointed to report on the advisability of revision. The Committee consisted of the Chief Secretary. Additional Chief Secretary (Planning Development), Member (B & C) Central Electricity Authority, Agricultural Production Commissioner, financial Commissioner, Commissioner, Industries, Chairman Industries, Chairman of the Board and secretary to Government of Assam, Power (Elect.). The State overnment on receipt of report scrutinised it and vacated the stay on January, 5, 1987 and ordered the revised tariff with some modifications from July, 1986. The Board thereupon informed all concerned on March 20, 1987 that the revision is enforced from July 1, 1986.

4. The Board in 1981 and in the revision of 1986 divided the consumers in twelve categories. The rates in 1981 were : 1. Domestic -- 60p./Kwh, 2. Public lighting --70. 3. Public water works -- 70. 4. Irrigation and 5. Rural Industries -- 60. 6. Commerical -- (a) up to 5 Kwh -- 100, (b) above 5 Kwh --130,7. I.T. Industries (a) up to 25 K W --80, (b) above 25 KW -- 110, 8. H.L. Industries above 100 KW -- 130, 9. Bulk Supply within the State -- 100, 10. Bulk Supply outside the State -- 100, 11. Tea Garden -- 100.

5. In the revision of 1986, tariff is as follows : 1. Domestic -- 60, 2. Commercial (a) up to 5 KVA -- 100, (b) above 5 KVA -- 130, 3. Public Lighting -- 100, 4. Public Water Works -- 100, 5. Irrigation -- 50, 6. Industry (a) (i) small industry (II) connected load 25 KVA (rural) -- 45, (ii) small industry (II) connected load up to 25 KVA (urban) -- 75, (b) Medium industry (HT) above 25 KVA and up to 100 KVA -- 90, (c) large industry (HT) (i) above 100 KVA and upto 2500 KVA --100, (ii) above 2500 KVA -- 100, 7. Bulk supply above KVA (HT) -- 9a) educational institution -- 80, (b) others -- 100, 8. Bulk outside the State -- 110 and 9. Tea, Rubber and Coffee Industry -- 115.

6. The aggrieved persons in spite of the modification effected by the authority were not satisfied. Some of them approached this Court to annul the revised tariff on numerous grounds. A large number of writ petitions are filed in this court from different types of consumers of energy. From among the large writ petitions some representative writ petitions are heard at first. In this group of cases eight writ petitions are by Tea Estates one is by a firm which runs a Hotel, one is by a paper Mill. Two writ petitions are by industries and one is by a Rice Miller. Numerous allegations, statements, some advice and some sugges- tions are offered in the petitions. They are so numerous that it is difficuft to classify them therefore pleadings in each case we will set out and answer of the Board and that of the State Government will be stated. Thus after the pleadings are paraphrased thereafter issues arising from them will be considered.

7. Civil Rule 1033 of 1987 is by Naharjan Tea Company Private Limited incorporated under the Companies Act of 1956 with the registered office at Calcutta. The second petitioner is Rugajaun Tea Estate. The petitioner No. 3 is the Director of Naharjan Tea Company Ltd. The three petitioners complain the Board does not arrange the generating units on economic principles. The petitioners suggest the Board should formulate plans, carry out schemes and adjust loans and finances properly. What loans are granted, what grants-in-aid are derived, what subventions are received by the Board are referred in this regard by the petitioners.

8. Naharjan Tea Estate obtained the sanction for 333 KVA. The Tea Estate is in rural area. The estate was paying tariff of 53 paise per KWH till the revision was made in 1986 and after revision is demanded to pay Rs. 1.15 paise per KWH, the monthly minimum charge in 1981 tariff was Rs. 25 which is now raised to Rs. 55/- per KV. These are the two items of complaints.

9. The Tea estate consumed 221480 Units betweenJune 1986 to February, 1987 and was charged for August, September and October, 1986 Rs. 1/- per Unit. From 1987 they have received bills at Rs. 1.15 per unit and Rs. 45/-as meter rent and were asked to pay Rs. 53,646.20 as arrears from July 1, 1986. The Tea Estate therefore approached the Board authorities in vain for exempting them from revised tariff. But due to the fear of disconnection the Tea Estate prayed for the facility of payment by instalments which was allowed by the Superintending Engineer, Jorhat Electrical Circle. The Tea Estate assails the tariff of 1986 as unreasonable, discriminative and contends in law the Board cannot increase tariff with retrospective effect. Further it is complained in revision a hostile discrimination is made. The cate- gorisation is attacked as unreasonable. The Board is a public utility authority and cannot increase the tariff without any ostensible reason. The demand is Rs. 2,24,586.18 out of which arrears is Rs. 53,646.20 p. which Naharjan Tea Estate seeks to quash (in) the instant writ petition.

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15. In Civil Rule 2158/88 the writ petition is by the rice miller in rural area. The power load of the mill is 28 KVA. The rice mills are clubbed in the category 4. The Miller assails the revised tariff with retrospective effect, the miller recounts the Government as a policy proclaimed to charge less as against mills in urban area and the Board''s action are to the contrary. The tariff of 1981 was .50 P. according to the miller was working well. But the mill has to pay 90 paise on revision almost double as compared to 1981 tariff. The increased tariff in 1986 the miller alleges is arbitrary. The miller compares in the quondam rates industries up to 100 KVA located in rural area had certain concession but the millers are not accorded any concessions. The miller seeks to quash the revised tariff rates.

16. In Civil Rule 1909/88, the firm M/s. Jalan Saw Works is the writ petitioner. The firm avers to be a small industry paying .50 paise under the 1981 tariff. Now after revision an 1986 the firm to pay .90 paise per KVH. Minimum charge from Rs. 25/- has been increased to Rs. 45/-. The saw mill states cost of operation plus interest and depreciation divided by energy sales is 134.47 paise per KWH. The quotient according to the firm is the highest in the country. The establishment costs of the Board are stated to be very high. The comparative statement of other States are set out in the petition. The prayer in the petition is to adjust the excess amount paid by them for their future liability.

17. In Civil Rule 188/88, National plyward Industries Ltd. is the petitioner. A demand of Rs. 7,09,351,59 including Rupees 4,93,313.42 being the arrears is raised against this industry. That demand prompted the National plyward Industries Ltd. to approach this Court. The industry avers sanctioned load is 996 KW or 988 KW. The petitioner avers the price rise of coal, furnace oil and inputs in India are the same to all States supplying electricity. Yet Assam Board is not supplying energy at a reasonable rate. The Board is paying for gas at the rate fixed in 1981 and is misleading to general public in this regard. Some of the advertisements made by the Board are referred to and it is averred the advertisements are not true as respects the installed capacity of turbines (MGT) at Geleky which is only 9 MW but the unit consumed 5% of the Board''s total gas requirement. The gas consumption of Namrup Thermal plant station and Lakwa Thermal Plant is based on 90% plant load factor but in practice the Board was paying OIL and O.N.GH.C. the minimum demand based on 90% load. An agreement with reference to Bongaigaon Thermal Power Station and Chandrapur Thermal Power Station are stated to be defective in that the Board is losing crores of rupees.

18. The Board entered into agreement with O.N.G.C. Nazira to supply power at 17 paise per unit which was valid up to 1983. The statement of the board that 177.8% rise shows against import rate from BRPL is misleading and incorrect. The Board imports energy at .50 P. per unit. The Boards''s establishment cost is highest in the country. The collection of the Board in 1983-84 was Rs. 54.84 crores and in 1985-86 it was Rs. 57.95 crores, an increase of only 54. But during this period the generation and import facility has gone up from 327 MW to 497 MW, an increase of 52%. The finances of the Board are in a disarray as there is no proper revenue estimates. The Board sold 1891 million Units in 1985-86 is an estimate derived by the Board by subtracting 25% from the total quantity generated and imported. The revenue collection is shown to be defective and that maladministration vitiates the impugned tariff. The minimum rate has been increased from Rs.25/- to Rs.45/-, The petitioner refers to States of Manipur. Tripura, Maghalaya and Nagaland as ahead of Assam. The industry in the category of minimum 25 KVA and large industries 100 KVA to 250 KVA having contribution more than 40% of the Board''s total revenue as yet are paying highest tariff which is unreasonable. The retrospective operation is specifically assailed in the writ petition.

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20. In Civil Rule 1401/87 Kamrup Paper Mill, a company registered under the Companies Act with office at B.R. Phookan Road at Gauhati is the writ petitioner. The sanctioned load of the mill is 750 KVA. The Mill alleges the rate of tariff for industry (100 to 2500 KVA) is Rs. 1/- which is almost double of the 1981 tariff, 58 paise. The minimum rate increased from Rs.25/- to Rs. 45/-. The increase in the price of furnace oil, H. S. Diesel, L.S. Diesel, Coal, Gas have not increased from 25% to 30%. The Board is paying rates of 1981 for the consumption of gas. In the writ petition agriculture rates and tariffs are referred. The Mill averred the paper industry was passing through a crisis and as many as 90 out of 288 of the paper mills are now closed. Increase of tariff and minimum charges levied are arbitrary therefore the bill dated February 11, 1987 for Rs. 1,84,402.36, arrears from July, 1986 to January, 1987 be set aside and the revised tariff be quashed.

21. The Law Officer of the Board in the counter referred to the tariffs enforced from January 1, 1981 and a revision of the tariff became necessary due to price spurt in the inputs and raw materials required for generation. He recounted there was escalation in price of fuel, plants and machineries, stores. he stated maintenance, over-head charges, salary and wages escalated abnormally. The living index it is alleged escalated enormously after 1981. These features according to him warranted to revise the tariff by the Board.

22. The demand for energy he averred is high therefore energy was imported from Maghalaya State, North Eastern Power Corporation, National Hydel Power Corporation and others at 18.25 paise per Unit excluding excise duty in 1981. In 1984-85, 533.18 million Units and in 1985-86, 633.02 million Units were imported. The Board spent Rs. 26.95 crores in the year 1985-86 as against Rs. 7.20 crores in 1980-81. As respects NEPCO agreement since July, 1983 the price is 45.60 per KWH till 1985-86 and later 46.50 per KWH. The MEPCO it is stated to have demanded higher rate from time to time. The Natural Gas Kathalguri MGT the cost of production is 35,31/1000 SCUM in 1981 which is 92.50/- 1000 SCUM in 1986. Likewise Galeky MGT 35.31 /1000 SCUM in 1981 is 100/1000 SCUM in 1986.

23. The Board''s units are thermal units, while Meghalaya, Himachal Pradesh are totally hydel units. Karnataka, Jammu and Kashmir, Andhra Pradesh are predominently hydel. Therefore the Law Officer averred no useful purpose is served by comparing the Assam Board''s structure with the structure of other States. The Board purchases fuel, natural gas, furnance, oil, High Speed Diesel and Coal. In 1985-86 there was increase of 36% power generation whereas expenditure incurred was Rs. 15.01 crores while fuel price increased by 178.48%. The Indian Oil Corporation claimed higher prices for furnace oil and LSHS at the rate of Rs. .872.00 per MT, excise duty Rs. 127.10 per KL. surcharge Rs. 5.00 per KL delivery charge Rs. 25.00 per KL plus 7% sales tax from March, 1986. The Board was making on account payment to Galeky and Namrup Project at the rate of Rs. 500/- per 1000 SCUM excluding transportation cost and other taxes with effect from January 30,1987.

24. The wages of casual labourer, salsries of the Board''s personnel was revised in 1982. The wages were increased because of escalation of price index. The pay of Grade IV employees which was Rs. 530.00, was increased enormously on revision. The establishment charges including General Administration expenses rose to Rs. 35.83 crores in 1984-85 from Rs. 2407 crores in, 1982. In 1980-81 the actual quantum of enefgy sold was 639.50 MU while in 1985-86 it rose to 1120''62 MU. To meet the demand projects of Bongaigaon, Lakwa, Galeky, Kathalguri are now run by oil, coal and gas. The high power transmission lines were installed at Namrup Thermal Power Station. Some projects are in the process of completion.

25. After bifurcation the Board supplies energy to 1747 out of 21,495 villages in 1975. The Board incurred heavy liability due to bifurcation as pay, pension to erstwhile employees. The Board therefore adjusted the tariff in 1981 after bifurcation. Soon thereafter the operational cost stood at Rs. 117.59 crores in 1985-86 as against Rs. 27.46 crores in 1981. The cost of power in 1985-86 was Rs. 158.47 per unit. The Board sold 1120.62 million units at an average price 52-02 paise per unit. The average loss per unit was 106.45 paise. To wipe out the loss the tariff is fixed at 158.47 paise per unit and the realisation of tariff was made effective from July 1, 1986. In spite of revision the deficit of 60.47 paise per unit persists. The above figures were quoted by the Board to show the tariff rates are not arbitrary, confiscatpry or unreasonable and no profit is made by the Board. (The cost of power in 1986-87 rose to 170.32 paise per unit and a document showing the cost of power of the Board for 1981-82, 1982-83, 1983-84 and 1985-86 is Annexure to the affidavit).

26. Tea, Coffee and Rubber industry are classified as one category of consumers as they are located in rural areas and also because tea is a developed industry. There is no policy to supply on concessional rates as Tea industry can pay the 1986 revised tariff. Before the revising of tariff, the Board on March 3, 1985 approached the State Government and obtained their permission for revising tariff and on August 18, 1986 published rates effective from July 1, 1986. That the minimum charges were not enhanced uniformly or proportionately is denied.

27. The Board met the representatives of the tea industry and offered them concessions as respects minimum charges, rebate on prompt payments and interest on meter security deposit etc. These concessions are recounted to show the consumers the tea estates and other categories of consumers were treated fairly by the Board authorities.

28. The Secretary to the Government of Assam, Department of power (Electricity) in counter of opposition referred to the amended Section 59 and averred that a minimum return of 3% of the value is to be obtained. The State Government has not specified any return higher than 3%. After revision of 1981 when the Board wrote on May 29, 1986 to make the tariff effective from July 1, 1986, the Government approved it on August 13, 1986 and ordered the revision to be effective from July, 1986.

29. We may mention in brief at first the history of electricity, Michael Farady, a citizen of United Kingdom formulated at first the principles of electricity. He was a man without any formal education. He was an apprentice to a second hand book dealer in London. He out of curiosity culled out the principle of electricity. When recognition came to him he was made a member of the Royal Society in 1821. Based on his formulation in 1864 James Clark Maxwell forty years later formulated what is called field theory. That in return in the hands of Albert Eienstein led to the theory of relativity that is E =MC2. These events in science of Physics are of immense significance or the modern civilization.

30. Today in all aspects of life we use electricity. There is hardly any field of life in which electricity is not used. Farady when he explained the primary role of energy as a heaven shaking device to the members of the London Chambers of Commerce in that gathering not a single member was impressed. He explained it to the Prime Minister of England who was not moved. But when the Prime Minister was informed that electricity can be taxed he became interested. Later Queen Victoria took interest in the projects of Farady and the road for modern development came to be laid in one country after another. The improtance of energy in the modern world is so much that when Lenin was asked what was Russia after revolution, he is reported to have said Russia is "Soviets and Electricity."

31. Energy is a commodity which can be sold and can be purchased. What is called tariff is nothing but purchase price paid by consumers of electricity. Tariff is a word in the meaning of tax. The controversy that in energy tariff whether is used as a tax is not relevant in the instant case.

32. We may advert to one of two general questions raised at the inception of the case. We may clear them as those aspects were put at the forefront on behalf of the Board, One is related to a report submitted to the Assam Legislative Assembly Enquiry Committee under the heading "Sickness of Assam State Electricity Board." A copy of the report is filed in this Court. The Board vehemently objected to the admissibility of the report in the instant cases. It is argued the report is not a public document. It is a legislative Assembly document : Therefore, this Court in law cannot have access and it cannot be relied in the instant proceedings and for that matter courts are barred to look at the report under Article 212 of the Constitution, This Court therefore cannot determine any question raised in these cases with the help of that report. We agree with the caveat raised by the Board. Since a copy of the report is filed before the court we will not be true if we are to say we have not read the report. We of course are not to rely on the report as it is inadmissible document in this group of cases.

33. In the prefatory part of the order we have shown tariff was enforced from January 1, 1981. The tariff was revised from July 1, 1986. The State Government stayed the tariff revision on November 26, 1986. The stay was vacated on January 5, 1987. The modified tariff is published on March 20, 1987. These dates are reiterated as many contentions are projected from the stand point of these dates.

34. The petitioners next referred to the administration of the Board, the tariff structure, the loans that the Board obtained, the subventions received by the Board, the interest paid by the Board to their creditors the expenditure incurred all is contended to havs been hit by maladministration in the Board. The escalation of tariff it is argued is the direct result of maladministration is the case of the petitioners. The counsel appearing for the Board vigorously defended the administration of Board is efficient and good in the circumstances of the case. The counsel referred to the Central enactments referred to show the character of tariff is price obtained for the sale of energy and referred to Delhi Cloth and General Mills Co. Ltd. and Another Vs. Rajasthan State Electricity Board and Another, ( Kerala State Electricity Board Vs. S.N. Govinda Prabhu and Bros. and Others, Kerala State Electricity Board v. S. N. Govinda Prabhu and brothers. In the latter case it is held the Board is not to generate energy or supply energy to consumers and make profits. The subventions received from the State Government were termed to be in the nature of bounty. The income from the tariff is the real revenues of the Board. From out of the recripts of tariff the Board has to manage its affairs without incurring any loss. The management expenses, the income and profits, interest payable on the debentures, bonds and loans are revenue expenditures and contribute towards the costs of capital works. A reasonable sum on the capital is to be left as surplus u/s 59 of the 1949 Act. That Act directs priority to be observed in discharging liabilities (Section 67). First the operating, maintenance and Management expenses have to be met, next provision has to be made for payment of taxes on income and profits thereafter various items of expenditure are mentioned in order of priority. The balance is to be utilised in such manner as the Board may decide or as specified in Section 59. Payment of interest as liability is to be discharged. Repayment of principal of loans in each year is to be made. Loan guaranteed by the State Government includes loans due for payment in the financial year as well as those loans which became due for payment in any previous year but remained unpaid (Section 67). If for any reason the revenue receipts in any year are not adequate to meet the operating maintenance and management expenses, taxes on income and profits the sanction of the State Government is to be obtained for discharging the liabilities. The legislature clarified this aspect in Amending Act 16 of 1983 and provided in Section 67A that interest on loans advanced u/s 64 or deemed to have been advanced u/s 60, which is charged to revenues, may be paid out of revenue receipts of a year only after all other expenses referred to in Section 59(1) are met. If interest is not paid in any year by reason of the priority mentioned in Section 67A, it shall be deemed to be a deferrred liability to be discharged in accordance with provision of Section 67A in the subsequent year or years. The Board as far as practicable and after taking credit on its operations under the Act not to run the administration at a toss. The Board may offer special tariffs to consumers in undeveloped or sparesely populated areas or to industrial consumers with a view to accelerate the rate of growth and development in the State. The learned counsel for the Board referred to these statutory provisions and argued that the Assam Board has not violated any of these and followed all the statutory provisions meticulously therefore there was no maladministration.

35. We see on today there is no accepted definition of maladministration. Few attempts that were made to define the word did not succeed. The definition which has now reached the text books is one made by Richand Crossman, the Lord President of the council, a Minister in Labour Government in United Kingdom, Crossman, Richard Howard Stafford was a Professor in Philosophy at New College. He was the leader of the Labour Party Group and a Minister in 1964. In Hansard page 734 House of Commons, Deb. Col. 51 on October 18, 1966 in his illuminating speech he touched the definition of maladministration. Professor Wade referred in the Sixth 1988 Edition Administrative Law, P. 87 to that speech and stated the word covered bias, corruption, unfair, discrimination, neglect, inattention, delay, incompetence, inaptitude, perversity, turpitude, arbitrariness and so on. It is a long list. It is like the nest of a male weaver bird built in wilderness which remains open ended when the mate does not feel fit enough to lay eggs and cause dismay to the builder of the nest. The Crossman''s catalogue or Crossman''s list is thus a dismay to the students of administrative law. It is a mixture of procedural and substantive laws.

36. The petitioners contend the 1986 revision of tariff is the product of maladministration of Assam Board and during the debate referred to long list of inaction, indifference, bad management all these factors contributed to the impugned revision. We have referred to the maladministration as on today Courts including Article 226 courts are not in a position to modulate reliefs on that count. We hope in future principles in this sphere will be formulated to mould relief on that count.

37. We may now turn to other issues raised in the petitions. The question raised at the forefront relates to the enforcement of revision of tariff with retrospective effect. All the petitioners contend after tariff is re-published at the instance of the State Government the tariff is enforced with retrospective effect by the notifications dated March 20, 1987.

38. The contention of the petitioners is stoutly resisted by the Board. The Board''s contention is revision of tariff was enforced by the Board from July 1, 1986. The State Government on 26th November, 1986 stayed the enforcement on the representations of the consumers. The stay order was vacated on January 5, 1987. The Board later published it on March 20, 1987. There is no retrospective effect to revision is the case of the Board. Whether the Board has power to impose tariff with retrospective effect is not the issue that is raised though such an issue arises on the facts of the case.

39. The learned counsel for the Board furnished the following table with the particulars of dates of publication to us :

The above table clearly indicates tariff is enforced with retrospective effect.

For example public lighting is enforced on July 1, 1986 was 70 P., from March 20, 1987 it was 100 P. per Unit yet the Board contends that there is no retrospective effect. Take tea, coffee, rubrber gardens as a group of consumers tariff was 55 paise in 1981 and 100 P. after 1986 revision. On modification from March 20, 1987 it is 115 P. From the table extracted it is seen tariff like public lighting, public water works is enforced retrospectively. Take the case of publication of tariff rate is made on August 18, 1986 and is enforced from July 1, 1986. Therefore, the contention of the Board that there is no retrospective operation is not to see the the obvious. The contention, therefore, is rejected.

40. The next question is whether the Board can levy tariff with retrospective effect? To repeat from July 1, 1986 the tea estates were to pay 100 P. per Unit. Now from March 20, 1987 the tariff is modified to pay 115 P. But as per the Board this rate is enforced from July 1, 1986. The tea estates contend tea is a commodity of international trade and market. Tea estates fix the cost of production taking all cost factors and fix the sale price. See they vend tea all over the world. The bulk of tea from Assam is purchased by Soviet Russia and Egypt. During the period of 8 months 20 days (period from July 1, 1986 to March 20, 1987) the tariff at 100 p. per Unit was calculated from August 18, 1986 and ascertained the cost of production. The State Government after the stay was granted could have reduced tariff or maintained same rate, instead the rate was enhanced to 115 P. May be the State Government had the power to advice and in turn the Board has the power to levy the tariff with retrospective effect. But does that mean levy can be made disregarding market principles. The tea estates contend under the market norms the tea sold during the relevant period the tea estates cannot collect the enhanced value of tariff as cost of production which is the indirect if not direct result of the enforcement of tariff with retrospective effect. Therefore, the tea estates vigorously argued that the retrospective operation is not to be permitted. In our view the contention is well founded.

41. The petitioners further argued the Government of Assam or the Board may in law have not intended but such a result ensued is obvious from the facts. Craies'' Interpretation of Statute Law, 5th Ed. p. 366 was cited by the Tea Estates which supports the contention rised in this regard :-- "Sometimes a statute, although not intended to be retrospective, will in fact have a retrospective operation. For instance, if two persons enter into a contract, and afterwards a statute is passed, which, as Cockburn, C. J. said in Duke of Devonshire v. Borrow, Haematite Steel Co. Ltd. (1877) 2 QBD 286 engrafts an enactment upon existing con- tracts'' and thus operates so as to produce a result which is something quite different from the original intention of the contracting parties, such a statute has, in effect a retrospective operation."

42. Whether the Board has power to levy the tariff with retrospective effect was considered in AIR 1987 SC 364 New Central Jute Mills Co. Ltd. v. Uttar Pradesh Electricity Board, Lucknow under the provisions of Act 54 of 1948. One of the two questions argued in that case related to retroactivity of tariffs. The question was answered to hold the Board was entitled to levy with retrospective effect. Para 3 of the decision reads : "Two contentions have been urged in support of this appeal. The first contention is that the Electricity Board had no authority to charge 55 paise per Unit in excess of the agreed rate without giving one month''s notice as contemplated by the agreement. The second contention is that the levy of the surcharge resulted in a retrospective levy and therefore, it was not in accordance with law." In that case the second question was decided to hold in favour of the Board. After the above decision there is hardly anything that survives for the consideration of this Court.

42A. There is however one aspect in each case the courts will have to be satisfied as to justification of the levy with retrospective effect. This is a feature which arises from Article 265 of the Constitution mostly because of our constitutional history. This feature is absent in United Kingdom, America and Australia. It has entered into the Canadian Constitution in 1981 as in that year Bill of Rights was incorported. These aspects with some elaboration have been considered and also relevant cases were reviewed by one of us (Chief Justice) in Ambae Picture Palace Vs. Entertainment Tax Officer and Another, wherein the State was held invested with the power to tax a citizen under Article 265 with retroactivity if reasons justified for doing so. The passage at page 781 in that case reads as under :

"In the case in Cawasji & Co. v. State of Mysore (1969) 1 Mys LJ 461 the facts show the Karnataka Government in 1966 was collecting 24 paise as sales tax from the vendees of liquor including sales tax on excise duty, education cess, wealth cess paid by the vendee. The Mysore High Court disapproved of the levy of sales tax to that part relatable to what was shown as paid by the vendee. ''It is difficult to see how excise duty paid, not by the seller but by the purchaser can become a part of the price...''. The collection of sales tax was thus declared void. To avoid refund of amounts collected already, the Karnataka Government promulgated Ordinance 3 of 1969 and replaced it by the Mysore Sale Tax Amendment Act 26 of 1969. When the 1969 Act was challenged, the High Court held that the Act was valid. On appeal, the Supreme Court reversed the decision. The Supreme Court held that the lacuna shown in the case of Cawasji & Co. v. State of Mysore (1969) 1 Mys LJ 461 was not removed. The Act of 1969 was not valid : D. Cawasji and Co., Mysore Vs. State of Mysore and Another, The Supreme Court held that since the lacuna shown in Cawasji & Co. v. State of Mysore (1969) 1 Mys LJ 461 was not removed, the Act, therefore, was unreasonable or was arbitraty or both. What is said in that context is instructive (at page 12) : "It appears that the only object of enacting that amended provision is to nullify the effect of the judgment which became conclusive and binding on the parties to enable the State Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6 1/2 per cent to 45 per cent and further proceeds to nullify the judgment and order of the High Court. In our opinion, the enhancement of the rate of duty from 6 1/2 per cent to 45 per cent, with retrospective effect is in the facts and circumstances of the case, clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep raise in the rate of duty by the amended provision is to nullify the effect of the binding judgment.'' Therefore, the court added : ''In our opinion this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the legislature to impose the levy at the higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds''. Thus Section 2 of the Amending Act to the extent that it imposes higher levy of 45 per cent, with retrospective effect from the first of April, 1966, and also Section 3 of the Amending Act which nullified the judgment of the High Court in Cawasji & Co. v. State of Mysore (1969) 1 Mys LJ 461 was held invalid. The other general and broad principles as to unreasonableness, relevant to statutes with retrospective effect, was evolved in the case of Kunnathat Thathunni Moopil Nair Vs. The State of Kerala and Another, where the Travancore Cochin Land Tax Act 15 of 1985 was considered. The tests were improved in Assistant The Assistant Commissioner of Urban Land Tax and Others Vs. The Buckingham and Carnatic Co. Ltd., etc., The further tests whether the statute is confisca-tory or extortionate were stated and reiterated in most of the cases."

In each case when taxes are imposed retrospectively proper and cogent grounds as held by the apex court must be given and the levy with retrospectivity must be justified.

42B. We see in the facts the Government nor the Board in their counters in opposition gave no reasons as to why with retrospective effect tariff revision is enforced instead the two have been contending there was no retrospectivity when tariff is enforced from July 1, 1986.

43. The next question argued by all the petitioners including the tea estates is that the impugned tariff is extortionate, unreasonable, arbitrary and confiscatory in nature therefore be quashed. This contention is argued in these broad terms and to support the contention several factors are juxtaposed. One such factor was founded on maladministration which has been already dealt with and now other factors may be adverted.

44. We may recount here that for sometime there was a controversy whether the Electricity Board is a State within the meaning of Article 12 of the Constitution. Today it is accepted the Board is a State or is an authority under Article 12 of the ConstitUr tion. The Board principally on that premises while imposed (imposing) tariff cannot discriminate between a consumer and a consumer, is set out in Clause four of Section 49 of the 1948 Act. The Board can promulgate Regulation for imposition of tariff. The Board in its sweep of powers can impose tariff even without promulgating regulation. The Board can stagger, curtail supply of energy to consumers if exigencies warranted to do so. The Board can release supply or lock the power area wise if such a course is beneficial. The Board is vested with prerogative power to supply as it thinks fit. The statutes enabled the Board to fix different tariffs based on geographical locations. All this can be done but the Board cannot discriminate a consumer from the other consumer. The words "any other relevant factors" in Section 49 were not ejusdem generis as no genus is apparent among the consumers. These aspects were extrapolated in The Adoni Cotton Mills Ltd. and Others Vs. The Andhra Pradesh State Electricity Board and Others, Adoni Cotton Mills Ltd. v. Andhra Pradesh State Electricity Board.

45. Powers of the Board were again considered in another case Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, In this case working of Boards is emphasised. Some broad features arising under the two Central enactments are referred. A Consultative Council assists the Board (Section 16). The Council consists of representatives of consumers of energy. As to powers of the Council inter alia the Council it is shown can scrutinise annual financial statements, offer comments and suggestions tendered by the Council bind the Board. There is a duty cast on the Board to submit in February of every calendar year to the State Government annual financial statement (Section 61) with details as to capital, revenue receipts, expenditure likely in the ensuing year. The State Government in its turn to submit a report to the legislature (Section 75). The decision of the legislature again is made obligatory for the Board to follow.

46. Thus Board is regulated not only by the consulative council of consumers by the State Government and by the Legislative Assembly. The cumulative effect of these letters leaves hardly any scope for the Board to take any arbitrary decision. The Board no doubt has the power to enhance rates, disconnect supply, impose higher rates, regulate supply etc. But every field of the Board''s activity is guided and regulated. AH that is emphasised in AIR 1987 SC 364 New Central Jute Mills Co. Ltd. v. U. P. Electricity Board.

47. The tea estates point out some special features of tea as an industry. Tea industry is in three categories. There are gardens where there is cultivation and green leaves are sold. There are gardens where green leaves produced also are cured. There are gardens where curing of green leaves alone is done. Tea gardens are invariably found established in rural areas. In this background the Planata-tions Labour Act 69 of 1951 in Section 2(f) "Plantation" is defined to mean any plantation to which this Act, whether wholly or in part, applies and includes offices, hospitals, dispensaries, schools, and any other premises used for any purpose connected with such planation, but does not include any factory on the premises to which the provisions of the Factories Act, 1948 (63 of 1948) apply. Because of the activity of tea estates in agriculture and industry tea estates are clubbed with industries though cultivation ordinarily is not connected with industry. This experience of the Board and the Tea Estate over long years is recounted and it is argued Tea Estate should always be clubbed with industry. See in 1981 tariff gardens are clubbed with industry and were paying 55 paise per Unit at par with the Industry. In the modified form from March 20, 1987 tea is retrieved from industry and charged 115 p. per unit while industries pay 100 paise per unit. This circumstance is assailed.

48. We may refer to what Willis has said in his Constitutional Law at page 587 -- "A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. Such is the width of the power." Therefore, whether tea gardens be clubbed with industry or disassociated with industry and at what rate the estates be charged it is for the Board and the State Government to decide. The tariff payable by Tea Estates was considered by the High Power Committee, the State Government and finally by the Board. In the counter of opposition (by) the Board tea is said to be an old well established industry in rural areas and can pay the tariff of 115 paise per unit. Therefore the rate of 115 paise is not unreasonable. There is a faux pas in this assertion.

49. The Tea Estates argued that criteria or capacity to pay is irrelevant. Tea gardens can pay therefore higher tariff can be charged cannot be supported. In Rohtas Industries Ltd. and Others Vs. Chairman, Bihar State Electricity Board and Others, this perspective of the contention was rejected. The Supreme Court in that case held tariff should be uniform. Consumers can be classified. The categories can be made on the basis of the nature of supply and on the basis of geographical area or like other relevant factors. While enumerating the categories the Apex Court held -- "That the financial capacity of individual industrial consumers had not been taken into account is devoid of force:" This plea of the Board and the State Government therefore cannot be countenanced.

50. The tea gardens and other consumers argued next that the impugned tariff are unreasonable and arbitrary. We have earlier referred to the 1981 tariff, which was imposed on January 1, 1981. In 1983 the Board requested the Government for revision of tariff and having regard to spurt in prices suffice it to state that no case is made out for interference by this Court.

51. We hold the tariff structure of 1981 remains in force till August 18, 1986. The tariff operative from August 18, 1986 remains in force with one exception. Wherever the tariff published on August 18, 1986 is modified as per notification of March 20, 1987 the higher rates are to be enforced from March 20, 1987 and not before. The writ petitions are partly allowed as indicated and in all other respects stand dismissed. No costs.

M. SARMA, J.

52. I agree.