Paragraph numbers below are the court’s original numbering, recovered from the source text.
34. As regards "deemed supply" by the Board to TISCO High Court noticed that under a tripartite agreement between the Board, the DVC and the TISCO, with the consent of the State Government, the electricity is being supplied directly by the DVC to the TISCO but such supply is treated as made-by the Board to the TISCO. l.t seems to be an admitted position – … that the tariff rates of the Board are higher than the tariff rates of the DVC. But since legally the TISCO cannot directly but electricity from lhe DVC it has entered into agreement with the c Board to buy electricity directly from DVC but pay the amount at the Board's rates. Though the amount is paid to DVC, such payment is adjusted against the amount due from the Board to it i.e. DVC. As seen above, DVC is one of the external sources, represented by D1. The Board buys the electricity from DVC, amongst others, and pays to it for the same. The increase AF in the average unit rate of purchase from it is reflected by D3. However, so far as the supply made by DVC to TISCO is concerned, it is treated as a "deemed supply" by the Board. While it may be permissible to charge the TISCO at the rates prescribed by the Board, i.e, at rates higher than the DVC rates, and it may also be permissible to treat sale of such electricity sold by DVC to TISCO as deemed supply/sale by the Board to TISCO. High Court held that two rates of supply/sale cannot be permitted for the purpose of computing 03 in the ordinary course, in the absence of any tripartite agreement referred to F above, the Board would have supplied/sold electricity to TISCO and charged at its rates. Such supply would have been made from the electricity either generated by it at its own generating station or purchased from external sources including DVC. Clause 16.10.3.1 provides for computation of the cost of G .,. …. generation at the Board's own generating station; as regards purchase of energy from other sources, the said clause lays down that the actual increase in average unit rate of purchase will apply. If the Board is purchasing electricity from different ' .. * A sources for the purpose of 03, E3, F3 etc. the actual increase in the average unit rate of purchase so far as the particular source is concerned, is to be taken into consideration. OVC has thus to be treated as one source. The source being one there cannot be two rates of purchase or increase in the B average unit rate of purchase. It may be mentioned here that NTPC sells electricity generated different power stations, namely, Farakka, Kahalgaon Talchar or Anta and though the increase in the average unit rate is not the same, it charges the Board at a uniform rate. It is an admitted position that c though the OVC has revised its tariff from year to year the Board so far has not recognised the revision and has been paying it at the rates applicable in the year 1991-92. In the agenda note dated 26.11.98 it has been clearly mentioned "that during the 1996-97 the OVC rates for the purchase remained D unchanged but the rates applicable to deemed supply to TISCO rose upto 13P/kwh. High Court held that the Board cannot treat the sale of electricity by the OVC to the TISCO as a separate class or category for the purpose of computing 03. The computation of 03 to this extent, was held to be not correct.
35. The computation of'the rates of fuel surcharge by the impugned circular for the years 1996-97 and onwards so far as it relates to the purchase of electricity from TVNL and "deemed supply" by the Board to TISCO thus does not appear to be in accordance with the formula. Fuel surcharge has to be calculated strictly within the framework of the formula. If any extraneous element has crept in the computation to that extent must be held to be not in accordance with law and accordingly modified.
36. The computation of fuel surcharge was also assailed …. before the High Court on the ground of non-disclosure of details to A2, B2 etc. It was submitted that as the incremental rise in the cost of generation at the Board's own generating stations and the average unit rate of purchase of electricity from external H sources represented by different denominators in the formula BIHAR STATE ELECTRICITY BOARD v. PULAK ENTERPRISES & ORS. [DR. ARIJIT PASAYAT, J.] ,.._ )- is not the same, the Board ought to have given the details of A the quantum of units sold respectively out of the units generated and purchased from the external sources. The High Court considered the plea to be of academic value. It is true that in the matter of calculation of Fuel surcharge the units sold from out of units generated at the Board's power stations and units purchased from external sources are shown by separate denominators i.e. A2, B2, C2 and D2, E2, F2 etc. respectively, but it would appear that after the electricity generated at the Board'.s stations or purchased from external sources are .fed into transmission lines, they lose their separate identity as c electricity generated at the Board's own power stations or purchased from other sources. It is difficult thereafter to find out as to how much of electricity fed in the trahsmission lines came from the Board's own power stations and how much of it from external sources. .,..,.
37. Board's stand was that it pays large amounts as delayed payment surcharge (DPS) to the DVC, NTPC etc. contributing to further increase in the average unit rate of purchase of electricity resulting in higher fuel surcharge and • causing thus additional burden on the consumers. The fact that ,A.- the Board has had to pay large amounts as DPS to the external agencies from which it has been purchasing electricity is more or less an admitted position. The case of the Board, however, -(_ is that the default in payment was mainly on account of defaults committed by the consumers themselves. It is said that as much as 3,200 crores of rupees are c:lee from the consumers as a result of which the Board is not in a position to pay to the agencies resulting in additional burden by way of DPS. High ' "' Court found substance in the stand of the Board. The fact that the consumers at large have not been paying the dues on time G .- _..,. and many of them have been making only part payment on the strength of interim orders of Courts are facts which are not disputed. If the consumers do not pay the dues to the Board, they cannot be heard to make any complaint against payment of DPS by the Board to the external agencies. [2009) 6 S.C.R.
38. We have referred in extenso reasonings of the High Court.
39. It is stand of Board that while arriving at the average . cost of purchase where the purchase prices vary weighted B average is taken into account. This can be explained by illustration of electricity purchased from different units of NTPC. The Board purchases electricity normally from generating units of NTPC at Farakka, Kahalgaon and Talcher at different rates. During 1996-97 the Board purchased electricity from Farakka unit at the rate of 147.28 paise/Kwh (inclusive of trans. Ch.) C from Kahalgaon at the rate of 179.20 paise/Kwh and Talcher at the rate of 70.33 paise/Kwh. The total power purchased from NTPC during the said year was 4047.70 Mkwh for Rs.61,989.32 lacs. For the purposes of calculating per unit rate during the said year weighted average of the different rates was D taken which comes to 153.15 paise/Kwh. The difference in cost of purchase of electricity from NTPC during 1996-97 with reference to the base year 1991-92 comes to 153.15 minus 83.65 = 69.50 paise/Kwh (the average rate during 1991-92 was 83.65 paise/Kwh). Similarly, in the case of purchase of power from 'other source', there is more than one source for such purchase and the rates of supply also vary. In such cases average incremental cost is arrived at by the method of weighted average.
40. There is no dispute with regard to levy of fuel surcharge in respect of power generated by the generating stations of the Board. The dispute in the writ petitions was with'regard to only the method of calculation of fuel surcharge in respect of power purchased by the Board, i.e. the rates of fuel surcharge in G respect of the years 1996-97 and 1997-98.
41. The Board by its Circular dated 31.5.1999 fixed the rate of fuel surcharge by applying formula for the years 1993- 94 to 1996-97. During the year 1996-97 the Board started purchasing electricity from generating unit of TVNL established in 1996. By treating TVNL as a source falling under the BIHAR STATE ELECTRICITY BOARD v. PULAK ENTERPRISES & ORS. [DR. ARIJIT PASAYAT, J.] category of other source, the Board calculated weighted average cost of power as Rs.60.57 paise/Kwh.
42. Stand of the writ petitioners was that since TVNL came into existence in the year 1996-97 there cannot be any incremental cost in respect of electricity purchased from TVNL inasmuch increase in the average unit rate of purchase of electricity has to be calculated treating 1991-92 as the base year. The other stand of the writ petitioners was that the Board – … has treated the supply of electricity by DVC to TISCO as deemed supply by the Board to TISCO at a differeht rate which c is not in accordance with the formula. The stand of the writ petitioners was accepted by the High Court. So far as TVNL and deemed supply to TISCO are concerned, the High Court held that there is no infirmity in the fixing of rates of fuel surcharge except on the aforesaid two grounds. All other stands taken in the writ petition was rejected . ……
43. Judgment of the High Court is under challenge in these appeals by the Board. An appeal has been filed by the private companies so far as the conclusions of the High Court relating to non accounting of Rupees 100 crores paid by the private · companies to the Board. According to the appellant-Board, the High Court was not right in directing to re-work out the rates of fuel surcharge for the years 1996-97 onwards after deleting the purchase of electricity from TVNL as a component of H3 in the ..(, formula. It is also submitted that the direction of the High Court to re-work out the rates of fuel for the year 1996-97 onwards after treating the deemed supply i.e. supply of electricity by DVC to TISCO as supplied by DVS to the Board as an element of 03 in the formula was erroneous. —'f
44. Though learned counsel for the appellant Board …… questioned correctness of High Court's conclusions, nothing material could be highlighted as to how the reasonings suffer from any infirmity. We are in agreement with the conclusions of the High Court. The appeals filed by the Board are accordingly dismissed.
45. In the other appeals challenge is to non-accounting of ,,,,; "11 Rs.100 croms paid by the Coal Companies to the Board. According to the writ petitioners, if the said amount has been shown in the accounts the rate of fuel surcharge would have been different. The High Court noticed that this aspect of the 8 matter has been dealt with by the Board in its rejoinder affidavit wherein it has been stated that as against the total claim of Rs.356.20 crores on account of loss due to grade slippage, short supply of coal, supply of stones etc. the Coal Companies have agreed to pay Rs.100 crores in full and final settlement of \,.. – c the claim. But though such decision was taken on 30.8.1998 actual payment has not been made till date. High Court observed that payment of the amount would be relevant consideration while calculating the rate of fuel surcharge for the year 1998-99 and not 1997-98.
46. We direct that the actuals be worked out within three months from today. The adjustment of Rs.100 crores be worked out accordingly. The appeals are accordingly disposed of. ….. R.P. Appeal disposed of. l