Appeal No. 26 of 2007

Between

Sr. Divisional Electrical Engineer,

O/o Divisional Railway Engineer,

South Central Railway,

Guntur Division, Elelctrical Branch,

Pattibhipuram, Guntur – 522 006

… Appellant

And

1.The Superintending Engineer / Operation / Kurnool / APCPDCL/Kurnool (Dist)

2.The Senior Accounts Officer / Operation/ / Kurnool / APCPDCL/Kurnool (Dist)

3.The Divisional Engineer/Operation / Nandyal/APCPDCL/ Kurnool Dist

4.The Chief General Manager/Commercial/APCPDCL/Corp.Office/Hyd

5.The General Manager/Revenue/APCPDCL/Corp.Office/Hyd

6.The General Manager/Customer Services/APCPDCL/Corp.Office/Hyd

… Respondents

The appeal / representation dated 27.07.2007 (received on 30.07.2007) of the appellant has come up for final hearing before the Vidyut Ombudsman on 07.06.2008 in the presence of Sri. Satish Kumar, Advocate on behalf of Sri. Bhaskar Poluri, Advocate and Sri Ramprasad for the appellant and Sri S.Srinivasa Rao, ADE (Commercial) on behalf of respondent No. 4, Sri P.Venkateswarlu, S.A.O, and having stood over for consideration till this day, the Vidyut Ombudsman passed / issued the following:

A W A R D

Aggrieved by the order dated 23.06.2007 passed by the Forum for Redressal of Consumer Grievances of APCPDCL in CG No.97/ 2006-07 / Kurnool Circle (for short the “Forum”), the appellant herein filed appeal / representation dated 27.07.2007.

2. In the appeal / representation dated 27.07.2007 mentioned above, it is stated that

a) The appellant has got HT Service Connection viz., S.C.No.149 at Nandyal Railway Station. The Distribution Company of the respondents (for short ‘DISCOM’) had been billing the said HT service connection under category–VI and the appellant has been paying billed amount. However, respondent No.1 by letter No.SE/O/KNL/SAO/JAO/HT/D.No.625/05 dated 20.12.2005 informed the appellant that it’s service connection is to be billed under category-II from January 1999. Further, the appellant was required to pay Rs.66,64,128/- as arrears towards difference of tariff arisen out of recategorisation for the period from January 1999 to November 2005. From the month of December 2005, the DISCOM is billing the service connection of the appellant under category–II and accordingly the appellant is paying the said charges.

b) The appellant submitted number of representations, including letter No. GNT/E.19/I/HT/149/KRNL dt: 05.01.2007 requesting the DISCOM to waive arrears of Rs.66,64,128/-. However, in the bill for the month of January 2007, the DISCOM not only demanded payment of arrears mentioned above, but also levied penalty of Rs.1,11,957/- thereon for late payment. The appellant paid the arrears of Rs.66,64,128/- under protest. However, in the bill for the month of February 2007, the DISCOM levied further penalty of Rs.1,08,076/- for non-payment of late payment charges of Rs.1,11,957/-. Later on, the appellant paid the entire amount of penal charges viz., Rs.1,11,957/- as well as Rs.1,08,076/- under protest.

c) As seen from the Lr.No.CGM/Coml/SE/C/DE (C)/ADE-III/D.No.2118/07, dt. 27.02.07 of respondent No.4, back billing for S.C.No.149 was done as per Terms & Conditions of Supply (for short ‘TCS’) which came into effect from 01.01.1999 i.e., since the formation of DISCOM. The said plea is not acceptable, because in 1990’s commercial activity at Nandyal was very less and hence the service connection was to be under category-VI. Change of service connection has to be from the month of November, 2005. As per clause 3.4.1 of General Terms & Conditions of Supply (for short ‘GTCS’) approved by Andhra Pradesh Electricity Regulatory Commission (for short ‘APERC’), which came into force on 06.01.2006, when reclassification of category is required, the DISCOM can suitably revise bills with retrospective effect for 3 months in case of domestic and agricultural categories and 6 months in case of other categories.

d) Further, re-categorisation of appellant’s service connection retrospectively and demanding arrears of Rs.66,64,128/- towards back billing as well as penalties for late payment is not as per the procedure laid down in 9.3.2.9 and 9.3.2.11 of the said GTCS. The appellant filed a complaint before the Forum, but the Forum by its order dated 23.06.2007 stated that reclassification of the appellant’s S.C.No.KNL-149 under category-II w.e.f 01.01.1999 and raising C.C. bill as per B.P.Ms.No.62 (Commercial) dt: 28.12.1998 claiming difference of tariff is in accordance with TCS only.

e) As recategorisation of a service connection cannot be done retrospectively, it is requested that the order dated 23.06.2007 may be set aside. Consequently, the amounts paid by appellant under protest viz., Rs.66,64,128/-, Rs.1,11,957/- and Rs.1,08,076/- may either be reimbursed or adjusted in the future bills of the appellant.

3. On 28.08.2007, the appellant filed additional representation / appeal dated 10.08.2007 containing additional grounds on appeal and further stated that:

(a) the appellant being a Government organisation has always been prompt in payment of bills and there is no single instance of default. The refund now being sought is for payment of amount that was paid by the appellant under duress. The appellant was threatened with disconnection of supply, if arrears are not paid. As the appellant is a public utility and cannot afford to cause discomfort to the innumerable commuters, it paid the arrears under protest.

(b) The Forum below did not properly appreciate the contents of (i) Memo. No.CE/Commercial / S.C.Railway/36/93 dated 23.03.1993, (ii) B.P.Ms.No.62 (Operation & Commercial) dated 28.12.1998 and (iii) Memo.No.CE/Commercial/ADE-2/S.C.Railway / 539 /2000 dated 08.06.2000 and wrongly came to the conclusion that recategorisation of the service connection of the appellant and claiming arrears from it is in accordance with TCS. Assessment is to be done with prospective effect only. Therefore, revision of tariff with retrospective effect is unjust, arbitrary and discriminatory.

(c) The audit is an internal matter of the DISCOM and objections raised during such audit cannot become policy directions. Revision of tariff based on audit objections is neither tenable, nor bind the consumers.

(d) As per the agreement with the APSEB, the predecessor-in-interest to the DISCOM, the respondents cannot unilaterally change category of supply retrospectively without giving notice to the appellant.

(e) In the clauses 24.1, 24.3, 25.1 and 35 of TCS relied on by the Forum below does not mention that the powers are vested in DISCOM to change the category or tariff retrospectively. Therefore, the finding of the Forum is not proper. On the other hand, as per clause 3.4.1 of GTCS, even if the recategorisation of category is required, the DISCOM can revise bills with retrospective effect for 3 months in case of domestic and agriculture categories and 6 months in case of other categories.

(f) For all these reasons, the order of the Forum may be set aside and the DISCOM may be ordered to refund the amounts of Rs.66,64,128/-, Rs.1,11,957/- and Rs.1,08,076/- which the appellant was compelled to pay under duress and under threat of disconnection. The Vidyut Ombudsman may further direct the respondents to pay interest on the said amounts.

4. By notice dated 27.11.2007 (dispatched on 03.12.2007), the Vidyut Ombudsman informed the respondents about the filing of representation / appeal by the appellant against the order of the Forum below and further informed the parties concerned that under clause 8(1)(c) and clause 11 of he APERC Establishment of Forum and Vidyut Ombudsman for Redressal of Grievances of Consumers Regulation, 2004 (for short “Regulation No. 1 of 2004”), the Vidyut Ombudsman is required to endeavour to promote settlement by mutual agreement between the parties.

5. By Letter No.SE/O/KNL/SAO/JAO/HT.Rev/D.No.560/08 dated 05.01.2008 (received on 07.01.2008), the respondent No.1 filed written submissions stating that:

(a) The Senior Audit Officer, AG audit during the inspection held in the month of July 2005 pointed out that railway station services are to be reclassified as per the tariff orders in vogue and shortfall, if any, may be billed from the month of January 1999.

(b) On receipt of load particulars from the field officers, the respondent No.1 reclassified four nos. HT services of railway stations including the appellant herein, under category-II and supplemental bills were issued for the period from 01.01.1999 to November 2005. All the four HT consumers arranged payment. The appellant herein after paying back billing amount together with surcharge totaling to Rs.67,51,953/- filed a complaint before the Forum below. The Forum pronounced that reclassifying the service connection and raising C.C bill claiming difference of tariff is in accordance with the GTCS. Further, as there is no deficiency of service on the part of respondents, the Forum did not interfere with the demand raised by the respondents.

6. Inspite of the best efforts made by the Vidyut Ombudsman on 16.04.2008 to promote settlement by mutual agreement between the parties as required under Regulation No.1 of 2004, the parties could not arrive at settlement. The appellant sought 2 months time for filing reply to the written submissions filed by respondent No.1. On 22.05.2008, Sri P.Bhaskar, Advocate filed a Memo of Appearance on behalf of the appellant. On the said date a copy of the order dated 03.08.2006 passed by the Vidyut Ombudsman in Appeal No.10 of 2006 is also filed by the appellant.

7. In continuation of written submission filed by respondent No.1, respondent No.4 filed further written submission on 07.06.2008 i.e., date of hearing and stated that

(a) as per BP.Ms.No.62 (Comml), dated 28.12.1998, the category of railway stations has been changed to HT Cat-II as water supply, sewerage and streetlights load put together exceeded 20% and the change of category was also communicated to the appellant by letter dated 12.12.2006. The appellant agreed for category change and paid Rs.66,64,128/- on 12.02.2007 and other charges of Rs.11,11,957/- and Rs.1,08,076/- under protest.

(b) In the orders of the Vidyut Ombudsman in Appeal No. 10 / 2006 it was mentioned that Clause 35 of TCS would not apply after formation of APERC i.e., after 1998. In this connection, it is submitted TCS is applicable eventhough APERC is formed and GTCS is yet to come into existence. The GTCS came into effect from the year 2006. Hence, clause 35 of TCS read with clause 5 of HT agreement is applicable in this case. Therefore change of category will be effective with retrospective effect.

(c) Further, in the order of Ombudsman it is mentioned that as per the mutual understanding held in the year 1993 between the APSEB and S.C.Railway, if domestic services load is above 50% they will be billed under HT Category-VI till a notice is served to S.C.Railway. In this connection, it is to submit that as per the B.P.Ms.No.62 if other loads are more than 20%, the service will be billed under HT Cat-II. As the said B.P is published in A.P.Gazette that itself is a notice to all the consumers and there is no necessity to serve a separate notice to a consumer. The appellant would have segregated domestic and commercial loads and obtained separate connections under HT Cat-VI and HT Cat-II separately.

8. Heard the arguments of the parties concerned and perused the records.

9. The point that arises for consideration is whether the order passed by the Forum below stating that “reclassifying the appellant’s service connection under HT Cat-II w.e.f 01.01.1999 and raising CC bill as per B.P. Ms.No.62 (Comml) dated 28.12.1998 claiming difference of tariff is in accordance with Terms & Conditions of Supply” is sustainable.

10. The main grievance of the appellant is that re-categorisation of its service connection from Category-VI to Category-II retrospectively is not correct. According to the appellant demanding arrears from 01.01.1999 to November 2005 consequent to such re-categorisation is unjust and erroneous. Audit is an internal matter of the DISCOM and auditor’s objections cannot become policy directions in any organisation. Reviewing tariff based on audit objections makes the contracts executed by consumers adhoc and collecting tariff with retrospective effect because of administrative failure to satisfy audit, is neither tenable nor binds consumers.

11. Before proceeding further it is necessary to point out that the appellant did not dispute change of category prospectively from the billing month of December 2005. It is also not in dispute that the appellant is paying C.C. charges under Category-II for its service connection No. KNL 149 with effect from December 2005 as per letter of respondent No.1 dated 20.12.2005. Therefore, the issue is confined to collection of difference of CC charges between Category-VI and Category-II retrospectively i.e., prior to the billing month of December 2005 for about 7 years by respondent No.1, to be precise for the period from 01/1999 to 11/2005. Apart from several grounds mentioned in the representation / appeal dated 27.07.2007 and additional grounds of appeal dated 10.08.2007, the appellant relied on the order passed by the Vidyut Ombudsman in Appeal No. 10/2006 to substantiate its claim that demanding short billed amount from 01/1999 to 11/2005 is not correct.

12. On examination of the order dated 03.08.2006 in the said appeal it is clear that the facts relating to said appeal are different from the facts of the case on hand. In the Appeal No. 10/2006, after joint survey conducted between the representative of the Railways and the authority concerned of APSEB in the month of August 2005, it was noticed that HT tariff of Palasa Railway station comes under category-II. Railways agreed in principle for payment of C.C.charges under category-II from September 2005 onwards, but not from July 1998 as demanded by the DISCOM concerned. But the Forum in its order dated 17.04.2006 in that case directed that the service connection of Palasa Railway station may be reclassified into category-II from the date of release of additional load on 27.09.2001, which order was challenged before the Vidyut Ombudsman in Appeal No.10/2006. On the other hand, in the present case the material placed before Vidyut Ombudsman does not disclose that Joint inspection was done with reference to change of category from Cat-VI to Cat-II or that additional load (for commercial activity) was released. It is an admitted fact that because of audit objection, recategorisation was done with effect from January 1999. For all these reasons, the finding given in Appeal No. 10/2006 cannot be applied to the facts of the case on hand.

13. In this context, it is necessary to point out that B.P.Ms.No.62 (Operation & Commercial) dated 28.12.1998 as published in Andhra Pradesh Gazette on 29.12.1998 is a notification relating to sale of electricity to different categories of consumers. The said B.P. does not empower licensees (DISCOMS) to collect arrears with retrospective effect consequent to recategorisation of a service connection. Reference to the said B.P. is helpful to the extent of identifying category under which appellant would have been billed at the relevant point of time. Whereas, the issue that falls for consideration of the Vidyut Ombudsman relates to power of DISCOM to claim difference of tariff with retrospective effect due to recategorisation of a service connection. Relying on B.P.Ms.No.62 is not correct for the simple reason that the said B.P. is only a Government order notifying tariffs applicable to different categories of consumers, but does not empower a DISCOM (licensee) to collect difference of tariff with retrospective effect as mentioned supra. TCS of erstwhile APSEB which was made applicable to APTRANSCO as per condition 12 of Provisional Retail Supply Licence granted by Government of Andhra Pradesh in G.O.Ms.No.4 (Energy) Power-III dated 30.01.1999 was in force till it was superceded by the GTCS as approved by APERC on 06.01.2006. As per clause 35 of TCS, the Board may also alter classification and suitably revise the bills if necessary, even retrospectively. However, the power to demand arrears retrospectively consequent to re-categorisation is not absolute and should be guided by the mandate of the Parliament which enacted the Electricity Act, 2003 (for short ‘the Act 2003’). Similarly, TCS which is made applicable to APTRANSCO and subsequently to different DISCOMS is only a stop-gap arrangements till APERC notified GTCS in accordance with provisions of the Act, 2003, the power to reclassify consumers and revise their bills retrospectively (without any limitation on the period) is not absolute and should be considered in line with provisions of the Act 2003 relating to the subject matter. Act 2003 came into force even by 20.12.2005 when respondent No.1 issued Lr.No.SE/O/KNL/SAO/JAO/HT/D.No.625/05 demanding shortfall bill amount of Rs.66,64,128/- from 01/99 to 11/2005. Therefore, Vidyut Ombudsman is of the opinion that clause 35 of TCS does not confer absolute power on respondents to demand arrears due to reclassification of service for 7 years prior to issuance of notice by respondent No.1 on 20.12.2005.

14. In this connection it is necessary to refer to a few provisions of the Act, 2003 for arriving at a decision in the case on hand. Section 56 of the Act 2003 deals with “Disconnection of supply in default of payment “ and sub-section (2) of the said section states that no sum due from any consumer shall be recoverable after the period of 2 years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrears of charges for electricity supplied. Similarly in the case of unauthorised use of electricity section 126 (5) of the Act which deals with “Assessment” states that if the period during which unauthorised use of electricity has taken place cannot be ascertained, such period shall be limited to a period of twelve months immediately preceding the date of inspection. In the letter issued by respondent No.1 dated 20.12.2005 it is not mentioned the basis on which back billing is done from January 1999. In the absence of the same, the Vidyut Ombudsman is of the opinion that respondent No.1 is not correct in demanding the arrears since January 1999. Had the appellant was directed to segregate domestic and commercial loads, it would have obtained separate connections under HT Cat-VI and HT Cat-II long back.

15. On the other hand, a duty is also cast on the appellant to segregate domestic and commercial loads as soon as usage of non-domestic load has increased in line with tariff orders issued by APERC from time to time. Simply stating that commercial activity at Nandyal Railway station increased only in the month of November 2005 and therefore, its service connection has to be changed with effect from December 2005 when notice dated 20.12.2005 was served by respondent No.1 is highly improbable. Had notice dated 20.12.2005 intimating change of category from VI to II is not issued, for whatever reason it may be, the appellant would have continued to pay C.C. bills in respect of its S.C.No.KNL-149 as earlier under HT Category-VI till date. The fact that the appellant had not disputed billing the said service connection under category-II with effect from 12/2005 as intimated by respondent No.1 in his letter dated 20.12.2005 and continuing to pay consumption charges under category-II prospectively in pursuance of said letter without any whisper casts a doubt on the contention of the appellant that commercial activity at Nandyal railway station has increased only in the month of November 2005. It appears that the said contention is invented for the purpose of denying its liability and as mentioned above, the same is without any basis.

16. Whatever it might be, strictly speaking the proposed action of respondent No.1 to bill S.C.No.KNL-149 under category-II with effect from 01/99 and demanding shortfall bill amount of Rs.66,64,128/- towards back billing charges upto November 2005 adversely effects the interests of appellant. As per the principles of natural justice, the appellant is entitled to a notice before raising such demand by respondent No.1, as pointed out by the Hon’ble High Court in several cases including in W.P.Nos. 14980/2007 and 2185/2008, eventhough there is no requirement for the respondents to give a notice under clause 35 of TCS which is applicable in this case. At the same time it cannot be denied that the respondent(s) concerned has power to demand short billed amount retrospectively after giving notice and calling for objections from the appellant, before taking decision as held by the Hon’ble High Court.

17. Keeping the facts of the case, Terms and Conditions of Supply, the legal provisions governing the subject matter and in order not to delay the collection of short billed amount any further as the same is already more than two and half years old, the Ombudsman proceeds to decide the matter in exercise of powers vested in him under clause 12 of the Regulation No. 1 of 2004.

18. Perusal of record reveals that the appellant paid Rs.66,64,128/- in order to avoid disconnection of supply, otherwise it would cause inconvenience to innumerable commuters. Respondent No.1 by his letter dated 27.10.2006 threatened to disconnect supply unless the above mentioned amount consequent to back billing is not paid. Therefore, there is force in the contention of the appellant that as it had no other alternative, it paid the said amount under protest. It is not out of place here to mention that under section 56(2) of the Act, 2003, licensee shall not cut-off supply of electricity for recovering any sum due from any consumer (appellant herein) after the period of 2 years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrears of charges for electricity supplied. Therefore, threatening the appellant with disconnection of supply for arrears for the period from 01.01.1999 is unjust. Similarly, Vidyut Ombudsman is of the opinion that levying of Rs.1,11,957/- and Rs.1,08,076/- as late payment charges is also unjust.

19. For the foregoing reasons, the Vidyut Ombudsman is of the opinion that interest of justice would be met if the appellant is directed to pay difference of tariff between C.C. bills under Category-VI and Category-II for 2 years prior to issuance of notice by respondent No.1 i.e., letter dated 20.12.2005 without any late payment or surcharge. Accordingly, the appeal is allowed partly and the appellant is directed to pay difference amount between category-VI and category-II from December, 2003 to November, 2005 as per the ‘Shortfall amount Statement’ appended to the letter dated 20.12.2005 mentioned supra and communicated to the appellant by respondent No.1.

20. However, the respondent(s) concerned shall be required to implement this award only after the appellant gives consent for this award to the respondent(s) concerned in terms of clause 12 of Regulation No.1 of 2004 stating that the award is in full and final settlement of its claim within a period of one month from the date of receipt of this order. Thereafter, within 15 days from the date of receipt of letter of acceptance from the appellant, respondent No.1 shall deduct the short billed amount from the month of December 2003 upto November 2005 (without any late payment or surcharge) and either refund the excess amount out of total amount of Rs. 68,84,161/ - (Rs.66,64,128/- + Rs.1,11,957/- + Rs.1,08,076/-) already paid by the appellant, under protect, within one month from the date of receipt of letter of acceptance or adjust such excess amount in the future C.C. bill of the appellant.

This order is corrected and signed on this 19^th day of June 2008.