Holding

Until a State Electricity Regulatory Commission is constituted, the State Electricity Board retains the power to determine and revise tariffs under the Electricity (Supply) Act, 1948; the 1998 Act’s provision for a State Commission is directory and the Commission cannot exercise retrospective jurisdiction.

Summary

Binani Zinc Ltd. challenged the Kerala State Electricity Board’s (KSEB) 2002 tariff revision order, arguing that after the Electricity Regulatory Commission Act, 1998 came into force, the Board no longer had authority to set tariffs until a State Electricity Regulatory Commission (KSERC) was constituted. The Supreme Court examined whether Section 17 of the 1998 Act imposes a mandatory duty on the State to create a commission, whether the Board retained jurisdiction under the Electricity (Supply) Act, 1948 during the interim, and whether the later Electricity Act, 2003 affected the Board’s powers or the maintainability of the appeal. The Court held that the 1998 Act’s provision for a State Commission is directory, not mandatory, and that until such a commission is constituted the Board continues to have tariff‑determining powers under the 1948 Act. The Commission cannot exercise retrospective jurisdiction, and the 2002 tariff revision by KSEB was therefore valid. The appeal was dismissed, with the reference answered.

Issues considered

Whether Section 17 of the Electricity Regulatory Commission Act, 1998 imposes a mandatory obligation on the State to constitute a State Electricity Regulatory Commission, and the effect of its non‑constitution on tariff revisions.
Whether the Kerala State Electricity Board retained jurisdiction to revise tariffs under the Electricity (Supply) Act, 1948 after the 1998 Act came into force but before the KSERC was constituted.
Whether the Electricity Act, 2003 repealed the 1998 Act and the 1948 Act, thereby affecting the Board’s powers and the maintainability of the appeal.
Whether a State Commission can frame tariff with retrospective effect covering periods prior to its constitution.
Whether the principles laid down in the 1998 Act (e.g., cross‑subsidy) bind the Board before the Commission’s existence.

Legislation cited

Electricity Act, 2003s. 185
Electricity Regulatory Commission Act, 1998s. 17, s. 2, s. 22, s. 28, s. 29, s. 3, s. 52
Electricity (Supply) Act, 1948s. 49, s. 59, s. 79

Subjects

tariff revisionelectricity boardregulatory commissiondirectory provisionretrospective effectjurisdictioncross‑subsidyElectricity (Supply) Act 1948Electricity Regulatory Commission Act 1998Electricity Act 2003

Judgment

[2009] 4 S.C.R. 636

A BINANI ZINC LIMITED
V. ·-
KERALA STATE ELECTRICITY BOARD AND OTHERS
Civil Appeal No. 3492 of 2006
MARCH 19, 2009
B
[ S.B. SINHA, ASOK KUMAR GANGULY AND R.M.
LODHA, JJ]
Electricity (Supply) Act, 1948:
ss. 49, 59 and 79UJ - Kera/a State Electricity Board -
.. --
c Revision of Tariff by Notification dated 24.10.2002 - KSERC
established on 14. 12. 2002 under Electricity Regulatory
Commission Act, 1998 as also the Appellate Tribunal
constituted under the Electricity Act, 2003 upholding the tariff
revised by the KSEB - HELD: Establishment of a State!
D Electricity Regulatory Commission uls 17 is directory - )>- •

Provisions of 1998 Act vis-a-vis 1948 Act are required to be
construed harmoniously - Law does not contemplate a
vacuum in its operation - Board had the jurisdiction to revise
the tariff-1948 Act was not repealed or replaced by 1998 Act
E - 1910 Act, 1948 Act and 1998 Act have been repealed by
2003 Act but actions taken under the repealed Acts have been
saved in so far as they are not inconsistent with the provisions
~
of 2003 Act - Regulatory Commission has not been
empowered to frame tariff with retrospective effect so as to
F cover a period before its constitution - Electricity Act, 1910 -
Electricity Regulatory Commission Act, 1998 - s. 29 -
Electricity Act, 2003 - s. 185.
The State Government of Kerala, pursuant to its G.O.
dated 17 .8.2001, entered into an MoU with the Government
G of India and constituted the Kerala State Electricity )..~·

Commission (KSERC) on 14.12.2002. Meanwhile the ~

respondent- Kerala State Electricity Board revised tariff
u/ss 49, 59 and 79U) of the Electricity (Supply) Act, 1948
with effect from 1.10.2002 by issuing the Kerala State
H 636
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 637
BOARD AND OTHERS

Electricity Board Extra High Tension Tariff Revision Order, A
2002, This was challenged by the appellant and when the
matter reached the KSERC, it by an order dated 30.4.2004
held, inter alia, that on the day the tariff revision
Notification dated 24.10.2002 was issued, the Board was
to determine the tariff since the Electricity (Supply) Act, B
1948 was still applicable. The finding was upheld by the

- High Court in appeal. The order of the High Court was
challenged under Article 136 of the Constitution of India.
It was contended for the appellant that the Electricity Act,
2003 having come into force w.e.f. 10 .. 6.2003, the KSERC C
functioning as such prior thereto continued to function
as the State Commission under the 2003 Act and it must
be held to have considered appellant's petition in terms
of the provisions therof. It was also submitted that the
1998 Act having been repealed by the 2003 Act, the appeal
preferred before the High Court was not maintainable. D
Pursuant to the order of the Supreme Court, the matter'
came to be heard by the Appellate Tribunal constituted
under the 2003 Act which held that till the State
Commission was constituted, the power remained vested
in the KSEB to determine the tariff. E·
\ iI
The instant appeal challenging the order of the ·
Appellate Tribunal was listed before a two-Judge Bench,
which noticjng the observations made by another two-
J udge Bench in BSES Ltd. and Ors. Vs. Tata Power
1
Company Ltd. referred the matter to the larger Bench. F
Answering the reference, the Court ·
HELD: 1.1 Section 3 of the Electricity Regulatory
Commission Act, 1998 Act mandates the Central
Government to establish Central Electricity Regulatory G
Commission. If the said provision is contrasted with s.17
of the said Act, it would be evident that no such mandate
has been imposed on the State Government to constitute
1
2003 (4 ) Suppl. SCR 932 H
638 SUPREME COURT REPORTS [2009] 4 S.C.R

A such a Commission. The Parliament advisedly used the -y.

words 'may' and 'if it deems fit' in s.17 while using the word
'shall' ins. 3 thereof. Establishment of a State Commission
by the State Government, therefore, is directory. It confers
some discretionary power on the State Government to
B constitute a State Commission. The State, for sufficient
and cogent reasons, may refuse to constitute such a
Commission or fail or neglect to do so within a reasonable
time. For the purpose the Central Government can take
recourse to certain measures but the same would not
-
c mean that the court can in exercise of its power of judicial
review, issue a writ or order in the nature of mandamus
directing the State to constitute such a Commission. [para \--
21] [647-E-G]
1.2 The provisions of Electricity Regulatory
D Commission Act, 1998 vis-a-vis Electricity (Supply) Act,
1948 are required to be construed harmoniously. For the
said purpose it is required to bear in mind that the law
does not contemplate a vacuum in its operation. The 1948
Act has not been repealed or replaced by the 1998 Act. It
E was only u/s 185 of the Electricity Act of 2003 that the
I.
provisions of the Electricity Act 1910, Electricity (Supply)
Act 1948 and the ERC Act 1998 were repealed. But at the
same time anything done or any action taken under the
repealed Acts have been saved in so far as they are not
F inconsistent with provisions of the 2003 Act.[para 23 and
33] [653-D]
1.3 Though upon coming into force of the 1998 Act
the provisions contained in 1948 Act which are found to
be inconsistent with the former shall give way thereto, but
G it cannot be said that if no Commission is constituted, the
Board would have no jurisdiction at all to frame tariff.[para
24] [648-D-E]
1.4 The State Electricity Board had the requisite
jurisdiction to revise a tariff till such time as the
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 639
BOARD AND OTHERS

Commission was constituted and the purposes .of the A
1998 Act could be achieved through it. Till the time the
Regulatory Commission was not constituted by the State
Government, the power to determine tariff remained with
the Board under the Electricity (Supply) Act 1948 as it was
not repealed by the Electricity Regulatory Commission s
Act 1998: The Parliament could not have intended to bring
about a situation where no authority would be
empowered to determine the tariff between the date of
coming into _force of the ERG Act, 1998 and the constitution
of the Comm,ission. It is only after the Regulatory c
Commission is constituted that it will be the sole authority
to determine the tariff. [para 34] [653-E-G]
2.1 The Regulatory Commission set up by the State
has been empowered to frame tariff. It has, however, not
been empowered to frame tariff with retrospective effect D
so as to cover a period before its constitution. The matter
might have been different if such a power has been
conferred on the Commission. It is now a well settled
principle of law that all laws would be prospective subject
of course to enactment wi_th an express provision or E
intendment to the contrary. [para 30] [650-C-D]
2.2 BSES* must be held to have been determined on
its own facts. Sub-section (6) of s.29 of the 1998 Act bars
·constitution of a rating committee. In 'BSES' a Committee
was constituted by the State of Maharashtra. In that case- F
when the Regulatory Commissions had been set up by
the Sta~e government under the ERC Act, no other
authority including the Board, would obviously have the
power to determine the tariff. It is presumably on that
premise that the provisions of the t998 Act must be given G
effect to even for the period during which it had not come
into force, must be understood. This clarification in regard
to the decision rendered by a two Judge Bench of this
Court in BSES would be sufficient to answer the
reference.[para 32-and 35] [653-B-C; 654-A-B] H
640 SUPREME COURT REPORTS [2009] 4 S.C.R.

A *BSES Ltd. and Ors. Vs. Tata Power Company Ltd. 2003
(4) Suppl. SCR 932=(2004) 1 SCC 195 - distinguished.

Case Law Reference
2003 (4 ) Suppl. SCR 932 distinguished para 1
B
CIVILAPPELALTE JURISDICTION: Civil Appeal No. 3492
of 2006
From the Judgement and Order dated 24.07.2006 of the •
Appellate Tribunal for Electricity in Appeal No. 154 of 2005.
c K.K. Venugopal, Sudhir Gupta, Syed Shahid Husain Rizvi,
Hina Rizvi, Uttara Babbar, for the Appellants.
T.L. Viswanatha Iyer, M.T. George, G. Prakash, for the
Respondents.
D
The Judgement of the Court was delivered by
S.B. SINHA, J.
1. Correctness or otherwise of an observation made by a
two Judge Bench of this Court in BSES Ltd. and others v. Tata
E
Power Company Ltd., [ (2004) 1 SCC 195 ] having been
doubted, this matter has been referred to a Larger Bench.
2. Kerala State Electricity Board (KSEB), respondent No.2
is constituted and incorporated under the provisions of the
F Electricity (Supply) Act, 1948 (for short 'the 1948 Act').
Indisputably the first respondent is entitled to frame and revise
tariff for electrical energy in exercise of the powers conferred
·upon it by Sections 49, 59 and clause 0) of Section 79 of the
1948 Act.
G
3. The Parliament enacted Electricity Regulatory
Commissions Act, 1998 (for short 1998 Act) which received
the assent of the President of India on or about 2°d July, 1998. It
was, however, deemed to have come into force with effect from
25th April, 1998.
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 641
BOARD AND OTHERS [S.B. SINHA, J.]
--{ 4. By order dated 13th May, 1999, KSEB revised its tariff A
with effect from 15th May, 1999. A writ petition was filed by an
Association questioning the said order.
. rd
5. Subsequently on 3 May, 2001 the Government of Kerela
effected an increase of tariff for all categories of consumers
except old age homes, schools and hostels of mentally retarded B
persons etc. The revised tariff was made effective from August
10, 2001. According to the governmental order, KSEB was
~
incurring a deficit of Rs. 160.44 crores per month and in order
to make up for the said deficiency the tariff hike was
necessitated. Pursuant to the said policy decision the KSEB c
later on issued a detailed tariff order.

6. The Power Department of the Government of Kerala
issued G.O. (MS) No. 23/2001/PD on 1ih August, 2001 inter
-·-"!' alia declaring that the Government of Kerela had tentatively
D
decided to enter into a MOU with the Government of India with
a view to affirm the joint commitment of the two parties to reform
the power sector in Kerela in a time bound manner. The said
MOU in the relevant para stated :-
"8. Kerala will constitute an independent State Electricity E
Regulatory Commission by October, 2001 and fii~ tariff
petitions by March 2002. Tariff orders issued by SERC
will be implemented fully unless stayed or set aside by
Court orders."
th
7. On or about 11 October, 2001 a Government Order F
was issued by the Government of Kerala further enhancing the
tariff by 50 paise per unit for all industrial consumers.
8. KSEB revised tariff under Sections 49, ·59 and sub-
... ,,.,j section U) of Section 79 of the 1948 Act by issuing an order
G
known as The Kerala State Electricity Board Extra High Tension
Tariff Revision Order 2002" (for the sake of brevi1J1 '2002 Order').
The said order came into force with effect from 1 October, 2002
in terms whereof revision in the tariff for extra high tension
industrial units was effected.
H
642 SUPREME COURT REPORTS [2009] 4 S.C.R.

A 9. The Kerala State Electricity Commission (KSERC) was
constituted by the State of Kerala on 14th November, 2002 in
exercise of its power conferred by Section 17 of the 1998 Act
10. Appellant questioning the validity of the said 2002 Order
filed a writ petition before the Kerala High Court which was
B marked as OP 9798 of 2003. As in the meanwhile the KSERC
came into force, the High Court permitted the appellant to
approach the Commission within 30 days noting that it would
be entitled to examine whether the revision conforms to Section
29 of the 1998 Act or not.
c
11. The Parliament enacted the Electricity Act, 2003 which
1
came into force with effect from 10 hJune, 2003.
12. The KSERC in terms of its order dated 30th April, 2004
inter alia held :- -.;- -~

D
a) On the day the notification dated 24.10.2002 was
issued, the Board was empowered to determine the
tariff since the Electricity (Supply) Act, 1948 was still
applicable.
E b) No ground for re-determining tariff for HT and EHT
consumers.
c) Cross subsidy for tariff for HT and EHT categories
was around 43%."
F 13: The appeal was preferred thereagainst before the High
Court in terms of Section 27 of the 1998 Act whereupon by an
order dated 2"d July, 2004 it was directed :-
"(a) Though the Tariff Revision Order, 2002 was issued
on 24th October, 2002, i.e. subsequent to coming into
G force of the ERC Act, 1998, the Board was empowered
to issue the notification as the Regulatory Commission
had not been constituted.
(b) With respect to issue of cross subsidy, matter
remanded to the Commission for fresh determination."
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 643
BOARD AND OTHERS [S.S. SINHA, J.]
14. A special leave getition was filed thereagainst. This A
court by an order dated 13 September, 2004 passed an interim
order directing the KSEB not to disconnect appellant's electricity
supply subject to its paying the demand as per the tariff before
its revision on 24.10.2002. Appellant was also asked to deposit
Rs.1 crore with the KSEB. B
15. Before the court it was contended by the appellant that
the Electricity Act, 2003 having come into force with effect from ,
June 10, 2003, the KSERC functioning as such prior thereto
continues to function as the State Commission under the.2003 C
Act and thus it must be held to have considered the appellants'
petition in terms of the provisions thereof. It was furthermore
argued that the 1998 Act having been repealed by the 2003
Act, the appeal preferred by the appellant before the Kerela
High Court was not maintainable.
D
This Court, however, while disposing of the appeal held
that the issues raised by the appellant could be more effectively
considered and disposed of by the appellate tribunal under the
2003 Act, being an expert body.
E
16. Pursuant to or in furtherance of the said order ii1e
Appellate Tribunal upon hearing the parties has passed the
impugned judgment inter alia opining that the respondent-KSEB
1
had the jurisdiction to revise the tariff framed on 24 h July, 2006,
stating :- F
"26 ..... Therefore, till the Commission was constituted by
the State of Kerala the power remained vested in the Board
to determine the tarjff,"
,._,.,i 17. Mr. K.K. Venugopal, learned counsel appearing on G
behalf of the appellant would urge:-
(i) Upon coming into force of 1998 Act the State was
obligated to constitute the Electricity Commission
within a reasonable period.
H
644 SUPREME COURT REPORTS [2009] 4 S C.R.

A (ii) On coming into force of the 1998 Act Respondent-
Board and/or the State of Kerala had no authority to ---
revise the tariff in terms of the provisions of the 1948
Act or otherwise.
(iii) In any event the principles laid down in 1998 Act
B should have been kept in mind while revising the
tariff, particularly in respect of the cross subsidy, which
had specially been dealt with in the Statement of
Objects and Reasons of 1998 Act. t
-
,

c 18. Mr. M.T. George, learned counsel.appearing on behalf
of the Board, on the other hand, would urge:-
(i) Section 17 of the 1998 Act does not impose any
legal obligation upon the State to constitute the
Commission ;
D ~ ~
(ii) So long the Commission is not constituted, the Board
would have jurisdiction to frame and/or revise tariff
as the statute does not contemplate a vacuum;
(iii) The 1998Act having not repealed the 1948 Act, the
E power to frame tariff in terms of Section 49 of the
1948 Act continued to remain in the Board ;
(iv) The High Court in exercise of its jurisdiction under
Article 226 of the Constitution of India could not have
issued a writ or order in the nature of mandamus
F directing the State to constitute the Commission.
19. We may at this stage notice the relevant provisions of
the 1998 Act.
Section 2(c) of the 1998 defines 'Commission' to mean
G the Central Commission or the State Commission or the Joint
Electricity Regulatory Commission, as the case may be. Section
'"'-
2U) of the 1998 defines 'State Commission' to mean the State
Electricity Regulatory Commission established under sub-
section ( 1) of Section 17.
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 645
BOARD AND OTHERS [S.B. SINHA, J]

-.. Section 3 provides for establishment and incorporation A
of Central Commission, sub-section (1) whereof read thus :-
"3. (1) The Central Government shall, within three months
from the date of the commencement of this Act by
notification in the Official Gazette, establish a body to be
known as the Central Electricity Regulatory Commission B
.to exercise the powers conferred on, and the functions
- \.

~
assigned to, it under this Act."
(Emphasis supplied)

Section 17 of the Act provides for establishment and c
incorporation of State Commission, sub-section (1) whereof
'
reads as under :-

"(1) The State Government may, if it deems fit, by
notification in the Official Gazette, establish, for the
..., --if D
purposes of this Act, a Commission for the State to be
known as the (name of the State) Electricity Regulatory
Commission.
(Emphasis supplied)
E
Section 22 deals with the functions of State Commission.
Section 28 provides for determination of tariff by the
Central Commission.
Section 29 provides for determination of tariff by the State
Commission, relevant part of sub-sections (1) and (2) whereof F
read as under:-
(1) Notwithstanding anything contained in any other law,
the tariff for intra-State transmission of electricity and the
tariff for supply of electricity, grid, wholesale, bulk or retail, G
---~
as the case may be, in a State (hereinafter referred to as
the tariff), shall be subject to the provisions of this Act and
the tariff shall be determined by the State Commission of
that State in accordance with the provisions of this Act.

H
646 SUPREME COURT REPORTS [2009] 4 S.C.R.

A Provided that in States or Union territories where Joint
Electricity Regulatory Commission has been constituted,
such Joint Electricity Regulatory CQJTlmission shall
determine different tariff for each of the participating States
or Union territories.
8
(2) The State Commission shall determine by regulations
the terms and conditions for the fixation to tariff, and in
doing so, shall be guided by the following, namely:-

c (c) that the tariff progressively reflects the cost of supply of
electricity at an adequate and improving level of efficiency;
(d) the factors which would encourage efficiency,
economical use of the resources, good performance,
D optimum investments, and other matters which the State
Commission considers appropriate for the purpose of this
Act;
(e) the interests of the consumers are safeguarded and at
E the same time, the consumers pay for the use of electricity
in a reasonable manner based on the average cost of
supply of energy;
(f) the electricity generation, transmission, distribution and
supply are conducted on commercial principles;
F
(g) national power plans formulated by the Central
Government;.
Sections 51 and 52 read as under :-

G "Section 51 - Amendment of Act 54 of 1948 - With effect
from such date as the Central Government may, by
notification, in tl1e Official Gazette appoint, sub-section
(2) of section 43A of the Electricity (Supply) Act, 1948
shall be omitted:
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 647
BOARD AND OTHERS [S.B. SINHA, J.]

Provided that different dates may be appointed for different A
--<!
States.
Section 52 - Overriding effect

Save as otherwise provided in section 49, the provisions
of this Act shall have effect notwithstanding anything B
inconsistent therewith contained in any enactment other

-
·~

-+
than this Act."
. ,-.

20. The 1998 Act indisputably was enacted inter alia for
the purpose of implementing reforms pertaining to fundamental
issues facing the power sector, namely, lack of rational retail c
tariff, high level cross subsidies, poor planning and operation,
inadequate capacity and for safeguarding the interest of the
consumers Jurisdiction of the Commission vis-a-vis the Board
in the context of the provisions of the 1998 Act and 1948 Act

-. must be determined having regard to a large number of factors. D
21. Section 3 of the 1998 Act mandates the Central
Government to establish Central Electricity Regulatory
Commission. If the said provision is contrasted with Section 17
of the 1998 Act, it would be evident that no such mandate has
been imposed on the State Government to constitute such a E
Commission. The Parliament advisedly used the wor.ds 'may'
and 'if it deems fit' in Section 17 of the Act while using the word
--1 'shall' in Section 3 thereof. Establishment of a State Commission
by the State Government, therefore, is directory. It confers some
discretionary power on the State Government to constitute a F
State Commission;The State, for sufficient and cogent reasons,
may refuse to constitute such a Commission or fail or neglect to
do so within a reasonable time. For the aforementioned purpose
the Central Government can take recourse to certain measures
,,_ -,\ but the same would not mean that the court can in exercise of G
its power of judicial review, issue a writ or order in the nature of
mandamus directing the State to constitute such a Commission.
22. In fact in this case itself the Central Government was
able to persuade the State Government to establish a
H
648 SUPREME COURT REPORTS [2009] 4 S.C.R

A Commission by entering into a Memorandum of Understanding
~-
ih
on 1 August, 2001 in terms whereof the State of Kera la made
itself bound to constitute the Commission by October. 2001.

If the contention of Mr. Venugopal is accepted and taken
to its logical conclusion, the superior courts would be entitled to
B direct to Government to implement even conditional legislations.

-
We, therefore, are of the opinion that the same is not legally
permissible.
+
23. The provisions of 1998 Act vis-a-vis 1948 Act are
c required to be construed harmoniously. For the said purpose it
is required to bear in mind that the law does not contemplate a
vacuum in its operation. The 1948 Act has not been repealed
or replaced by the 1998 Act. Section 61 merely replaced the
Ordinance.
D 24. Thus, it would be one thing to say that upon coming
into force of the 1998 Act the provisions contained in 1948 Act
.. ~,

which are found to be inconsistent with the former shall give
way thereto but it is another thing to say that although no
Commission is constituted, the Board would have no jurisdiction
E at all to frame a tariff.
25. The State Electricity Board is a 'State' within the
meaning of Article 12 of the Constitution of India. It is a statutory
authority. If the Board has the power to frame or revise the tariff
as contained in Section 49 and other provisions of the 1948
F Act which is plenary in nature, unless a statutory provision is
brought into force interdicting exercise of such power, it cannot
be held to become denuded thereof.
26. The power to make tariff would bring within its folds
G the power to revise the same. Exercise of such powers from .... -~
time to time would depend upon the exigencies thereof.

27. The powers/guidelines under the provisions of 1998
Act were to be exercised by the Central Commission or the
State Commissior1. It must come into existence for the said
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 649
,
BOARD AND OTHERS [S.B. SINHA, J.]

purpose .. A non obstante clause contained in Section 29 or A
Section 52 of the 1998 Act would be attracted only when the
Commission comes into force and not prior thereto. The
provisions of the said Act are to be exercised by the Commission
for the purposes of the Act. It must, therefore, come into existence
before it can exercise its power. B
28. It is, therefore, difficult for us to persuade ourselves
that that the factors enumerated in clauses (c) to (g) contained
... in sub-section (2) of Section 29 of 1998 Act providing for the
principles required to be followed by the Commission were
3l
<
binding on the State Electricity Boards also. c
The State Electricity Boards are entitled to frame tariff in
terms of the provisions contained in the 1948 Act. The tariff so
framed is legislative in character. The Board as a statutory
authority is bound to exercise its jurisdiction within the four-
..... ·f D
corners of the statute. It must act in all fields including the field of
framing tariff by adopting the provisions laid down in 1948 Act
or the Rules and the Regulations framed thereunder. It is one
thing to say that while framing tariff it can only take into
consideration the provisions laid down in the Schedule
..... E
appended the Act and/or the directions contained in the policy
decisions issued by the State as also other statutory principles
governing the same but then a tariff framed by it cannot be held
. ....(

-<
to be ultra vires only because it did not take into consideration
certain principles laid down in clauses (c) to (g) of sub-section
(2) of Section 29 of the 1998 Act. It is of some significance to F
note that the Commission in terms of clauses (a) and (b} of sub-
section (2) of Section 29 of the 1998 Act are required to follow
the principles provided for under Sections 46, 56 and 57 of the
1948 Act as also the Sixth Schedule appended thereto. The
• -I 1998 Act, therefore, recognises the principles contained in the G
1948 Act also.
29. The provisions of Section 52 of 1998 Act, therefore,
are required to be read in the light of the other provisions
contained therein. It is also a well settled principle of law that a
H
650 SUPREME COURT REPORTS [2009] 4 S.C.R.

A statute does not envisage doing anything which is impossible
to be done. Lex non cogit ad impossibilia Gausa ommiss
Gausa ommiss is a well known principle.
It would be absurd to suggest that the principles required
to be adopted by the Commission were per force required to
B be adopted by the Electricity Boards despite the fact that the
Commission did not come into existence.

30. The Commission has been empowered to frame tariff.
+
It is, however, not been empowered to frame tariff with
c retrospective effect so as to cover a period before its
constitution. The matter might have been different if such a power
has been conferred on the Commission. It is now a well settled
principle of law that the rule of law inter alia postulates that all
laws would be prospective subject of course to enactment an
D express provision or intendment to the contrary.
31. On the aforementioned factual backdrop we may notice
;. -·
that in the case of BSES (supra) the Electricity Commission
1
was constituted on 5 h August, 1999. A dispute arose in regard
to payment of standby charges by and between the licensee
E (Tata Power) and the appellant therein (BSES) for the period
~ st •
1 December, 1998 to 31 March, 1999. We may notice the
fact of the said case :-
" .... On account of the notice given by TPC for increasing
the charges of standby supply of 275 MVA, a dispute
F arose and a meeting was convened on 4-3-1999, wherein
the Deputy Chief Minister, Government of Maharashtra
and representatives of both the sides were present. The
Deputy Chief Minister, though advised both the parties to
settle the issue amicably between themselves without
G referring to the Government, at the same time issued
certain directions, namely, that BSES should share Rs 9
crores out of Rs 22 crores additional standby charges
levied by MSEB upon TPC for the period 1-12-1998 to
31-3-1999 and the issue regarding sharing of standby
H
BINANI ZINC LIMITED V. KERALA STATE ELECTRICITY 651
-i BOARD AND OTHERS [S.B. SINHA, J.]

" ----( charges for the period 1-4-1999 onwards be referred to A
a Committee to be constituted by the State Government.
The Government of Maharashtra thereafter constituted a
Committee on 27-5-1999 to study certain issues including
that of standby charges to be paid by BSES to TPC and
to submit a report. Shortly thereafter, a notification was B
issued on 5-8-1999 constituting the Maharashtra Electricity
Regulatory Commission (for short "the Commission"). The
+ Committee constituted by the Government of Maharashtra
on 27-5-1999 in its meeting held on 2-5-2000 resolved
' that in view of the constitution of the Commission, the
question of payment of standby charges could only be
c
determined by the Commission and accordingly resolved
that the said issue be referred to the Commission for
determination. An intimation in this regard was also sent
... + to the respective parties. However, the Government of
Maharashtra passed an order on 22-3-2000 whereby
D
BSES was directed to pay standby charges to TPC at the ·
rate of 50 per cent of the amount of standby charges
payable by TPC to MSES. This was done on the basis
that MSES was providing standby facility of 550 MVA to
TPC and as TPC was providing standby facility of 275 E
MVA to BSES, it should pay half of the said amount. The
-4 order further provided that for the period 1-12-1998 to 31-
3-1999 BSES should pay Rs 9 crores as standby charges
to TPC. BSES was not satisfied with the aforesaid order
of the Government and made repeated requests for review F
of the same and lastly on 6-10-2000, it sent a detailed
letter to the Government requesting for reconsideration of
the matter."
In the aforementioned fact situation obtaining the Division
# --{
G
Bench held as under:-
"19. Shri Nariman has submitted that TPC gave a notice
on 30-9-1998 of their intention to enhance the charges of
standby facility provided to BSES from Rs 3.5 crores to
Rs 15.125 crores per month and this notice having been H
652 SUPREME COURT REPORTS [2009] 4 S.C.R

A given under the Sixth Schedule (para I, third proviso) of .,.__ ~

the Electricity (Supply) Act, 1948, the enhanced charges
became effective and operative after the expiry of 60 days
of notice i.e. with effect from 1-2-1998. The submission is
that by operation of law the charges for standby facility
B stood revised and enhanced with effect from 1-12-1998.
In our opinion, the contention raised has no substance.
The legal position has undergone a complete change with
the enforcement of the Electricity Regulatory Commissions +
Act, 1998. In view of Section 29 of the Act, the tariff for
c intra-State transmission of electricity and tariff for supply
of electricity in wholesale, bulk or retail has to be
determined by the Electricity Regulatory Commission of
the State and a licensee cannot by its unilateral action
enhance the charges. The provisions of the Act have an
D overriding effect by virtue of Section 52 of the Act and,
therefore, any provisions of the Electricity (Supply) Act,
. -;

1948, which are inconsistent with the Act would cease to
apply and consequently, the provisions of the Sixth
Schedule of the said Act can have no application now.
E The Sixth Schedule has been made by virtue of Sections
57 and 57-A of the Electricity (Supply) Act, 1948 and
Section 57-A contemplates constitution of a Rating
Committee by the State Government to examine the
licensee's charges for the supply of electricity. Section
F 29(6) of the Act specifically lays down that notwithstanding
anything contained in Sections 57-A and 57-B of the
Electricity (Supply) Act, 1948, no Rating Committee shall
be constituted after the date of the commencement of the
Act. The effect of Section 29 and the Regulations framed
G thereunder is that it is no longer open to a licensee or .-~

utility to unilaterally increase the tariff. The tariff can be
enhanced only after approval of the Commission and
charging of an enhanced tariff which has not been approved
by the Commission will amount to commission of an
offence. Therefore the notice to enhance the charges given
H
...._
~
BINANI ZINC LIMITED V KERALA STATE ELECTRICITY 653
BOARD AND OTHERS [S.B. SINHA, J.]
. -../ by TPC, which was subsequent to the enforcement of the A
Act, can have no legal effect."
32. BSES (supra) must be held to have been determined
on its own facts. Sub-section (6) of Section 29 of the 1998 Act
bars constitution of a rating committee. In 'BSES' a Committee
was constituted by the State of Maharashtra. In that case when B
the Regulatory Commissions had been set up by the State
government under the ERC Act, no other authority including the
-t
Board, would obviously have the power to determine the tariff. It
~ is presumably on that premise the that the provisions of the 1998
Act must be given effect to even for the period during which it c
had not come into force, must be understood.
33. We must also notice that the Electricity (Supply) Act,
1998 was not repealed by the ERC Act, 1998. It was only under
•-, + Section 185 of the Electricity Act of 2003 that the provisions of
D
the Indian Electricity Act 1010, Electricity (Supply Act 1948 and
the ERC Act 1998 were repealed. But at the same time anything
done or any action taken under the Acts of 1910 or 1948 or
1998 Act have been saved in so far as they are not inconsistent
with provisions of the 2003 Act.
E
34. We have, however, no hesitation in finding that the State
Electricity Board had the requisite jurisdiction to revise a tariff ·
till such time as the Commission was constituted and the
purposes of the 1998 Act could be achieved through it. Till the
time the Regulatory Commission was not constituted by the state F
of Kerela, the power to determine tariff remained with the Board
under the Electricity (Supply ) Act 1948 as it was not repealed
by the Electricity Regulatory Commission Act 1998. The
Parliament could not have intended to bring about a situation
........ where no authority would be empowered to determine the tariff
G
between the date of coming into force of the ERC Act, 1998
and the constitution of the commission. It is only after the
Regulatory commission is constituted that it will be the sole
authority to determine the tariff.
35. We are, therefore, of the considered opinion that this H
654 SUPREME COURT REPORTS [2009] 4 S.C.R.

A clarification in regard to the decision rendered by a two Judge ...- •
Bench of this Court in BSES (supra) would be sufficient to
answer the reference.
36. Mr. Venugopal would, however, submit that other
contentions/substantial questions of law have been raised in
B the appeal. Such questions may be determined by an
appropriate 2 Judge Bench.

37. This reference is answered accordingly. +
38. The matter may now be placed before an appropriate ,..
C Bench.

R.P. Reference answered.

+ ,..,