M J Antony: Power to consumers

OUT OF COURT

A recent Supreme Court judgement cautions state electricity boards not to overlook consumer rights

Consumers of electricity have become assertive in the consumer forums, courts and even in the streets, as seen in the capital nowadays. While the Consumer Protection Act granted them general rights regarding deficiency in service, the Electricity Regulatory Commission Act bestowed on them explicit role in fixing tariffs.

Even the two old legislations, the Indian Electricity Act and the Electricity (Supply) Act had given them substantial rights, though they had to fight in civil courts in the past against state monopolies, mostly in vain.

But the Supreme Court judgement delivered earlier this month in Punjab State Electricity Board vs Zora Singh sends out a strong signal of caution to the state boards not to ignore the rights of the consumers.

"Electrical undertakings acquire the character of public utilities by reason of their virtually monopolistic position and their profession to serve the public," the judgement said.

"The state, in exercise of its legislative power, has a right to compel the licencees to render service efficiently, promptly and impartially to the members of the public ... They are under an automatic obligation by reason of the fact that the property of a public utility is dedicated to public service and impressed with public interest to serve the public and any such statutory obligation is in effect and substance a declaration of the common law."

The case arose when a large number of people applied for electricity connection from the state electricity board. Some of them had applied for the facility in 1986 and the demand for security amounts was made and met in 1999.

They had spent huge sums on infrastructure. Several years passed by and there was no electricity connection. So they moved the consumer forum. It directed the board to give the necessary connections.

On the board's appeal, the National Consumer Commission imposed a penal interest of 12 per cent on the amounts deposited by the consumers. The board appealed to the Supreme Court, from where it got a long declaration, all in favour of electricity consumers.

One of the excuses put forward by the board was that the state government had directed free supply of power to agriculturists, resulting in drainage of huge funds. So it was not in a position to buy materials required for the supply of electricity.

The Supreme Court stated that if the board was cash-starved owing to a faulty decision of the state government, "it was an internal matter between the state and the board; the prospective consumers cannot suffer for that."

The court pointed out that the right of a prospective consumer was "meticulously and minutely regulated" under the Electricity (Supply) Act and the Indian Electricity Act and the rules passed under it.

"Upon the dedication of the public to public use and in return for the grant to it of a public franchise, the public utility is under a legal obligation to render adequate and reasonably efficient service, without unjust discrimination and at reasonable rates."

Regarding fixation of tariffs, the Supreme Court has already passed a judgement two year ago in West Bengal Electricity Regulatory Commission vs CESC Ltd. Though the Calcutta High Court had denied consumers a hearing determining the tariff, the Supreme Court has come to their full support.

While setting the rates, the commission had issued newspaper advertisements and invited citizens to appear and file objections in case they were interested in the proceedings. In response, several consumer organisations submitted their viewpoints.

However, the high court felt that allowing such a large number of consumers representation would render the proceedings absurd. Income tax rates are not fixed by consulting the tax payers, it stated.

The Supreme Court overruled the high court, pointing out that Section 26 of the new Act made it obligatory on the commission to hear the consumers while fixing the tariff.

The procedure must be transparent and open to the public. The fears of the high court that the proceedings of the commission would be unmanageable were "imaginary", the Supreme Court said.

These judgements of the Supreme Court should waken up the electricity suppliers from their traditional lethargy. The decisions of the consumer forums regarding "deficiency in service" are innumerable and deal with the problems of the individual consumers.

The Monopolies and Restrictive Trade Practices Commission also have dealt with unfair trade practices and deficiency in services in a number of cases.

All these point to the need for drastic reforms not only in the application of electricity laws but also change in the attitude of the authorities, whether they act as the arms of the state or private agencies who have now entered the high voltage field.