Sets aside State Energy Department order cancelling temporary waiver of cross-subsidy surcharges

In an order that will bring relief to HT consumers, the Madras High Court has set aside a State Energy Department order of July this year cancelling the temporary waiver of cross-subsidy surcharges given on February 27, 2009.

Allowing a batch of 120 writ petitions challenging the G.O. of July 11, Justice V. Dhanapalan remanded the matter to the authorities for fresh consideration to obtain the views of the petitioners and all other stakeholders, and take a decision in accordance with law.

“Looked at from any angle, the manner of sudden change of cancellation of earlier order and passing the impugned G.O. by way of a modification will definitely give to this court a clear impression that the authorities have not acted with fair play and reasonableness and that they acted in a sudden moment, which will be construed as an arbitrary exercise of power,” the Judge observed.

Seeking to quash the July G.O., Kamakshi Lamipack Private Ltd., Ambattur Industrial Estate here, and others prayed the court to restrain the authorities from levying cross-subsidy charges on them while procuring energy from third party sources so long as the Restriction and Control (R and C) measures were in force.

The petitioners’ counsel contended that cancelling the waiver of cross-subsidy surcharge was based on an application by Tangedco and, therefore, was only an administrative order. Prior to passing the order, no opportunity was afforded to the petitioners. It was a violation of principles of natural justice.

The State submitted that the government, as the owner of Tangedco, had the power to decide the temporary waiver of surcharge and also withdraw it. Due to surcharge waiver, the board incurred a loss of Rs. 200 crore to Rs. 250 crore per year. Therefore, the government partially modified the earlier order and issued the new one.

Mr. Justice Dhanapalan said though it was pleaded that the cancellation of waiver was policy decision, on a material consideration, it could be seen that the G.O.s had been passed at Tangedco’s request based on certain factors weighing with the company.

All G. O. s could not be termed policy decisions. Though the government was empowered to take the impugned decision by virtue of executive powers, it ought to have been done in the manner contemplated.

The department’s only point for cancellation of waiver was that there was revenue loss. Had that been the position, the department should have looked into the present scenario in respect of the power crisis and the other factors, including the hardship of petitioner companies. It would have been proper for the authorities had they taken the decision after giving reasonable opportunity to the aggrieved parties. That was not done.

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