The Rajasthan High Court in the case Bhansali Dyeing v. State of Rajasthan and Ors and connected matters observed and has held that Distribution Companies, DISCOMS as the bodies of the State government, have the duty to protect the interests of consumers.
The bench headed by Justice Pushpendra Singh Bhati in the case observed and has held that the imposition of the Special Fuel Surcharge beyond the original principal amount is deemed unjustified in the eyes of the law.
The court in the case observed that the respondent-DISCOMS are the bodies of the State Government and fall under the definition of ‘State’ as it is contained under Article 12 of the Constitution of India, and therefore, it being the duty of the State to protect the interests of the consumers; but despite the same, the respondents levied the additional cost in the name of Special Fuel Surcharge.
Therefore, the court stated that the Special Fuel Surcharge would have been justified had it been only on the aforementioned original principal amount i.e. Rs.3,048.63/- Crores, but the Special Fuel Surcharge as imposed herein is not justified in law.
In the present case, the said court was dealing with the set of cases wherein it challenged the imposition of a Special Fuel Surcharge by distribution licensees, DISCOMS in response to an increased cost of electricity generation.
The judgment also referred to a contempt plea moved before the Supreme Court, where the respondents were directed to pay the petitioner a specified amount. An amount was paid towards the principal amount, interest, and carrying costs.
The Supreme Court in the case observed and has lamented the practice of DISCOMS and power-generating companies pursuing endless litigation challenging the concurrent findings arrived at by the Central Electricity Regulatory Commission, CERC and the Appellate Tribunal for Electricity, APTEL.
The Apex Court in the case observed and has concluded that all the additional charges which are being payable on account of orders, directions, notifications, Regulations, etc., issued by State instrumentalities after the cut-off date specified in the PPAs, will have to be considered to be ‘Change in Law’ events for payment of compensation under the PPAs.
It has also been highlighted by the High Court in the case that there is no dispute about the DISCOMS’ liability, which was settled by the Supreme Court.
The court in the case noted that the Special Fuel Surcharge was imposed to meet the original liability arising from an uncontrollable factor, i.e., the change in law. Thus, the court questions the justification of imposing the surcharge on consumers for interest/carrying costs, which it views as a controllable factor due to the delay in discharging the liability.
The court in the case observed and has quashed the impugned order, along with proceedings related to interest or carrying costs, allowing the recovery of the Special Fuel Surcharge only to the extent of the original principal amount.
Further, the said court acknowledged the transparency maintained by the State Commission, RERC but questioned the fairness of recovering additional costs from consumers.
Accordingly, the court concluded by allowing the DISCOMS to recover the original principal amounts under the Special Fuel Surcharge, adhering strictly to the judgment and all the pending applications were disposed of by the court.