Dismissed

Federation of Karnataka Chambers of Commerce and Industry v. the Government of Karnataka

Karnataka HC25 Mar 2024WP/4010/2023

Case brief

AI extract

What is this about?

A chamber of commerce challenged amendment rules permitting recovery of the government's pension contribution through electricity tariffs for transferred KEB/KPTCL employees. The court upheld the amendment as consistent with the tripartite agreement and parent statute, held the regulator's contrary order non-binding, and dismissed the petition.

What did the court decide?

None granted; petition seeking quashing of Gazette Notification No.ENERGY/168/PSR/2022 dated 31.12.2022 was dismissed.

Federation of Karnataka Chambers of… — Pension and Retirement Benefits | Karnataka HC (2024)

¶1

¶2

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶3

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶4

DATED THIS THE 25^TH DAY OF MARCH, 2024

¶5

BEFORE

¶6

THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR WRIT PETITION NO. 4010 OF 2023 (GM-KEB)

¶7

BETWEEN:

¶8

FEDERATION OF KARNATAKA

¶9

CHAMBERS OF COMMERCE AND INDUSTRY A COMPANY REGISTERED UNDER SECTION 8 OF THE COMPANIES

¶10

ACT, 2013 & HAVING ITS REGISTERED ADDRESS AT FEDERATION HOUSE K G ROAD, BENGALURU-560 009 REPRESENTED BY MR LOKARAJ M., SECRETARY

¶11

…PETITIONER

¶12

(BY SRI. ASHOK HARANAHALLI, SENIOR COUNSEL FOR SRI. RAGHAVENDRA PRASAD M S, ADVOCATE)

¶13

AND:

¶14

THE GOVERNMENT OF KARNATAKA ENERGY DEPARTMENT VIKASA SOUDHA, BENGALURU-560 001 REPRESENTED BY ITS UNDER SECRETARY.

¶15

Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA

¶16

KARNATAKA POWER TRANSMISSION CORPORATION LTD. KAVERI BHAVAN, KEMPEGOWDA ROAD GANDHINAGAR, BENGALURU-560 009. (REPRESENTED BY ITS MANAGING DIRECTOR)

¶17

KPTCL EMPLOYEES UNION(659) REPRESENTED BY ITS GENERAL SECRETARY SRI K. BALARAM S/O LATE KRISHNAPPA AGED ABOUT 54 YEARS,

¶18

OFFICE OF THE GENERAL SECRETARY,

¶19

'A' STATION COMPLEX, SUBEDAR CHARAM ROAD NEAR ANAND RAO CIRCLE BENGALURU - 560 009.

¶20

KPTCL ACCOUNTS OFFICERS ASSOCIATION REPRESENTED BY ITS GENERAL SECRETARY MR. PRAKASH T R, AGED ABOUT 52 YEARS S/O RAMAPPA T, NO. 28, RACE COURSE CROSS ROAD ANANDA RAO CIRCLE, BENGALURU- 560 009.

¶21

2 - NC: 2024:KHC:12249 WP No. 4010 of 2023

¶22

KEP ENGINEERS ASSOCIATION REPRESENTED BY ITS GENERAL SECRETARY MR. T N SUDHAKARA REDDY AGED ABOUT 46 YEARS S/O CHIKKA NARAYANA REDDY T R OFFICE AT RACE COURSE CROSS ROAD ANANDA RAO CIRCLE BENGALURU - 560 009.

¶23

( R2 TO R5 IMPLEADED VIDE C/O DATED 27.02.2024)

¶24

…RESPONDENTS

¶25

(BY SRI. K SHASHI KIRAN SHETTY, ADVOCATE GENERAL A/W SRI. S R KHAMROZ KHAN, AGA FOR R1; SRI. SHAHBAAZ HUSAIN, ADVOCATE FOR R2; SRI. M R RAJAGOPAL, SENIOR COUNSEL FOR SRI. K S KALLESHAPPA, ADVOCATE FOR R3 TO R5)

¶26

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE GAZETTE NOTIFICATION BEARING NO.ENERGY/168/PSR/2022 DATED 31.12.2022 ISSUED BY THE RESPONDENT PRODUCED AT ANNEXURE-F AS NULL, VOID AND UNSUSTAINABLE IN LAW AND ETC.

¶27

THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

¶28

ORDER

¶29

The petitioner is before this Court seeking an issue of writ in the nature of certiorari to quash Karnataka Electricity Reform (Transfer of undertaking of Karnataka Power Transmission Corporation Limited and its personnel to Electricity Distribution and Retail Supply Companies) Rules, 2002 (Amendment) Rules, 2022 , published vide Gazette Notification bearing No 168/PSR/2022 dated 31.12.2022.

¶30

The petitioner (Federation of Karnataka Chambers of Commerce and Industry) is a company registered under the

¶31

3 - NC: 2024:KHC:12249 WP No. 4010 of 2023

¶32

Companies Act, 2013, and is an apex organization for industry, trade and service sectors in Karnataka. Since its inception, the petitioner has sought to promote national interest by way of both public and private sectors leading to economic growth, and has played a catalytic role in policy making at the State and Central levels.

¶33

The Energy Department, Government of Karnataka is arrayed herein as Respondent No 1; Karnataka Power Transmission Corporation (KPTCL) as Respondent No 2; KPTCL Employees Union as Respondent No 3; KPTCL Accounts Officers Association as Respondent No 4; and Karnataka Electricity Board Engineers’ Association as Respondent No 5.

¶34

The respondent Nos 3, 4 and 5 are erstwhile employees of the Karnataka Electricity Board (KEB) who were transferred to KPTCL and ESCOMs upon the enactment of the Karnataka Electricity Reforms Act 1999. The second Proviso to Section 15 of the Reforms Act 1999 provides for any transfer scheme to be consistent with the tripartite agreements entered into between the State Government, Board or KPTC, as the case may be, and the employees. Accordingly, a tripartite agreement was entered into between the Government of Karnataka, KEB, and KEB Employees Union on 31.07.1999.

¶35

The transfer of the respondent-employees was executed in accordance with the Karnataka Electricity Reform Rules, 2002. These rules regulate the transfer of personnel from

¶36

¶37

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶38

the Karnataka Power Transmission Corporation Limited (KPTCL) to Electricity Distribution and Retail Supply Companies (ESCOMs). Specifically, Rule 4 of these rules, in conjunction with Clause (k) of the Tripartite Agreement, provides employees with the choice to either remain with KPTCL or transfer to an ESCOM.

¶39

The petitioner is challenging the Amendment Rules 2022, which modified Rule 4, sub-rule (13), clause (1) of the 2002 Rules by adding a new proviso.

¶40

“Amendment of rule 4: After the rule 4, sub-section (13), Clause (1), the following proviso shall be inserted, namely

¶41

" Provided that the Government whenever deems it fit, may by an order direct KPTCL to claim the Government portion of Pension Contribution through tariff by filing an application before the State Regulatory Commission"

¶42

( Impugned amendment )

¶43

The petitioners argue that, according to the original 2002 Rules, the State Government was responsible for funding the pension funds for employees of the Karnataka Electricity Board (KEB) and the Karnataka Power Transmission Corporation Limited (KPTCL) before their transfer to Electricity Distribution and Retail Supply Companies (ESCOMs). They claim that until the State Government makes the necessary financial arrangements, KPTCL should continue to cover the retirement benefits for these employees.

¶44

¶45

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶46

However, the recent Amendment Rules 2022 shift this financial responsibility from the State Government to the consumers by increasing electricity tariffs. The Petitioners argue that this shift violates the original 2002 Rules and the tripartite agreement, which were designed to protect the employees' benefits. They also argue that this change contradicts Section 62 of the Electricity Act 2002. According to Section 62, any levy or tax must be imposed by a proper statute (a law passed by the legislature) and not through subordinate legislation (rules or regulations made under the authority of a statute).

¶47

The respondents counter that Rule 4(13)(1) of the 2002 Rules only requires the State Government to "make arrangements" for these retirement benefits, not necessarily to pay them directly. They argue that the amendment aligns with this requirement by arranging for the funds through tariffs, which is consistent with Sections 61 and 62 of the Electricity Act 2003, allowing employee-related costs to be included in tariffs. Additionally, they assert that if the amendment conflicts with the original Rule 4, the amendment should prevail as it represents the legislature's later intention, following the principle established in the S. Sundaram Pillai case.

¶48

Sri Ashok Haranahalli, learned senior counsel representing the petitioner's counsel would argue as follows:

¶49

a. The insertion of the proviso to Rule 4 subrule (13) is contrary to Sections 14 and 15, and sub-rule

¶50

¶51

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶52

(13) explains that the liability to pay the pension and gratuity is fastened solely on the Government, and, therefore, by amending sub-rule (13) to include a proviso, a liability cannot be fastened by collecting tariffs.

¶53

b. The scheme cannot be altered beyond a period of 12 months as stated in Section 16 of the Reforms Act as well as sub-rules (4) & (5) of Rule 7 of the transfer scheme rules. Therefore, the amendment by inserting the proviso to sub-rule (13) of Rule 4 is one without authority of law.

¶54

c. The amendment to this Rule was made without considering the objections submitted by the petitioner and, therefore, on this ground alone, the amendment to sub-rules (13) and (14) of Rules requires to be quashed.

¶55

In support, he places reliance on the following

¶56

decisions:

¶57

Dwarka Prasad v. Dwarka Das Saraf , (1976) 1 SCC 128.

¶58

Sirpur Paper Mills Ltd. v. CWT, (1970) 1 SCC 795.

¶59

Union of India v. Purushottam, (2015) 3 SCC 779.

¶60

A. N. Parasuraman v. State of T.N., (1989) 4 SCC 683.

¶61

¶62

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶63

Durgabai Deshmukh Memorial Sr. Sec. School v. J.A.J. Vasu Sena, (2019) 17 SCC 157 .

¶64

Sri. Shashikiran Shetty, learned Advocate General representing the respondent-State would argue that the amendment to Rule 4 is in conformity with Sections 14 and 15 of the Act, 1999 since the second proviso to Section 15 (2) states that any such scheme under Sub-Section (1) and (2) shall be consistent with the tripartite agreement entered into between the State Government, Board or KPTC as the case may be and the employees, and clause (d) in the tripartite agreement, the Government and the Board, KPTC shall guarantee the payment of pension including the dearness relief and other terminal benefits for the pensioners/family pensioners. Therefore, the amendment by inserting proviso cannot be said to be contradictory to Rule 4.

¶65

The Tariff Notification was published on 15.11.2022 providing for filing of objections within 15 days and the objections submitted by the petitioner on 20.11.2022 was considered before a reply was sent through e-mail on 20.12.2022 rejecting said objections and, thereafter, published the final notification on 31.12.2022. Therefore, the contention of the petitioner that the rule was amended without considering the objections submitted by the petitioner is without any substance.

¶66

In support of his arguments, reliance is placed on decisions of the Hon'ble Supreme Court in the cases of:

¶67

¶68

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶69

State of Karnataka v. Karnataka Electricity Board Engineers Association, Bangalore & Ors., 2010 SCC OnLine KAR 5211.

¶70

Prabha Tyagi v. Kamlesh Devi, (2022) 5 SCR 970.

¶71

Nagar Palika Nigam v. Krishi Upaj Mandi Samiti And Ors., (2008) 14 S.C.R. 419.

¶72

Delhi Metro Rail Corporation Ltd. v. Tarun Pal Singh & Ors., (2017) 14 S.C.R 202 .

¶73

Ishverlal Thakorelal Almaula (Deceased) v. Motibhai Nagjibhai, AIR 1966 SC 459 .

¶74

S. Sundaram Pillai, etc. v. V.R. Pattabiraman Etc., (1985) 1 SCC 591 .

¶75

Heard the learned counsel for the parties.

¶76

The points that arise for consideration are as follows:

¶77

Whether the Amendment Rules, 2022 to the Karnataka Electricity Reform (Transfer of undertaking of Karnataka Power Transmission Corporation Limited and its personnel to Electricity Distribution and Retail Supply Companies) Rules, 2002 are unsustainable and non-est in law in light of the Electricity Act, 2003 repealing the provisions of the Reforms Act, 1999 insofar as inconsistent with the provisions of the repealing enactment of 2003?

¶78

Whether the amendment by inserting of the proviso to clause (1) sub-rule 13 of Rule 4 of the Karnataka Electricity Reform (Transfer of undertaking of Karnataka Power Transmission Corporation Limited and its personnel to Electricity Distribution and Retail Supply Companies) Rules, 2002, is contradictory to sub-rule (13) of Rule 4 of the said Rules?

¶79

9 - NC: 2024:KHC:12249 WP No. 4010 of 2023

¶80

Whether the order of the Karnataka Electricity Regulatory Commission dated 28.02.2024 stating that the Government’s responsibility cannot be shifted to the KPTCL by issue of a proviso to the absolute Rule is binding on the government?

¶81

Whether the transfer scheme cannot be altered beyond a period of 12 months as stated in Section 16 of the Reforms Act, 1999 as well as subrules (4) & (5) of Rule 7 of the Karnataka Electricity Reform (Transfer of undertaking of Karnataka Power Transmission Corporation Limited and its personnel to Electricity Distribution and Retail Supply Companies) Rules, 2002?

¶82

Point No. 1 :

¶83

Before addressing the above questions, it is pertinent to cite the governing provisions of the case at hand.

¶84

The Karnataka Electricity Reforms Act of 1999 was enacted to restructure the electricity industry in Karnataka, create an electricity regulatory commission, and promote private entrepreneurship while protecting consumer interests. Part IV of the Act deals with reorganizing the Karnataka Electricity Board (KEB), transferring its functions, properties, and liabilities to the newly formed Karnataka Power Transmission Corporation Limited (KPTCL).

¶85

Section 14 specifies the process for transferring KEB's assets and liabilities to the State Government and then to KPTCL or other generating companies. Section 15 addresses the transfer of personnel from KEB to KPTCL or other entities, ensuring their

¶86

10 -

¶87

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶88

service terms are protected and consistent with a tripartite agreement among the Government of Karnataka, KEB, and the KEB Employees Union.

¶89

The main issue is whether the Amendment Rules of 2022, made under Section 57 of the Reforms Act, 1999 are valid given that the Electricity Act of 2003 repealed parts of the Reforms Act, 1999 that are inconsistent with the new law. The petitioner argues that the Amendment Rules, 2022 are invalid, as Section 57 of the Reforms Act, 1999 is no longer applicable, yet seeks enforcement of the original Rules of 2002 promulgated under the same section. However, Section 185 of the Electricity Act, 2003, preserves provisions consistent with that of the Reforms Act. Therefore, the petitioner cannot simultaneously argue against the Amendment Rules of 2022, while supporting the original Rules of 2002.

¶90

Point No. 2:

¶91

It is a settled legal principle that a proviso must be read in context with the main clause it modifies. The Supreme Court, in Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC 128 , emphasized that a proviso should be interpreted in harmony with the main clause, reflecting the legislative intent of the parent statute. The Court, referencing Maxwell's Interpretation of Statutes, noted that the enacting clause, saving clause, and proviso should complement each other.

¶92

11 -

¶93

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶94

In the case of Durgababai Deshmukh Memorial Sr School v. J.A.J. Vasu Sena (2019) 17 SCC 157 , the Supreme Court reinforced this principle, stating that a proviso is not an independent enactment. The Court, referring to the ratio laid down in Tahsildar v. State of UP AIR 1959 SC 1012, stressed the need to reconcile the main clause and the proviso to avoid contradictions.

¶95

In CIT v. Indo Mercantile Bank Ltd AIR 1959 SC 713, the Supreme Court held that a clear main enactment should not be interpreted through its proviso unless the proviso's language necessitates it. Similarly, in Maharashtra State Financial Corpn v. Jaycee Drugs and Pharmaceuticals (P) Ltd (1991) 2 SCC 637 , the Court stated that statutory provisions should support the purpose of the enactment and not render any part meaningless.

¶96

Finally, in the case of the State of HP v. Pawan Kumar (2005) 4 SCC 350 , the Apex Court highlighted that statutes should be interpreted based on their plain, literal meaning, unless doing so would result in absurdity or inconsistency with the statute's purpose. The burden of proving that words should not be taken literally lies with the party challenging this interpretation.

¶97

The Second proviso to Section 15 of the Reforms Act makes it abundantly clear referred to sub-Sections (1) and (2) of Section 15 of the said Act shall be consistent with the tripartite agreement entered into between the State Government, the Karnataka Electricity Board / or KPTCL as the case may be, and

¶98

12 -

¶99

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶100

the employees.Therefore, any rule framed under Section 57 of the Reforms Act, 1999 shall be interpreted harmoniously with the provisions of the parent Reforms Act, 1999 and the tripartite agreement.

¶101

We now advert to the wordings of the principal Rule 4(13)(1) of the Rules, 2002 which reads thus -

¶102

"The State Government and not the ESCOM’s, shall be liable for and shall make appropriate arrangements in regard to, the funding of the pension funds and of all statutory and other personnel related fund for the services rendered by the specified personnel to Karnataka Electricity Board and KPTCL prior to the effective date of second transfer of the specified personnel and to the extent they are unfunded as at the respective effective date of second transfer of the specified personnel. Until such arrangements are made by the State Government, the discharge of all such unfunded liability for the specified personnel who retire after the effective date of the second transfer of such specified personnel shall be arranged by KPTCL."

¶103

The Amendment Rules, 2022 have introduced a proviso to the above, which reads thus -

¶104

“ Provided that the Government whenever deems it fit, may by an order direct KPTCL to claim the Government portion of Pension Contribution through tariff by filing an application before the State Regulatory Commission"

¶105

The effective date of the second transfer as defined in

¶106

Rule 2 (l) of the Rules, 2002 reads thus -

¶107

" effective date of the second transfer means the date as may be notified by order by the state government for effecting transfer of assets, liabilities, posts,

¶108

13 -

¶109

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶110

personnel, proceedings or undertakings from KPTCL to BESCOM, MESCOM, GESCOM or HESCOM, as the case may be in accordance with these rules, and different Effective dates of the second transfer may be notified for different transfers."

¶111

The restructuring of the Karnataka Electricity Board into the Karnataka Power Transmission Corporation Limited (KPTCL) and four electricity supply companies (BESCOM, MESCOM, HESCOM, GESCOM) aimed to separate power transmission and distribution. This required transferring assets, liabilities, and personnel to these new entities, as specified in the Reforms Act, 1999, particularly Part IV and Sections 14 and 15. The Act clearly defines the responsibilities for pension funds and other retirement benefits for employees before and after the transfer.

¶112

Rule 4(13)(1) of the Rules, 2002 obligates the State Government to cover pensions and retirement benefits for services rendered before the transfer. However, rising costs have made it challenging for the government to fund these benefits. The Reforms Act of 1999, the Tripartite Agreement, and the Rules of 2002 clearly outline the financial responsibilities of the state government, KPTCL, and ESCOMs. KPTCL and the ESCOMs are independent entities with their own revenue sources, focused on providing reliable and affordable power. Additionally, the Karnataka Electricity Regulatory Commission (KERC), established under the Reforms Act, set tariff determination regulations in 2006, under Section 61 of the Electricity Act, 2003.

¶113

14 -

¶114

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶115

The relevant provisions are extracted hereunder for convenience -

¶116

“2.4.1 - The ERC filing under the MYT framework shall contain the following -

¶117

The Operation and Maintenance (O&M) costs which include employee-related costs, repairs & maintenance costs and administrative & general costs, estimated for the Base Year and the actuals for the previous two years prior to the Base Year in complete detail, together with the forecast for each year of the Control Period based on the norms proposed by the Transmission Licensee including indexation and other appropriate mechanisms;”

¶118

The regulations require that the employee costs of the licensee, including the pension fund, be included in the tariff filing under Form T6/D6. This aligns with the Electricity Act, 2003, which mandates that competitive pricing of electricity supply includes employee costs under operations and maintenance.

¶119

A Division Bench of the Karnataka High Court in State of Karnataka v. Karnataka Electricity Board Engineers Assn. 2010 SCC OnLine KAR 5211 , confirmed that employees in ESCOMs should have service conditions equivalent to those in KPTCL for promotion and pay. The Court ruled that excluding ESCOM employees from statewide seniority was against the tripartite agreement, which protected their service conditions after transferring from KEB to KPTCL or ESCOMs. The Div Bench further observed that,

¶120

15 - NC: 2024:KHC:12249 WP No. 4010 of 2023

¶121

“It is well-settled that the rules framed under the Act cannot be contrary to the provisions of the Act and the Rules had to be framed in conformity with the tripartite agreement. Since Rule 4(5)(a) of the Rules is contrary to Clause 5(j) of the tripartite agreement in view of proviso to Section 15(2) of the Act as referred to above, it is clear that the said rule is contrary to the provisions of the Act.”

¶122

The Reforms Act, 1999 was enacted to address inefficiencies in the power sector, shifting from subsidized models to a tariff based on the average cost of energy supply. This transition aimed to ensure the long-term viability of the electricity industry by aligning it with consumer demand and consumer financing, while also prioritizing reasonable payment for electricity consumption.

¶123

Section 27 (2) (e) of the Reforms Act, 1999 reads as

¶124

follows -

¶125

“the interest of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner based on the average cost of supply of energy;”

¶126

Section 27 (2) (f) of the Reforms Act, 1999 reads as follows -

¶127

“the electricity generation, transmission, distribution and supply are conducted on commercial principles”

¶128

In contrast to the successor entities solely responsible for operating and maintaining their respective organizations, the state treasury faces increasing responsibilities typical of a welfare state. This includes the challenge of paying retirement benefits to

¶129

16 -

¶130

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶131

the employees, further complicating the implementation of the Reforms Act, 1999.

¶132

Rule 8 of the Rules 2002, which addresses how to handle difficulties states as follows :

¶133

“Rule 8 - Removal of Difficulties - (1) The state government shall have the power to remove difficulties arising in implementing the above transfers.

¶134

(2) The State Government may exercise any of the powers vested in it under these rules by issue of an order to be notified in the Official Gazette.”

¶135

The Apex Court in the case of Madeva Upendra Sinai v. UoI (1975) 3 SCC 765 held that the "removal of difficulties" clause in Indian statutes gives the Executive limited power to make minor adjustments to implement the law effectively. This power is meant to avoid unnecessary legislative intervention for minor issues, especially when the legislature aims to advance socioeconomic activities. The Court emphasized that this power can only be used if an actual difficulty arises in implementing the law, and it cannot alter the basic structure of the statute.

¶136

In the case of the State of West Bengal v. Anindya Sundar Das 2022 LiveLaw (SC) 831 , the Apex Court reiterated that the government cannot misuse this clause to bypass statutory restrictions. The power is only for minor adaptations and cannot be used to sidestep the statute's provisions.

¶137

Regarding the second point, the amendment in question was introduced to address practical enforcement

¶138

17 -

¶139

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶140

difficulties, specifically the lack of resources. The amendment allows for funding through tariffs, aligning with the original intent of the Rules, 2002, which aimed to manage personnel transfers due to the restructuring of the Karnataka Electricity Board (KEB). The amendment ensures the government fulfills its pension liabilities through consumer financing.

¶141

Thus, the state government has not abandoned its liability but has found a practical solution to meet its obligations without contravening the law. Any other interpretation would contradict the clear intent of the Reforms Act, 1999 and the Rules, 2002. The amendment by introducing proviso is in conformity with the terms and conditions of the tripartite agreement which fastened the liability on the KPTCL i.e. successor corporate entity to pay the welfare benefit to make payment and other benefits to those who have retired and who are going to retire from the Board after the effective date of the second transfer.

¶142

Point No.3:

¶143

The KPTCL requested the KERC to review their annual performance for FY-2023 and adjust the ARR and transmission tariff for FY-2025. KPTCL sought permission to recover an overall gap of INR 2803.46 crores from ESCOMs starting from April 1, 2023. However, on May 12, 2023, the KERC ruled that according to Rule 4(13)(1) of the 2002 Rules, it is the state government, not the ESCOMs, that is responsible for funding

¶144

18 -

¶145

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶146

pension and gratuity payments. This decision was reiterated vide order dated February 28, 2024.

¶147

The KERC's decision was based on an application from KPTCL, without involving the state government in the proceedings. The KERC lacked the authority to examine the validity of the proviso and ignored the Second Proviso to Section 15 of the Reforms Act, 1999, and the tripartite agreement. A regulatory authority, like the KERC, cannot overrule rules set by the state government. Therefore, the KERC's order is not binding on the state government, and the petitioner's claim that Respondent Nos. 1 and 2 should have appealed to the Appellate Tribunal under Section 111 of the Electricity Act 2003 is unfounded.

¶148

Point No. 4:

¶149

The short point that survives for consideration is the contention of impermissibility to amend the transfer rules post the expiry of twelve months from the effective date of the Rules. Before addressing the same, a reference must be made to Section 16 of the Reforms Act, 1999, extracted hereunder -

¶150

“Section 16 - Variation of transfers - Subject to the proviso of sub-section 2 of Section 15, the State government may provide that the transfers in terms of Sections 14 and 15 shall be provisional for a period of twelve months from the effective date and reserve the right to alter, vary, modify, add, or otherwise change the terms in such manner as the state government may consider appropriate.”

¶151

The argument put forth is that Section 16 of the Reforms Act, 1999 has two connected parts linked by the word

¶152

19 -

¶153

NC: 2024:KHC:12249 WP No. 4010 of 2023

¶154

'and'. The twelve-month time limit applies only to the first part, which affects the transfer itself, not the terms of the transfer.

¶155

In the case of Vidyacharan Shukla v. Khubchand Baghel AIR 1964 SC 1099 , the Apex Court ruled that courts must give meaning to each word in a section. When sentences are connected by a conjunction, one sentence should not limit the other. Thus, the second part of Section 16 stands alone, allowing the state government to change the terms of the transfer under Sections 14 and 15 of the Act of 1999 even after twelve months.

¶156

Therefore, the petitioner’s claim that the amendment contradicts Section 16 of the Reforms Act, 1999 is unfounded and rejected. Accordingly, I pass the following -

¶157

ORDER

¶158

The petition is dismissed.

¶159

Sd/JUDGE

¶160

HR/BKM

Federation of Karnataka Chambers of Commerce and Industry v. the Government of Karnataka

Case brief

What is this about?

What did the court decide?

Federation of Karnataka Chambers of Commerce and Industry v. the Government of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Thippeswamy @ Sanna Thippeswamy Vs Karnataka Power Transmission Corporation Limited

Arun Kumar @ Vikas.B v Vs State by Karnataka

R. Raghupathi Gowda Vs the Karnataka State Transport Authority

Sri Shivaprakash @ Chippi Vs State of Karnataka

A Janardhan Shetty Vs State of Karnataka

Shri Radhakrishna Yuvaka Bajana Sangha (R) Vs State of Karnataka