Allowed¶73

Ashok Pascal Noronha v. Chairman and Managing Director

Karnataka HC8 Apr 2025WP/17704/2021

Case brief

AI extract

What is this about?

LT-3 vs LT-5 tariff classification of idly manufacturing unit; MESCOM back billing; certiorari against appellate orders of Executive Engineer and CMD; interpretation of Electric Power Tariff Scheme 2002; commercial vs manufacturing/industrial consumer; bulk sale not commercial activity; refund/adjustment of excess tariff; Articles 226/227 writ; Karnataka HC, Anant Ramanath Hegde J.

What did the court decide?

Writ petition allowed; impugned orders dated 30.12.2002 (Annexure-F) and 16.12.2005 (Annexure-H) quashed; any excess collected under LT-3 tariff to be refunded or adjusted towards future consumption; any deposit by the petitioner to be adjusted towards future consumption; no order as to costs. ¶73

Ashok Pascal Noronha Vs Chairman and Managing… — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the petitioner's idly manufacturing unit is liable to be billed under LT-3 (commercial) tariff or LT-5 (manufacturing/small scale industry) tariff under the Electric Power Tariff, 2002. +1 more

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Court's answer

Under the tariff guidelines 2002, LT-3 tariffs apply to commercial units and the LT-5 category applies to manufacturing units.

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Ratio / Principle

An idly manufacturing unit cannot be treated as a commercial activity on par with a hotel selling idlys so as to attract LT-3 tariff.

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Key takeaways

Merely because idlys are sold in bulk does not make idly manufacturing a commercial activity attracting LT-3 tariff; on that analogy roti, bakery and ice cream manufacturing units would also fall under LT-3, which is not the respondents' case.ratio¶65
The determinative test is whether the product is manufactured, sold and consumed in the same unit as a retail outlet, or sold in bulk for sale at other outlets; the respondents did not consider this aspect.ratio¶22
If the petitioner were running a hotel, LT-3 tariff would apply (conditional observation; it is not the respondents' case that he runs a hotel).

Detailed headnote1 paragraphs

Karnataka High Court (Anant Ramanath Hegde, J.), C.A.V. order dated 08.04.2025 in W.P. 17704/2021 (GM-KEB): Petitioner running an idly manufacturing unit (AJ Industries, Udupi), connected under LT-5 and billed accordingly, was subjected to back billing under LT-3 (commercial) tariff by MESCOM on the strength of clarifications from the Chief Engineer (letter dated 01.12.2001) and Superintendent Engineer (letter dated 22.08.2002); his appeals were dismissed by respondent No.2 (30.12.2002) and respondent No.1 (16.12.2005, second appeal held not maintainable under the Indian Electricity Act, 2003). Held: under the tariff guidelines 2002 / Electric Power Tariff, 2002, LT-3 applies to commercial units and LT-5 to manufacturing units; an idly manufacturing unit is not a commercial activity on par with a hotel selling idlys, and mere bulk sale does not attract LT-3 (otherwise roti, bakery and ice cream units would too); the test is whether the product is made, sold and consumed in the same unit as a retail outlet or sold in bulk for sale elsewhere, an aspect the respondents never considered; the appellate authority acted incorrectly by deciding on superior officers' interpretations without referring to the tariff guidelines. Orders dated 30.12.2002 and 16.12.2005 quashed; excess collected under LT-3 to be refunded or adjusted towards future consumption; deposits likewise adjustable; no costs.

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WP No. 17704 of 2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 08^TH DAY OF APRIL, 2025

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BEFORE

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THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO.17704 OF 2021 (GM-KEB)

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BETWEEN:

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ASHOK PASCAL NORONHA S/O LATE GEORGE NORONHA AGED ABOUT 46 YEARS, AJ INDUSTRIES, MOODABETTU SHANKARPURA POST – 574 115. UDUPI TALUK AND DISTRICT.

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...PETITIONER

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(BY SRI VINAYA KEERTHY, ADVOCATE )

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AND:

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CHAIRMAN & MANAGING DIRECTOR MANGALOORU ELECTRICITY SUPPLY

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CO. LTD., (MESCOM), PARADIGM PLAZA, AB SHETTY CIRCLE, PANDESHWAR, MANGALOORU – 575 001.

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EXECUTIVE ENGINEER, MANGALOORU ELECTRICITY SUPPLY

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CO. LTD., (MESCOM),

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UDUPI DIVISION, MARUTHI VEETHIKA, UDUPI – 576 101.

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ASSISTANT EXECUTIVE ENGINEER, MANGALOORU ELECTRICITY SUPPLY CO. LTD., (MESCOM), KAPU SUB-DIVISION

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UDUPI TALUK AND DISTRICT – 576 101.

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…RESPONDENTS

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(BY SRI H.V.DEVARAJU, ADVOCATE)

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WP No. 17704 of 2021

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI QUASHING THE IMPUGNED ORDER NO.KANILM.UDUPI:LE:SALE-2:RCA:12618-23 DT: 30.12.2002 (ANNEXURE-F) PASSED BY THE SECOND RESPONDENT AND ISSUE A WRIT OF CERTIORARI QUASHING THE IMPUGNED ORDER NO.AAEE(MAM), UULENI/LEAA/HISAKA/4708-10 DT: 16.12.2005 (ANNEXURE-H) PASSED BY THE FIRST RESPONDENT AND ETC.

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THIS WRIT PETITION PERTAINS TO PRINCIPAL BENCH BENGALURU HAVING BEEN HEARD AND RESERVED ON 04.04.2025 AND COMING ON FOR PRONOUNCEMENT OF ORDERS AT KALABURAGI BENCH THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT MADE THE FOLLOWING :

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CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE

WP No. 17704 of 2021

C.A.V. ORDER

The petitioner is assailing the order dated 30.12.2002 marked at Annexure – F passed by respondent No.2, and the order dated 16.12.2005 marked at Annexure – H passed by respondent No.1 and also seeking writ of mandamus against the respondents not to collect the tariff under LT-3 for the petitioner’s Idly manufacturing unit at AJ Industries, Modlubetta, Shankarapura Post, Udupi District and seeking directions to return the excess tariff collected under LT-3 Tariff.

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Annexure – F is the order passed by respondent No.2 dismissing the petitioner’s appeal wherein the petitioner has questioned the back billing order. Annexure-H is the order dismissing the petitioner’s second appeal against the order at Annexure-F.

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The petitioner is running an Idly manufacturing unit and has taken electricity connection under LT-5 category. There is no dispute that the petitioner has paid electricity charges as per LT-5 tariff.

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The dispute arose as the revenue monitoring authority demanded electricity charges as per LT-3 tariff on the

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WP No. 17704 of 2021

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premise that the petitioner’s unit is a commercial unit and not an industrial unit.

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It appears that there was a doubt as to whether the petitioner’s Idly manufacturing unit is to be billed under LT-3 or LT-5 tariff. Referring to the clarification issued in this behalf by the Executive Engineer, the respondents took a stand that Idly manufacturing unit is to be considered as a commercial unit attracting LT-3 tariff. Thus, demand was raised.

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Aggrieved by the said order, the petitioner has filed the said appeal before 2^nd respondent. Respondent No.2 did not accept the petitioner’s contention that the unit has to be charged as per LT-5 tariff and not as per LT-3. Respondent No.2 referred to the letter dated 01.12.2001 issued by the Chief Engineer who opined that the food manufacturing unit should be construed as commercial unit under LT-3 category as the main intention of the manufacturer is to sell the food. Thus, respondent No.2 dismissed the appeal.

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The petitioner filed the second appeal before respondent No.1 which is also dismissed, on the premise that the second appeal is not maintainable under the Indian Electricity Act, 2003 (for short, the 'Act,2003').

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WP No. 17704 of 2021

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Learned counsel for the respondents has not urged the contention relating to the alternative remedy referred to in the impugned order passed by the Appellate Authority. This Court noticing the fact that the petitioner has agitated the issue before the Consumer Forum and before this Court on earlier occasion and that the dispute is pending since last 23 years, has heard the learned counsel for the petitioner and the learned counsel for the respondents on merits.

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Learned counsel for the petitioner would contend that the petitioner has obtained permission to set up small scale idly manufacturing unit and has applied for electricity connection under LT-5 category applicable to Small Scale Industry. It is also urged that noticing that it is a small scale industry, LT-5 electricity connection is sanctioned. Thus, it is urged that the decision to apply LT-3 tariff is erroneous and the idly manufacturing unit cannot be considered as commercial unit under the Tariff Scheme, 2002.

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It is also urged that 2^nd respondent has not held that the petitioner is selling idly as sold in restaurants and the decision is based on the erroneous interpretation of Tariff Scheme, 2002 as interpreted by the Chief Engineer and same

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is contrary to the tariff structure provided in the Electric Power Tariff Scheme, 2002. It is also urged that there are several units which are manufacturing idly, chakli and roti and those units are billed under tariff LT-5 and the petitioner is discriminated by demanding charges under LT-3 tariff.

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Learned counsel for the petitioner refers to the information secured under the Right to Information Act, wherein it is stated that in respect of 18 units, manufacturing idly, chakli and roti, LT-5 tariff is applied.

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Learned counsel for the respondents defending the impugned order would submit that the tariff payable is governed by the Electricity Power Tariff, 2002. Referring to it, the learned counsel for the respondents would submit that the petitioner is rightly asked to pay LT-3 tariff as the idly is sold by the manufacturer and it is a commercial activity.

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This Court has considered the contentions raised at the bar and perused the records.

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From the impugned order at Annexure-F, it is evident that 2^nd respondent has not opined that the petitioner is selling idlys as they are sold in restaurants. It is the finding

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WP No. 17704 of 2021

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of 2^nd respondent that the petitioner is manufacturing idlys in his unit. The respondent No.2 has opined that 1998 guidelines are not clear as to the tariff applicable to idly manufacturing units. When the clarification was sought in this regard, it was clarified by the Chief Engineer that food catering units are to be charged under LT-3 category and 2^nd respondent has also referred to the letter dated 22.08.2002 issued by the Superintendent Engineer who has opined that if idly and roti are manufactured in one unit, then it should be treated as one coming under LT-3 category.

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It is to be noticed that 2^nd respondent has not referred to the tariff guidelines 2002 before passing the impugned order.

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The order is passed based on the interpretation by the superior officers. This approach is incorrect.

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Respondent No.2 was required to refer to the tariff guidelines. Respondents have annexed the tariff guidelines 2002 in their statement of objections. After going through the same, it is noticed that certain establishments/category of consumers of electricity are covered under LT-3 category. It is

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WP No. 17704 of 2021

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also evident that LT-3 tariffs apply to commercial units. And LT5 category applies to manufacturing units.

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There is no dispute that the petitioner has obtained

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licence to manufacture idly. The licence is not obtained for running a hotel. The electricity supplied is also to the manufacturing unit.

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It is not the case of the respondents that the petitioner is running a hotel. The reading of the impugned order would reveal that 2^nd respondent has opined that the petitioner is to be charged under LT-3 category because of the interpretation of tariff schedule provided in Electric Power Tariff 2002. Said schedule does not indicate that idly manufacturing unit is to be charged under LT-3 category. It is not the case of the respondents that the petitioner is running a hotel to sell idlys. If the petitioner is running a hotel, then LT-3 tariff would apply.

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This being the position, this Court is of the view that idly manufacturing unit cannot be treated as a commercial activity on par with a hotel selling idlys so as to attract LT-3 tariff.

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WP No. 17704 of 2021

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It is also relevant to note that LT-5 tariffs applies to manufacturing units where eatables like bakery products, ice creams are manufactured. Merely because idlys are sold in bulk, later cannot be said that it is a commercial activity attracting LT-3 tariff. If the same analogy is applied, manufacturing units where rotis, bakery products and ice creams and the like are manufactured, should also come under LT-3 category. However, it is not the contention of respondents that the bakery and ice cream manufacturing units are treated as commercial units. Merely because idly manufacturing is not specified in LT-5 category, one cannot apply tariff under LT-3 category.

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The test is whether the product is manufactured and sold and consumed in the same unit making the unit as a retail outlet or it is sold in bulk, later to be sold at some other outlets. The respondents have not considered this aspect at all. In fact, the respondents have not referred to the Tariff Guidelines. Respondent No.2 has simply proceeded to pass the order by referring to the interpretation by the higher officer. Respondent No.2 being the Appellate Authority should have applied its mind to the Electric Power Tariff, 2002. On this

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WP No. 17704 of 2021

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ground, though there is a ground for remand, as already noticed that dispute is pending since two decades, this Court has proceeded to interpret the application of Electric Power Tariff, 2002 to idly manufacturing unit, run by the petitioner.

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For the aforementioned reasons, the impugned orders are not sustainable.

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Hence, the following:-

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ORDER

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i) Writ petition is allowed.

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ii) Impugned order dated 30.12.2002 at Annexure-F passed by 2^nd respondent is quashed.

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iii) Impugned order dated 16.12.2005 at Annexure-H passed by 1^st respondent is quashed.

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iv) If any excess amount is collected by the respondents from the petitioner by applying LT-3 tariff, same has to be either refunded or adjusted towards future consumption of electricity by the petitioner.

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v) If any amount is deposited by the petitioner with the respondents, same shall be adjusted towards future consumption of electricity by the petitioner.

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vi) No order as to costs.

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Sd/(ANANT RAMANATH HEGDE) JUDGE

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THM/CHS

Ashok Pascal Noronha v. Chairman and Managing Director

Case brief

What is this about?

What did the court decide?

Ashok Pascal Noronha v. Chairman and Managing Director

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

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