Full Judgment Text & Judicial Ruling

2021 Y L R 1527 [Sindh] Before Syed Hassan Azhar Rizvi and Zulfiqar Ahmad Khan, JJ MAJEED & SONS STEEL (PVT.) LTD. through Authorized Representative and 7 others---Petitioners Versus FEDERATION OF PAKISTAN through Secretary, Ministry of Energy and through Secretary, Ministry of Finance and 2 others---Respondents C. P. No. D-2253 of 2020 along with C. Ps. Nos.D-2287, 2291, 2293, 2295, 2296, 2297, 2298, 2300, 2301, 2304, 2305, 2306, 2309, 2310, 2312, 2313, 2314, 2315, 2323, 2324, 2325, 2326, 2327, 2328, 2329, 2332, 2334, 2335, 2336, 2337, 2338, 2339, 2340, 2341, 2342, 2343, 2344, 2345, 2349, 2351, 2352, 2353, 2354, 2355, 2356, 2357, 2358, 2359, 2360, 2361, 2362, 2363, 2364, 2365, 2366, 2369, 2370, 2371, 2374, 2381, 2382, 2383, 2385, 2386, 2392, 2393, 2394, 2395, 2396, 2397, 2398, 2399, 2400, 2406, 2410, 2412, 2424, 2435, 2436, 2438, 2446, 2451, 2466, 2493, 2522, 2579, 2581, 2584, 2600, 2613, 2624, 2627, 2634, 2635, 2638, 2684, 2698, 2700, 2704 and 2705, all of 2020, decided on 28th September, 2020. (a) Regulation of Generation, Transmission and Distribution of Electric Power Act (XL of 1997)--- ----Ss.7(3) & 31---National Electric Power Regulatory Authority (Tariff Standards and Procedures) Rules, 1998, R. 17(3)---Notifications SRO 12(I)/2019 dated 1-1-2019, SRO 575(I)/2019, dated 22-5-2019 & SRO 810(I)/2019 dated 12-7-2019---Constitution of Pakistan, Art. 199---Constitutional petition---Electricity tariff--- Determination---Retrospective effect---Off peak hours tariff---Petitioners were industrial consumers of large scale industrial pro-ducts--- Petitioners assailed corrigendum dated 22-1-2020 withdrawing and modifying electricity tariff retrospectively vide notification SRO 575(I)2019, dated 22-5-2019---Validity---Subsidy of Government of Pakistan figured alongside the determined tariff which subsidies were already granted and made part of K-Electric s bills after issuance of Notification SRO 12(I)/2019 dated 1-1-2019---Notification SRO 575(I)/2019 dated 22-5-2019 was not an outcome of determination per se as it only printed earlier determined tariff alongside Government of Pakistan s subsidized tariff---If at any point in time any entry in column of variable charges was attacked, tariff was to fall back to respective and corresponding entry in column of fixed charges and the same was outcome of actual determination---Amount in the column of variable charges could never be higher than those in the column of fixed charges---High Court declared corrigendum dated 22.1.2020, as illegal, void, issued in excess of authority and the same was quashed---High Court restrained K-Electric from enforcing the same in any manner whatsoever as it resulted in determination higher than National Electric Power Regulatory Authority s determined tariff and it was not correcting any error---High Court directed that industrial consumers of K-Electric to be charged tariff as per column of fixed charges of Notification SRO 575(I)/2019 dated 22.5.2019 as determined vide determination dated 5.7.2018 in respect of variable off-peak hours charges and column of uniform tariff in respect of variable peak hours charges as long as subsidy for peak hours provided through Notification SRO 12 (I) /2019 dated 1-1-2019 held the field, as at any point in time when peak hour subsidy was withdrawn, values shown in column of variable charges had fallen back to uniform charges unless any new determination had taken the field---Government of Pakistan was solely competent to provide or withdraw any subsidy, therefore, Notification SRO 810(I)/20219 dated 12-7-2019 was lawful---High Court directed the authorities to refund or adjust towards future bills, the sums charged and paid by petitioners per rates specified in the corrigendum after deducting rates provided in column of fix charges of Notification SRO 575(I)/20219 dated 22-5-2019 as determined vide determination dated 5-7-2018 in respect of variable off-peak hours charges---High Court further directed the authorities to reissue new bills to those petitioners who did not pay any previous bills of ISPA component for period July-2019 to January-2020, on the basis of values provided in fixed charges of Notification SRO 575(I)/2019 dated 22-5-2019 as determined vide determination dated 5-7-2018 in respect of variable off-peak hours charges---High Court also directed the authorities to give reasonable period to make payments---Constitutional petition was allowed accordingly. OGRA through Secretary v. Messrs Midway-II, CNG Station and others 2014 SCMR 220; Al-Noor Sugar Mills Limited and another v. Federation of Pakistan and others 2018 PTD 2082; Muhammad Rafiq and others v. Federation of Pakistan and others 2014 PTD 1881; Secretary to the Government of Pakistan Ministry of Finance and others v. Muhammad Hussain Shah and others 2005 SCMR 675; Government of KPK and others v. Khalid Mehmood 2012 SCMR 619; Messrs Army Welfare Sugar Mills Association Limited and others v. Federation of Pakistan and others 1992 SCMR 1652; Messrs Abdul Ghafoor Furnace v. WAPDA and others 2005 YLR 442; Messrs Trade Link Corporation and others v. Federation of Pakistan and others 2016 PTD 1096; The Engineer-in-Chief Branch through Ministry of Defence, Rawalpindi and another v. Jalaluddin PLD 1992 SC 207; Government of the Punjab, Education Department through Secretary Higher Education, Punjab Civil Secretariat Lahore and others v. Muhammad Imran and others 2019 SCMR 643; Star Textile Mills Ltd. and another v. Government of Sindh and others 2002 MLD 1608; Zaman Cement Company (Pvt.) Ltd. v. Central Board of Revenue and others 2002 SCMR 312; Messrs Bolan Industries (Pvt.) Ltd. through Managing Director and others v. Water and Power Development Authority (WAPDA) through Chairman and others PLD 2014 Bal. 173; OGRA through Secre-tary v. Messrs Midway-II, CNG Station and others 2014 SCMR 220; Dossani Travels Pvt. Ltd. and others v. Messrs Travels Shop (Pvt.) Ltd. and others PLD 2014 SC 1; Abdul Sami Memon and 8 others v. Federation of Pakistan through Secretary Establishment and 5 others 2020 PLC 125 and Government of Pakistan v. Sikandar Khan and others PLD 1987 Pesh. 68 ref. (b) Maxim--- ----Aequitas est quasi aequalitas---Connotation---Equality is equity---When there are no reasons for any other basis of division of property, those entitled to it should share it equally. For petitioners: Haider Waheed, Muhammad Ameen Bandukda, Syed Mohsin Ali, Omer Soomro, Shahbakht Pirzada, Maqbool Hussain Shah, Abdul Sattar Pirzada, Khawaja Aizaz Ahsan, Rajindar Kumar, Obaid-ur-Rehman Khan, Salman Yousuf, Ali Kambar Askary, Aijaz Ali, Asad Raza Khan, Qazi Umair Ali, Anas Makhdoom, Ahmed Faraj, Darvesh K. Mandan, Ahmed Madni, Naeem Suleman, Arshad Hussain Shahzad, Manzar Hussain, Abdul Ghaffar Khan, Farhan-ul-Hasan Minhas, Ovais Ali Shah, Sami-ur-Rehman Khan, Faiz Durrani, Shariq Razzaq, Syed Irshad ur Rehman, Muhammad Waleed, Hassan Khurshid Hashmi, Rajesh Kumar Khagaija, Nasir Elahi Siddiqui, Ms. Navin Merchant, Sofia Saeed Shah, Zoha Sirhindi, Tehmina Ashraf and Samia Faiz Durrani. For respondents: Usman Hadi, D.A.G. along with Ms. Durdana Tanveer, Assistant Attorney General. Kashif Hanif for NEPRA along with Atif Hanif. Abid S. Zuberi, Ayan Mustafa Memon and Ali Zuberi for K-Electric and Muhammad Abdullah, Iftikhar Ahmed and Zulfiqar Ali Mirjat for K-Electric in some petitions. Syed Amir Ali Shah Jeelani for Lasbela Industrial Estates Development Authority. Dates of hearing: 23rd, 28th, 30th April, 5th, 12th, 14th, 19th, 21st, 28th, 29th and 30th, May, 2020. JUDGMENT ZULFIQAR AHMAD KHAN, J.---Petitioners are industrial consumers of K-Electric (Respondent No.3) engaged in the manufacture of steel and other large scale industrial products, having their factories located in the territorial limits of Karachi/Balochistan, where K-Electric has exclusive monopoly of generation, transmission and distribution of electricity, granted to it under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 ("the Act"). The Petitioners through these petitions have challenged the issuance and implementation of the Corrigendum dated January 22, 2020 retrospectively withdrawing and modifying KE's tariffs notified vide SRO 575(I)/2019 dated May 22, 2019 after withdrawal of off-peak hour subsidies through SRO 810(I)/2019 dated 12 July, 2019 on the following grounds: (A) That the SRO 810(I)/2019 dated 12.07.2019 ("the July SRO") purporting to amend SRO 12(I)/ 2019 dated 01.01.2019 ("the January SRO") for K-Electric's industrial consumers had no legal effect after the notification of SRO 575(I)/2019 dated 22.05.2019 ("the New Tariff") embodying full determination of KE's tariff, whereupon the January SRO ceased to hold the field in accordance with latter's paragraph 4; (B) That once the earlier relief notified through the January SRO was fully incorporated into the New Tariff, the same could not have been unilaterally modified, amended or altered by the Federal Government through the July SRO or through the Corrigendum without following the mandatory procedure specified by the Act and the NEPRA (Tariff Standards and Procedures) Rules, 1998 ("the Tariff Rules") where the power to determine, modify, or revise rates, charges and terms and conditions for the provision of electric power was exclusively vested in NEPRA under sections 7(3) and 31 of the Act, and that the Federal Government had no power under law to issue the July SRO or the ensuing Corrigendum; (C) That a tariff once determined by NEPRA and notified by the Federal Government under section 31(7) of the Act creates vested rights and could only be modified prospectively under section 31(5) of the Act read with the Tariff Rules. Accordingly, and once final determinations were notified, only "adjustments" could be incorporated therein as per the proviso to section 31(7) of the Act by NEPRA as law does not prescribe any possibility to alter or modify the tariff through unilateral action of the executive via issuance of a corrigendum; (D) That it is settled law that executive orders and notifications (i.e. the Corrigendum read with the July SRO) could not be applied or given retrospective effect altering vested rights or to reopen past and closed transactions as the tariff related savings were passed on to the consumers by the Petitioners and the costs and expenses for the production of goods during the six month's period of July 2019 to December 2019 have also been passed on to the end-users; (E) That as per section 31(3) of the Act, guidelines are prescribed for the determination, modification or revision of rates, charges, terms and conditions for the provision of electric power, to the extent that "(i) tariffs should seek to provide stability and predictability for customers; and (j) tariff should be compre-hensible, free of misinterpretation and shall state explicitly each component thereof". Further, per Section 31(2) of the Act, NEPRA in the determination, modification or revision of rates, charges and terms and conditions for provision of electric power services has to keep in view "(f) the elimination of exploitation and minimization of economic distortions". On the touchstone of the above statutory provisions alone, the substantive changes attempted through the July SRO or the ensuing corrigendum are in contravention of the letter and spirit of the law; (F) That giving effect to the July SRO and the Corrigendum would mean that the Federal Government can bypass NEPRA and unilaterally modify an already approved and determined tariff thereby depriving Petitioners of valuable opportunity to be heard on two statutory forums for redress/ appeal under the Act which otherwise would have been available to them, had NEPRA notified a modification to the New Tariff in accordance with law; (G) That the Petitioners cannot be penalized under any circumstances for the failure of the Federal Government to follow the Act and the Tariff Rules for modification of an approved and determined tariff; or the failure of NEPRA to intervene or take any action in dereliction of its statutory duties to ensure that consumers were not unlawfully burdened by the actions of the Federal Government or its licences; (H) That even if it is accepted, without conceding, that the earlier reduction/relief notified by the January SRO was not directly incorporated into the New Tariff as a reduced rate for industrial consumers of K-Electric, Federal Government enjoyed no powers to withdraw a subsidy retrospectively in violation of Articles 38 and 9 of the Constitution. 2. Petitioners through these petitions (of which C.P. No. D-2253/202 is taken as the leading petition) have sought following key declarations: I. Declare the Corrigendum dated 22nd January, 2020 as unlawful and void ab initio. II. Declare that the Respondents are bound to be abided by the original rates specified by the Schedule of Electricity Tariff contained in S.R.O. 575(I)/2019 dated 22nd May, 2019 (without reference to the Corrigendum dated 22nd January, 2020). III. Declare the SRO 810(I)/2019 dated 12 July, 2019 as unlawful and void ab initio to the extent of industrial consumers of K-Electric. IV. Declare that neither the Federal Government nor NEPRA can retrospectively modify, amend or alter S.R.O. 575(I)/2019 and that NEPRA can only do so prospectively in accordance with the procedure contained in the Act and the Tariff Rules. V. Declare that the Petitioners are not liable to pay the increased rates notified by SRO 810(I)/ 2019 and Corrigendum for the six-month period from July 2019 to December 2019 (or any time thereafter) and that any bills already issued by K-Electric incorporating such increased rates be declared illegal. 3. Mr. Haider Waheed representing a large number of Petitioners formulated following contentious points and delivered the undermentioned deliberations:- I: That the Petitioners have a vested right in respect of tariff (as notified through SRO 575 dated 22 May, 2019) (a) Per learned counsel, subsidy can take two forms (i) via a bare notification issued by the Federal Government in which case the subsidy operated as a reduction or "discount" by the Federal Government; and (ii) as a reduced rate built into, incorporated or subsumed into a tariff (or "part and parcel" of a tariff) notified by the Federal Government with the prior approval of NEPRA, whereupon any subsidy gets subsumed or made part and parcel of the determination as it had lost its separate identity and character. (b) The Industrial Support Package (admittedly first introduced in January 2016), entered the field through notification issued independently by the Federal Government through SRO 12(I)/ 2019, but upon the issuance of SRO 575(I)/2019, with the prior approval of NEPRA, ISP became a reduced rate, built-in and subsumed part and parcel of K-Electric's consumer end tariff as (i) SRO 575/2019 expressly stated that "The above mentioned variable charges under the head of uniform tariff were inclusive of industrial support package notified vide SRO 12(I)/2019"; whilst, (ii) SRO 12/2019 expired and ceased to hold the field in accordance with its paragraph 4 which stated, "The notification unless amended or withdrawn earlier by the Federal Government shall continue to remain in field till notification of new tariff for XWDISCOs and K-Electric." (c) Learned counsel admitted that the Petitioners have never claimed any right in respect of a subsidy, however, the Petitioners' case is that even if it was accepted, without conceding, that the earlier reduction/relief notified through SRO 12/2019 was not directly incorporated into SRO 575/2019 as a reduced rate for industrial consumers of K-Electric, the Federal Government could only withdraw a subsidy in accordance with the established principles of administrative law and had no power to withdraw a subsidy retrospectively in violation of Articles 38 and 9 of the Constitution. II: That the "left hand column" i.e. consumer-end tariff/uniform tariff for K-Electric in SRO 575/2019 was in law and fact determined by NEPRA. (a) Per learned counsel, the consumer-end, duly determined tariff could never be notified by the Federal Government on its own without prior approval of NEPRA as a tariff being outcome of the detailed procedure laid down by sections 31(4) and 31(7) of NEPRA Act read with paragraph 3 of NEPRA Determination of Consumer End Tariff (Methodology and Process) Guidelines, 2014 and Rule 17(3) of the Tariff Rules, and if needed to be changed, the process calls for third party and public intervention for this consultative, tripartite procedure. (b) As per paragraph 13(ii) of the Decision dated 19 December, 2018, during the proceedings, K-Electric submitted an intervention request to which the Federal Government responded stating that upon NEPRA's determination of XWDISCOs tariff, K-Electric's tariff notification will also be dealt with accordingly, meaning thereby in those proceedings no separate determination for KE's tariff was made and only tariff determination for XWDISCOs were made, accordingly the uniform tariff determination made by NEPRA for XWDISCOs dated 19 December, 2018 was explicitly applied to K-Electric by the Federal Government notifying the same through SRO 575/2019 refer-ring to section 31(7) of the Act. III: SRO 575/2019 cannot be amended without NEPRA's approval or without due process of law. (a) Per learned counsel section 7(3) of the Act empowers NEPRA to determine, modify or revise the rates, charges and terms and conditions for the provision of electric power services and section 31 of the Act makes no distinction between a XWDISCO MYT Tariff or KE's Consumer End Tariff and SRO 575/2019 per learned counsel was expressly issued pursuant to section 31(7) of the Act, thus had NEPRA's approval. (b) The issuance of the Corrigendum dated 22 January, 2020 per learned counsel itself and the fact that it attempted to amend SRO 575/2019 (and not SRO 12/2019 or 810/2019) proves that ISPA subsumed and became part and parcel of the consumer end Tariff. This was also evidenced by the fact that K-Electric removed all references to ISPA in its bills from July 2019 onwards. IV: Regardless of NEPRA approval, no notification (either of a tariff or a subsidy) can be amended retrospectively or through a Corrigendum. (a) Per learned counsel, SRO 12/ 2019 ceased to hold the field in accordance with its own terms (paragraph 4 thereof) upon notification of the new tariff through SROs 575/2019 and 576/2019 therefore SRO 810/2019 could not amend SRO 12/2019 or bring about any changes to the extent of K-Electric. As there was no "error" or "mistake" to be corrected in SRO 575/2019 by the corrigendum, as SRO 810/2019 did not exist on the date when SRO 575/2019 was issued, hence the corrigendum itself has no legal sanctity. (b) The issuance of the corrigendum itself and the fact that it sought to amend (and not merely correct) SRO 575/2019 (and not SRO 12/2019 or 810/2019) proves that the relief/ISPA subsumed as a reduced rate and became part and parcel of Schedule of Tariff notified through SRO 575/2019. Since issuance of a corrigendum is an executive action, it cannot retrospectively operate to disturb vested rights or to open past and closed transactions especially as the costs and expenses for the production during the six-month period from July 2019 to December 2019 have already been accounted for and the same cannot be adjusted or revised retrospect-tively at this belated stage. (c) Additionally, regardless of NEPRA's approval, a tariff cannot be changed retrospectively as that would violate clauses (i) and (j) of section 31(3) of the Act which state, "(i) tariffs should seek to provide stability and predictability for customers; and (j) tariffs should be comprehensi-ble, free of misinterpretation and shall state explicitly each compo-nent thereof"; and section 31(2)(f) of the Act which provides that the Authority in the determination, modification or revision of rates, charges and terms and conditions for provision of electric power services shall keep in view "(f) the elimination of exploitation and minimization of economic distortions." (d) Moreover, such an action would be violative of Rule 17(3)(vii) of the Tariff Rules which states that "the tariff regime should clearly identify inter-class and inter-region subsidies and shall provide such subsidies transparently if found essential, with a view to minimizing if not eliminating them, keeping in view the need for an adequate transition period". (e) That separately, no notification (either of a tariff or a subsidy) can be amended by a corrigendum, prospectively or retrospectively, as a corrigendum can only be issued to correct any clerical or arithmetical errors in a decision and serves not to make any substantive amendments in a previous decision. V: K-Electric is estopped by their conduct from charging ISPA from its industrial consumers for the period July 2019 to December 2019. (a) Per learned counsel even if the change in tariff, or withdrawal of subsidy was not to violate the law and if it was accepted without conceding that SRO 810/2019 applied to the industrial consumers of K-Electric, K-Electric was bound to immediately give effect to the changes brought by SRO 810/2019 through its monthly bills to the consumers, and it is now estopped by its own conduct from demanding the same nine months later. 4. In support of his arguments learned counsel made reference to the cases reported as OGRA through Secretary v. Messrs Midway-II, CNG Station and others (2014 SCMR 220), Al-Noor Sugar Mills Limited and another v. Federation of Pakistan and others [2018 PTD 2082 (SC)], Muhammad Rafiq and others v. Federation of Pakistan and others [2014 PTD 1881(DB], Secretary to the Government of Pakistan Ministry of Finance and others v. Muhammad Hussain Shah and others (2005 SCMR 675), Government of KPK and others v. Khalid Mehmood (2012 SCMR 619), Messrs Army Welfare Sugar Mills Association Limited and others v. Federation of Pakistan and others (1992 SCMR 1652), Messrs Abdul Ghafoor Furnace v. WAPDA and others [2005 YLR 442 (SB)], Messrs Trade Link Corporation and others v. Federation of Pakistan and others [2016 PTD 1096 (DB)], The Engineer-in-Chief Branch through Ministry of Defence, Rawalpindi and another v. Jalaluddin) (PLD 1992 SC 207) and Government of the Punjab, Education Department through Secretary Higher Education, Punjab Civil Secretariat Lahore and others v. Muhammad Imran and others (2019 SCMR 643). 5. A number of counsel appearing for the Petitioners in these clubbed petitions either adopted arguments of Mr. Waheed or placed their own arguments, however remaining in the ambit of the issues raised by Mr. Waheed as elaborated in the foregoing. 6. Mr. Abid Zuberi, learned counsel representing K-Electric strongly defended his client's position. By way of background, the learned counsel stated that the Industrial Support Package (ISPA) subsidy was first introduced by the Government of Pakistan vide Notification dated 04.02.2016 and the said subsidy was re-introduced on 01.01.2019 through SRO 12/2019 by paragraph 2 thereof. It was pointed out that SRO 12/2019 also prescribed another separate and additional subsidy for "zero rated industrial consumers" through its paragraph 3 and both of these subsidies were approved by the Government of Pakistan without any intervention of NEPRA. The appropriate reductions on account of subsidy were made by K-Electric and XWDISCOS in the consumer bills to give industrial consumers the benefit of the GoP subsidies. The amounts so reduced were paid off by the GoP to the respective DISCOs in the name of "Tariff Differential Subsidy". 7. Mr. Zuberi stated that NEPRA determined KE's latest MYT on 05.07.2018 however the same could not be immediately notified in view of an ad-interim order passed in Suit No. 1467/ 2018 by this Court. After withdrawal of said suit on 03.04.2019, the Federal Government notified the said duly determined MYT vide SRO 576(I)/2019 dated 22.05.2019 which continues to hold the field. Simultaneously GoP on its own accord issued SRO 575(I)/2019 dated 22.05.2019 and notified the applicable tariff for consumers of KE to bring the consumers of KE at par with the consumers across the country. Per learned counsel the said applicable tariff was prescribed under the head "Uniform Tariff" and the origins of the said column in SRO 575 /2019 find mention in Paragraph(s) 3, 4, 5 7 of the comments filed by GoP (available at Page 1559) which makes it clear that the right hand column of SRO 575/2019 was issued by the GoP on its own, without NEPRA's involvement as it catered for the subsidies provided by the Government uniformly, whereas the KE's applicable tariff at left hand side was determined by NEPRA vide its determination dated 19.12.2018 (available at Page 1415) and through SRO 575/2019 ISPA subsidy was accounted for in the…

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