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Official Citation: 2024 CLC 744
Court / Jurisdiction: Lahore High Court
Year of Decision: 2022
Decision Date: 2022-10-10
Parties: Muhammad Azhar Siddique vs Federation of Pakistan etc.
Ruling Summary: This decision was rendered by the Lahore High Court on 2022-10-10, officially reported as 2024 CLC 744. In this matter between Muhammad Azhar Siddique and Federation of Pakistan etc., the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 CLC 744
Court Name: Lahore High Court Judge(s): Ali Baqar Najafi Title: Muhammad Azhar Siddique vs Federation of Pakistan etc. Case No.: W.P. No. 50725 of 2022 Date of Judgment:2022-10-10 Reported As: 2023 LHC 203, 2024 CLC 744 Result: Petition Disposed of
JUDGMENT
JUDGMENT IN THE NAME OF ALLAH, THE MOST BENEFICIENT, THE MOST MERCIFUL
"And We sent down iron, wherein there is awesome power and many benefits for people,"
"And to Solomon 'We subjected' the wind: its morning stride was a month's journey and so was its evening stride. And we caused a stream of molten copper to flow for him, and 'we subjected' some of the jinn to work under him by his Lord's Will. And whoever of them deviated from our command, we made them taste the torment of the blaze." ALI BAOAR NAJAFI, J. Through all these constitutional petitions enumerated in Schedules (A), (B), (C), (D) & (E) the petitioners domestic, industrial and commercial consumers herein have challenged the imposition of FUEL PRICE ADJUSTMENT (hereinafter to be called FPA) and QUARTER TARIFF ADJUSTMENT (hereinafter to be called QTA) etc. change of tariff from Industrial to Commercial by invoking the constitutional jurisdiction under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 and seek a direction to the National Electric Power Regulatory Authority (hereinafter to be called NEPRA) and Distributing Companies (hereinafter to be called DISCOs) not to charge them illegally in violation of Article 4, 9 & 38 of the Constitution of Islamic Republic of Pakistan, 1973 by taking different favourable grounds. 2. The Almighty Allah created Noor/light/energy for the existence of the universe ever essential for the life on our planet, therefore, has to be made accessible for all of us since it is our basic human right so fundamental that it is guaranteed by our Constitution and the law.
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3. At present the relevant law on the subject is National Electric Power Regulatory Authority Act, 1997 (hereinafter to be called NEPRA Act 1997) which needs to be read, understood and discussed. NEPRA ACT, 1997 4. Since the entire discussion will revolve around the NEPRA Act, 1997 therefore, it will be expedient to read the original Act of 1997 and then study subsequent amendments introduced in the year 2011, 2018 and 2021. This will help to understand the legislative response due to the difficulties in the power sector. 5. The original Act promulgated on 16.12.1997 had a preamble for being just and expedient to provide any regulation, generation, transmission, and distribution of electric power and the connected matters. This preamble was changed through Amendment Act of XII of 2018 on 02.05.2018 and the preamble was drastically modified keeping in view the expediency to ensure elimination of energy poverty in Pakistan and to ensure a transparency and to effectively regulate the electric power markets of the country and to provide a legal framework to develop and sustain the competitive market. It also aimed at providing and developing renewable electricity markets in line with the international commitments of the country while acknowledging the responsibility of Pakistan to support and encourage steps for effectively mitigating adverse climate change and to efficiently manage the conflict and interest of the states in relation to the electric power markets of the country. The preamble is reproduced as under:- "AND WHEREAS it is expedient to ensure the elimination of energy poverty in the country to ensure the highest standards of transparent, certain and effective regulation of the electric power markets of the Islamic Republic of Pakistan, to provide the legal framework within which a competitive electric power market can develop and sustain, to make special provisions for development of renewable electricity markets in accordance with the international commitments of the Islamic Republic of Pakistan as well as the responsibility of Islamic Republic of Pakistan to support and encourage measures to effectively mitigate adverse climate change and to effectively manage conflict of interest of the State in relation to development of the electric power markets of the Islamic Republic of Pakistan." 6. The National Energy Power Regulatory Authority (NEPRA) created under section 3 of NEPRA Act, 1997 by Federal Government through a notification, was consisting of a Chairman directly appointed by the Federal Government and 4 members (one from each province) appointed by the Federal Government after considering the recommendations of the Provincial Governments. The vice Chairman of the Authority was appointed from the members for a period of one year by rotation in an alphabetical order. The qualification for Chairman was that he must be an eminent professional of known integrity and competence with 20 years of related experience in law, business, engineering, finance, accounting, economics or the electric utility business. The qualification for the member was the same but with the slight difference of maximum experience reduced to 15 years instead of 20 years. The tenure of the Chairman and the member was 4 years each and their maximum age limit was 65 years. However, it was prescribed that any act or proceedings of the Authority would not be considered invalidated if there existed a vacancy or a defect in the constitution of the Authority. Under Section 5 three members out of total membership of 5, 6 & 7 would constitute a quorum of the Authority for taking a decision. The decision of the Authority was to be made by majority of the members present in the meeting and in case of a tie, the person presiding over the meeting would have a casting vote. The Authority was empowered to grant license for generation etc., prescribe procedure for investment performance standards, to establish a uniform system of accounts, prescribe fee for the grant of licenses and fine in case of contravention of the Act and perform any other function consequent thereto. The Authority was also empowered to determine tariff, rates, charges, terms and conditions of supply of electric power, renew organizational affairs, encourage
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uniform industry standards and develop code of conduct, tender advice to public sector projects, submit report about activities of the companies and to perform any other consequential functions. It was also given in the Act that before approving the tariff for supply of electric power by generation companies using hydroelectric plants, the Provincial Government's recommendation (where such generation facility was located), was also to be considered. It was specifically mentioned that in performing its functions under the Act, the Authority shall as far as practicable, protect the interest of consumers and companies providing electric power services in accordance with guidelines laid down by the Federal Government but not inconsistent with provisions of the Act. Under section 31, the tariff was to be determined by the Authority under the prescribed procedures and following standards for determination, modification, revision of rates, charges and terms and conditions for generation of electric power, transmission, interconnection, distribution services and power sales to the consumers. The Authority while determining above standards, was required to protect consumers against monopolistic and oligopolistic prices, keeping in mind the research, development and capital investment program costs of licensees. It was also supposed to encourage efficiency in licensees operations and quality of service, economic efficiency in the electric power industry keeping in view the economic and social policy objectives of the Federal Government, thus was also responsible to determine tariff so as to eliminate the demand of exploitation and minimize the economic distortions. In order to determine the tariff, the procedure would ensure the timeframe to decide the tariff petitions to provide opportunity to consumers and other interested parties to participate meaningfully in the tariff approval process and protect the refund to the consumers during the pendency of the tariff decision. Once the tariff rates, charges and other terms for supply of electric services by the generation, transmission and distribution companies is approved by the Authority, it shall be notified in the official Gazette by the Federal Government upon intimation to the Authority. However, the Federal Government could require the Authority to reconsider its determination within 15 days and then Authority shall determine and renew after consideration and intimate the decision within 15 days to the Federal Government. Notably, the decisions of the Authority were to be enforced as decrees of the civil court. For our comparative analysis relevant Section 3, Section 5, Section 6, Section 7 and Section 31 are reproduced as under for ready reference:- 3. Establishment of the Authority. -- (1) As soon as may be, but not later than thirty days after the commencement of this Act, the Federal Government shall, by notification in the official Gazette, establish a National Electric Power Regulatory Authority consisting of a Chairman to be appointed by the Federal Government and four members, one from each Province, to be appointed by the Federal Government after considering the recommendations of the respective Provincial Governments. (2) There shall be a Vice-Chairman of the Authority, appointed from amongst the members for a period of one year, by rotation, in the following order, namely: - (i) the member representing the Province of Balochistan; (ii) the member representing the Province of North-West Frontier; (iii) the member representing the Province of the Punjab; and (iv) the member representing the Province of Sindh. (3) The Chairman shall be an eminent professional of known integrity and competence with twenty years of related experience in law, business, engineering, finance, accounting, economics or the electric utility business. (5) The Chairman and a member shall, unless he resigns or is removed from office earlier as hereinafter provided, hold office for a term of four years and shall be eligible for reappointment for similar term:
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Provided that the Chairman or a member shall not be appointed under sub-section (1) if he has attained the age of sixty-five years. (6) No act or proceeding of the Authority shall be invalid by reason only of the existence of a vacancy in, or defect in, the constitution of the Authority. (7) The principal office of the Authority shall be in Islamabad and it may set-up offices at such place or places as it may deem appropriate. 5. Meetings of the Authority, etc.__ [(1) The meetings of the Authority shall be presided over by the Chairman or, in his absence, the Vice-Chairman. (2) Three members shall constitute a quorum for meetings of the Authority requiring a decision by the Authority. (3) The members shall have reasonable notice of the time and place of the meeting and the matters on which a decision by the Authority shall be taken in such meeting. (4) The decision of the Authority shall be taken by the majority of its members present, and in case of a tie, the person presiding the meeting shall have a casting vote. 6. Decisions of the Authority. All orders, determinations and decisions of the Authority shall be taken in writing and shall identify the determination of the Chairman and each member. 7. Powers and functions of the Authority.--(1) The Authority shall be exclusively responsible for regulating the provision of electric power services. (2) In particular and without prejudice to the generality of the foregoing power, only the Authority, but subject to the provisions of sub-section (4), shall-- (a) grant licences for generation, transmission and distribution of electric power; (b) prescribe procedures and standards for investment programs by generation, transmission and distribution companies: (c) prescribe and enforce performance standards for generation, transmission and distribution companies: (d) establish a uniform system of accounts by generation, transmissions and distribution companies: (e) prescribe fee including fee for grant of licences and renewal thereof: (f) prescribe fines for contravention of the provisions of this Act; and (g) perform any other function which is incidental or consequential to any of the aforesaid functions. (3) Notwithstanding the provisions of sub-section (2) and without prejudice to the generality of the power conferred by subsection (1) the Authority shall-- (a) determine tariff, rates, charges and other terms and conditions for supply of electric power services by the generation, transmission and distribution companies and recommend to the Federal Government for notification; (b) review organizational affairs of generation, transmission and distribution companies to avoid any adverse effect on the operation of electric power services and for continuous and efficient supply of such services; (c) encourage uniform industry standards and code of conduct for generation, transmission and distribution companies; (d) tender advice to public sector projects; (e) submit reports to the Federal Government in respect of activities of generation, transmission and distribution companies; and (f) perform any other function which is incidental or consequential to any of the aforesaid functions. (4) Notwithstanding anything contained in this Act, the Government of a Province may construct power houses and grid stations and lay transmission lines for use within the Province and
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determine the tariff for distribution of electricity within the Province. (5) Before approving the tariff for the supply of electric power by generation companies using hydroelectric plants, the Authority shall consider the recommendations of the Government of the Province in which such generation facility is located. (6) In performing its functions under this Act, the Authority shall protect interests of consumers and companies providing electric power services in accordance with the guidelines, not inconsistent with the provision of this Act, laid down by the Federal Government. 31. Tariffs. (1) As soon as may be, but not later than six months from the commencement of this Act, the Authority shall determine and prescribe procedures and standards for determination, modification or revision of rates, charges and terms and conditions for generation of electric power, transmission, inter-connection, distribution services and power sales to consumers by licensees and until such procedures and standards are prescribed, the Authority shall determine, modify or revise such rates, charges and terms and conditions in accordance with the directions issued by the Federal Government. (2) The Authority while determining the standards referred to in sub-section (1) shall- (a) protect consumers against monopolistic and oligopolistic prices; (b) keep in view the research, development and capital investment programme costs of licensees; (c) encourage efficiency in licensees operations and quality of service; (d) encourage economic efficiency in the electric power industry; (e) keep in view the economic and social policy objectives of the Federal Government; and (f) determine tariffs so as to eliminate exploitation and minimize economic distortions. (3) The procedures established under sub-section (1) shall include (a) time frame for decisions by the Authority on tariff applications; (b) opportunity for customers and other interested parties to participate meaningfully in the tariff approval process; and (c) protection for refund, if any, to customers while tariff decisions are pending. (4) Notification of the Authority's approved tariff rates, charges, and other terms and conditions for the supply of electric power services by generation, transmission and distribution companies shall be made, in the official Gazette, by the Federal Government upon intimation by the Authority: Provided that the Federal Government may, as soon as may be, but not later than fifteen days of receipt of the Authority's intimation, require the Authority to reconsider its determination of such tariff, rates, charges and other terms and conditions. Whereupon the Authority shall, within fifteen days, determine these anew after reconsideration and intimate the same to the Federal Government." LEGISLATIVE HISTORY OF NEPRA ACT, 1997 7. Initially, the Act did not provide a forum to challenge the decision against determination of tariff and other charges, therefore, the amendments were made according to the requirements of the time. The first amendment was made on 27.06.2008 in Section 31 by introducing a proviso according to which the Authority was required to renew and revise the approved tariff on monthly basis on account of any variation in the fuel charges and policy guidelines that the Federal Government might issue and then recommend the revised tariff to the Federal Government for notification in the official Gazette; whereafter the tariff is imposed. On 24.09.2011 Section 3 was further amended to improve the qualification of the Chairman to be a person who may have an experience of power industry. Section 7 was also amended and according to the amended position the Authority could also review its order, decisions or determinations, settle disputed between the licensees, issue guidelines and Standards Operation Procedure (SOPs). Section 12A was inserted according to which a right of appeal was provided to any aggrieved person against the order of
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the single Member of the Authority or Tribunal, established under Section 11, before the newly constituted Tribunal within 15 days in the prescribed manner which was to be decided within 60 days. Section 31 was further amended by introducing the requirement that Authority could make adjustment in the approved tariff on monthly basis but not later than the period of 7 days. However, on 30.04.2018, substantial amendments were made by the Act of XII of 2018 under which in Section 3, the Khyber Pakhtunkhwa name was substituted for NWFP and the qualification of the Chairman as well as the members of the Authority was prescribed with an experience of not less than 12 years in the relevant field including law, business, engineering, finance, accounting or economics preferably in the electric power services business. However, the Authority as a whole was to comprise of the requisite range of skill, competence, knowledge and experience relevant to its functions. The maximum age for Chairman or Member was 60 years. Under Section 5, the Authority was further empowered to perform its functions and conduct its proceedings in accordance with the regulations made under the said Act. Now the maximum age limit of the Chairman of the authority was 65 years whereas the Member Finance and the Member Electricity, both of not more than 60 years, were to be appointed for a period of 3 years by rotation from each Provinces. In case of a vacancy of the member of the authority, the Federal Government would designate a new member and if the position of the Chairman was vacant, the Federal Government would appoint one of the existing members as acting Chairman only for a period of 3 months. The Federal Government was essentially required to fill up the vacancy of the tribunal within 3 months from the date when such vacancy occurred. The absence of Chairman or his temporary incapacity was not to affect the power of members to decide. In order to further strengthen and provide more efficient forum for the resolution of disputes the Appellate Tribunal was established by the Federal Government with its members appointed by the Federal Government under section 12 and a former Judge of the High Court as Chairman for a period of 4 years whereas the members should be nominated by the Provinces or the Federal Government representing Federal Government and the Provinces. The decision of the Appellate Tribunal was to be taken by the majority. If there were less than 03 members in the Appellate Tribunal the presence of 02 shall constitute a quorum and the decision shall be taken by consensus. Importantly, the Appellate Tribunal at the most could remand a matter of tariff determination to the Authority with the relevant guidelines to review such determination within one month. The decision of the Authority was to be given full effect during the pendency of the appeal and against the decision of the said Tribunal further appeal was competent before the High Court having territorial jurisdiction. The Appellate Tribunal was deemed to be a Civil Court having same powers under Code of Civil Procedure including the power to enforce attendance, production of documents, issuing commissions and was also empowered to examine any record, require information of document from any person in relation to the matter under appeal. The appellate tribunal was also competent to maintain a panel of national and international experts in power sector to assist in its performance and functions. Sections 12G, 12H, 12I, 12J, 12K are reproduced as under:- 12G. Appellate procedures.--(1) Any person aggrieved by a decision or order of the Authority or a single member thereof or a Tribunal established under section 11 may, within thirty days of the decision or order, prefer an appeal to the Appellate Tribunal in the prescribed manner and the Appellate Tribunal shall decide such appeal within three months after filing of the appeal. (2) In examining an appeal under sub-section (1), the Appellate Tribunal may make such further inquiry as it may consider necessary and after giving the Authority or the Tribunal and an appellant an opportunity of being heard, pass such order as it thinks fit, confirming, altering or annulling a decision or order appealed against: Provided that if the decision under appeal is a determination of tariff by the Authority, then the Appellate Tribunal may in case of disagreement with the determination of the Authority, remand
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the matter back to the Authority with relevant guidelines, which shall be duly considered by the Authority which shall be bound to review its determination within one month of the receipt of such guidelines from the Appellate Tribunal. (3) The decision of the Appellate Tribunal shall be in writing, detailing the issues raised in the appeal and the arguments adopted by the appellant and the Authority or Tribunal, as the case may be. The Appellate Tribunal shall also provide reasons for reaching its decision with reference to the provisions of this Act and the facts of the case. (4) The Appellate Tribunal shall provide copies of its decision to all the appellants and the respondents including the Authority or Tribunal, as the case may be, not later than five days from the date of rendering its decision. (5) A decision or order of the Authority or Tribunal, as the case may be, shall be given full force and effect during the pendency of any appeal of such determination. (6) The decision of the Appellate Tribunal shall be appealable before the High Court having territorial jurisdiction. 12H. Disclosure of interest. --The following shall apply to members of the Appellate Tribunal including the Chairman, namely:-- (a) a member of the Appellate Tribunal shall be deemed to have an interest in a matter if he has any interest, pecuniary or otherwise, in such matter which could reasonably be regarded as giving rise to a conflict between his duty to honestly perform his functions, so that his ability to consider and decide any question Page 19 of 46 impartially or to give any advice without bias, may reasonably be regarded as impaired; (b) a member of the Appellate Tribunal having any interest in any matter to be discussed or decided by the Appellate Tribunal shall disclose in writing to the Secretary to the Appellate Tribunal, the fact of his interest and the nature thereof; (c) a member of the Appellate Tribunal shall give written notice to the Secretary to the Appellate Tribunal of all direct or indirect pecuniary or other material or personal interests that he has or acquires in a body corporate involved in a matter before the Appellate Tribunal; and (d) a disclosure of interest under clause (a) shall be made a part of the record of the Appellate Tribunal in that particular matter. 12I. Powers of the Appellate Tribunal.--(1) The Appellate Tribunal shall, for the purpose of deciding an appeal, be deemed to be a civil court and shall have the same powers as are vested in such court under the Code of Civil Procedure, 1908 (Act V of 1908), including the powers of -- (a) enforcing attendance of any person and examining him on oath; (b) compelling production of documents; and (c) issuing commissions for examination of witnesses and documents. (2) The Appellate Tribunal may call for and examine any record, information or documents from any person in…
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