KPTCL can't hike supervision charges on its own: Karnataka High Court

The Karnataka High Court has ruled that the Karnataka Power Transmission Corporation Limited (KPTCL) has no power to revise supervision charges payable by consumers who choose to self-execute electrical works [Anushka Realty Inc v State of Karnataka]..Justice Ravi V Hosmani observed that such revisions of supervision of charges have to be approved by the Karnataka Electricity Regulatory Commission (KERC)The Court, therefore, quashed a ₹1.2 crore demand notice isssued by KPTCL to Anushka Realty, which involved a demand for the payment of supervision charges in excess of limits imposed in regulations framed by the KERC.The Court noted that KPTCL was not empowered to fix or revise supervision charges on its own, going by Sections 39 to 41 of the Electricity Act, 2003. These provisions laid down the functions, duties, etc. of a State Transmission Utility and Transmission Licensee like KPTCL"Indeed, there is no express conferment of power (on KPTCL) to determine or revise charges payable by consumers for supervision of self-execution works," the Court noted in its June 1 ruling..It, proceeded to set aside the KPTCL demand notice under challenge as well as a connected order passed in 2018 imposing slab-wise supervision charges on Anushka Realty in excess of the KERC-prescribed limits. "In absence of KPTCL sourcing its authority to revise supervision charges beyond ceiling prescribed under regulatory framework, impugned order dated 27.06.2018 at Annexure-A prescribing slab-wise supervision charges, as also demand notice at Annexure-B cannot sustain," the Court held. .Anuskha Realty had been developing a multi-storied residential project in Bengaluru, in connection with which it decided to self-execute certain electrical works, instead of having such work executed by the State's electrical utility company. In such cases, KPTCL is allowed to collect supervision charges to cover the costs of supervising such self-execution works and ensure their compliace with safety and other requirements. According to KERC regulations, such supervision charges are capped at 10 per cent of the estimated cost of work or ₹15 lakhs, whichever is lesser. However, in Anushka Realty's case, KPTCL demanded a supervision charge of ₹1,02,11,000 (₹ 1.2 crores), instead of sticking to the KERC-prescribed ₹15 lakh limit. The developer challenged this move before the High Court. It argued that KPTCL had no authority to hike the supervision charges in this manner. Anushka Realty argued that the KPTCL itself acknowledged this in a 2018 letter addressed to KERC, wherein it sought KERC's approval to hike the supervision charges to 15 per cent of the estimated work cost, stating that the charges had not been revised for 13 years. The Court found merit in Anushka Realty's stance. "Very act of KPTCL addressing communication at Annexure-R1 to KERC seeking its approval for revision of supervision charges, would indicate absence of independent statutory authority to KPTCL to revise supervision charges," it said. .The Court also rejected KPTCL's argument that the hike was an administrative measure that was meant to rationalise supervision charge rates and ensure the recovery of the actual cost of supervising self-executed electrical works. "Levy of supervision charges affecting consumers and prescribing monetary liability cannot be regarded as purely administrative action, when Section 45 (Electricity Act) stipulated procedure for such fixation," it held. .The Court proceeded to quash the KPTCL order and demand notice under challenge and ordered it to refund any excess payments collected from Anushka Realty.The Court further issued directions to allow the developper to pay supervision charges in line with KERC-prescribed rates. .Anushka Realty Inc was represented by Advocate Joseph Anthony. Additional Government Advocate Milind Dange appeared for the State. KERC was represented by Advocate BN Prakash, KPTCL and BESCOM were represented by Senior Advocate S Sriranga and Advocate Sumana Naganand. .[Read Order]