VIDYUT OMBUDSMAN

5th Floor, Singareni Bhavan, Red Hills, Hyderabad –500 004.

 

 

Dated:   27-12-2006

 

Present: S. Surya Prakasa Rao, Ombudsman

 

 

Appeal No 18 of 2006

 

 

 

Between

 

M/s. Hindustan Petroleum Corporation Ltd.

Represented by Chief Manager - VSPL

VR-ATP Area, Naval Base Post

Visakhapatnam – 530 014                                                                                                                                                  ...….. Appellant

 

 

and

 

 

1. Superintending Engineer/Operation/Nalgonda

2. General Manager/Customer Service/Corporate Office /CPDCL Hyderaba                                                 ……. Respondents

 

 

            This appeal dated 01-06-2006 (received on 05-06-2006) filed by M/s Hindustan Petroleum Corporation Ltd (herein after called as consumer or Appellant), against the order dated 13-04-2006 of the Forum for Redressal of Grievances of Consumers (herein after called as the Forum), of CPDCL, Hyderabad in CG.No.21/2006, Nalgonda Circle, coming up before the Ombudsman for consideration and having stood over till this day, the Ombudsman issues the following: -

 

 

 


O R D E R

 

2.         The facts on record in this case are narrated herein briefly. The consumer availed HT supply for the booster station of visakha-Vijayawada-Secunderabad pipeline (VVSPL) project, at Imampet, near Suryapet, Nalgonda District, at 33 KV for a Contracted Maximum Demand of 1550 KVA with HT Service connection No. NLG 417 with effect from 13-02-2002. The service was sanctioned under HT category II (a residual category) but the test report at the time of release of supply on 13-02-2002 contains the tariff applicable, as HT category – I (Industrial). How ever, the billing is being done under HT category – II right from the date of release of supply on 3-02-2002 and the consumer paid the bills accordingly. In January 2004, the consumer made a representation to the corporate office of the respondents to refund the excess amount paid. The CPDCL sent a common clarification to the representations made by 3 oil companies stating that the HT category –I is not applicable for their HT services as per the Tariff classification in the Tariff Order of A.P. Electricity Regulatory Commission (APERC) and requested them to pay the C.C. bills under HT category – II with effect from February 2004 consumption month. Subsequently after a period of about 2 years the consumer filed a complaint before the Forum of CPDCL, Hyderabad 18/02/2006 protesting the classification under HT category – II. The learned Forum rejected the complaint in its order dated 13-04-2006. Hence this appeal.

 

3.         In this appeal, the consumer made the following prime contentions:

 

(i)                 It is not material that the location must carry on directly some manufacturing or processing activity. The pipeline project is an integral part of the Industrial activity of manufacturing goods for sale.

(ii)               The supply was released under HT category – I as per DE/Operation/Suryapet letter dated 25-02-2002

(iii)             From inception, (February 2002) the billing is done under HT category – II and payment is being made accordingly, though supply was released under HT category – I.

(iv)              The mere fact of payment of charges by the appellant under HT category – II does not mean that they accepted the classification.

(v)                In letter dated 08-01-2004, the CPDCL was requested to refund the excess payment made.

(vi)              The CPDCL clarified in the letter addressed to IOCL (another oil company) cherlapally, Hyderabad that the services fall under HT category – II and requested the oil companies to pay bills under HT category – II from February 2004.

(vii)            The re-categorisation was done without giving any show cause notice and no opportunity was given to make their submissions.

 

The appellant cited a few judgments of the Hon’ble Supreme Court to assert his contention that the entire activity up to the point where goods are stored for sale, is to be treated as Industrial activity.

 

For all the reasons stated above the appellant requested the Ombudsman to setaside the order of the Forum of CPDCL.

 

4.         It may be mentioned here that this appellant filed two other appeals in respect of the HT services availed for the VVSPL project at Vijayawada (No.16 of 2006) and at Visakhapatnam and Rajahmundry (No.17 of 2006). As required under clause 8(1)(C) and clause 11 of the Regulation No.1 of 2004 of the Hon’ble APERC, the Ombudsman endeavoured to promote a mutually acceptable settlement by convening a meeting between the parties herein along with respondents in the other two Appeals of this appellant, on 25-07-2006 in the office of Ombudsman at Hyderabad.  The respondents sought time for consultation with respective managements for responding to the deliberations that occurred in the meeting.  However no response was received from either of the parties and hence the Ombudsman took up further proceedings in the appeal by issuing notice for filing counters/rejoinders and fixing the hearing on 11-10-2006, which was later postponed to 10-11-2006 at the request of the respondents in appeal No.17 of 2006, as all these 3 appeals were agreed to be heard together as the appellant was one and the same and issues are more or less same.

 

5.         The SE/Operation/Nalgonda (respondent No.1) filed counter on behalf of the respondents in his letter dated 15-09-2006, which can be summarized as follows:

(i)                             As per Tariff order approved by APERC this service is not entitled for HT category – I. The estimate was prepared and submitted to the corporate office for sanction under HT category –II

(ii)                           The revenue return and also the security deposit was calculated as per HT category – II Tariff rates (Rs.4.50/unit).

(iii)                         The minimum energy @ 25 units/KVA applicable for HT category –II was adopted while arriving at the revenue return.

(iv)                          The purpose of supply is mentioned in the agreement as Transportation, storage and distribution of petroleum products.

(v)                            The DE/Operation/Suryapet mentioned the nature of supply and Tariff applicable as HT-I instead of HT-II byover-sight.

(vi)                          However, even the first bill was correctly issued under HT category II only, as per sanction and the consumer is paying the bills under HT category – II right from the beginning.

(vii)                     No re-classification was done in this case in February 2004. Hence there is no need to issue any show-cause notice.

For all the reasons stated above, the respondent No.1 requested the Ombudsman to dismiss the appeal as no injustice was done to the appellant.

 

6.         The appellant filed rejoinder in letter dated 29-09-2005. In this rejoinder the appellant responded to the points in the counter as follows:

(i)                 The consumer is an Industrial consumer with a refinery at visakhapatnam i.e. manufacturer of petroleum products for sale and the booster station at suryapet is a part of the industrial activity of the consumer for storage before sale.

(ii)               Though the appellants did not recognize the basis of sanction and billing at the initial period, they reserve the right to claim refund of excess amount paid, in case HT category – I is applicable.

(iii)             The respondent No.1 has merely assumed that the DE/Operation/Suryapet mentioned HT category –I by over sight. No other test report is provided to prove that the sanction was made under HT category – II.

(iv)              The decision of CPDCL in February 2004 pursuant to the representation of the appellants was ex-parte and unilateral.

(v)                The clarification given by the erstwhile APSEB in letter dated 22-06-1998 was not considered.

(vi)              The decision of the respondent licensee is erroneous under the law as per the decision of the Apex court in the case cited by the appellant.

 

For all the reasons stated above, the appellant requested to confirm HT category –I for this service and order for refund of excess amount paid with 12% interest.

 

7.         As mentioned in para 4 above, the parties in all the 3 appeals (Nos.16, 17 and 18 of 2006) were heard together on 10-11-2006. sri D.P. Bhave, Advocate and learned counsel for the appellants, presented the issues involved in these appeals. He dealt at length the basis for classification, power to re-classify and power to re-classify with retrospective effect and effect of section 56(2) of Electricity Act 2003 etc. He stated that the activity of the consumer cannot be disected, and oil-pumping activity is part of the Industrial activity of the appellant who is an Industrial consumer. He also stated that the terms of the Agreement do not empower the respondents to change the category.  When his attention was invited to the provisions under clause 35 of the Terms & Conditions of Supply in the matter of power to re-classify the services, the learned advocate said that the said provisions are not made available and requested for copy of the same to enable them to file rejoinder on this aspect. The respondent in Appeal No.17 of 2006 has been requested to provide the same to the appellant.  The Learned counsel also provided a copy of the judgment of Hon’ble High court of Gujarat and stated that this matter is covered by the said judgment.  He also handed over a book-let containing the written submissions on behalf of the appellant, copies of which were also handed over to the respondents.

            On behalf of respondents:

                        The respondent No.1 in appeal No.16/2006,

                        Respondent No.2 and 3 in appeal No. 17/2006,

                        and Respondent No.1 in appeal No.18/2006,

 

have attended the hearing on 10-11-2006. They have stated that they will submit written submissions on the issues raised in the hearing.  But no further written submissions are filed by respondents, except furnishing the copies of certain documents like HT requisition, sanction letter, Test Report etc. as required by the Ombudsman during the hearing.  Hence, the submissions as filed in the counters are considered for the stand of the Respondents. 

 

8.         In the background of the above rival contentions, the issues for consideration in this appeal No.18 of 2006 or:

(i)                 Whether the sanction under HT category – II and billing under HT category – II from the date of release of supply on 13th February 2002 is correct ?, and

(ii)               Whether the clarification of CPDCL in February 2004 constitutes change of category ?.

 

9.         The issue of classification of the connections taken by HPCL for its VVSPL project was thoroughly dealt in paras 12 to 14 of the order dated     14-12-2006 of this Ombudsman in Appeal No.16 of 2006 of this appellant. The relevant paras are appended as Annexure to this order. The various decisions of the Hon’ble Supreme Court cited by appellant in support of its contentions on the classification, power of re-classification etc. have also been discussed in the said order of this Ombudsman including the clarification dated 22-06-1998 of the erstwhile APSEB.

           

            In view of the above and in accordance with the discussion contained in paras 12 to 14 of the order dated 14-12-2006 of this Ombudsman in Appeal No.16 of 2006 of this appellant, I hold that the S.C.No NLG-417 is not entitled for classification under HT category I, and it falls under the residual category i.e. HT category – II

 

10.       The next issue to be decided in this appeal is whether the common clarification given by CPDCL in February 2004 pursuant to the representation of the oil companies constitutes an act of re-clarification.

The facts on records in this appeal lead to an inevitable conclusion that no such re-classification is done in so far as HPCL connection at Suryapet (HT SC No.417) is concerned. The appellant has relied upon the mention of HT category – I in Test Report Communicated by DE/Operation/Suryapet in his letter dated 25-02-2002 and the common clarification given by CPDCL in February 2004 (for all the 3 oil companies). I have no doubt that this clarification does not constitute an act of re-classification. The service was already under HT category – II and was being billed under that category for about 2 years. The CPDCL merely proposed to continue the status-quo and no change was contemplated.

 

 I therefore agree with the contention of the respondent No.1 that no show-cause notice is required in this case.

 

11.       Concluding the above discussion, I hold that there is no merit in the contentions of the appellant and accordingly the appeal is dismissed. No costs.

 

 

 

12.       Reasons for delay:

            This Appeal was received on 05-06-2006.  As there are two more appeals of this appellant on similar matters in two other DISCOMs, the proceedings had to be programmed simultaneously for the convenience of the parties herein as explained in para 4 above. During the reconciliation meeting, the respondents sought time for discussion with managements for proposing settlement terms if possible. A part from this, after hearing is over, further time had to be given for written submissions by appellants on condition 35 of TCS.  Thus there is a delay of about 3 1/2months, (15 weeks) over the three months period specified by the Hon’ble Commission in Regulation No.1 of 2004, for which no one is responsible.

 

 

 

This Order is signed by me on the 27th day of December 2006



 

VIDYUT OMBUDSMAN

 

 

 

             


ANNEXURE

(Paras 12 to 14 of Order dated 14-12-2006 in Appeal.No.16 / 2006)

 

12.       I will now deal with the above issues considering all the contentions raised by the appellant as well as the respondents

 

 

Classification:

 

12.1    Pumping activity an integral part of Industrial activity of HPCL.

 

This is the crucial aspect in all the three (3) appeals, which requires to be examined carefully. The relevant portion of the description of HT Industrial category (i.e. HT category – I) is extracted here under:

 

“This Tariff is applicable for supply to all HT Industrial consumers. Industrial purpose shall mean manufacturing, processing and/or preserving goods for sale, but shall not ………………….“

           

            The above description does not cover the activity of transport of goods through pumping (over long distances) and storing them before sale. Thus it requires a reasonable interpretation and harmonious construction of the relevant provisions. It may be of some help to examine the existing classification of consumer categories from the viewpoint of any activity of pumping being covered in any of the categories.   The following questions can be framed for this limited purpose.

 

(i)         Whether pumping of any fluid in any form is covered in any of the categories covered in the Tariff Order issued by the APERC.

 

(ii)   Whether there is any specific consumer or class of consumers who have composite activities and of the same consumer has different activities whether such different activities are classified under different categories?