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The Supreme Court ruled as legally justifiable fixing higher electricity tariff for self-financed educational institutions (SFEIs) than government- run and aided educational institutions under the Electricity Act, 2003.

In its verdict on Thursday, a bench comprising Justices Deepak Gupta and Aniruddha Bose gave its nod to the Kerala State Electricity Regulatory Commission  to club tSFEIs with commercial service providers for levying power tariff.

The court noted that a tariff fixing body was not required to proceed solely on the basis of “nature of service” rendered by the institution converned while fixing tariffs.

“While we construe the meaning of the expression ‘purpose’ under sub-section (3) of Section 62 of the 2003 Act, we are of the opinion that for the purpose of settling the tariff question, who is serving the ‘purpose’ and for whom such ‘purpose’ is being served have to be factored in. We also have to take into account that the nature of service rendered by them cannot be the sole determinant for the tariff-fixing exercise,” it said.

The Kerala commission had issued a notification on November 26,  2007 categorising  SFEIs under the head “Low Tension VII(A) Commercial”.

The government-run or aided private educational institutions were placed under “Low Tension VI Non-Domestic” tariff category.

Multiple writ petitions were filed before the a single judge bench of of the Kerala High Court by several SFEIs questioning the legality of the notification which in effect created a higher tariff regime for them.

The single judge validated the tariff structure imposed by the commission.

Subsequently, the respondents moved an appeal against the single judge’s order before a division bench of the high court.

The division bench ruled in favour of SFEIs by setting aside the single judge’s order, holding that as the determination of the tariff by the state commission could only be based on Section 62 of the 2003 Act, the differentiation as put by the commission was not for any of the grounds as specified thereto.

“When the supply is to an educational institution, irrespective of whether it is self-financing or aided or governmental purpose, cannot be different, as education means to impart knowledge,” the division bench said.

Aggrieved by this verdict, the state commission approached the Supreme Court.

The apex court assailed the division bench order of the high court, saying the commission was within its right as a tariff fixing body to distinguish the “purpose” of respective categories of educational institutions as the means to an end was dissimilar in nature for both institutions.

While both imparted education, the state-run and aided institutions were also discharging their duties of welfare of citizens.

“The expression “purpose” has to be understood in the context of the character or feature of the entity which is undertaking the activity of imparting education. While funding educational institutions, the State undertakes to discharge one of its essential welfare measures.”

The bench subsequently asserted that fixing higher tariffs for SFEIs and not on the state-run educational institutions would not amount to giving “undue preference” to state-aided institutions in terms of the tariff notification as the purposes could be of both could be duly differentiated

“The fact that SFEIs have been clubbed together with several commercial service providers wholly unrelated to education becomes insignificant once we find that purpose of the SFEIs could be differentiated from the Government run and Government aided educational institution,” it added.

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