GRID CORPORATION OF ORISSA LTD. AND ORS.versusEASTERN METALS AND FERRO ALLOYS AND ORS.

                    [2010] 10 S.C.R. 779


   GRID CORPORATION OF ORISSA LTD. AND ORS.                       A
                           v.
  EASTERN METALS AND FERRO ALLOYS AND ORS.
        (Civil Appeal Nos. 5842-5889 of 1998)
                     AUGUST 31, 2010
                                                                  B
     [R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]

      Orissa Electricity Reform Act, 1995: s.14(iv) -
Provisional licence issued by State Government in exercise
of power under s. 14(iv) - Words "charges made by the C
licencee not to exceed on average 117% of those permitted
under the interim tariffs in force on 1.4.1996" used in Clause
9. 1 of the licence - Correct interpretation of - Held: The use
of the words "charges made by the licencee" and the words
"shall not exceed on average 117%" necessarily indicates that D
the rates fixed by the licencee should not result in an increase
in realization or revenue in excess- of 17% of what it would
have realized with reference to the tariff rates that were earlier
in force under the interim tariff - "Charges made by the
licencee," therefore, refers to the total revenue by sale of E
electricity to the different categories of consumers - The word
'on average' used in clause 9. 1 gives the discretion to
licencee to charge tariff rates with different increases
 depending upon the category of consumers, so long as the
 overall increase in revenue, that is, the "charges made" by the
                                                                   F
licencee, does not exceed 17% - Any other interpretation
would render the words 'on average' otiose and have the effect
 of substituting the words 'tariff rate' for the word 'charges' -
 Interpretation of statutes - Electricity.

    Administrative law: Opinion of technical body                 G
(Electricity Regulatory Commission) - Acceptability of - Held:
The opinion of a technical body in regard to purely technical
matters deserves acceptance and should not be interfered,
unless it is arbitrary or unreasonable.
                              779                                 H
    780     SUPREME COURT REPORTS              [2010] 10 S.C.R.


A      Interpretation of statutes: Purposive construction -
  Held: The golden rule of interpretation is that the words of a
  statute have to be read and understood in their natural,
  ordinary and popular sense - Where, however, the words used
  are capable of bearing two or more constructions, it is
B necessary to adopt purposive construction, to identify the
  construction to be preferred - Such an exercise involving
  ascertainment of the object of the provision and choosing the
  interpretation that would advance the object of the provision
  can be undertaken, only where the language of the provision
c is capable of more than one construction.
       By virtue of Section 14(iv) of the Orissa Electricity
  Reform Act, 1995, the State Government is authorized to
  grant provisional licences for carrying on the business
  of transmission or supply of electricity. In exercise of the
D power under the said section, the State Government, by
  notification dated 30.3.1996, issued three licences to the
  appellant subject to the terms and conditions mentioned
  in those licences. The appellant took over the
  transmission, distribution and supply of electricity from
E the Orissa State Electricity Board (OSEB) with effect from
  1.4.1996. Clause 9 of the licences was related to tariffs.
  Clause 9.1 stated that the charges made by the licencee
  should not exceed on average 117% of those permitted
  under the interim tariffs in force on 1.4.1996. The interim
F tariffs in force as on 1.4.1996, referred to in the said
  clause 9.1 were the tariffs contained in the Notification
  dated 28.10.1995 issued by the OSEB, predecessor of the
  appellant.

       By notification dated 13.5.1996, the appellant revised/
G prescribed different tariff rates for different categories of
  consumers in supersession of the tariff rates prescribed
  in the OSEB Notification dated 28.10.1995. Several writ
  petitions were filed before the High Court, challenging (i)
  the validity of Section 14(iv) of the Act; (ii) the validity of
H the Notification dated 30.3.1996, in particular the
 GRID CORPORATION OF ORISSA LTD. v. EASTERN              781
         METALS AND FERRO ALLOYS

provision of the licence which enabled the appellant to         A
increase the tariff not exceeding on average 117% of
those permitted under the interim tariff issued by the
State Government; and (iii) the tariff notification dated
13.5.1996 issued by the appellant.
                                                                B
     The High Court upheld the validity of Section 14 (iv)
of the Act and the Notification dated 30.3.1996. It also
upheld the power of the appellant to revise the tariff under
the provisional licence. It, however, held that the increase
in tariff rates under the tariff notification dated 13.5.1996   C
issued by the appellant was more than 17% (over the
tariff rates contained in OSEB Notification dated
28.10.1995) in regard to some categories of consumers
and as such was in excess of the power given to the
appellant under clause 9.1 of the licence. As a
consequence, the High Court quashed the tariff                  D
notification dated 13.5.1996 and directed the Commission
to re-determine the tariff as per law.

     The instant appeals were filed challenging the order
of the High Court. The Court by interim order dated             E
3.4.2000 directed the Orissa Electricity Regulatory
Commission to determine the tariff by two methods, that
is, by taking into account the observations made in the
impugned judgment, and the second, without reference
to the observations/directions of the High Court. The           F
report of the Commission disclosed that in regard to
consumers falling under the category 'irrigation', the
increase was only 8.33% and for the Railways falling
under the category 'railway traction', the increase was
only 10.09%. In regard to the domestic consumers, the           G
increase was 17.47%. In regard to other categories of
consumers, the increase was much more.

    Allowing the appeals, the Court

    HELD: 1. The golden rule of interpretation is that the      H
    782     SUPREME COURT REPORTS             [2010] 10 S.C.R.


A words of a statute have to be read and understood in their
  natural, ordinary and popular sense. Where, however, the
  words used are capable of bearing two or more
  constructions, it is necessary to adopt purposive
  construction, to identify the construction to be preferred.
B Such an exercise involving ascertainment of the object
  of the provision and choosing the interpretation that
  would advance the object of the provision can be
  undertaken, only where the language of the provision is
  capable of more than one construction. (Para 14) [796-F;
c 797-A]
         Bengal Immunity Co. v. State of Bihar 1955 (2) SCR 603;
    Kanai/a/ Sur v. Paramnidhi Sadhukhan· 1958 SCR 360 -
    relied on.

D       Principles of Statutory Interpretation (12th Edition) by
    Justice G.P.Singh's - referred to.

       2.1. It is not disputed that clause 9.1 is reasonably
  capable of more than one construction, that is, at least
E three interpretations. The first interpretation of clause 9.1
  is that it permits increase in tariff rates but with a ceiling
  of 17% in regard to each and every category of
  consumers and, therefore, the increase in case of no
  category can exceed 17%, has found favour with the High
  Court and the Commission. The fact that there can be
F different percentages of increases in tariff in regard to
  different categories is an accepted procedure. Therefore,
  when there is a revision of tariff rates, the percentage of
  increase can vary from category to category. If the said
  interpretation is applied by holding that in no case, the
G increase can be more than 17%, and if in regard to some
  categories, increases are to be nominal, it will be
  impossible to achieve a 17% increase which is permitted
  and contemplated under clause 9.1. Further, the words
  'on average' would be rendered meaningless if by
H average 17% increase cannot be achieved and if the
 GRID CORPORATION OF ORISSA LTD. v. EASTERN              783
         METALS AND FERRO ALLOYS

increases cannot exceed 17% in any case. This                   A
interpretation, if accepted, would also prevent the
licencee from creating or carving out any new category
of consumers and fix the tariff rate for such category.
Therefore, this interpretation apart from rendering the
words 'on average' redundant and meaningless, militates         B
against the provisions of clause 9.1. [Para 16] [797-H;
798-A-E]

     2.2. The second interpretation is that so long as the
average of the different increases does not exceed 17%
of the interim tariff rates, the appellant has the discretion C
to apply different rates of increases to different categories
and increases with reference to some categories can
exceed 17%. This interpretation would also lead absurd
result, if put into effect. The average of the percentages
of increase in regard to six categories would be only D
16.66% which is less than 17%. But in terms of revenue
realization, the increase wo·uld exceed not only 17%, but
even as much as 40% with reference to revenue at the
previous tariff rates. This obviously was not the object.
The average should ensure that there is no increase E
beyond 17% in regard to the total revenue. [Para 17) [798-
F; 799-D]

     2.3. The third possibl~ interpretation would be: The
increase in tariff rates for different categories of            F
consumers could be of different percentages, provided
the average realization per unit during the relevant period
(arrived at by dividing the estimated revenue during the
period, by the estimated consumption during that period)
was not more than 17% of the average realization per unit       G
during the previous period when the interim tariff was in
force. The words used in clause 9.1 are "charges made
by the licencee shall not exceed on average 117% of
those permitted under the interim tariffs". It is significant
to note that the clause does not use the words "the tariff
                                                                H
   784      SUPREME COURT REPORTS             [2010] 10 S.C.R.


A rates prescribed by the licencee shall not exceed 17% of
  those permitted under the interim tariffs." The use of the
  words "charges" and 'tariffs' in the same clauses
  indicates that they were intended to signify different
  meanings. As was rightly noticed by the Commission that
B the word 'tariffs' referred to the schedule of rates. If the
  object of clause 9.1 was to refer to 'tariff rates' prescribed
  by the licence, there was no need to use the words
  "charges made". The use of the words 'on average' while
  referring to 117% has also some significance. If the
c words "charges made by the licencee" are interpreted as
  "tariff rates fixed by the licencee", then, the words 'on
  average' would be rendered meaningless and become an
  useless appendage. The use of the words 'charges made
  by the licencee' arid use of the words "shall not exceed
  on average 117%" necessarily indicates that the rates
0
  fixed by the appellant should not result in an increase in
  realization or revenue in excess of 17% of what it would
  have realized with reference to the tariff rates that were
  earlier in force under the interim tariff. 'Charges made by
  the licencee', therefore, refers to the total revenue of
E appellant by sale of electricity to the different categories
  of consumers. The appellant, discharging the functions
  of the State Government under the Act, has to ensure that
  the burden of increase on the agriculturist-consumers,
  that is, those consuming electrtcity for "irrigation", should
F be the minimum. Similarly, increase in the tariff rate for
  electricity consumed by railway traction has to be kept
  minimal in national economic interest. Similarly, the
  increase in tariff for residential user should be
  comparatively lesser than commercial user. At the same
G time, the appellant has to ensure an increase in its
  revenue by 17%. If increase beyond 17% was not
  permissible in regard to any category of consumers, and
  if some categories had to be subjected to only small
  increases far below 17%, due to economic or social
H justice criteria, the appellant would never be able to
 GRID CORPORATION OF ORISSA LTD. v. EASTERN              785
         METALS AND FERRO ALLOYS

achieve the increase anything in the range of 17%. Only          A
by adopting the process of applying a higher than 17%
increase in the case of some categories of consumers, it
can offset the effect of small or marginal increase in the
case of some other categories like 'irrigation' and 'railway
traction". Therefore, if appellant chose to charge a lesser      B
increase in percentage to some categories of consumers
and higher increases in regard to other categories of
consumers, it cannot be found fault with so long as its
total revenue does not exceed 17% over the
corresponding revenue with reference to the old interim          c
tariff rates. The word 'on average' used in clause 9.1 gives
the discretion to appellant to charge tariff rates with
different increases depending upon the category of
consumers, so long as the overall increase in revenue,
that is, the "charges made" by the licencee, does not            0
exceed 17%. Any other interpretation would render the
word~ 'on average' otiose and have the effect of
substituting the words tariff rate for the word charges. In
fact, the Commission has accepted this contention of the
appellant to a large extent. [Paras 13, 18, 19, 20] [796-C-
D; 799-F-H; 800-A-C; 800-D-H; 801-A-C]                           E

     4. The reliance placed b, the respondent upon the
definition of 'tariff' in clause (b) of Explanation to Section
26 of the Act to interpret that the "charges made" in
clause 9.1 do not refer to the total revenue received by         F
the appellant, but referred to the tariff rates prescribed by
the appellant, is misconceived. The explanation to
Section 26 does not define the words 'charges made', but
defines the word 'tariffs'. Under the erroneous
assumption that the word "charges" referred to the actual        G
tariff rates that were chargeable to different categories of
consumers, the Commission ignored its own
conclusions and held that clause 9.1 placed a ceiling of
17% in respect of increases in the tariff rates applicable
to different categories of consumers. It is true that the        H
    786      SUPREME COURT REPORTS            [2010] 10 S.C.R.


A interpretation by a technical body in regard to purely
  technical matters deserves acceptance and should not
  be interfered, unless it is arbitrary or unreasonable. But,
  in the instant case, on technical issues, the Commission
  has favoured the stand of the appellant. Having accepted
B the interpretation of the appellant as being technically
  sound and correct, it reached a different conclusion only
  because it thought that the word 'charges' had to be
  interpreted as 'tariff rates'. If that is found to be without
  basis or erroneous and, therefore, ignored, the opinion
c of the Commission fully favours the appellant. The High
  Court was not justified in holding that the tariff rate in
  regard to none of the category of consumers can exceed
  17% over the previous rates. [Paras 11, 21, 22] [795-A-B;
  802-F-H; 803-A-C]
D                        Case Law Reference:
          .1955 (2) SCR 603      relied on           Para 14
          1958 SCR 360           relied on           Para 14
E       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    5842-5889 of 1998.

        From the Judgment & Order dated 30.10.1998 of the High
    Court of Orissa at Cuttack in O.J.C. 8449, 5229, 4565, 4736,
    4779, 5114, 5231, 5428, 5577,6745, 8906, 8970,9037, 9038,
F   9212, 9413, 10048, 10447, 10656, 10736, 10737, 10858,
    11008, 11087, 11273, 11370, 11472, 11494, 11597, 11598,
    11599, 11818, 12183, 12407, 12409, 12429, 12459, 12492,
    13631, 13632, 13668, 15001, 15033 of 1996 and 994, 995,
    996, 997, 4161 of 1997.
G
                               WITH

    C.A. Nos. 3-8, 748 of 1999 & 7246 of 2010.

      Jaideep Gupta, Raj Kumar Mehta, Antrayami Upadhyay,
H S. Lakhi Singh, Sanjay Sen, Rana S. Biswas, Mridul
 GRID CORPORATION OF ORISSA LTD. v. EASTERN                   787
         METALS AND FERRO ALLOYS
Chakravarty, Indra Sawhney, Sarla Chandra, P.N. Gupta,                A
Himanshu Shekhar, Vinoo Bhagat, Abhijit P. Medh, Kirti Renu
Mishra, Ranab Kumar Mullick, Radha Shyam Jena for the
appearing parties.

    The Judgment of the Court was delivered by
                                                                      B
    R.V.RAVEENDRAN, J. 1. Leave granted in SLP(C)
No.4596 of 1999.

     These appeals involve the interpretation of a tariff provision
in the provisional supply and distribution Licence issued under       c
the Orissa Electricity Reform Act, 1995 ('Act' for short).

    2. The State of Orissa enacted the said Act, to restructure
and rationalize the generation, transmission, distribution and
supply of electricity in the state.
                                                                      D
     2.1 Section 3 of the Act provided for the establishment of
the Orissa Electricity Regulatory Commission ('Commission'
for short), to discharge functions including the issue of licences
in accordance with the Act and determine the conditions of such
licences.                                                             E
     2.2 Chapter VI of the Act deals with licensing of
transmission and supply. Section 14(iv) of the said Act
authorized the State Government to grant provisional licences
for a period not exceeding twelve months, for carrying on the
                                                                      F
business of transmission or supply of electricity, as a
transitional measure till the establishment of the Orissa
Electricity Regulatory Commission ('Commission' for short).

     2.3 Section 13 of the Act provided that the Grid
Corporation of India Ltd. ('GRIDCO' for short, the appellant          G
herein) incorporated with the main object of engaging in the
"business powers" of the state government under section 12
of the Act, would be the principal company to undertake the
planning and co-ordination in regard to transmission and to
                                                                      H
    788       SUPREME COURT REPORTS                  [2010] 10 S.C.R.


A   determine the electricity requirements in the state in co-
    ordination with various stakeholders.

         2.4 Chapter VIII of the Act dealt with tariffs. It contained two
    sections - section 26 dealing with licencee's revenues and tariffs
B   and section 27 dealing with finances of licencees.

       3. In exercise of the power under section 14(iv) of the Act,
  the State Government, by notification dated 30.3.1996, issued
  three licences to the appellant - the Provisional Orissa
  Transmission Licence 1996, Provisional Orissa Supply Licence
C (Bulk Supply) 1966 and the Provisional Orissa Supply Licence
  (Retail Supply and Distribution), 1996 - authorising the
  appellant to engage in the business of transmission, bulk
  supply and retail supply and distribution of electrical energy
  within the State of Orissa, upon the terms and conditions
D mentioned in those licences. In pursuance of such licences, the
  appellant took over the transmission, distribution and supply of
  electricity from the Orissa State Electricity Board ('OSEB' for
  short) with effect from 1.4.1996. Part 111 of the Retail Supply and .
  Distribution Licence (similar provisions were contained in the
E Provisional Transmission Licence and Provisional Bulk Supply
  Licence also) related to "Tariffs" and it is extracted below :

          "9. Basis of Charges

          9.1 The charges made by the licensee shall not exceed
F         on average 117% of those permitted under the interim
          tariffs issued by the State Government and in force on 1st
          April 1996.

          9.2 The authority granted in clause 9.1 expires with the
G         expiration of this license."

    The "interim tariffs in force as on 1.4.1996 issued by the state
    government", referred to in the said clause 9.1 were the tariffs
    which came into effect on 5.11.1995, contained in the

H
 GRID CORPORATION OF ORISSA LTD. v. EASTERN 789
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]
  Notification dated 28.10.1995 issued by the Orissa State                A
  Electricity Board, predecessor of GRIDCO.
'
                      -
         4. By notification dated 13.5.1996, the appellant revised/
  prescribed the electricity charges for different categories of
  consumers of electricity in the State as per the tariff schedule        B
  appended to the said notification with effect from 21.5.1996,
  in supersession of the tariff rates prescribed in the OSEB
  Notification dated 28.10.1995. The tariff schedule under the
  Notification dated 13.5.1996, prescribed different tariff rates for
  (i) large industries, (ii) medium industries, (iii) small industries,   C
  (iv) irrigation pumping and agriculture, (v) public water works
  and sewerage pumping, (vi) commercial, (vii) domestic, (viii)
  railway traction supply, (ix) street lighting, (x) direct current
  service, (xi) power intensive industries, (xii) heavy industries,
  (xiii) general purpose supply, (xiv) public institutions, (xv) mini-
  steel plants; and (xvi) emergency power supply to captive power         D
  plants.

     5. Several industries which were consumers of electricity
and the Utkal Chamber of Commerce, filed writ petitions before
the High Court, challenging (i) the \lalidity of section 14(iv) of        E
the Act; (ii) the validity of the provisional Retail Supply and
Distribution Licence issued by the State Government under
section 14(iv) of the Act to the appellant, in particular the
provision of the licence which enabled the appellant to increase
the tariff not exceeding on average 117% of those permitted               F
under the interim tariff issued by the State Government; and (iii)
the tariff notification dated 13.9.1996 issued by the appellant.

     6. A Division Bench of the High Court disposed of the said
writ petitions by the impugned judgment dated 30.10.1998. The             G.
High Court upheld the vires of section 14 (iv) of the Act and
the Notification dated 30.3.1996 of the State of Orissa granting
the provisional licences in favour of the appellant. It also upheld
the power of the appellant to revise the tariff under the
provisional licence. It however held that the increase in tariff
                                                                          H
    790     SUPREME COURT REPORTS                 (2010] 10 S.C.R.

A   rates under the tariff notification dated 13.5.1996 issued by the
    appellant was more than 17% (over the tariff rates contained
    in OSEB Notification dated 28.10.1995) in regard to some
    categories of consumers and as such was in excess of the
    power given to the appellant under clause 9.1 of the provisional
B supply & distribution licence. The High Court held that while the
    appellant could increase the tariff upto 17% in terms of the
    licence, there was no power or authority to increase the tariff
    rates beyond 17% in respect of any particular category of
    consumers; and as the appellant had increased the tariff rates
c   by different percentages in regard to different categories of
    consumers, in the absence of a specific authorization for
    enhancement beyond 17% in regard to any category of
    consumers, it was not competent for the appellant to enhance
    the tariff rate beyond 17% in respect of any category of
    consumer. The High Court negatived the contention of the
0
    appellant that it could increase the tariff by more than 17% in
  . regard to some categories, provided the increase in respect
    of other categories was less than 17%, and the net overall result
    by way of average did not exceed 17%. As a consequence,
E the High Court quashed the tariff notification dated 13.5.1996
    as also the demands under the respective bills raised against
    the various writ petitioners. The High Court directed the
    Commission to redetermine the tariff as per law and further
    directed that any excess payments collected from the
    consumers shall be adjusted towards future demand/s.
F
          7. The said judgment is challenged in these appeals by
    special leave. The appellant contends that Clause 9.1 of the
    Provisional Licence clearly provided that the charges made by
    the licensee shall not exceed 17% on an average, which implied
G that while the increase in case of some categories of
    consumers could be more than 17%, it could be less than 17%
    in case of other categories so that the total increase on an
    average does not exceed 17%. It is submitted that the interim
    tariffs permitted by the State Government and which was in
H
 GRID CORPORATION OF ORISSA LTD. v. EASTERN 791
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.)
force on 1.4.1996 was an average 171.6 paisa per unit. The            A
revised tariff under the notification dated 13.5.1996 effective
from 21.5.1996 was estimated to yield a revenue of Rs.1241.12
crore by sale of 629.1 crore units during the whole of the year
1996-97, which would mean that the average tariff would be
200.15 paise per unit. During the year 1996-97, the interim           B
tariffs were in force for the period 1.4.1996 to 20.5.1996 and
the revised tariff under notification dated 13.5.1996 was in force
from 21.5.1996 to 31.3.1997. In view of it, the estimated yield
of revenue during the year 1996-97 worked out to Rs.1216.81
crore by sale of 620.1 crore units, and the average tariff for the    c
full year 1996-97 worked out to 195.228 paise per unit.
Therefore it is contended that the average increase in the tariff
for the year 1996-97 over the interim tariff in force on 1.4.1996
was 14.35%, well within the permissible limits and did not
violate the provisions of clause 9.1 of the provisional supply and
                                                                      0
distribution licence.

     8. This Court by interim order dated 3.4.2000 directed the
Orissa Electricity Regulatory Commission to determine the tariff
by two methods, that is by taking into account the observations
made by the High Court in the impugned judgment, and the              E
second, without reference to the observations/directions of the
High Court.

     9. In pursuance of the said direction, the Commission
submitted a report dated 24.11.2000 to this Court in regard to        F
the tariff determination. The Report stated :

     "We have carefully examined the basic facts and figures
     on which the impugned tariff notification dated 13.05.96
     was issued. The mandate for us is to redetermine tariff
     within the parameters stipulated in the provisional license      G
     that the charges shall not exceed 117% of those permitted
     under the interim tariffs in force. As per law, revised tariff
     can be proposed by licensee when it finds that its annual
     revenue requirement cannot be met by the charges fixed
                                                                      H
     792       SUPREME COURT REPORTS                  [2010] 10 S.C.R.


A          under prevailing tariff notification. As the estimated
           revenue fell short of annual revenue requirement, the
           licensee was authorized under the temporary licensee to
           increase the tariff, subject to the limit aforesaid. Gridco
           estimated its annual revenue requirement for 1996-97 at
B          Rs.1413 crores which was at a substantially higher level
           than estimated realization of Rs.1033.94 crores on
           prevailing interim tariff. Hence Gridco was entitled to
           revise tariff but within the parameters indicated at clause
           9 of the Licence. The charges proposed under impugned
c          notification dated 13.5.1996 would raise a total revenue
           of Rs.1241.22 Crores for a whole year and Rs.1212.83
           Crores for the period upto 31.3.1997 when provisional
           license was to expire. Thus, Gridco's notification
           authorized charges considerably short of its annual
           revenue requirements. Hence legitimacy of tariff increase
D
           cannot be assailed. We have come to this conclusion after
           taking into a~count objections raised before us during ~he
           redetermination proceeding. We do not consider it
           appropriate to burden this note with the facts, statements
           and views presented by the objectors during the
E          proceeding. It may suffice to say that there has been no
           serious or reasonable challenge to the calculation of actual
           revenue requirement of Gridco even though objectors have
           challenged Gridco on various grounds such as lack of
           prl!dence in purchase of power, in expenditure, failure to
F          restrict T & D Loss, unreasonableness of increase in tariff
           and lack of concern for affordability etc. In view of wide gap
           between revenue requirement and revenue realizable,
           Gridco was justified in increasing tariff. But what has to
           be ensured is whether the increase was hit by the ceiling
G          imposed under clause 9 of provisional license."

                                                  (emphasis supplied)

     The report also noticed the submission of the appellant that as
     the average of the interim tariff (as per OSEB Notification dated
H-
 GRID CORPORATION OF ORISSA LTD. v. EASTERN 793
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.)
28.10.1995) which was in force till 20.5.1996 was 171.6 paise        A
per unit and as it was empowered to raise the average tariff to
117%, it had the mandate to raise the average tariff to 200. 772
paise per unit (that is 117% of 171.6 paise); that as the interim
tariff under OSEB notification dated 28.10.1995 was in
operation till 20.5.1996 and the new tariff under GRIDCO             B
notification dated 13.5.1996 was in operation from 21.5.1996
to 31.3.1997, the percentage of increase over the interim tariff
with reference to the revenue receipts for the said period was
only 200.166 paise, that is an increase of 16.65% and
therefore, was not hit by the ceiling of 117% imposed by the         c
provisional lincence. (For this purpose, the average tariff rate
(200.166 paise) was arrived at by dividing the Revenue for the
period when the tariff was in force, by the total consumption
during that period). The Report did not find anything
unreasonable in the said contention of the appellant. But the
                                                                     D
commission proceeded to opine that in the light of the definition
of the word 'tariff in the Act and the clear difference between
the words 'tariff and 'charges', clause 9 of the Provision Supply
Licence by using the words "charges made by the licencee",
conferred on the appellant only a limited power of raising
                                                                     E
charges by a m~ximum of 17% for any category of consumer.
It observed that 'tariff' referred to the Schedule of standard
prices/charges, and "charge" referred to the rate to be charged
for a particular category of customers and therefore, 'charges'
meant 'prices'. Consequently the report rejected the appellant's
method of calculating the ceiling with reference to overall rate     F
of tariff. The commission held that even if the observations of
the High Court were not taken into account, there would be a
need to cut the charges in respect of those categories of
consumers where the increase was more than 17% as being
in excess of appellant's authorization. Consequently it held that    G
while the increase in charges for the category of "irrigation" and
category of "railway traction" will remain unchanged (as the
increase therein was less than 17%), there should be reduction
in the tariff rates or charges for all other categories of
                                                                     H
    794      SUPREME COURT REPORTS                (2010] 10 S.C.R.


A consumers (where the increase was more than 17%). The
  Commission in effect supported the decision of the High Court.

          10. The appellant contended that the interpretation of
    clause 9.1, adopted by the High Court and the Commission
B   was erroneous. According to the appellant, the High Court and
    the Commission while reading and interpreting the words
    "charges made by the licensee shall not exceed on average
    117% ..... " in clause 9.1, have ignored the significance of the
    words 'on average' and rendered the said words redundant and
C   otiose. The appellant contended that they also overlooked the
    fact that clause 9.1 used the words "charges made" and not
    the words "charges imposed" or "tariff rates". It was also pointed
    out that clause 9.1 neither referred to "consumers" or "category
    of consumers". The appellant submitted that the object of the
    provision was not to bar category-wise revisions, but to provide
0   for different increases which on averaging increased the overall
    revenue by 17% over the revenue that would have been derived
    with reference to pre-revision tariff rates. The appellant
    contended that the use of the word 'average' was intended to
    mean that the appellant was entitled to apply different rates to
E   different categories of consumers provided the aggregate of
    revenue on account of the increases did not exceed 17% of
    the revenue with reference to pre-revision tariff rates. The
    appellant contended that the provision did not place a ceiling
    of 17% in regard to increase in the tariff rates for each of the
F   categories; that it was entitled to .increase the tariff rates in
    respect of some categories of consumers beyond 17% while
    restricting the increase in the tariff rates for other categories
    to a lesser percentage, to ensure that the total revenue for the
    electricity consumed during the relevant period, did not exceed
G   17% over the revenue for such quantum based on the previous
    interim tariff rates. It was therefore submitted that the tariff
    notification dated 13.5.1996 was valid.

      11. The respondents on the other hand contended that the
H word "charges" in clauses 9.1 referred to the tariff rates. They
 GRID CORPORATION OF ORISSA LTD. v. EASTERN                    795
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]

relied upon the definition of 'tariff' in clause (b) of explanation    A
to section 26 of the Act which reads as under : "tariff'' means a
schedule of standard prices or charges for specified services
which are applicable to all such specified services provided to
the type or types of customers specified in the tariff'. They
submitted that "charges made" in clause 9.1 do not refer to the        8
total revenue received by appellant, but referred to the tariff
rates prescribed by appellant. It was next contended that even
assuming that the words 'charges made' were capable of being
interpreted in more than one way, the interpretation that is
beneficial to the consumer should be adopted. They further             C
contended that where the opinion/ views of a technically
competent body, that is the Commission, was available in
regard to the interpretation that should normally be accepted
unless it was shown to be arbitrary and unreasonable.

     12. The report of the Commission discloses that in regard         D
to consumers falling under the category 'irrigation', the increase
was only 8.33% and for the Railways falling under the category
'railway traction', the increase was only 10.09%. In regard to
the domestic consumers, the increase was 17.47%. In regard
to all other categories of consumers, the increase was much            E
more. In particular, for small industries, the increase is said to
be 27.59%, for medium industries the increase is said to be
29.73% and for large industries the increase is said to be
32.25%. The question is whether clause 9.1 authorized and
permitted the appellant to increase the tariff rate in regard to       F
each category of consumers, by a percentage not exceeding
 17% over the pre-revision tariff rate, or whether the appellants
had the discretion to increase the tariff rate relating to different
categories by different percentages (that is even more than 17%
in regard to some categories) so long as the overall revenue           G
on account of different increases, did not exceed on the whole,
 17% of the overall revenue calculated at the pre-revision tariff
rates. The entire question would thus revolve around the
interpretation of the words "shall not exceed on average 117%"
in clause 9.1.
                                                                       H
    796       SUPREME COURT REPORTS                   [2010] 10 S.C.R.


A        13. It is not disputed that clause 9.1 is capable of different
    interpretations. The three possible interpretations are:

         Interpretation (i) : There can be an increase in tariff rates,
    but the increase in tariff rate in respect of any category of
    consumers, could not exceed 17% of the interim tariff rates.
B
         Interpretation (ii) : So long as the average of the different
    increases does not exceed 17% of the interim tariff rates, the
    appellant had the discretion to apply different rates of increases
    to different categories and some of them can exceed 17%.
c        Interpretation (iii) : The increase in tariff rates for different
    categories of consumers could be of different percentages,
    provided the average realization per unit during the relevant
    period (arrived at by dividing the estimated revenue during the
    period, by the estimated consumption during that period) was
0
    not more than 17% of the average realization per unit during
    the previous period when the interim tariff was in force.

  The first interpretation has found favour with the High Court and
  the Commission, having regard to the definition of 'tariff in the
E Explanation to section 26 of the Act.

       14. This takes us to the correct interpretation of clause 9.1.
  The golden rule of interpretation is that the words of a statute
  have to be read and understood in their natural, ordinary and
F popular sense. Where however the words used are capable of
  bearing two or more constructions, it is necessary to adopt
  purposive construction, to identify the construction to be
  preferred, by posing the following questions: (i) What is the
  purpose for which the provision is made? (ii) What was the
G position before making the provision? (iii) Whether any of the
  constructions proposed would lead to an absurd result or would
  render any part of the provision redundant? (iv) Which of the
  interpretations will advance the object of the provision? The
  answers to these questions will enable the court to identify the
  purposive interpretation to be preferred while excluding others.
H
GRID CORPORATION OF ORISSA LTD. v. EASTERN                   797
METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]
Such an exercise involving ascertainment of the object of the        A
provision and choosing the interpretation that will advance the
object of the provision can be undertaken, only where the
language of the provision is capable of more than one
construction. (See Bengal Immunity Co. v. State of Bihar -
1955 (2) SCR 603 and Kanai/al Sur v. Paramnidhi                      B
Sadhukhan - 1958 SCR 360 and generally Justice
G.P.Singh's Principles of Statutory Interpretation, 12th Edition,
published by Lexis Nexis - Pages 124 to 131, dealing with the
rule in Haydon's case).

     15. In this case, we have noticed above that clause 9.1 is      C
reasonably capable of more than one construction, that is at
least three interpretations. We may therefore attempt to
ascertain the true meaning of the provision by answering the
four questions referred in the earlier para. On a careful
consideration, the answers to the four questions posed are :         D
(i) The purpose of clause 9.1 is to provide for an increase in
revenue by revising the tariff rates, by balancing the needs of
the Licencee with the interests and needs of different
categories of electricity consumers. (ii) Clause 9.1 being a fresh
provision, the question of considering the position that existed     E
before making of the said provision does not arise. (iii) The
interpretation· canvassed by the respondents, (that is
interpretation (i) that increase in respect of any category of
consumers cannot exceed 17%) which found favour with the
High Court and the Commission, though may not lead to an             F
absurd result, would render the words 'on average' occurring
in the clause, redundant and otiose. (iv) The interpretation put
forth by the appellant gives meaning to every part of the clause
and also achieves the object of the clause. We will elaborate
the reasons therefor.                                                G
Re: Interpretation (i)

     16. The first interpretation of clause 9.1 is that it permits

                                                                     H
    798      SUPREME CoURT REPORTS-               [2010] 10 S.C.R.


A increase in tariff rates but with a ceiling of 17% in regard to
  each and every category of consumers, and therefore the
  increase in case of no category can exceed 17%, has found
  favour with the High Court and the Commission. The fact that
  there can be different percentages of increases in tariff in
B regard to different categories is an accepted procedure. For
  example a lesser tariff is applied to agriculturists using
  electricity for irrigation purposes when compared to consumers
  using electricity for commercial or industrial purposes.
  Therefore, when there is a revision of tariff rates, the percentage
c of increase will and can vary from category to category. If the
  aforesaid interpretation is applied by holding that in no case,
  the increase can be more than 17%, and if in regard to some
  categories, increases are to be nominal, it will be impossible
  to achieve a 17% increase which is permitted and
0 contemplated under clause (9.1 ). Further, the words 'on
  average' would be rendered meaningless if by average 17%
  increase cannot be achieve9 and if the increases cannot
  exceed 17% in any case. This interpretation, if accepted, would
  also prevent the licensee from creating or carving out any new
  category of consumers and fix the tariff rate for such category.
E Therefore this interpretation apart from rendering the words 'on
  average' redundant and meaningless, militates against the
  provisions of clause (9.1).

    Re : Interpretation (ii)
F
        17. The second interpretation is that so long as the
  average of the different increases does not exceed 17% of the
  interim tariff rates, the appellant has the discretion to apply
  different rates of increases to different categories and
G increases with reference to some categories can exceed 17%.
  This interpretation will also lead absurd result if put into effect.
  Let us illustrate with referenc~ to a hypothetical example (not
  with reference to actuals):      ·


H
 GRID CORPORATION OF ORISSA LTD. v. EASTERN 799
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]

                                                                        A
 s. Category of Use      Consumption        Percentage in
 No.                     share out of total increase over the
                         quantity of        previous tariff
                         electricity        rate
                         generated and
                          distributed                                   B
 1. Industry               40%                   60%
 2.  Domestic               30%                  30%
 3.  Irrigation             10%                   1%
 4.  Railway traction       10%                   2%                    c
 5.  Public Institutions     5%                   3%
 6.  General purposes        5%                   4%


The average of the percentages of increase in regard to six             D
categories will be only 16.66% which is less than 17%. But in
terms of revenue realization, the increase would exceed not only
17%, but even as much as 40% with reference to revenue at
the previous tariff rates. This obviously was not the object. The
average should ensure that there is no increase beyond 17%              E
in regard to the total revenue.

Re : Interpretation (iii)

     18. The words used in clause (9.1) are "charges made by
the licencee shall not exceed on average 117% of those                  F
permitted under the interim tariffs". It is significant to note that
the clause does not use the words "the tariff rates prescribed
by the licencee shall not ex.ceed 17% of those permitted
under the interim tariffs." The use of the words "charges" and
'tariffs' in the same clauses indicates that they were intended         G
to signify different meanings. As rightly noticed by the
Commission, the word 'tariffs' referred to the schedule of rates.
If the object of clause 9.1 was to refer to 'tariff rates' prescribed
by the Licence, there was no need to use the words "charges
made". The use of the words 'on average' while referring to             H
    800      SUPREME COURT REPORTS                  [2010] 10 S.C.R.


A 117% has also some significance. If the words "charges made
  by the licencee" are interpreted as "tariff rates fixed by the
  licencee'', then, the words 'on average' would be rendered
  meaningless and becomes an useless appendage. The use of
  the words 'charges made by the licencee' and use of the words
B "shall not exceed on average 117%" necessarily indicates that
  the rates fixed by the appellant should not re$ult in an increase
  in realization or revenue in excess of 17% of what it would have
  realized with reference to the tariff rates that were earlier in force
  under the interim tariff. 'Charges made by the licensee'
c therefore refers to the total revenue of appellant by sale of
  electricity to the different categories of consumers.

          19. The appellant, discharging the functions of the state
    government under the Act, had to ensure that the burden of
    increase on the agriculturist - consumers, that is those
D   consuming electricity for "irrigation", should be the minimum.
    Similarly, increase in the tariff rate for electricity consumed by
    railway traction had to be kept minimal in national economic
    interest. Similarly, the increase in tariff for residential user
    should be comparatively lesser than commercial user. At the
E   same time, the appellant had to ensure an increase in its
    revenue by 17%. If increase beyond 17% was not permissible
    in regard to any category of consumers, and if some categories
    had to be subjected to only small increases far below 17%, due
    to economic or social justice criteria, the appellant would never
F   be able to achieve the increase anything in the range of 17%.
    Only by adopting the process of applying a higher than 17%
    increase in the case of some categories of consumers, it can
    offset the effect of small or marginal increase in the case of
    some other categories like 'irrigation' and 'railway traction".
G   Therefore, if appellant chose to charge a lesser increase in
    percentage to some categories of consumers and higher
    increases in regard to other categories of consumers, it cannot
    be found fault with so long as its total revenue does not exceed
    17% over the corresponding revenue with reference to the old
H   interim tariff rates. If appellant would have realized 'X' amount
GRID CORPORATION OF ORISSA LTD. v. EASTERN                     801
METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]

as revenue at the interim tariff rates which were in force before      A
21.5.1996, the object of the increase was to provide an
increase in revenue by 17% over 'X' after 21.5.1996. That is
why the word 'on average' is used in clause 9.1. This gives the
discretion to appellant to charge tariff rates with different
increases depending upon the category of consumers, so long            B
as the overall increase in revenue, that is the "charges made"
by the licensee, does not exceed 17%. Any other interpretation
would render the words 'on average' otiose and have the effect
of substituting the words tariff rate for the word charges.

     20. In fact, the Commission has accepted this contention          C
of the appellant to a large extent as is evident from the following
observations in the report :

     "As there will be considerable uncovered gap between
     revenue requirement and revenue expected. We do not               D
     find scope to bring down the charges in any category. But
     in the present environment of cross-subsidy which is bound
     to continue for a number of years and in the absence of
     reliable data for calculating cost of supply and average
     tariff, we consider that the relative rates for different         E
     categories of consumers for the interim period as decided
     by GRIDCO is as good as any other alternative allocation
     of costs and charges ........ .

     It appears that it has not been brought to the notice of the
     Court that all along in the pas,t varying charges for different
                                                                       F
     categories of consumers has been determined in
     consideration of nature and purpose of use and
     affordability of different categories of consumers. The cost
     of supply, the quality of supply and affordability are widely
     different for different classes of consumers. Due to socio-       G
     political decision to cross-subsidize some categories, it
     has never been considered desirable or possible to levy
     uniform charges or to decide upon a uniform percentage
     of increase of charges .......
                                                                       H
    802       SUPREME COURT REPORTS                   (2010) 10 S.C.R.

A          In the practice followed by electrical utilities in the country
          as well as abroad, the average J'charges" for electricity
           tariff is calculated by considering the total revenue
           realizable during a period divided by number of units
          estimated to be sold during the period. Percentage of
B         increase in charges or tariff, normally refers to percentage
          of increase of the average rate over the overall average
          rate of prevailing tariff calculated in this method. This has
          been the practice mainly due to the prevalence of cross-
          subsidy in the electricity tariff structure in India. Even when
c         there is no cross-subsidy the rate of increase in tariff for
          various categories are different because the determination
          is with reference to cost of supply for a particular category
          of consumer. The concept of uniform rate of increase for
          all categories of consumers is unknown because every
D         time there is a revision the interests of different categories
          are rebalanced in consideration of public policy, pattern
          of consumption, consumer composition and revenue
          requirements. Viewed in this light we find some justification
          in Gridco's claim that ceiling of 117% was with reference
-         to overall average of interim tariff and overall average rate
E         of new tariff. This logic implies that there has been no clear
          distinction between 'tariff and 'charges'."

       21. The reliance upon clause (2) of Explanation to section
  26 of the Act to interpret the wording of clause 9.1 is
F misconceived. The explanation to section 26 does not define
  the words 'charges made', but defines the word 'tariffs'. Under
  the erroneous assumption that the word "charges" referred to
  the actual tariff rates that were chargeable to different
  categories of consumers, the Commission ignored its own
G conclusions and held that clause 9.1 placed a ceiling of 17%
  in respect of increases in the tariff rates applicable to different
  categories of consumers. It is true that the interpretation by a
  technical body in regard to purely technical matters deserves
  acceptance and will not be interfered, unless it is arbitrary or
H unreasonable. But in this case, on technical issues, the
 GRID CORPORATION OF ORISSA LTD. v. EASTERN 803
 METALS AND FERRO ALLOYS [R.V. RAVEENDRAN, J.]

Commission has favoured the stand of the appellant. Having              A
accepted the interpretation of the appellant as being technically
sound and correct, it reached a different conclusion only
because it thought that the word 'charges' had to be interpreted
as 'tariff rates'. If that is found to be without basis or erroneous,
and therefore ignored, the opinion of the Commission fully              B
favours the appellant.

      22. We are of the view that the High Court was not justified
in holding that the tariff rate in regard to none of the category
of consumers can exceed 17% over the previous rates. We
accept the explanation and interpretation of the appellant. The         C
Commission has found that the increase in revenue, on an
average, under the tariff notification dated 13.5.1 ~96 was only
16.65% over the revenue calculated with reference to the earlier
interim tariff rates. We therefore, allow these appeals, set aside
the judgment of the High Court dated 30.10.1998 and dismiss             D
the writ petitions filed by the respondents before the High Court
and uphold the validity of the Tariff notification dated 13.5.1996.

D.G.                                             Appeals allowed.