SYED HASAN AZHAR RIZVI, J. Since both these petitions involve same questions of law and facts hence we propose to dispose both these petitions by this common order/judgment. The petitioners Messrs Power Cement Ltd. engaged in the business of manufacturing cement and the consumer of electricity provided by respondent No.3 pursuant to a license granted to it by respondent No.2 and is categorized as Industrial Consumer. The petitioners have challenged the imposition of Quarterly Tariff Adjustment (QTA) which in simple terms is only levied on the end consumer to mask the inefficiency of electricity distribution companies and Notifications bearing SRO 375(I)/2018 dated 22.03.2018, SRO 664(I)/2019, SRO 1173(I)/2019 both dated 28.06.2019, SRO 1475(I)/2019 dated 29.11.2019 (in C.P. No.D-1370/2020) and SRO 1067(I)/2020 dated 19.10.2020 and SRO 1376(I)/2020 dated 23.12.2020 (in C.P. No.D-5270/2021). The said QTA is levied due to the increase in overhead costs, maintenance, plant upgradation, line losses anti under recovery by the distribution companies and is then adjusted rather recovered from a bill that has already been paid.
2. Petitioners' case is that the respondent uses to supply electricity, which is prime source of their businesses and is consumed at large in their factories/unit by lawful means and in turn they are charged by the respondent by means of monthly billing. They challenged the imposition of Quarterly Tariff Adjustment (QTA) which have been required from them by the respondent to be paid in their current bills on account of periodical adjustment for the quarters of financial year which have long gone by and thus illegal and unlawful. The QTA is only levied on the end consumer to mask the inefficiency of electricity distribution companies. It is according to them violative of principle of natural justice as the tariffs levied by the respondent in an arbitrary manner and are retrospective in nature.
3. The respondents disputed the averments of the petitioners by taking instance that levy of the QTA was legitimate. Respondent attacked the maintainability of these petitions as the alternate remedy was available to the petitioners before Appellate Tribunal under Section 12-G of the Regulation of Generation, Transmission and Distribution of Electric Power Act of 1997, which -they have omitted to avail with the result that petitions are not maintainable and liable to be dismissed.
4. Learned counsel for the petitioners has contended that the petitioners are the consumers of electricity and are aggrieved by the imposition of QTA in their bills on the basis of which the tariff has been adjusted retrospectively. He has further contended that as per the billing mechanism, the distribution company, on the basis of the monthly readings, issues bills to consumers in accordance with the tariff notified by the Federal Government and once the bill is paid, it becomes a past and closed transaction as the petitioners have paid the bill along with all relevant taxes and on the basis thereof have built that payment into their costs for the purposes of their business. He has also argued that once the bill has been paid, there is no justification to seek any adjustment against a paid bill nor does the law provide for the same. He has also argued that the petitioners cannot possibly recall its cement already sold in the market to add additional costs as the same is not a past and closed transaction. He has placed reliance upon the judgments reported in the case of Sohail Ahmed and others v. Province of Sindh and 2 others (2017 PLC (C.S) 510), (2)
Messrs Farooqui Ice Factory, Gambat and 24 others v. Revenue Officer SEPCO (WAPDA), Ranipur and 14 others (PLD 2014 Sindh 443), (3) Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others (1992 SCMR 1652) and (4) Chief Administrator Auqaf v. Mst. Amna Bibi (2008 SCMR 1717).
5. Per learned counsel the petitioners the impugned notifications are not signed by anyone and as such contrary to the dicta laid down in the case of Mustafa Impex and others v. Government of Pakistan and others (PLD 2016 SC 808) as all the decision shall be taken by the Federal Government and not alone approved by the competent authority i.e. Federal Government. This alone renders the notifications void. For ready reference relevant paragraphs 54 and 84 are reproduced below:- "54. We are unable to agree with him. Article 90 states categorically what the Federal Government is; it consists of the Prime Minister and the Federal Ministers (i.e. the Cabinet) and not the President who is not mentioned therein (we note, in passing, the similarity with Articles 176 and 192 which respectively define the Supreme Court and the High Court as consisting of the Chief Justice and judges). We are unaware of any principle of constitutional interpretation which would allow us to construe Article 41 and Article 48, on the basis of a presumed intention, so as to override the explicit provisions of Article 90. Neither article purports to do so. The concept of the President being the Head of State should not be confused with the completely different concept of the Head of Government and nor should the two offices be conflated. Article 48 merely stipulates that, in the discharge of his functions, the President is mandated to act on, and in accordance with, the advice of the Cabinet or the Prime Minister. This article relates to the performance. of the constitutional functions of the President by making it binding on him to follow the advice of the Cabinet. This is by no means the same as asserting that, by doing so, he becomes a part of the Federal Government.
He is not. He is the Head of State. There are many functions of State which are discharged by different organs without their becoming part of the Federal Government. To take an obvious illustration; the judicial functions of the State, which lie at the heart of the rule of law, are discharged by the Supreme Court and the High Courts as well as such other courts as are established by law in terms of Article 175. By doing so they do not become part of the Federal Government (at least for purposes of the domestic law of the State). Article 175 does not in any manner qualify the position stated in Article 90. The concept of Head of State is distinct from that of head of government and remains as such."
"84. We may now summarize our conclusions:--
(i) The Rules of Business, 1973 are binding on the Government and a failure to follow them would lead to an order lacking any legal validity.
(ii) The Federal Government is the collective entity described as the Cabinet constituting the Prime Minister and Federal Ministers.
(iii) Neither a Secretary, nor a Minister and nor the Prime Minister are the Federal Government and the exercise, or purported exercise, of a statutory power exercisable by the Federal Government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law. Similarly budgetary expenditure, or discretionary governmental expenditure can only be authorized by the Federal Government i.e. the Cabinet, and not the Prime Minister on his own.
(iv) Any Act, or statutory instrument (e.g. the Telecommunication (Re-Organisation) Act, 1996) purporting to describe any entity or organization other than the Cabinet as the Federal Government is ultra vires and a nullity.
(v) The ordinance making power can only be exercised after a prior consideration by the Cabinet.
An ordinance issued without the prior approval of the Cabinet is not valid. Similarly, no bill can be moved in Parliament on behalf of the Federal Government without having been approved in advance by the Cabinet. The Cabinet has to be given a reasonable opportunity to consider, deliberate on and take decisions in relation to all proposed legislation, including the Finance Bill or Ordinance or Act. Actions by the Prime Minister on his own, in this regard, are not valid and are declared ultra vires.
(vi) Rule 16(2) which apparently enables the Prime Minister to bypass the Cabinet is ultra vires and is so declared.
(vii) Fiscal notifications enhancing the levy of tax issued by the Secretary, Revenue Division, or the Minister, are ultra vires. (it is clarified, in passing, that this court has in the past consistently held that a greater latitude is allowed in relation to beneficial notifications and that principle still applies).
(viii) In consequence of the above findings the impugned notifications are declared ultra vires and are struck down."
6. Learned counsel for the petitioner has next contended that as per Section 31(7) of the Act, the notifications have to be published in the official gazette, which has not be done by the respondents as such the notifications would be deemed invalid. He has vehemently argued that the said notifications are the result of decisions passed by the respondent No.2 for which no hearing was given to the petitioners nor any prominent public notice was published. This act amount to arbitrariness on part of the respondents and the same renders it unconstitutional and illegal and thus liable to be set aside. He has further argued that it is settled law that any notification which imposes a new liability cannot operate retrospectively. He has submitted that it is beyond logic as to how an authority can recover money attributing to its own shortcoming and that too for a period that has already passed. He has urged that the notifications do not take into account the financial viability of all the stakeholders which is a direct contravention of Section 31(3)(i) & (j) of the Act.
Reliance is placed upon the cases Sohail Ahmed and others v. Province of Sindh and 2 others (2017 PLC (C.S) 510), Government of the Punjab and others v. Messrs United Sugar Mills Ltd. and others (2008 SCMR 1148) and Government of Sindh and others v. Messrs Khan Ginners (Private)
Limited and 57 others (PLD 2011 SC 347).
7. On the other hand, Mr. Kashif Hanif, learned counsel for the respondent No.3 has argued that the NEPRA is the sole Regulatory Authority for the power/electricity in the country and not a single KW can either be sold or purchased or distributed without the approval of the Authority and no agreement for the distribution, sale, and purchase can be entered upon without the approval of the Authority under the Act, hence no entity, be it be a Federal Government, has any power or authority to fix the tariff which is a sole prerogative of the NEPRA. He has argued that it is an admitted fact that no person including but not limited to any Distribution Company could undertake distribution or sale of power without obtaining a license; which provides that the determining of consumer end tariff, rate, charges, etc. for the supply of electricity by DISCOs is the sole responsibility of the Authority as stipulated in Section 7 of the NEPRA Act. He has further argued that such finding and determination of NEPRA was never challenged by the Petitioner and in fact, has been accepted and acted upon therefore cannot now question the validity of the notification issued based on determination validly made by NEPRA. He has submitted that in terms of Section 31(7) of the Act, the Federal Government is required to issue Notification in terms of the Authority's approved tariff, rate, charges, and other terms and conditions for the supply of electric power hence, the issuance of Notification is nothing more than the Ministerial work and cannot behold to be made at the pleasure or discretion of the federal government as even the federal government cannot change or make any variance to the approved tariff or hamper or suspend the decision/determination made by the authority except the mechanism provided under 12-G of the Act through the Tribunal established under the Act. He has also submitted that Section 31 of the Act deals with the tariff and provides the mechanism for determining the same and shows that tariff is divided into two components one is fixed part and the other is variable part being adjustable on actual consumption; by Section 31(3) of the Act so also guidelines provide the mechanism for determining the fixed and variable components of the tariff. He has further submitted that the two variable is also divided into two parts components one being fuel cost adjustment which has to be undertaken on monthly basis and the other part is a periodic adjustment in the shape of quarterly and yearly adjustment is provided in term of Sections 31(2)(a) and 31(2)(d) as well as provided under the guideline issued and duly notified by the Federal Government being Guidelines for Determination of Consumer End Tariff (Methodology and Process), 2015 and its Guideline Noss. 40 and 49 provides the regulatory framework to receive the amount of adjustment / the QTA as determined by the NEPRA. The structure of the Act read with 1998 rules and the guideline provides for periodic adjustment of the PPP component which has to determine based on the actual cost incurred, hence QTA falls within the regulatory framework of the Act.
8. Learned counsel for the respondent No.3 has next contended that the petitioner had an alternate remedy to challenge any decision or order of NEPRA within 30 days; as provided under Section 12G of the Act. However, the petitioner failed to do so. Hence, the present lis merit dismissal. He has argued that it is also a fact that the law i.e. 1998 Rules provides that any person including the Petitioner can file a tariff petition and so also it authorizes any person to approach the Authority to seek fresh adjudication with respect to the determination of tariff, however, the Petitioner has not availed such remedy, therefore, at this stage cannot claim ignorance of law hence, the present petition is liable to be dismissed on the ground of non-availability of alternate adequate remedy.
He has also argued that before making any determination with respect to the QTA on the request of XWDISCOs, the objections were invited from the general public so also the advertisement is made in widely circulated newspapers so that in case of any objection to the grant of any adjustment including QTA the grievance of the general public of any stakeholder can be addressed. However, Petitioner chose to remain silent and did not participate in any of the proceedings of determination dated 19.12.2018, 14.06.2019, 27.09.2019, and 26.11.2019. Hence, now after lapsing the Period of limitation to challenge the same under the Act, the petitioner cannot file these proceedings under writ jurisdiction to disturb the findings of the Authority which has attained finality, therefore, these proceedings merit dismissal with heavy cost having approached this Hon'ble Court with unclean hands.
9. Learned counsel for the respondent No.3 has referred to Guideline No. 49, the Tariff comprises multiple, including variable components. Also, QTA is as per the prescribed methodology and falls within the framework of the Act. These are technical issues, based on projections and data for which NEPRA has laid out a transparent and comprehensive procedure, which should be followed.
Therefore, the contention of the petitioners with reference to QTA is without basis as the structure of the Act read with 1998 Rules and the Guidelines provides for periodical adjustment of the PPP components which have to be determined based on actual costs incurred. Hence, the actual loss can also be calculated here and now, then the periodical adjustments are made in the PPP Components, which include QTA. Therefore, the contention of the petitioner that QTA adjustment is retrospective in nature is not tenable as such exercise is only the adjustment in an already determined tariff. Learned counsel for the respondent No.3 has submitted that the similar issue of retrospectivity came before this Hon'ble Court in a C.P. No.D-431 of 2020 in the case of Amreli Steel v. Federation of Pakistan and others along with other cases in which the question of retrospectivity in presence of the Fuel Cost Adjustment was taken up and this Hon'ble Court was pleased to hold that its application does not amount to giving the retrospective effect hence, on this count petition is liable to be dismissed. Learned counsel for the respondent No.3 has urged that the petitioner can impugn the determination of the NEPRA under section 12-G of the Act but chose not to impugn the same neither petitioner filed any objections during the determination proceedings not any tariff petitioner is filed under the Rules 1998 to challenge the tariff adjustment.
As such, now petitioner is estopped from challenging or impugning the determination of NEPRA indirectly through present constitution petition.
10. Learned counsel for the respondent No.3 has drawn the attention of this Court to the judgment passed on 20.11.2019 by the learned Single Judge of Lahore High Court in Writ Petition No.48379/2019 along with several connected petitions against the determination by NEPRA dated 14.06.2019 with respect to the grant of QTA and Notification issued in consequence thereto on the ground of being violative of fundamental rights being outside the framework of the regulatory regime of NEPRA Act; illegal being without jurisdiction; against the principal of past and closed transaction and its application retrospectively and has submitted that the learned Single Judge of Lahore High Court after hearing the parties was pleased to dismiss these petitions and came to the conclusion that QTA was competently levied within the regulatory framework of NEPRA as the licensees [any XWDICOs] can file their request and seek the quarterly adjustment to ensure that all pass through costs factor into the tariff so that can be recovered in line to the NEPRA Act and in accordance with the Guidelines framed thereunder. He has further submitted that the Hon'ble Lahore High Court also opined that the Petitioner has not availed the alternate remedy as provided under Section 12G of the Act and so also finds that the levy of the QTA is not illegal being given retrospective effect.
Learned counsel for the respondent No.3 has urged that against above judgment/order the Civil Petitions Nos.4441 and 4619 of 2019 were preferred before the Hon'ble Supreme Court of Pakistan which was disposed of vide order dated 10.01.2020 without disturbing and upholding the Judgment passed by the Hon'ble Lahore High Court at Lahore.
11. Learned counsel for the respondent No.3 has vehemently argued that subsequently on 27.09.2019, NEPRA through its detailed determination allowed another periodic adjustment in tariff of the 3rd and 4th quarter for the year 2018-19 with respect to XWDISCOs, and the same was followed by a Notification in term of Section 31(7) of the Act, which was also not challenged by any person including the petitioner, hence the petitioner is now estopped to re-agitate the issue in the writ jurisdiction. He, has submitted that it is pertinent to mention that Authority yet again decided on the request filed by the XWDISCOs regarding periodic adjustment in tariff for the 1st quarter of 2019 on 26.11.2019 which was allowed yet again; consequently, QTA was permitted and same determination of the NEPRA was not challenged by any person including the Petitioner hence, has attained finality. Learned counsel has submitted that without challenging or impugning the determination of the NEPRA dated 19.12.2018, 14.06.2019, 27.09.2019, and 26.11.2019 has only resorted to challenging the Notification issued under Section 31(7) of the Act pursuant to the determination dated 14.06.2019 with respect of adjustment for the period of 1st and 2nd quarters for the year 2017- 18, the petitioner has not challenged any determinations of NEPRA that levies or imposes QTA hence is barred to challenge the Notification issued in pursuance of above determination of NEPRA which otherwise does not require the assent of the Federal government and the determination made by the NEPRA shall automatically become enforceable with the force of law.
12. In the end, learned counsel for the respondent No.3 has submitted that NEPRA has exclusive jurisdiction to determine the tariff, rates, charges, and other terms and conditions for the supply of electric power services by the Generation, Transmission, and Distribution Companies as provided under Section 7(3)(a) of the Regulations of Generation, Transmission, and Distribution of Electric Power Act, 1997. He has submitted that according to the 1998 Rules, the determination of tariff activity was advertised in widely circulated newspapers and so also the comments and objections of the interested parties were also solicited, however, the petitioner failed to raise any issue in such activity. He has urged that the petitioner has not challenged any determinations of NEPRA that levies or imposes QTA hence is barred to challenge the Notification issued in pursuance of supra determination of NEPRA which otherwise does not require the assent of the Federal government and the determination made by the NEPRA shall automatically become enforceable with the force of law hence the petition is devoid of merit. He has also submitted that the petitioner from the day one was fully aware of the legal position that NEPRA is the exclusive authority to determine the tariff and this fact was further explicitly mentioned in the license determination such determination of NEPRA was never challenged by Power Producers, therefore, no vested right can be created in favor of Power Producers. Learned counsel for the respondent No.3 in support of his submission has placed reliance upon the cases of ALLEGED CORRUPTION IN RENTAL POWER PLANTS ETC. in HRC Nos.7734-G/2009 and others (2012 SCMR 773), PLD 2020 Lahore Page No. 167; (Ghani Global Glass Limited v. Federation of Pakistan and others) and unreported judgment passed by this Court in C.P. No.D-431 of 2020 (Amreli Steel v. Federation of Pakistan and others). He prays for dismissal of these petitions with compensatory cost.
13. In rebuttal, Mr. Jaffer Raza, learned counsel for the petitioners has argued that the judgment of the Lahore High Court dated 20.11.2019 and the decision of the Hon'ble Supreme Court of Pakistan dated 10.01.2020 does not support the case of the respondent as the order of the Hon'ble Supreme Court is a consent order and only binds the parties to the consent. He has made reference to Article 189 of the Constitution of Pakistan, 1973 and has submitted that it is not a decision and no enunciation of law has take place therefore the same is not binding on this Court. He has submitted that the theory of merger also does not apply in the instant case as the said theory does not apply to a consent order. Additionally, he has submitted that the judgment of the Lahore High Court is a Single Bench judgment and thus not binding on this court. He has again reiterated that it is settled law that any notification which imposes a new liability cannot operate retrospectively. In support of his submission, learned counsel for the petitioners has placed reliance upon the cases of Khan Gul Khan and others v. Daraz Khan (2010 SCMR 539), Muhammad Tariq Badr and another v. National Bank of Pakistan and others (2013 SCMR 314), Nasrullah Khan and others v.
Mukhtarul Hassan and others (PLD 2013 SC 478), Sahabzadi Maharunisa and Another v. Mst.
Ghulam Sughran and another (2016 PLD SC 358), Pakistan Refinery Limited v. Maskatiya Industries (Pvt.) Limited (2011 CLD 550), Dr. Muhammad Anwar Kurd and others v. The State (2003 YLR 2016), Pakistan Test Foundation v. Government of Pakistan and other (1997 CLC 1379) and Mst. Jameela v. Province of Sindh and others (2020 PLC (C.S.) 176).
14. Mr. Khursheed Javed, learned Assistant Attorney General for Pakistan also adopts the arguments advanced on behalf the learned counsel for respondent No.3/NEPRA.
15. We have heard the learned counsel for the parties, perused the available material and the case law cited at the bar.
16. Apparently, the advent of the Act, 1997 was aimed at to cater for the regulation of generation, transmission and distribution of electric power. Under section 3 thereof, National Electric Power Regulatory Authority has been established for the regulation of the provisions of Electric Power Services in Pakistan. NEPRA is exclusively mandated inter alia for the determination of tariffs, rates, charges, and other terms and conditions for the supply of Electric Power Services by the Generation, Transmission, and Distribution Companies. Section 7 of the Act provides for the powers and functions of the Authority, wherein Section 7(2)(i) prescribes that the Authority shall issue guidelines and standard operating procedures for tariff determination. Likewise, section 7(3)(a) prescribes that NEPRA shall determine tariffs, rates, charges and other terms and conditions for the supply of electric power service by the generation, transmission and distribution companies and recommended to the Federal Government for its notification. Following are the functions of the Authority:- "Section 7. Power 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 subsection (4), shall --
(a) grant licenses under this Act;
(aa) specify procedures and standards for registration of persons providing electric power services;
(ab) aid and advise the Federal Government, in the formulation of national electricity plan;
(ac) ensure efficient tariff structures and market design for sufficient liquidity in the power markets;
(b) specify procedures and standards for investment programmes by generation companies and persons licensed or registered under this Act;
(c) specify and enforce performance standards for generation, companies and persons license or registered under this Act;
(d) specify accounting standards and establish a uniform system of account by generation companies and persons licensed or registered under this Act;
(e) specify fees including fees for grant of licenses and renewal thereof;
(f) ...........
(g) review its order, decision or determinations;
(h) settle disputes between the licensees in accordance with the specified procedure;
(i) Issue guidelines an standards operating procedures;
(ia) promote the development of a market, including trading, in accordance with the national electricity policy and the national electricity plan; and
(j) Perform any other function which is incidental or consequential to any of the aforesaid function.
(3) Notwithstanding the provisions of subsection (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 series and for continues 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 functions which is incidental or consequential to any of the aforesaid function.
(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 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 hydro-electric 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, as far as practicable, protect the interests of consumers and companies providing electric power services in accordance with guidelines, not inconsistent with the provision of this Act laid down by the Federal Government."
18. We confine our discussion to the issue before us and such issue as is evident from the afore- mentioned powers of the Authority, is covered by the word 'tariff' which come in the domain of the Authority. To go ahead, we think it advantageous to see the definition of 'tariff' which has been given under Rule 2(m) of the Rules in the following words:- "Tariff means the rates, charges, terms and conditions for generation of electric power, transmission, interconnection, distribution, services and sales of electric power to consumers by a licensee."
19. In terms of Section 31 of the Act, the Authority shall in the determination, modification, or revision of rates, charges, and terms and conditions for the provision of electric power service be guided by the national electricity policy, the national electricity plan, and such guidelines as may be issued by the Federal Government to give effect to the national electricity policy and national electricity plan. Whereas, in terms of Section 31(3) the general guidelines applicable for tariff determination have been provided in which it is stated that tariff should allow the licensees the recovery of any costs prudently incurred to meet the demonstrated needs of their customers. Section 31(4) provides that NEPRA shall determine a uniform tariff for distribution licensees based on their consolidated accounts. Once the tariff has been approved, the Federal Government is bound to notify in the Official Gazette under Section 31(7). For ready reference, Section 31 reads as under:- Section 31 Tariff.-- (1)...........
(2) The Authority, in the determination, modification or revision of rates, charges and terms and conditions for the provision of electric power services shall keep in view -
(a) the protection of consumers against monopolistic and oligopolistic prices; (b)...........
(c)........
(d) the encouragement of economic efficiency in the electric power industry; (e).........
(3) Without prejudice to the generality of the subsection (2), the following general guidelines shall be applicable to the Authority in the determination, modification or revision of rates, charges and terms and conditions for provision of electric power services:-
(a) tariffs should allow licensees the recovery of any and all cost prudently incurred to meet the demonstrated needs of their customers: Provided that assessments of licensees' prudence may not be required where tariffs are set on other than cost of service basis, such as formula-based tariffs that are designed to be in place for more than one year;
(b) tariffs should generally be calculated by including a depreciation charge and a rate of return on the capital investment of each licensee commensurate to that earned by other investments of comparable risk;
(c) tariffs should allow licensees a rate of return which promotes continued reasonable investment in equipment and facilities for improved and efficient service;
(d) tariffs should include a mechanism to allow licensees a benefit from and penalties for failure to achieve the efficiencies in the cost of providing the service and the quality of service;
(e) tariffs should reflect marginal cost principles to the extent feasible, keeping in view the financial stability of the sector;
(f) the Authority shall have a preference for competition rather than regulation and shall adopt policies and establish tariffs towards that end;
(g) tariffs may be set below the level of cost of providing the service to consumers categories consuming electric power below such consumption levels as may be prescribed, as long as such tariffs are financially sustainable;
(h) tariffs should, to the extent feasible, reflect the full cost of service to consumer categories with similar service requirements;
(i) tariffs should seek to provide stability and predictability for customers; and
(j) tariffs should be comprehensible, free of misinterpretation and shall state explicitly each component thereof.
Provided that the Authority shall strike a balance to the extent possible, among the general guidelines in order to optimize the benefits to all persons likely to be affected by the determination, modification or revision of rates, charges and terms and conditions.
(4) ...........
(5) ...........
(a) ...........
(b) ...........
(c) ...........
(6) ...........
(7) 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 by the Federal Government in the official Gazette, within fifteen days of intimation of the final tariff by the Authority: Provided that the Authority may, on a monthly basis and not later than a period of seven days, make adjustments in the approved tariff on account of any variations in the fuel charges and policy guidelines as the Federal Government may issue and notify the tariff so adjusted in the official Gazette.
20. The NEPRA (Tariff Standards and Procedure) Rules, 1998 Rules prescribe for the procedure to be followed by the distribution licensees when filing their tariff petitions are filed under Rule 3. In this regard, Rule 5 of the 1998 Rules requires publication and service of notices for a public hearing and in terms of Rule 9. Whereas, the Rule 17 of the 1998 Rules provides for the standards and guidelines based on which tariff shall be determined, and again in terms of Rule 17(3)(i) of the 1998 Rules tariff should allow licensees the recovery of any costs prudently incurred to meet the demonstrated needs of their customers. For advantageous, Rule 17(3) of NEPRA (Tariff Standards and Procedure)
Rules, 1998 is reproduced below:- "Rule 17. Standards and guidelines. -
(1) ...........
(2) ...........
(3) Tariffs shall be determined, modified or revised on the basis of and in accordance with the following standards, namely:-
(i) tariffs should allow licensees the recovery of any and all costs prudently incurred to meet the demonstrated needs of their customers, provided that, assessments of licensees, prudence may not be required where tariffs are set on other than cost of service basis, such as formula-based tariffs that are designed to be in place for more than one year;
(ii) tariffs should generally be calculated by including a depreciation charge and a rate of return on the capital investment of each licensees commensurate to that earned by other investments of comparable risk;
(iii) tariffs should allow licensees a rate of return which promotes continued reasonable investment in equipment and facilities for improved and efficient service;
(iv) tariffs should include a mechanism to allow licensees a benefit from, and penalties for failure to achieve, the efficiencies in the cost of providing the service and the quality of service;
(v) tariffs should reflect marginal cost principles to the extent feasible, keeping in view the financial stability of the sector;
(vi) the Authority shall have a preference for competition rather than regulation and shall adopt policies and establish tariffs towards that end;
(vii) the tariff regime should clearly identify inter-class and inter-region subsidies and shall provide such subsidies transparently if found essential, with a view to minimizing if not eliminating them, keeping in view the need for an adequate transition period;
(viii) tariffs may be set below the level of cost of providing the service to consumers consuming electric power below the consumption levels determined for the purpose from time to time by the Authority, as long as such tariffs are financially sustainable;
(ix) tariffs should, to the extent feasible, reflect the full cost of service to consumer groups with similar service requirements;
(x) tariffs should take into account Government subsidies or the need for adjustment to finance rural electrification in accordance with the policies of the Government;
(xi) the application of the tariffs should allow reasonable transition periods for the adjustments of tariffs to meet the standards and other requirements pursuant to the Act including the performance standards, industry standards and the uniform codes of conduct;
(xii) tariffs should seek to provide stability and predictability for customers; and
(xiii) tariffs should be comprehensible, free of misinterpretation and shall state explicitly each component thereof.
(4) ...........
(5) ...........
21. Section 7(2)(i) of the Act, NEPRA has issued NEPRA Guidelines for Determination of Consumer- End-Tariff (Process and Methodology), 2015, which provides for the methodology to be adopted concerning tariff determination. In terms of Guideline 49 quarterly and bi-annual PPP, adjustments are prescribed with reference to the PPP components being adjustments about the capacity and transmission charges, the impact of T&D losses, and adjustment of variable O&M. As per Guideline No. 42 each component of the PPP as laid down in Guideline No. 40 is provided for in the revenue requirement of the distribution licensees based on projected figures which are subject to adjustment as per actual figures as it is a pass-through item. Also since there is a requirement for a uniform consumer and tariff at a national level, this is determined by NEPRA and notified by the Federal Government. The XWDISCOs file their adjustment requests on account of PPP variation in terms thereof. The objective of quarterly adjustment is to ensure that all pass-through costs are factored into the tariff as per the requirement of the Act and 1998 Rules. The Distribution Companies do not have to bear these costs and are entitled to recover all prudently incurred costs.
Hence, the requirement of quarterly or bi-annual adjustment. It may be noted that as per the Guidelines only fuel adjustment is made on a monthly basis. The relevant Guideline is reproduced hereunder:- "Guideline 49. Quarterly/Bi-Annual PPP Adjustments (1) The scope of quarterly/ Bi-Annual adjustments would be limited to; i. The adjustments pertaining to the capacity and transmission charges. ii. The impact of T&D losses. iii. Adjustment of Variable O&M."
22. Moreover, to sum up, the whole process it is submitted that NEPRA determines tariff as per Section 31 of the Act, upon the filing of a petition by a distribution licensee as per the 1998 Rules i.e. Rule 3 and the Guidelines. Thereafter, NEPRA determines the consumer end tariff for each distribution licensee after assessing the different components of its revenue requirements. In this context, a public hearing is held under Rule 9 of the 1998 Rules, which is then duly published as per Rule 5 in the widely circulated newspapers inviting all comments, objections, and interveners requests. The formulas and principles for determining the revenue requirement are provided under the Guidelines. The Guideline prescribes for quarterly adjustment of capacity and transmission charges; the impact of transmission and distribution losses; and the adjustment of variable O&M.
As per the Guideline No. 50, the fuel adjustment is made on a monthly basis whereas the costs, charges, and losses are made on a quarterly basis i.e. Guideline No. 49. This is necessitated because every tariff determination is based on presumptive figures at the beginning of the financial year, which figures have to be actualized on the basis of actual data. The above-referred exercise is carried out periodically every quarter after holding a public hearing. In this way, every tariff determination is for a fixed period and every quarterly adjustment is also for a fixed quarter.
23. It is worth mentioning that the Act provides an appeal under Section 12G against any decision or order of the Authority and the quorum of the Appellate Tribunal is in terms of Section 12E. Section 12G of the Act is reproduced hereunder: "Section 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 the filing of the appeal.
(2) In examining an appeal under subsection (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 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."
24. It may be noted that before making any determination with respect to the QTA on the request of XWDISCOs, the objections were invited from the general public so also the advertisement is made in widely circulated newspapers so that in case of any objection to the grant of any adjustment including QTA the grievance of the general public of any stakeholder can be addressed. In the instant case the petitioner chose to remain silent and did not participate in any of the proceedings of determination dated 19.12.2018, 14.06.2019, 27.09.2019, and 26.11.2019 and now after lapsing the period of limitation has challenged the same under the Act by filing writ petition to disturb the findings of the Authority which has attained finality. Additionally, the petitioner without challenging or impugning the determination of the NEPRA dated 19.12.2018, 14.06.2019, 27.09.2019, and 26.11.2019 has only resorted to challenge the Notification issued under Section 31(7) of the Act.
The petitioner has not challenged any determinations of NEPRA that levies or imposes QTA hence is barred to challenge the Notification issued in pursuance of supra determination of NEPRA which otherwise does not require the sanction of the Federal Government and the determination made by the NEPRA shall automatically become enforceable with the force of law.
25. It is worth mentioning that against the determination by NEPRA with respect to the grant of QTA and notification issued in consequence thereto, Writ Petitions No.48379 of 2019 along with other petitioner were filed before the Lahore High Court on the ground of being violative of fundamental rights; illegal being without jurisdiction; against the principle of past and closed transaction and its application retrospectively and the learned Single Judge of Lahore High Court was pleased to dismiss these petitions and came to the conclusion that QTA was competently levied within the regulatory framework of NEPRA as the licensees can file their request and seek the quarterly adjustment to ensure that all pass through costs fact into the tariff so that can be recovered in line to the NEPRA Act and in accordance with the Guidelines framed thereunder, so also finds that the levy of the QTA is not illegal being given retrospective effect. The said order was challenged through Civil Petitions Nos.4441 and 4619 of 2019 before the Hon'ble Supreme Court of Pakistan which was disposed of vide order dated 10.01.2020 without disturbing and upholding the Judgment passed by the Hon'ble Lahore High Court at Lahore. However, it may be noted that the submission made by the learned counsel for the petitioners that the judgment passed by the learned Single Judge is not binding on the division bench of this Court seems to be correct. With regard to the submission of the learned counsel for the petitioner that a consent order not being binding on any third party is also correct and in this respect we take guidance from the judgment of the Apex Court's in the case of Muhammad lqbal and others v. Khair Din through L.Rs. and others reported as 2014 SCMR 33 is guiding light where it was held that "... a consent decree is a kind of agreement/contract between two parties with a superadded command of the court but it would not bind a third party who was not party to the said suit."
26. Learned counsel has contended that the impugned determination as seen from the material available on record has been passed by the NEPRA after following due procedure whereby a Notice for Public hearing was served to all the stakeholders. It is to be noted that the petitioners neither participated nor filed any objections at that given time. The similar issue of retrospectivity came before this Court in C.P. No.D-431/2020 in the case of Amreli Steel v. Federation of Pakistan along with other petitions wherein the question of retrospectivity in presence of the Fuel Cost Adjustment was taken up before a bench in which I was one of the member was held that its application does not amount to giving the retrospective effect. Learned counsel for the petitioners has failed to advance any justifiable and/or convincing arguments from differing the earlier view taken in the above-cited case. Hence these petitions being devoid of merit are dismissed along with pending applications.