Messrs GADOON TEXTILE MILLS And 814 Others vs WAPDA And Other

AJMAL MIAN, J. ---By this common judgment we intend to dispose of the above appeals and the petitions for leave to appeal. The aforesaid appeals and petitions for leave have arisen out of judgment dated 2-10-1995 of a Division Bench of Peshawar High Court, Peshawar, rendered in Writ Petition go.255 of 1995 and 104 connected writ petitions, filed inter alia by some of the appellants/petitioners impugning the levy of surcharge and additional surcharge and the withdrawal of concession of 50% electricity charges in respect of certain industries situate in Gadoon Amazai Industrial Estate, Swabi, hereinafter referred to as G.A.I.E., by WAPDA (which is one of the respondents), and the -judgment dated 19-12-1995 passed by a Division Bench of Lahore High Court in Writ Petition No. 14612 of 1995 and 1439 connected writ petitions, filed inter alia by some of the above appellants and the petitioners challenging the levy of surcharge and additional surcharge, dismissing the same.

2. The appellants who have their factories have been receiving electricity from the Authority. It seems that a summary for the Cabinet dated 19-11-1991 was submitted by the Ministry of Finance pointing out therein that according to the decision oh the C.C.I. i.e. Council of Common Interests (constituted under Articleof the Constitution) the profits on hydel generation had to be transferred to the Provinces by WAPDA which involved a payment of Rs.6.1 billion by WAPDA to the Provinces. It was further pointed out that no provision for such payment was therefore made in the Federal Budget and that WAPDA had expressed its inability to transfer the net profits to the Provinces for the following three reasons:-- "(i) Under international covenant WAPDA is required to raise 40% of the total development outlay. Unless this is achieved WAPDA would not be able to utilise foreign assistance.

(ii) The indicated amounts far exceed the net profits of WAPDA.

(i.e) The amount has not been provided in the budget of WAPDA for the current year.

It was highlighted that the budgetary position of the Federal Government itself was under strain because of additional requirement necessitated by higher subsidy bills of wheat, defence expenditure and other supplementary grants, which might have to sustain additional deficit of Rupees five billion. It was stated that efforts were to be made jointly through the Federal Budget and WAPDA itself which had the primary responsibility for payment of net profits on the hydel generation to the Provinces. It was further stated that in order to generate funds to the extent of Rupees to billion, the following to proposals were submitted for decision of the Cabinet:-- "(i) WAPDA may be authorised to levy a fixed surcharge of paisas 8 per unit on all consumers; or

(ii) WAPDA may be authorised to levy a surcharge equivalent to 2.5 % of the total tariff on all consumers every three months for the current financial year. Thus the proposed levy will be staggered in three small installations of December, February and April."

It appears that the Economic Coordination Committee of the Cabinet approved the proposal contained in above-quoted sub-para. (ii) of the summary. Pursuant to the above decision, WAPDA issued an office order dated 31-12-1991 addressed to its Chairmen of the Area Electricity Board, informing them that it had decided to impose surcharge at the rate of 2.5 % on the supply charges as defined in WAPDA Schedule of Tariffs on electricity bills to be issued on or after 1-1-1992. It was further stated that surcharge of 10% for the late payment of bills was to be shown separately. They were directed to compute the above 2.5 % surcharge on the following four items:-- "(1) Fixed charges for the Authority's reservation of power for the consumer's billing demand in kilowatt as defined in WAPDA Schedule of Tariff.

(2) The charges for the amount of energy actually consumed by the consumer in kilowatt-hour.

(3) The Fuel Adjustment Surcharge.

(4) The penalty for low power factor."

It was also stated that the account of above 2.5 % surcharge shall be kept separately and that above surcharge would not be levied on the following items which are not part of supply charges as defined in WAPDA Schedule of Tariff:--

(i) The electricity duty payable to the Provincial Governments;

(ii) Meter rentals; and (i.e) Service rentals.

The above surcharge of 2.5 % was increased in December, 1991, February and April, 1992. Pursuant to the above decision, the same was increased to 5.1% with effect from 1-2-1992 through an order dated 6-2-1992--- then to 7.7% with effect from 1-4-1992 by an order dated 20-3-1992. After that in response to WAPDA's letter dated 25-2- 1993, the Federal Government through a Section Officer's letter dated 9-3-1993, authorized WAPDA to increase above surcharge from 7.7% to 10.4% with effect from 16-1-1993.

3. It appears that under the covenants of the loans agreement with the World Bank, WAPDA was to generate 40% of I.C.G. (i.e. Internal cash generation) for its development schemes. In order to meet the above covenants, proposals for increase and rationalisation of electricity tariffs were approved by the Task Force, which were put up for approval of the Federal Government which was accorded on 8-8-1993. Pursuant to the above decision, WAPDA imposed additional surcharge at the rate of 16.1 % with effect from 10-8-1993 by an order dated 9-8-1993.

It was also stated in the aforesaid order that the additional surcharge of paisa 25/KWH shall also be applicable to all consumers including the industrial consumers of G.A.I.E. And to the bulk purchaser of power, namely, the Government of Azad Jammu and Kashmir. Thereafter by orders dated 24-11-1994 and 9-7-1995, in addition to above 16.1% additional surcharge, at the rate of 24.3 % and 14.5 % of the gross tariffs were imposed.

4. The above additional surcharge was also to be shown in the consumers' bills separately and was to be computed on the same basis as surcharge on the items referred to hereinabove.

5. The above facts are common in all the aforementioned appeals and petitions for leave. However, in the writ petitions, which were heard by the Peshawar High Court, besides challenging the above levy of surcharge and additional surcharge, withdrawal of 50% reduction in electricity tariff in respect of certain industries established in G.A.I.E. Was also impugned. It may be pertinent to give brief facts in respect thereof. It appears that on 6-10- 1986 the Prime Minister of Pakistan presided over a meeting regarding enforcement of ban on the cultivation of opium, poppy and the establishment of an industrial estate in Gadoon Amazai. The following incentives were offered to the prospective entrepreneurs:-- "(i) exemption from import duty, lqra and surcharge on machinery and raw materials;

(ii) ten years tax holiday; (i.e) provision of loans for establishment and operation of the Units from the Financial Institutions and Banks at rates not exceeding 3 per cent mark-up;

(iv) at least 50 per cent. Reduction in electricity tariff. "

It further seems that WAPDA initially resisted the grant of 50 % reduction in the electricity tariff for the above' new proposed industrial estate on account of financial constraints, but through office letter dated 3-6-1987, in exercise of the powers conferred on it by subsection (1) of section 13 read with section 12 and subsection (2) of section 25 of the Act, it notified that all industrial units established within the Industrial Estate in the Gadoon Amazai area of N.-W.F.P. Would be charged at 50% of the normal applicable industrial tariffs of ,WAPDA's Schedule of Tariff enforced under which the supply was allowed. It was also stated ,that this would also include fuel adjustment surcharge. It was further clarified that the other rules, procedures and Abridged Conditions of Supply issued from the to the and other conditions of supply contained in the Schedule of Tariffs shall remain in force until amended, altered, changed, omitted or substituted by it. It is the case of the concerned appellants/petitioners that pursuant to the above incentives offered to them, they established their factories in G.A.I.E. And continued to enjoy the benefits of the above concession till the the the same was withdrawn. It appears that WAPDA submitted a summary for E.C.C. Of the Cabinet in January, 1994, highlighting the losses which it was suffering on account of above 50% concession, namely, Rupees 120 million per year and made following recommendations:-- "7. RECOMMENDATIONS: It is, therefore, recommended that:- The energy-intensive industry like steel furnaces, steel re-rolling mills and plastic industry etc. Be put on negative list for all times to come as the current production of these industries is far in excess of the requirement.

Since steel furnace usually recovers its total investment within the first to to three years of its operation, the subsidy to the existing steel furnaces may be withdrawn on completion of their operation of five years.

Concession of 50 % may be limited to the first 15 % of the monthly bill of steel industry (i.e. Energy Charges, M.D.I., F.A.S., Low Power Factor Penalty). The concession may be reduced to 25 % for the next 10% of the consumption and the concession may be eliminated altogether for the balance.

The revenue loss on account of the provision of this subsidy to consumers may be compensated to WAPDA by adjusting the revenue so lost, against the next profit on hydel power generation being paid to Government of N.

W. F. P."

Since the matter was deferred in the E.C.C. Meeting held on 24-1-1994, inter alia another summary dated 24-8- 1994 was prepared for consideration of E.C.C., whereupon the following decision was taken by the E.C.C.:-- "The Economic Coordination Committee of the Cabinet considered the Summary dated 24th August, 1994 submitted by the Revenue Division and decided as under:--

(i) Industrialists of Gadoon Amazai should be allowed 25 % concession on the leviable duties for a period of five years at import stage in respect of existing units and for units coming into production till 30th June, 1995. The concession should apply to each imported consignment and up to a maximum of their assessed annual requirement;

(ii) 50 % rebate on electricity should be continued for a further period of five years except to the industries included in the negative list of industries; and (i.e) The concessions as in (i) and (ii) above should not apply to the existing or future units in the industries on the negative list. ,

(iv) A Committee under the convenership of Secretary Finance and comprisingSecretaries Petroleum and Natural Resources, Revenue Division and Water and Power Division as its members should finalise the negative list and monitor operation of the concession etc."

It seems that inter alia appellants' factories in Civil Appeals Nos.12, 22, 25, 29 to 33, 37, 56, 60 to 72 and 73 of 1996 have been included in the above negative list and, therefore, they have been denied the aforesaid 50% concession.

6. It may also be pertinent to mention that at the the of granting above concession no period was specified, but E.C.C. Resolved that the above concession would be available up to 28-8-1999 excluding the consumers mentioned in the negative list. This decision was conveyed by WAPDA through its letter dated 23-2-1995.

However, this terminus ad quem was reduced to 2-6-1997 through WAPDA s letter dated 8-3-1995.

It may be mentioned that the aforesaid negative list, which was approved by the E.C.C., included the following items:-- "A. Edible Products, i.e. Vegetable ghee/cooking manufacturing units; B. Plastic Products

(i) Plastic film.

(ii) Plastic bags.

(i.e) Rigid/flexible pipes.

(iv) Plastic bottles.

(v) Adhesive tapes, manufactured from coated film.

(vi) Plastic utensils all sorts and plastic crockery.

(vii) Ply-urethance foam and products made thereof.

(viii) Polypropylene woven bags.

C. Chemical/Dye-Stuff:---

(i) Caustic soda.

(ii) Manufacture where only mixing or repacking is involved.

D. Metals:

(i) Furnaces and rolling/re-rolling mills.

(ii) Galvanization units.

(i.e) Corrugation units.

(iv) Metal containers and utensils, all sorts."

7. The aforementioned writ petitions filed by the appellants/petitioners were dismissed through the aforesaid to judgments passed by Division Benches of Peshawar and Lahore High Courts. Thereupon, a number of petitions for leave were filed. Leave was granted inter alia in Civil Petition No.301-P of 1995 to consider the various contentions noticed in the leave granting order dated 17-1-1996. The above leave granting order was followed in other petitions for leave. The appeals arising from the aforesaid petitions have been fixed out of turn pursuant to the above leave granting order inter alia before this Bench. It seems that during the hearing of the above appeals, inter alia the above petitions for leave to appeal have been filed which have been tagged with the 'above appeals. However, it may be pointed out that in Civil Appeals Nos.667 to 669 and 674 to 676 of 1996 and in Civil Petitions Nos.621-L, 628-L to 630-L. 757-L, 831-L, 832-1;. 835-1 to 842-L, 844-L to 846-L, 856-L to 858-L, 889- L,903-L,968-L,1051-L,1235-L to 1238-L of 1996, the appellants/petitioners were not parties before the High Court.

8. Before taking up the contentions of the learned counsel for the parties, we may examine the legal status of WAPDA. The WAPDA was incorporated by West Pakistan Water and Power Development Authority Act (XXXI of 1958) gazetted on 24-4-1958, hereinafter referred to as the Act. The Preamble of the Act provided the object of its incorporation, namely, to provide for the unified and coordinated development of the water and power resources of West Pakistan. It may be pointed out that WAPDA was intended to cater for West Pakistan as one unit. However, after the fall of Dacca and dissolution of West Pakistan and creation of four Provinces by P.O. No.1 of 1970 (Province of West Pakistan (Dissolution) Order, 1970) gazetted on 30-3-1970, and upon enforcement of the Constitution of Islamic Republic of Pakistan, 1973, hereinafter referred to as the Constitution, and because of Item 3 in Part II of the Federal Legislative List, WAPDA became a Federal subject under the supervision of the Federal Government. The words "West Pakistan" appearing in various provisions of the Act were substituted by the word "Pakistan". A number of adaptations/amendments were made inter alia by P.O. No.4 of 1975 (Federal Adaptation of Laws Order) 1975, gazetted on 1-8-1975, Ordinance No.LXXII of 1979 (West Pakistan Water and Power Development Authority (Amendment) Ordinance, 1979, gazetted on 29-12-1979, and Act NO.XIIl of 1994 (Pakistan Water and Power Development Authority (Amendment) Act, 1994, hereinafter referred to as the Act, gazetted on 6-7-1994. It may be stated that clause (i) of section 2 defines the word "Authority" as means the Pakistan Water and Power Development Authority established under section 3 of the Act. It may be observed that by virtue of subsection (2) of section 3 of the Act, the Authority is a body corporate which is entitled to acquire, hold and dispose of property having perpetual succession and common seal and entitled to sue and be sued. It will not be out of context to mention that the power to dispose of the property was conferred on the Authority by virtue of the amendment incorporated by Act XIII of 1994 dated 6-7-1994.

It may further be observed that subsection (1) of section 8 of the Act envisages that the Authority shall prepare, for the approval of the Government, a comprehensive plan for the development and utilization of the water and power resources of Pakistan on a unified and multi purpose basis; whereas subsection (2) thereof gives the detail of the scheme or schemes which the Authority may prepare for a Province or part thereof.

It may be instructive to reproduce subsection (2) of section 8 of the Act, which reads as under:-- "(2) The Authority may frame a scheme or schemes for a Province or any part thereof providing for all or any of the following matters, namely:--

(i) irrigation, water-supply and drainage; and recreational use of water resources;

(ii) the generation, transmission and distribution of power; and the construction, maintenance and operation of power houses and grids; (i.e) flood control;

(iv) the prevention of waterlogging and reclamation of waterlogged and salted lands;

(v) inland navigation;

(vi) the prevention of any ill-effects on public health resulting from the operations of the authority; and

(vii) privatise or otherwise restructure any operation of the Authority except the hydel generating power stations and the National Transmission Grid", It will not be out of context to point out that above sub-clause (vii) of subsection (2) of section 8 for authorising privatisation or otherwise restructuring of any operation except the hydel generating power stations and the National Transmission Grid was incorporated by aforesaid Act XIII of 1994.

It may be stated that subsections (3) and (4) of section 8 of the Act envisage the submission of above schemes for the approval and sanction of the Government. At this juncture, it may also be pointed out that section 15 of the Act authorises the Authority to amend or modify any approved scheme with the previous sanction of the Government if it involves the increase in the cost of the scheme by more than 15 % of the sanctioned cost or a change in the benefit and cost ratio etc. It may further be observed that subsection (5) of section 8 was incorporated by aforesaid Act XIII of 1994, which enlarged the, spheres of the activities, by providing as follows:-- "(5) Where a scheme is sanctioned by the Government under subsection (4), the Authority may---

(a) undertake any joint venture or work in association with the Provincial Government, an agency, corporation, company, authority or any person and may subscribe to the equities and acquire such other rights and obligations as may be necessary for such joint venture or association;

(b) promote, form or sponsor any company or companies having objects of installation of thermal and hydel projects and development and utilization of any resources of energy for generation, transmission and distribution of power and for survey, investigation, exploitation and utilization of resources of energy for generation, transmission and distribution of power;

(c) subscribe for, take or otherwise acquire, hold and dispose of shares, bonds, debentures, commercial papers or other securities of any company promoted, formed or sponsored under clause (b) and receive dividends or other payments therefrom and transfer to it any of its land or any other property, movable and immovable, tangible or intangible, against cash, shares, bonds, debentures, commercial papers or other securities as is desirable or necessary to enable it to privatise or otherwise restructure any operation of the Authority;

(d) enter into any of the following arrangements which may be consistent with its objects, namely:--

(i) provision of services and personnel;

(ii) provision of goods, appliances, plants, machinery and other material; and (i.e) purchasing of electrical capacity and energy from any company specified in clause (b); and

(e) enter into any contract or agreement with any company or companies specified in clause (b).

Explanation.--For the purpose of this section the expression "privatise" means the transfer or disinvestments of any of its assets, property, rights or liabilities, interest, power houses, grid operation of work, or maintenance thereof, or generation or its distribution, by the Authority, with the prior approval of the Federal Government, for valuable consideration to any person, company or body on ownership basis or for management, control, operation or maintenance, either in joint venture or in association or otherwise and subject to such conditions as the Authority may impose."

It may also be mentioned that section 11 of the Act empowers the Authority to have control over waters, power houses and grids etc. Whereas section 12 thereof provides that the Authority shall for the purpose of the Electricity Act, 1910, be deemed to be a licensee and shall have all the powers and discharge all the obligations of a licensee under the said Act. However, proviso to the above section excludes the application of sections 3 to 11, subsections (2) and (3) of section 21, sections 22, 23 and 27 and clauses (i) to (xii) of the Schedule to the said Act relating to the duties and obligations of a licensee.

It may further be stated that section 21, which is contained in Chapter V of the Act, imposes obligations on the part of the Authority to submit yearly reports and returns of every financial year before the last day of September next following, a report on the conduct of its affairs for that year. It also envisages placement of a copy of audit report before the National Assembly which is required to refer the same to its Committee on Public Accounts for scrutiny and examination.

It may be stated that Chapter VI of the Act deals with the financial matters of the Authority. Subsection (1) of section 22 of the Act provides that there shall be a fund to be known as the "Authority Fund" vested in the Authority, which is to be utilised for the purposes mentioned therein; whereas subsection (2) gives the composition of the Authority Fund as under: "(2) The Authority Fund shall consist of---

(a) grants made by the Government;

(b) loans obtained from the Government;

(c) grants made by local bodies as required by the Government;

(d) sale proceeds of bonds, debentures, commercial papers or other securities issued by the Authority;

(dd) all sums, dividends, shares, bonds, debentures, commercial papers, securities or any other payments received from a company or companies specified in clause (b) of subsection (5) of section 8;"

It will not be out of context to point out that aforequoted clause (d) was substituted, whereas clause (dd) was added by Act XIII of 1994.

It may further be mentioned that section 23 lays down that the Authority shall be deemed to be a local authority under the Local Authorities Loans Act, 1914, for the purpose of borrowing money under the said Act and the making and execution of any scheme under the Act shall be deemed to be a work which such authority shall be legally authorised to carry out.

It may also be stated that subsection (2) of section 23, which was incorporated by Act XIII of 1994, provides that any sum due to the Authority shall be recoverable as arrears of land revenue. It may further be mentioned that section 24 limits the liability of the Government by providing that the liability of the Government to the creditors of the Authority shall be limited to the extent of grants made by the Government and the loans raised by the Authority with the sanction of the Government.

It may also be observed that subsection (1) of section 25 of the Act provides that the Authority shall ordinarily sell power in bulk; whereas subsection (2) thereof deals with the fixation of rates by laying down as follows:-- "(2) The rates at which the Authority shall sell power shall be so fixed as to provide for meeting the operating costs, interest charges and depreciation of assets; the redemption at due the of loans other than those covered by depreciation, the payment of any taxes and a reasonable return on investment. "

It may further be stated that section 26 deals with the maintenance of accounts by the Authority. Section 27 imposes obligation on the Authority to submit to the Government for approval a statement of the estimated receipts and expenditure in respect of the next financial year. Whereas section 28 provides that the accounts of the Authority shall be audited every year by the Auditor --General of Pakistan in such manner as may be prescribed by the Government. Section 29 empowers the Authority with the approval of the Government to frame regulations for carrying into effect the provisions of the Act.

The above resume of the Act indicates that WAPDA is a corporate body having its own charter. It is subject to administrative control of the Federal Government. It is also subject to financial scrutiny by the National Assembly as its audited annual accounts are to be placed before the National Assembly, which in turn refers the same to its Committee on Public Accounts for scrutiny and examination. The Amending Act, 1994 has made amendments 'of far-reaching consequences inasmuch as efforts have been made to convert WAPDA into a modern, viable and dynamic Corporation. The scope of its activities has been considerably enlarged. It may privatise or otherwise restructure any operation other than hydel generation power stations and National Transmission Grid, it may enter into a joint venture inter alia with any other Corporation/company and, it may even purchase bulk power from private sector etc. Of course, this is subject to Constitutional constraints.

9. In support of the above petitions Mr. Abdul Hafeez Pirzada, learned Senior Advocate Supreme Court, who has appeared for the appellants in Civil Appeals Nos.60 to 72 of 1996 arising out of the Peshawar High Court judgment, has urged as under:--

(i) That under sub-clause (d) of clause (2) of Article .157 of the Constitution, it is a Provincial Government which has the power to determine the tariff for distribution of electricity within a Province, which fact is reinforced by the factum that electricity is Item No.34 in the Concurrent Legislative List and that executive authority in respect thereof by virtue of Article 97,read'with Article 137 of the Constitution vests in a Provincial Government, the above levy of surcharge and additional surcharge is ultra vires the Constitution;

(ii) that in the alternative by virtue of clause (1) of Article 154 read with clause (2) of Article 161 of the Constitution, the tariff of electricity is to be determined by the C.C.I.; (i.e) that even otherwise surcharge and additional surcharge, according to WADPA's own showing, are not part of the electricity tariff and, therefore, are ultra vires of section 25 of the Act;

(iv) that, in any case, surcharge is an exaction and, therefore, it is not a legal levy;

(v) that the levy of surcharge and additional surcharge suffers from legal infirmity on account of irrationality, procedural impropriety and want to at fairly;

(vi) that the inclusion of the appellants' factories in the negative list is violative of Article 25 of the Constitution being discriminatory;

(vii) that withdrawal of above 50% concession is hit by the doctrine of promissory estoppel and, therefore, is illegal; and

(viii) that without prejudice to the foregoing submissions, the appellants are entitled to 50% concession on the above surcharge and additional surcharge.

Mr. Abdul Latif Yousafzai, learned Advocate Supreme Court has appeared in 32 appeals mentioned in the title of the judgment. He has categorised the above appeals into following three categories:--

(i) The factories of appellants in Civil Appeals Nos.23. 24, 27, 28, 36, 57 and 58 of 1996 are situated outside G.A.I.E. (total 7 appeals)

(ii) The factories of appellants in Civil Appeals Nos.7 to 1;, 15 to 21, 26, 34 and 35 of 1996 (total 15 appeals) are situated within G.A.I.E. But they have not been included in the negative list; and (i.e) The factories of the appellants in Civil Appeals Nos.12, 22, 25, 29 to 33, 37 and 56 of 1996 (total 10 appeals) are located in G.A.I.E. But are included in the negative list.

He adopted the arguments of Mr. Abdul Hafeez Pirzada.

Mr. Khawaja M. Zia Nayyar, learned Advocate Supreme Court has appeared in four appeals mentioned in the title of the judgment. Out of the above four appeals, the factory of the appellant in Civil Appeal No.73 of 1996 has been included in the negative list. He also adopted the arguments of Mr. Abdul Hafeez Pirzada.

Mr. Khalid Anwar, learned Senior Advocate Supreme Court, who has appeared in the appeals mentioned in the title of the judgment, has contended as follows:--

(i) That in view of clause (1) of Article 154 read with clause (2) of Article 161 of the Constitution, C.C.I. Is competent to fix the tariff of electricity and hence levy of surcharge and additional surcharge is ultra vires the Constitution;

(ii) That in the alternative by virtue of Article 12 of P.O. No. 1 of 1970 (Province of West Pakistan (Dissolution Order, 1970) read with Article 3 of P.O. No.18 of 1972 (Standing Power Rates Advisory Board Order, 1972) and Article 268 of the Constitution, the Advisory Board is competent to determine the tariff and, therefore, the above surcharge and additional surcharge are ultra vires.

(i.e) That, in any case, by virtue of sub-clause (d) of clause (2) of Article 157 read with Articles 97 and 137 of the Constitution, a Provincial Government is competent to determine the tariff and, hence, the above impositions are ultra vires;

(iv) That under subsection (1) of section 25 of the Act, WAPDA can ordinarily sell power in bulk and. Therefore, has no power to distribute it directly to the consumers and to fix a tariff in respect thereof;

(v) That even under subsection (2) of section 25 of the Act, WAPDA has no power to impose above surcharge and additional surcharge as according to WAPDA the same are not part of electricity charges but are appendages; and

(vi) That even otherwise the same are not sustainable as the object for which they are levied are foreign to section 25 and other provisions of the Act.

Messrs Syed Jamshaid Ali Shah, Muhammad Nawaz Abbasi and Hamid Mukhtar, who have appeared in the appeals mentioned in the title of the judgment, adopted the arguments of Mr. Abdul Hafeez Pirzada and Mr. Khalid Anwar; whereas Mr. Anwar Kamal, learned counsel appearing for the appellants in Civil Appeals Nos. 178, 179 and 350 of 1996, besides adopting the arguments of Mr. Khalid Anwar, contended that WAPDA, being a local authority in terms of section 23 of the Act, could not have obtained loans on the condition attached by the World Bank, namely, that it is to generate 40% of the total development outlay from its own resclurces in view of the language used in subsection (2) of section 25 of the Act read with Local Authorities Loans Act, 1914.

Mr. Muhammad Akram Sheikh, learned counsel for the appellants in Civil Appeals Nos.107 to 116 of 1996, besides adopting the arguments of Messrs Abdul Hafeez Pirzada and Khalid Anwar, has urged as under:--

(i) That this Court, while deciding the above appeals, may not overlook the factum that the present dispute is not simpliciter between a few industrialists and WAPDA but in fact it is between consumers of electricity as a class and WAPDA;

(ii) that there is no guidline/system provided in section 25 of the Act or the regulations for fixing or revising the tariff and, therefore, the exercise of power is arbitrary and unfair particularly keeping in view that there is no supervision/control of the Government/Parliament including of National Assembly Committee on Public Accounts; (i.e) that there is no nexus between the levy of surcharge and additional surcharge with the reasonability or relevant facts inasmuch as the ground realities, paying capacity of the consumers, inflation rate, rupee value and the fact that how much a person is expected to spend on electricity, were overlooked;

(iv) that the High Court failed to apply the objective test to the impugned levies and erred in holding that the same are reasonable; and

(v) that the High Court also failed to take into consideration that in view of the dominant position of WAPDA, the bargain between it and a consumer is founded on inequality as the latter has no option and, therefore, Abridged Conditions Nos.26 and 27 of the Agreement have no binding force.

10. Whereas Mr. Fakhruddin G. Ebrahim, learned Senior Advocate Supreme Court appearing for WAPDA, has urged as under:--

(i) That neither the C.C.I. Nor a Provincial Government nor Advisory Board has power to determine tariff for the electricity which is generated, transmitted and distributed by WAPDA 'among the consumers;

(ii) that under section 25 read with sections 12 and 13 of the Act, and Abridged Conditions Nos.26 and 27 of the Agreement, WAPDA has the power to determine tariff for electric supply and to vary the same from the to the; (i.e) that even otherwise WAPDA as a corporate body having the power to distribute electricity among the consumers is entitled to fix the rates for the same;

(iv) that surcharge and additional surcharge though are shown as separate items in electricity bills issued to consumers but in substance they are part of electricity tariff and hence are intra vires;

(v) that since before levying surcharge and additional surcharge and varying the same, detailed exercise was carried out by experts, the same do not suffer from any legal infirmity on account of irrationality or procedural impropriety or because of lack to at fairly.

(vi) that the withdrawal of 50% concession in the electricity charges sin respect of certain industries granted on 3-6-198'7, which were to be established in G.A.I.E. Does not suffer from any legal infirmity nor it is hit by the doctrine of promissory estoppel;

(vii) that the above concession of 50% in the electricity charges was granted in respect of tariff obtaining on 3- 6-1987 and, therefore, certain industries of G.A.I.E. Which are still enjoying above-concession have no right to claim above concession in respect of surcharge and additional surcharge;

(viii) that the preparation of negative list in respect of certain industries of G.A.I.E. Is not discriminatory as to violate Article 25 of the Constitution but is founded on reasonable classification/intelligible differentia;

(ix) that since the concession of 50 % in the electricity charges granted on 3-6-1987 was not for a specified period, it could have been withdrawn at any the or in any case after reasonable notice, which was in fact given in the case in hand.

(x) that obtaining of loan by WAPDA from the World Bank on the conditions attached to the same are not violative of any provision of the on Act or of the Local Authorities Loans Act, 1914;

(xi) that it is wrong to contend that there is no guideline for fixing the tariff or that there is no provision or control of the Federal Government and/or Parliament as there are elaborate provisions in the Act enjoining WAPDA to submit yearly reports and returns to the Federal Government which are to be placed before the National Assembly and which in turn refers it to its Committee on Public Accounts for scrutiny and examination in terms of section 21 of the Act besides the requirement of regular audit every year by the office of Auditor-General of Pakistan as per section 28 of the Act;

(xii) that there is a direct nexus between the levy of surcharge and additional surcharge with the reasonability and the other relevant factors; and

(xiii) that the Abridged Conditions Nos.26 and 27 of the Agreement are binding on the consumers as the agreement is not founded on inequality nor WAPDA was in dominant position.

11. Notices were also issued to the learned Attorney-General and the learned Advocates-General of Punjab and N-W.F.P Mr. Raja Muhammad Bashir, learned Deputy Attorney-General has appeared on behalf of the Attorney- General and produced the rules framed under clause (3) of Article 154 of the Constitution for functioning of C.C.I.

He also produced a copy of decision taken by C.C.I. In its meeting held on 12-1-1991 for computing the net profits payable to the Provinces in which hydro electric stations are situated in terms of clause (2) of Article 161.

Whereas Mr. Abdus Sattar Najam, Advocate-General, Punjab, appeared on 10th, 11th and 17th June, 1996. And stated that the Punjab Government adheres to its stand which it had taken before the Lahore High Court. It may be pertinent to quote hereinbclow the relevant portion of the judgment of the High Court reflecting the above- stand, the same reads as follows:-- "Mian Abdus Sattar Najam, Advocate-General, Punjab has contended What in the given situation, the Provincial Government does not come in at all nor any sanction of the Provincial Government is necessary, to impose and demand the questioned levies as the said Government has neither obtained the supply of Energy in bulk from the national grid nor is distributing the same within the Province, therefore, the provisions of Article 157 of the Constitution are not attracted; that the increase of the levies is quite reasonable, which has been sufficiently reasoned out by the respondent' learned counsel that major resources so collected are to be spent by the Authority for the national good and social welfare of the people in order to successfully compete with the developing and developed countries, while at the threshold of 21st century .

Mr. Saif-ur-Rehman Kiani, learned Advocate-General, N.W.F.P., submitted that under Article 157(2) the Government of a Province has power in respect of matters mentioned in sub-clauses (a) to (d) thereof including the power to determine tariff for distribution of electricity within the Province, but the Government of N.-W.F.P. Has entrusted the aforesaid matters to the Federal Government with its consent under Article 147 of the Constitution and that the Provincial Government is satisfied with the above arrangement.

12. We may now advert to the question, as to who has the power to determine the tariff for electricity supply by WAPDA. In this regard, it may be pertinent to mention that Messrs Abdul Hafeez Pirzada and Khalid Anwar learned senior counsel for some of the appellants and Mr. Fakhruddin G Ebrahim, learned senior counsel for WAPDA. Have referred to legislative history of the item of electricity.

13. It seems that in the Government of India Act, electricity was given as Item No.31 in the Concurrent Legislative List. However, under 1956 and 1962 Constitutions, electricity was a Provincial subject for legislation inasmuch as it was mentioned as Item No.56 in the former and whereas in the latter it was not mentioned in the Federal Legislative List and, therefore, was a Provincial subject. Electricity was brought in the Concurrent Legislative List as Item No.36 in the Interim Constitution of Pakistan, 1972. This was repeated in the present Constitution as Item No.34.

This thrust of the arguments of Messrs Abdul Hafeez Pirzada and Khalid Anwar was that since electricity was in the Concurrent Legislative List up to the framing of the present Constitution, the executive authority in respect of the same in terms of Articles 97 and 137 the Constitution vests in the Government of a Province in view of the fact that the executive authority is co--extensive with the power to legislate and that power of the Federal Government will not extend in respect of an item in respect of which a Provincial Legislature has power to legislate because the same is in the Concurrent Legislative List unless it is so provided expressly by the Constitution or by some law enacted by the Parliament. To reinforce the above submission, they inter alia referred to Articles 97 and 137 of the Constitution, which read as under:-- "97Subject to the Constitution, the executive authority of the Federation shall extend to the matters with respect to which Majlis-e-Shoora (Parliament) has power to make laws, including exercise of rights, authority arid jurisdiction in and in relation to areas outside Pakistan: Provided that the said authority shall not, save as expressly provided in the Constitution or in any law made by Majlis-e-Shoora (Parliament), extend in any Province to a matter with respect to which the Provincial Assembly has also power to make laws.

137. Subject to the Constitution, the executive authority of the Province shall extend to the matters with respect to which the Provincial Assembly has power to make laws: Provided that, in any matter with respect to which both Majlis-e-Shoora (Parliament) and the Provincial Assembly of a Province have power to make laws, the executive authority of the Province shall be subject to, and limited by, the executive authority expressly conferred by the Constitution or by law made by Majlis-e-Shoora (Parliament) upon the Federal Government or authorities thereof "f~`

14. A perusal of the above-quoted Article 97 indicates that it provides that subject to Constitution, the executive authority of the Federation shall extend to the matters with respect to which Parliament has power to make laws including exercise of rights, authority and jurisdiction in and in relation to areas outside Pakistan. It may further be noticed that proviso to the above' Article limits the executive authority of the Federation by providing that the said authority shall not, save as expressly provided (i) in the Constitution or (ii) in any law made by Parliament; extend in any Province to a matter with respect to which the Provincial Assembly has also power to make laws.

The above position is reinforced by above Article 137 which lays down that the executive authority of the Province shall be co-extensive with its legislative power, however, the proviso to the above Article provides that in any matter with respect to which both Parliament and the Provincial Assembly of a Province have power to make laws, the executive authority for the Province shall be subject to, and limited by, the executive authority expressly conferred by the Constitution or by law made by Parliament upon the Federal Government or authorities thereof.

15. It has been vehemently urged by Messrs Abdul Hafeez Pirzada and Khalid Anwar that neither the Constitution nor any law has been made which confers on the Federation the executive power in respect of electricity. They have pointed out that before dissolution of one unit in West Pakistan by P.O. No.1 of 1970, the electricity was exclusively Provincial Subject under late 1956 and 1962 Constitutions. It has been further submitted by them that under Article 12 of P.O. No.1 of 1970, the President was vested power in respect of WAPDA which he was to exercise on behalf of the Provincial Governments in terms of clause (7) thereof. According to them this legal position continued even after the issuance of P.O. No.4 of 1975 i.e. Federal Adaptation of Laws Order, 1975, which purported to substitute the word "Pakistan" in place of "West Pakistan", against the word "Government", the words "National Assembly" in place of "Provincial Assembly of West Pakistan", "Federal Government" in place of "Provincial Government" and "Auditor-General" in place of "Comptroller and Auditor-General" in the relevant sections of the Act. They further contended that this legal position was not altered by Constitution (Fifth Amendment) Act, 1976 (Act LXII of 1976), which came into force with effect from 13-9-1976), which in Part II of the Federal Legislative List in Item No.3, inter alia in place of the words "West Pakistan Water and Power Development Authority", the words "Pakistan Water and Power Development Authority" were substituted. They further urged that promulgation of West Pakistan Water and Power Development Authority (Amendment) Ordinance, 1979 (Ordinance No.LXXII of 1979), whereby sections 1, 3, 17 and some other provisions of the Act were amended particularly for the words "West Pakistan Water and Power Development Authority", the words "Pakistan Water and Power Development Authority" were substituted, was also of no legal consequence as to the executive power of the Federal Government in relation to WAPDA.

Mr. Abdul Haferz Pirzada has ieferred~iclause (6) of Article 268 of the Constitution and has pointed out that under clause (3) thereof the Presidenthad the power to make adaptations by way of modification, addition or omission for the purpose of bringing the provisions of any existing law into accord with the provisions of the Constitution within a period of to years from the commencing day of the Constitution but there is no such the for a Court or tribunal or authority under clause (6) of the above Article and a Court can construe any provision of law as adapted for bringing it in accord with the provisions of the Constitution. According to him, Provincial Government should be read in place of the Federal Government in the Act or in the alternative C.C.I. To reinforce-his above submission, he has referred to the following cases:--

(i) Muhammad Din and others v. The State (PLD 1977 SC 52 at 65).

(ii) Sardar Ali and others v. Muhammad Ali and others (PLD 1988 SC 287 at 302).

(i.e) Aijaz Haroon v. Inam Durrani (PLD 1989 Karachi 304 at 325);

(iv) Shaukat Hussain v. Mst. Rubina and others PLD 1989 Karachi 513);

(v) Messrs Bank of Oman Ltd. v. Messrs East Trading Co. Ltd. (PLD 1989 Karachi 404 at 425 and 441);

(vi) Irshad H. Khan v. Mrs. Parveen Ajaz (PLD 1987 Karachi 466); and

(vii) Habib Bank Ltd. v. Muhammad Hussain and others PLD 1987 Karachi 612).

In the case of Muhammad Din and others v. The State (supra), this Court, while construing clause (6) of Article 268 of the Constitution, has held that since P.O. 14 of 1972 was an existing law in terms of clause (3) of the above Article 268, clause (4) thereof, which conferred power on the President, shall by virtue of above clause (6), should be read as exercisable on the advice of the Prime Minister under Article 48 of the Constitution. Whereas in Sardar Ali's case (supra). This Court was considering effects of the judgment rendered by Shariat Appellate Bench of this Court in the case of Secretary, Law Department, v. Malik Said Kamal Shah (PLD 1986 SC 360) (in which provisions relating to pre-emption contained in M.L.R. 115 were held repugnant to the tenets of Islam) in respect of pending pre-emption cases. In that context, it was held that resort could be made to Article 2A of the Constitution. It may further be stated that in Shaukat Hussain's case (supra), the validity of section 7 of the Muslim Family Laws Ordinance, 1961, was examined on the touchstone of Islamic Injunctions by pressing into service Article 2A read with Article 268(6) of the Constitution. In the above remaining reports, "Riba" (i.e. Interest) was held repugnant to Islamic Injunctions by resorting to above provisions of the Constitution.

Whereas Mr. Khalid Anwar has contended that the scope of clause (3) of Article 268 is very limited inasmuch as it empowers the President to make adaptations by way of modification,. Addition or omission for the purpose of bringing of any existing law into accord with the provisions of the Constitution, which power does not include to make any amendment of substantial nature in any existing law. In support of his above contention, he has referred to the case of Mr. Fazlul Quader Chowdhry and others v. Mr. Muhammad Abdul Haque (PLD 1963 SC 486), in which the facts were that the President of Pakistan issued Removal of Difficulties (Appointment of Ministers) Presidential Order No.34 of 1962 under clause (3) of Article 224 of the late Constitution of 1962, whereby it purported inter alia to add clause (4) in the above Article 224 barring all Courts from questioning the validity of the amendments introduced by the above Order. The above amendments included omission of the word "Minister from clause. (1) of Article 104 of the above late Constitution, with a view to enabling Ministers appointed from Members of the Assembly to retain their seats in the Assembly which they would not have been entitled for the reason that office of a Minister being office of profit. It was held by this Court that the above Presidential Order No.34 of 1962 was beyond the scope of Article 224(3) of the-above late Constitution. In this regard, it may be pertinent to reproduce hereinbelow an extract from the opinion of S.A. Rehman, J. At page 519, which reads as under:- "That the word 'difficulty' must receive a restricted meaning is also apparent from the fact that clause (3) of Article 224 talks of "adaptations of the Constitution whether by way of modification, addition or omission". The word 'adaptations' provides the key to the interpretation of this clause. It savors of a machinery provision, inserted to facilitate the enforcement of the Constitution. It cannot be equated with the power of amendment of the Constitution at large. The words "modification, addition or omission" occurring in this clause, have to fall within the confines of "adaptation" of the Constitution, in order to be valid under this clause. I am, therefore, unable to agree with the contention raised that the power of the President was not circumstanced by any restrictions under this clause. Even on much wider language employed in Article 234 of the 1956-Constitution, this Court had no hesitation in declaring, in Special Reference No. l of 1957 that the President was not invested with any powers to introduce changes in the Constitution so as to alter its very basis. Judged in the light of the restrictions which are implicit and to a certain extent explicit in this clause, it is difficult to maintain that the impugned Order had made valid changes in the Constitution, so as to allow Ministers to retain their seats in the Legislature as members."

According to Mr. Khalid Anwar the word "C.C.I." should be read in place of "Government" in the relevant statutes by way of adaptation.

No doubt that under clause (3) of Article 268 the power of the President to make necessary adaptations in the existing laws for a period of to years was intended and designed for the limited purpose of bringing the Constitution in operation and existing laws in accord with the Constitution, and not to make substantial amendments either in the Constitution or in any existing law. In the instant case, P.O. 4 of 1975 and other legislative instruments enacted were designed and intended to achieve 'the above objective. The effect of Article 70 read with item No.3 of Part II of the Federal Legislative List of the Constitution was to confer exclusively legislative power in respect of WAPDA on the Federal Legislature. As a corollary to the same, the Federal Government shall have executive power in respect of WAPDA in terms of Article 97 of the Constitution. The factum that "electricity" is given in the Concurrent Legislative List as Item No.34 is of no consequence as above Item No.3 of Part 11 of the Federal Legislative List would exclude the application of the former in the case of WAPDA subject to Articles 154 and 161 of the Constitution.

16. Messrs Abdul Hafeez Pirzada and Khalid Anwar are at variance as to the order of priority of their contentions about the power of C.C.I. Vis-a-vis the Government of a Province in respect of determination of electricity tariff.

According to Mr. Abdul Hafeez Pirzada's first contention, the Government of a Province has the power under sub- clause; (d) of clause (2) of Article 157 of the Constitution to determine the electricity, tariff for the distribution of electricity within the Province and in the alternative C.C.I. Whereas as per Mr. Khalid Anwar, C.C.I. Has the power to determine electricity tariff or in the alternative, Advisory Board or in the alternative, a Provincial Government.

17. We may first examine the above question with reference to the power of a Provincial Government. In this behalf, it -may be advantageous to reproduce Article 157 of the Constitution, which reads as follows:-- "157.--(1) The Federal Government may in any Province construct or cause to be constructed hydro-electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter- Provincial transmission lines.

(2) The Government of a Province may---

(a) to the extent electricity is supplied to that Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province;

(b) levy tax on consumption of electricity within the Province;

(c) construct power houses and grid stations and lay transmission lines for use within the Province; and

(d) determine the tariff for distribution of electricity within the Province.

A perusal of the quoted clause (1) of Article 157 indicates that the Federal Government has been empowered to construct or cause to be constructed hydro-electric or thermal power installations or grid stations for the generation of electricity and it may lay or cause to be laid inter-Provincial transmission lines. Whereas clause (2) has four sub-clauses; sub-clause (a) empowers the Government of a Province that it may to the extent of electricity is supplied to that Province from the national grid, required supply to be made in bulk for transmission and distribution within the Province; whereassub-clause (b) empowers the Government of a Province to levy tax on consumption of electricity within the Province. It may further be noticed that by virtue of sub-- clause (c), the Government of a Province may construct power houses and Grid Stations and may lay transmission lines for use within the Province; whereas under sub-clause (d), it may determine the tariff for distribution of electricity within the Province.

18. It will not be out of context to point out that in the above Article 157, the word "may" has been employed and not the word "shall", meaning thereby that it is an enabling provision and not a mandatory provision. The Federal Government and the Government of a Province have discretion either to at under the above Article or not to at.

In other words, there is no Constitutional obligation to carry out words or to take action mentioned in the above Article.

The thrust of the arguments of Messrs Abdul Hafeez Pirzada and Khalid Anwar was that each of the above sub- clauses of clause (2) is independent and, therefore, even if the Government of a Province does not purchase electricity in bulk in terms of sub-clause (a) from the national grid or does not construct power houses and grid stations and lay transmission lines for the use within the Province, it can still determine the tariff for distribution of electricity within the Province. Additionally, it can also levy tax on consumption of electricity within the Province notwithstanding that it has not acted under above sub-clauses (a) and (c). There is no doubt that the Government of a Province has power to levy tax on consumption of electricity within the Province irrespective of the fact that it has not purchased electricity in bulk for distribution in the Province or that it has not constructed power houses and grid stations and has not laid transmission lines for use within the Province. To put it differently, sub-clause (b) of clause (2) of above Article 157 is independent and can be pressed into service without invoking other sub-clauses. However, we are unable to subscribe to the N submissions of the above learned counsel that sub-clause (d) of clause (2) is also independent. In our view, the Government of a Province can determine the tariff for the distribution of electricity within the Province under above sub-clause (d) only when it purchases electricity in bulk from the national grid under sub---clause (a) for distribution within the Province or when it constructs power houses and grid stations and lays transmission lines for use within the Province under above sub-clause (c). In other words, the operation of sub-clause (d) is depended on the factum whether the Government of a Province has acted either under sub-clause (a) and/or under sub-clause

(c) of clause (2) of above Article 157 of the Constitution.

19. We may observe that Mr. Fakhruddin G. Ebrahim has rightly pointed --t that it is not the case of any of the parties that the Governments of Punjab and N.-W.F.P. Have been purchasing electricity in bulk from the national grid and have been distributing the same to the consumers within their respective Provinces nor it is the case of any of the parties that the Government of above Provinces have ever determined any tariff for electricity under sub-clause (d) of clause (2) of Article 157 of the Constitution. On the other hand the case of the above Provinces is that WAPDA is competent to determine the tariff or the electricity. Furthermore, even otherwise, even if it is to be held that sub-clause (d) of clause (2) of above Article 157 is independent from the other above sub--clauses, in that event also the Government of a Province is not under any Constitutional mandate to determine the tariff for distribution of electricity within the Province as pointed out hereinabove that Article 157 is an enabling provision and not a provision which mandates its carrying out.

20. We may at this juncture point out that the Government of a Province under section 3(2)(d)(i) read with section 23 and Para. XI Schedule of Electricity Act, 1910, while granting a licence to a licensee under the terms of the licence may provide that the licensee would not charge for the energy more than the maximum price fixed under the licence. However, we may mention that though under section 12 of the Act, WAPDA is deemed to be a licensee under the above Electricity Act, 1910, and shall have all the powers and discharge all obligations of a licensee under the said Act but because of proviso to above section 12 duties and obligations contained in sections 3 to 11, subsections (2) and (3) of section 21 and sections 22, 23, and 27 or in clauses (I) to (XII) of the Schedule to the said Act shall not be attracted to WAPDA. In other words, the obligation to charge up to maximum price for the supply of energy, which may be fixed by the Government of a Province, stands excluded by virtue of the above exclusion of the application of the above provisions of the Electricity Act, 1910. In fact WAPDA is deemed to be a licensee by fiction of law, but factually it is not required to obtain a licence under the aforesaid Act.

21. We may now revert to the question, as to whether C.C.I. Has the power to determine the electricity tariff for WAPDA. In this regard, it may be pertinent to mention that Mr. Abdul Hafeez Pirzada has invited our attention to the Constitutional Accord dated 20-10-1972 entered into between Pakistan People's Party and the other political parties for framing of the Constitution. This Accord was followed by a report dated 31-12-1972 submitted by the Constitution Committee, which included MNAs of the various political parties including some independent MNAs.

He has also highlighted the factum that there was controversy as to the quantum of autonomy, which the Federating Units were to enjoy under the then proposed Constitution, which was a burning issue for quite a long period. He has invited our attention particularly to paras. 33, 36 and 40 of the above report, which read as follows:-- "33. To confirm to the spirit of federalism, a new arrangement has been worked out to ensure effective participation of the Provincial Governments in sensitive and important spheres of national life. In respect of the subjects in Part II of the Federal Legislative List and the item of electricity in the Concurrent Legislative List, special provision has been made for the creation of a Council of Common Interests to be appointed by the President as envisaged in the Constitutional Accord. The Council shall consist of the Chief Ministers of the Provinces and an equal number of members from the Federal Government. The Council shall formulate and regulate policies in relation to the specified matters and exercise supervision and control over related institutions.

36. With regard to the item of electricity in the Concurrent List, it has been provided that the Federal Government may in any Province construct hydro-electric and thermal power installations or grid stations for the generation of electricity and lay inter-Provincial transmission lines. It has been provided further that where electricity is supplied to a Province from the national grid, the Government of that Province may require supply to be made in bulk for transmission and distribution within the Province. A Provincial Government may levy tax on the consumption of electricity within the Province, construct power houses, transmission lines and grid stations for use within the Province, and determine the tariff for distribution of electricity within the Province, These provisions follow the Constitutional Accord, and likewise the provision in the following paragraphs.

40. The net profits earned by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated. In considering whether the term 'net profits' should be defined in the Constitution, three views were expressed in the Committee--

(a) The definition of 'net profits' in the Constitution should be avoided as this would introduce an element of rigidity which would not be desirable.

(b) The Council of Common Interests may be empowered to determine the 'net profits'.

(c) Guidelines for the Council of Common Interests for determining 'net profits may be given.

It was decided that some formula or guidelines for determining 'net profits' should be incorporated in the Constitution."

22. In the above background, the Constitution was framed. It reflects the above Constitutional Accord as well as the report of the Constitution Committee in the form of inter alia Articles 153, 154, 155 and 161 of the Constitution.

It may be observed that clause (1) of Article 153 envisages that there shall be a Council of Common Interests, hereinafter referred to as C.C.I. To be appointed by the President, whereas clause (2) thereof gives the composition of the same by providing that the Members of the Council shall be--

(a) the Chief Ministers of the Provinces; and

(b) an equal number of members from the Federal Government to be nominated by the Prime Minister from the to the.

It may further be pointed out that clause (3) of the above Article provides that the Prime Minister if he is a member of the Council, shall be the Chairman of the Council, but if at any the he is not a member of the Council, the President may nominate a Federal Minister who is a member of the Council as its Chairman.

It may be mentioned that clause (4) of the above Article makes the Council responsible to Majlis-e-Shoora (Parliament)

It may further be stated that Article 154 deals with the functions of the C.C.I. Since clause (1) of the above Article needs interpretation for resolving the controversy in issue, it may be advantageous to reproduce the same, which reads as follows:-- , "154.--(1) The Council shall formulate and regulate policies in relation to matters in Part 11 of the Federal Legislative List and, in so far as it is in relation to the affairs of the Federation, the matter in Entry 34 (electricity) in the Concurrent Legislative List, and shall exercise supervision and control over related institutions."

Clause (2) of the above Article lays down that the decision of the Council shall be expressed in terms of the opinion of the majority, whereas clause (3) thereof envisages that until Majlis-e-Shoora (Parliament) makes provision by law in this behalf, the Council may make its rules and procedure. It may further be pointed out that clause (4) empowers the Majlis-e-Shoora in a joint sitting by resolution issue directions through the Federal Government to the Council generally or in a particular matter to take action as Majlis-e-Shoora (Parliament) may deem just and proper and such directions shall be binding on the Council. It may further be observed that clause (5) of the above Article lays down that if the Federal Government or a Provincial Government is dissatisfied with a decision of the Council, it may refer the matter to Majlis-e-Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final.

It may also be stated that Article 155 provides right of lodging of a complaint in writing by the Federal Government or a Provincial Government with the Council if the interests of a Province, the Federal Capital or the Federally Administered Tribal Areas, or any of the inhabitants thereof, in water from any natural source of supply have been or are likely to be affected prejudicially by--

(a) any executive at or legislation taken or passed or proposed to be taken or passed, or

(b) the failure of any authority to exercise any of its powers with respect to the use and distribution or control of water from that source, It may further be observed that clauses (2) and (3) of the above Article deals with the procedure for disposing of the complaint referred to in above clause (1) thereof. It may also be mentioned that clause (5) provides that "notwithstanding any law to the contrary, but subject to the provisions of clause (5) of Article 154, it shall be the duty of the Federal Government and the Provincial Government concerned in the matter in issue to give effect to the decision of the Council faithfully according to its terms and tenor."

Whereas clause (6) of the above Article ousts the jurisdiction of the Courts by providing as under: "(6) No proceedings shall lie before any Court at the instance of any party to a matter which is or has been in issue before the Council, or of any person whatsoever, in respect of a matter which is actually or has been or might or ought to have been a proper subject of complaint to the Council under this Article. "

23. It may not be out of context to refer to Article 161 of the Constitution. Clause (1) thereof lays down that the net proceeds of the Federal duty of excise on natural gas levied at well-head and collected by the Federal Government and of the royalty collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well--head of natural gas is situated.

Whereas clause (2) provides for the payment of net profits earned by the Federal Government from the bulk generation of power at a hydro-electric station to the Province in which the hydro-electric station is situated. It may further be observed that Explanation to above clause (2) lays down the method of computing the "net profits" by C.C.I. Referred to in the above clause (2). As the above explanation is germane to the controversy in issue, it may be advantageous to reproduce the same, which reads as follows:-- Explanation.--For the purpose of this clause 'net profits' shall be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydro-electric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, "` duties, interest or return on investment and depreciations and element of obsolescene, and overheads, and provision of reserves. "

24. Messrs Abdul Hafeez Pirzada and Khalid Anwar have urged that since under clause (1) of Article 154 the C.C.I.

Is obliged to formulate and regulate policies in relation to matters in Part II of the Federal Legislative List, and is also obliged to exercise supervision and control over related institutions, C.C.I. Was the competent authority to determine the electricity tariff for WAPDA from the to the and not WAPDA or the Federal Government. To reinforce the above submission they have referred to clause (2) of Article 161 and submitted that under the above clause, C.C.I. Is to determine the net profits for the payment to the Provinces in respect of hydro-electric stations situated in the Provinces concerned.

On the other hand Mr. Fakhruddin G. Ebrahim, learned senior counsel for WAPDA, has submitted that C.C.1. Can lay down general policy in terms of clause (1) of Article 154 for determining the electricity tariff by WAPDA, but it has no power to determine the same. He has also urged that determination of net profits under clause (2) of Article 161 of the Constitution is to be worked out on a different formula, namely, what revenues would have accrued from the bulk supply from the bus-bars of a hydro-electric station minus the operating expenses, which would include items mentioned in the Explanation to above clause (2) of Article 161 and not on the basis of net profit which may be earned on the basis of generation transmission and distribution to the consumers in retail.

25. Learned counsel for the parties have referred to the following cases:--

(i) Federation of Pakistan through the Secretary, Ministry of Finance, Government of Pakistan, Islamabad etc. v.

United Sugar Mills Ltd., Karachi. (PLD 1977 SC 397); in which the vires of newly-added clause (4-A) to Article 199 of the Constitution which provided 60 days for the expiry of an interim order made by a High Court in respect of assessment or collection of public revenues, was assailed. In that context while maintaining the legality of the above newly added clause, the following observations were made about C.C.I.:-- "Again in one significant respect the Federal executive authority has been obliged under the Constitution and has been entrusted to a newly created institution called 'the Council of Common Interests'. It is a body quite apart from the Federal executive (See Articles 153--156). The administration of matters falling in Part II of the Federal Legislative List (Railways, mineral oil, natural gas etc.) and Item 34 of the Concurrent List (electricity) are entrusted to the Council of Common Interests. This is a body consisting of the representatives of the Federal Government and the four Provinces. Any dispute arising between one or more Provinces inter se or between the Federation or a Province regarding aforesaid subjects is referable to the Parliament in joint session for final decision. This Constitutional arrangement also abridges the original jurisdiction of the Supreme Court under Article 184 and correspondingly new power essentially quasi judicial in character 'has been conferred on the Parliament in joint sitting."

(ii) Khalid Malik and others v. Federation of Pakistan and others (PLD 1991 Karachi 1); In the above case the dissolution of the National Assembly and dismissal of the Federal Cabinet by the President of Pakistan under Article 58 of the Constitution by his order dated 6-8-1990, was assailed. One of the grounds mentioned in support of the above order was the failure of the Federal Government to convene C.C.I. Meeting in spite of repeated requests made by the Provinces. A Full Bench of the High Court of Sind comprising Acting C.J.

Saiduzzaman Siddiqui and four companion Judges dismissed the above writ petition. Saleem Akhtar, J. (as he then was) in his separate opinion commented as to the object of C.C.I. As follows:-- "By referring to this observation and provisions of Articles 153 and 154 Mr. Pirzada has highlighted the object, function and the privotal position CCI occupies in the Constitutional field. Its object is to strengthen and integrate Federation and Provinces, iron out their differences and provide Constitutional justice to the Provinces. Similar provisions are found in Federal Parliamentary Constitutions. Section 135 of the Constitution of India Act and Article 263 of the Constitution of India provide for inter-State Council for inter-Provincial conflicts and problems relating to common interest. Pleading for a broader spectrum of inter-State Council and appointment of the Leader of Opposition as its member Justice Krishna Lyer in his book ' A Constitutional Miscellany' observed as follows:-- 'The purpose is not to weaken the Centre nor to exaggerate autonomy of the States, nor to usurp powers rightfully lodges elsewhere. Indeed India can be strong only if the Union is strong and operate on a common wave length in matters fundamental to the governance of India Nationalism is more than periodic ballot convulsions. The Constitution is what the Constitution does.

The Constitution requires the Federation and Provinces to function harmony on 'mutually complementary and cooperative basis'. "

(i.e) Khawaja Ahmad Tariq Rahim v. The Federation of Pakistan through Secretary, Ministry of Law and Parliamentary Affairs Islamabad and another (PLD 1992 SC 646): In this case a petition for leave to appeal was filed inter alia against judgment of the Lahore High Court dismissing writ petition filed for impugning the aforesaid order dated 6-8-1990, dissolving the National Assembly and dismissing the Federal Cabinet. The above petition was dismissed and leave was refused. Shafiur Rahman, J. Wrote leading opinion to whom most of the learned Judges agreed. While dealing with dissolution order, he commented upon the failure of the Federal Government to convene the C.C.I. Meeting as under:-- "As regards the second ground, we find sufficient correspondence on record to indicate that persistent requests were made by the Provinces for making functional the Constitutional institutions like Council of Common Interests, National Finance Commission with a view to sort out disputes over claims and policy matters concerning the Federation and the Federating Units as such. In spite of the inter secession of the president, no heed was paid, Constitutional obligations were not discharged thereby jeopardizing the very existence and sustenance of the Federation. "

(iv) Mian Muhammad Nawaz Sharif v. President of Pakistan and others (PLD 1993 SC 473); in which the Presidential Order dated 18-4-1993 under Article 58 of the Constitution dissolving the National Assembly and dismissing the Federal Cabinet was impugned in this Court directly under Article 184(3) of the Constitution through a Constitution petition. In this case also one of the grounds in support of the dissolution order was that the Federal Government failed to convene C.C.I. Meeting in spite of repeated requests made by the Provinces. This ground and the other grounds were not sustained. Consequently, dissolution order was set aside and the National Assembly and the Federal Cabinet were restored by this Court. The above Constitution petition was heard by a Full Bench comprising the then C.J. And ten companion Judges. Almost all the learned Judges dilated upon as to the importance of C.C.I. The learned Attorney-General's contention that it was not mandatory to bring the question of privatisation of industries referred to in Item No.3 of Part II of the Federal Legislative List and Item 34 of the Concurrent Legislative List, was repelled inter alia by one of us (Ajmal Mian, J.) as under:-- "The President's Secretary raised the above questions first the in the aforesaid letter dated 28-12-1972. The Chief Minister, N.-W.F.P.'s letter about NEC is of 8-10-1993 (sic) and about CCI of 9-1-1993. And of the Sind Chief Minister is of 21-3-1993. The Baluchistan Chief Minister's letter of 6-12-1992 does not refer to CCI, but asked for the payment of balance amount. In my view, the Federal Government should have brought the matter of privatization in respect of the items covered by the above Constitutional provisions before the CCI. The petitioner's plea that, it was not mandatory is not sustainable. However, before the impugned order of dissolution was passed, the item of Government Privatization Policy was ;- consideration by CCI for the meeting which was scheduled after Pre --Council of Common Interests fixed on 11- 4-1993."

26. A perusal of the above-quoted clause (1) of Article 154 indicates that it has three parts. The first to parts relate to the formations and regulations of policies i.e. It provides that the Council shall formulate and regulate policies--

(i) in relation to matters in Part 11 of the Federal Legislative List;

(ii) in so far as it is in relation to the affairs of the Federation, the matter in Entry 34 (electricity) in the Concurrent Legislative List.

Whereas the third part envisages that the Council shall exercise supervision and control over related institutions.

In the opening part of clause (1) of Article 154, three keywords are used which need interpretation namely "Formulate". "Regulate" and "Policies". Mr. Khalid Anwar has furnished the meanings of the above words given in some of the dictionaries referred to hereinafter:--

(a) Formulate: (i) The Concise Oxford Dictionary (1982 Edn) defines word "Formulate" as 'set forth, systematically, reduce to a formula'.

(ii) Chambers' 20th Century Dictionary (New Edition) provides its meaning as 'to reduce to or express in a formula to state or express in a clear or definite form'.

(i.e) New Webster's Dictionary (1986 Edn) defines the same as "To reduce to or express in a formula; to put into a precise and comprehensive statement; to invent or develop, as a new kind of perfume".

(iv) Legal Thesaurus by William C. Burton defines the above word as "arrange, compose, devise, draft, draw up, effirm, express in a formula, express in a systematic way, express in precise form, fabricate, fashion, forge, form, formularize frame, give form to, hammer out, indite, produce, put into shape, put together, reduce to a formula, set down, shape, state systematically, turn out".

Whereas the word "Regulate" has been defined as follows:

(b) Regulate: (i) New Shorter Oxford English Dictionary, (1993 Edn.): "Control, govern or direct by rule or regulations, subject to guidance or restrictions".

(ii) Webster's New World Dictionary, Second College Edition. "To control, direct or govern according to a rule, principle or system, to make uniform methodical orderly, etc. "

(c) Policy: The word "Policy" has been defined as under:--

(i) Chamber's 20th Century Dictionary (New Edition): "The at of Government, statecraft, a course of action; a system of administration guided more by interest than by principle; dexterity of management; prudence, cunning; in Scotland the pleasure grounds around a mansion".

(ii) Black's Law Dictionary. Sixth Edition: "The genera', principles by which a Government is guided in its management of public affairs, or the Legislature in its measures.

This term, as applied to a law, ordinance, or rule of law, denotes its general purpose or tendency considered as directed to the welfare or prosperity of the State or community".

(i.e) Webster's New World Dictionary, Second College Edition: "A principle, plan or course of action, as pursued by a Government, organization, individual etc."

(iv) Wharton's Law Lexicon: "Policy. The general principles by which a Government is guided in its management of public affairs, or the Legislature in its measures."

The third part of the above clause (1) of Article 157 have employed the words "Supervision" and "Control". Mr. Khalid Anwar has also quoted the definitions of the above words in the following dictionaries;

(d) Control

(i) Webster's New World Dictionary, Second College Edition: "To regulate, to exercise directing, guiding or restraining power over".

(ii) New Shorter Oxford English Dictionary, 1993: "The at of directing or regulating; command, regulating influence. A means of restraining or regulating."

(i.e) Concise Oxford Dictionary: "(usually in plural) means of regulating prices, etc. "

(e) Supervise: (i) The New Shorter Oxford English Dictionary, 1993 Edition: "Supervise" look over, survey, inspect, read through for correction, revise.

Supervision": The action or function of supervising a person, task etc. Management, direction, superintendence.

(ii) Webster's New World Dictionary, Second College Edition: "To oversee, direct or manage (work, workers, a project, etc.")

27. Besides referring some of the above dictionaries on the definition of the word "regulate", Mr. Khalid Anwar has referred to the following cases wherein the above word has been interpreted on the basis of the meanings given in dictionaries:--

(i) Pakistan Burmah Shell Ltd. v. Central Labour Commissioner etc. (PLD 1982 Kar.. 33)

(ii) Karachi Electric Supply Corporation Ltd. v. National Industrial Relations Commission (PLD 1982 SC 113); (i.e) The General Manager, Heavy Mechanical Complex, Taxila v. Mr. Mamoon A. Kazi, Senior Member, National Industrial Relations Commission, Islamabad (PLD 1977 Lahore 998);

(iv) Karachi Electric Supply Corporation Ltd v. National Industrial Relations Commission (NIRC) and Wajid Ali Khan 1980 PLC. 196;

(v) Sujatha Tairing Talkies and others v State of Karnataka AIR 1986 Karnataka 21).

Whereas in the following cases the word "Control" has been construed with reference to the dictionary meaning:--

(i) Ghulam Rasool v. Muhammad Hayat PLD 1984 SC 385);

(ii) Gul Naras Khan v. Governor, N.-W.F.P. Through Chief Secretary (PLD 1981 Peshawar 87); (i.e) Corporation of City of Nagpur v. Ramchandra G. (AIR 1984 SC 626);

(iv) The Shamrao Vilthal Cooperative Bank Ltd. v. Mallya (AIR 1972 SC 1248); and

(v) Bharat Bhushan v. Cinema & City Magistrate (AIR 1956 All. 99 at 100).

He has also referred to the case of Sharaf Faridi and 3 others v. The Federation of Islamic Republic of Pakistan through Prime Minister of Pakistan and another (PLD 1989 Karachi 404) on the construction of the expression "the supervision and control" used in Article 203 of the Constitution, reliance was placed by him particularly on the following observation at page 438:-- "I am inclined to hold that the supervision and control over the subordinate judiciary vested in the High Court under Article 203 of the Constitution keeping in view Article 175, is exclusive in nature, comprehensive in extent and effective in operation. It comprehends the administrative power as to the working of the subordinate Courts and disciplinary jurisdiction over the subordinate judicial officers. In this view of the matter, any provision in an Act or any rule or a notification empowering any executive functionary to have administrative supervision and control over the subordinate judiciary will be violative of above Article 203 of the Constitution. Besides, it will militate against the concept of separation and independence of judiciary as envisaged by Article 175 of the Constitution and the Objectives Resolution

28. We are unable to subscribe to M/s. Abdul Hafeez Pirzada and Khalid Anwar's above contention that the effect of the incorporation of Article 154(1) and/or Article 161(2) of the Constitution is that C.C.I. Has the power to determine the tariff for distribution of electricity by WAPDA to the consumers directly. The object of the incorporation of clause (1) of Article 154 of the Constitution is reflected inter alia in para. 33 of the Constitution Committee's Report reproduced hereinabove in para. 18, namely, "to confirm to the spirit of Federalism, a new arrangement has been worked out to ensure effective participation of the Provincial Governments in sensitive and important spheres of national life". To achieve the above objective, C.C.I. Consists of the Chief Ministers of the four Federating Units and an equal number of members from the Federal Government which generally includes the Prime Minister of Pakistan as provided under Article 153(21 of the Constitution. In the first case of Federation of Pakistan v. M/s. United Sugar Mills Ltd. (supra), the interpretation of Article 153 or 154 of the Constitution was not involved though observations as to its effect inter alia on the power of the Federal Government were made. In Khalid Malik, Tariq Rahim and Nawaz Sharif cases (supra), the Federating Units repeatedly requested Federal Government to summon the meeting of C.C.I. To iron out and to resolve the outstanding issues between the Federating Units and the Federation but the request was not acceded to. The failure on the part of the Federal Government to accede to the above request was pleaded by the President as one of the grounds in support of the impugned orders for dissolving the National Assembly and dismissing the Federal Cabinet. In fact in the above cases (except in Nawaz Sharif's case in which question of privatisation of WAPDA was involved) interpretation of clause (1) of Article 154 of the Constitution was not directly involved.

In our view Articles 153, 154, 155, 160 and 161 of the Constitution provide an in-built self-adjudicatory and self- executory mechanism in the Constitutional set-up. The object seems to be to generate sense of participation among the Federating Units on sensitive issues of national importance referred to in the above Articles, and to ensure:--

(i) resolving of any dispute arising between one or more Federating Units inter se or between the Federation and a Federating Unit;

(ii) payment of the net proceeds of the Federal duty excise on natural gas levied at well-head and collected by the Federal Government to the Federating Units in which the well-heads of natural gas are situated; (i.e) payment of net profits earned by the Federal Government or any undertaking established or administered by the Federal Government from the bulk-generation of power at a hydro-electric station to the Federating Unit in which the hydro-electric station is situated;

(iv) carrying out direction issued by the Parliament in its joint session to C.C.I.;

(v) equitable distribution of Federal taxes among the Federating Units and resolving other financial issues (Article 160 of the Constitution).

29. We are inclined to hold that the matters referred to in Part ii of the Federal Legislative List and Item 34 of the Concurrent Legislative List (electricity) are to be brought before C.C.I. For formulating and regulating policies. In Nawaz Sharif's case (supra), it was held (by one of us Ajmal Mian, J.) that before taking any action towards privatisation of WAPDA, it was mandatory to have brought the above matter before C.C.I. The rationale of the above conclusion was that hydro-power stations were situated in N.-W.F.P., which was then opposing privatisation of WAPDA. It would not have been proper on the part of the Federation to privatize above hydro- power stations and to create private interest in such sensitive installations situated in a Federating Unit without the participation of the Federating Units. So the forum for ironing out such a controversy was C. C. I.

30. Indeed in the case of Sharaf Faridi (supra), the High Court of Sind has construed the expression "the supervision and control over the subordinate judiciary" used in Article 203 of the Constitution as exclusive in nature, comprehensive in extent and effective in operation. This was construed as such while keeping in view Article 175 of the Constitution, which mandated that the Judiciary shall be separated from the Executive within the period specified therein, which period in fact had expired. In this view of the matter, the above report is of no help for construing the above words used in clause (1) of Article 154 of the Constitution. Nor the other reports referred to hereinabove can be pressed into service as the words "regulate" and "control" have been construed therein with reference to the context in which they are employed in the relevant provisions of the statutes. The latter point has been dilated upon hereinafter in detail.

It may be observed that the words "formulate", "regulate", "policy" "control" and "supervise" employed in clause (1) of Article 154 of the Constitution carry wide connotations. The word "formulate" inter alia carries the meaning, set forth, reduce to a formula; whereas the word "regulate" inter alia connotes control, subject to guidance. The word "policy" inter alia carries meaning, as the general principles by which a Government is guided in its management of public affairs. The word "control" inter alia connotes, to regulate or guiding or restraining power over; whereas the word "supervise" inter alia carries the meaning, to look over and to inspect. The above words cannot be construed in isolation, but the same are to be construed in the context in which they are employed. In other words, their colour and contents are to be derived from their context. PLD 1996 SC 324 at page 429, para.23 (Al- Jehed Trust case). Applying the above principle to the case in hand, we are of the opinion that C.C.I. Is not required to make decision as to the day to day working of the Corporations mentioned in Part II of the Federal Legislative List and of the related institutions. It is supposed to formulate and regulate general policy matters as to their working, which may include general policy for the working of WAPDA. It may even include a guideline for fixation of tariff by WAPDA but such guideline cannot be inconsistent with subsection (2) of section 25 of the Act, which lays down statutory parameters for fixation of tariff. In our view, the C.C.I. Is not required to determine tariff for the supply of electricity by WAPDA to the consumers and to vary the same from the to the as this comes within the ambit of day to day working. It may be pointed out that fixation of tariff of electricity depends on various factors, which regularly and frequently fluctuate warranting revision of tariff from the to the. It may further be observed that there are a number of other Corporations and related institutions under the administrative control of the Federal Government, which deal with manufacture and also of various goods/machinery. Can it be urged that it is mandatory that C.C.I. Should fix the prices of the above items from the to the. The composition of C.C.I., which comprises Chief Ministers of the four Federating Units and four nominees of the Federal Government, which generally includes the Prime Minister as stated above, militates against taking of above exercise which if taken in respect of all the Corporations and related institutions referred to in Article 154 (1), will be a full the job, the Prime Minister and the Chief Ministers instead of running the Federation and the Federating Units will mostly be busy in the above exercise. The requirement under rule 5 of the Rules I of Procedure of C.C.I, to summon a meeting at least once in a year also lends support to the above view, which we are inclined to take.

31. Additionally, there seems to be some force in Mr. Fakhruddin G. Ebrahim's contention that the last part of clause (1) of Article 154 of the Constitution, namely, "and shall exercise supervision and control over related institutions" does not cover WAPDA, as it is covered by the first part of the above clause. In any case, day to day working even of a related institution is not covered by the expression "supervision and control" for the foregoing reasons. Furthermore, admittedly C.C.I. Had not laid down any guideline for determining electricity tariff for WAPDA, in the absence of any such guideline, it cannot be urged that the tariff in question is violative of Article 154(1) of the Constitution. Additionally, the aforesaid Articles including Article 154 were intended and designed for the protection of the Federating Units' interest. None of the Federating Units has come forward to contend that the determination of tariff in question for supply of electricity including surcharge and additional surcharge is arbitrary or that it has no nexus with the actual cost. On the contrary, the learned Advocates-General, Punjab and N.-W.F.P., who appeared in response to the Court's notice, stated that the above Federating Units were satisfied with the present arrangement of supply of electricity by the WAPDA including the tariff which is in force.

The appellants who have their factories in the above to Federating Units have no locus standi to urge that above Article 154(1) has been violated particularly in view of the fact that there is no Constitutional mandate G that C.C.I.'s approval is to be obtained before enforcing any tariff. However, Mr. Khalid Anwar has invited our attention to the typed page 35 from the impugned judgment of Lahore High Court, wherein summary for the submission of the Prime Minister for Increase in Consumers Tariff for financial year 1995-96 has been quoted, which inter alia includes the detail of the items for which WAPDA intended to provide for expenditure. One of the said items is Ghazi Brotha Project. According to him, this item and some other items are matter of policy, which should have been brought before C.C.I. The above project is a quite old project. It was not the case of the appellants before the High Court nor it was pleaded by the appellants in their memo of petitions for leave before this Court that approval of C.C.I. Was required which was not obtained. The controversy relates to the legality of surcharge and additional surcharge. Mr. Khalid Anwar has raised above contention first the on the last day of arguments in reply to Mr. Fakhruddin G. Ebrahim's arguments. This being a question of fact cannot be allowed to be raised at this late stage, particularly keeping in view that this is not the case of the Federating Units concerned that the above project was being executed without their concurrence or that the same did not have backing of the requisite approval of the competent authorities. In fact the above contention is not germane to the question in issue.

32. We may now advert to the question, as to whether C.C.I. Has power to determine tariff for the supply of electricity by WAPDA under clause (2) of Article 161 of the Constitution. It may again be observed that clause (2) of Article 161 enjoins that the net profits earned by the Federal Government or any undertaking established from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated. Explanation to above clause which has been reproduced in para. 23 hereinabove provides the formula on the basis of which the above net profits are to be computed by C.C.I. The above formula is as follows:--- Revenues accruing from the bulk supply of power from the bus-bars of hydro-electric station minus operating expenses of the station which will include:--

(i) any sum payable as taxes;

(ii) duties; (i.e) interest;

(iv) depreciations and elements of obsolescence (i.e. The deterioration or the going of out of date of a product);

(v) return on investment;

(vi) overhead expenses: and

(vii) provision for reserves.

33. C.C.I. In its meeting held on 12-1-1991 took decision as to the payment of net profits to the Provinces as under:- -- "The C.C.I. Took note of the summary dated 24th December, 1990 submitted by the Finance Division and decided as follows:--- I. The methodology of calculation of net profits from bulk generation of electricity proposed by Mr, A.G.N. Kazi Committee should be adopted.

II. The net profit up to the end of financial year 1990-91 should be adjusted against the deficit grants released to the Provinces from 1974--75 onward. For the current year (1990-91), some ad hoc payment may be made to the Province of N.-W. F. P. To relieve its budgetary deficit to the extent possible..

III. The return of 4 % on investment being paid by WAPDA to the Federal Government should be allowed to be paid to the Provincial Governments and adjusted against the deficit grants for the past.

IV. The net profits of hydel power stations should be paid to the Provinces from the financial year 1991-92. "

V. The N.F.C. Should consider in its next meeting whether the net profits of electricity from hydel generation should be paid to the Provinces by WAPDA or the Federal Government."

It may further be observed that pursuant to the above decision of C.C.I., President of Pakistan issued P.O.No.3 of 1991 dated 2-6-1991, which came into force on the first day of July, 1991, as per sub-clause (2) of Article 1.

Preamble to the above Order provides that "Whereas in pursuance to clause (2) of Article, 161 of the Constitution of the Council of Common Interests has decided on 12-1-1991 the rates of operating expenses to be deducted from the revenues accruing from the hydro-electric stations for computing the net profits; and whereas the National Finance Commission on reference from the Council of Common Interests has recommended that the net profits shall be made by the undertaking established or administered by the Federal Government. Articles 3 and 4 provide as follows:--- "3. Distribution of net profits from hydro-electric stations.--The net profits from the bulk generation of power at a hydro-electric station located in the Provinces shall be paid by the concerned undertaking established or administered by the Federal Government (i.e. Water and Power Development Authority) to the Provinces.

4. The Federal Government shall guarantee payment of net profits to the Provinces concerned by the above undertaking on a regular basis. "

34. From the above-quoted decision of the C.C.I. And the provisions of P.O.No.3 of 1991, it is evident that C.C.I. Has discharged its Constitutional obligation as to the computation of net profits for payment of the same to the Federating Units concerned. There are sufficient documents on record to indicate that some payments have been made towards profits inter alia to N.-W.F.P. Pursuant to the above decision of the C.C.I. The formula adopted for working out of net profits to the Federating Units under above clause (2) of Article 161 cannot be made basis for determining the tariff for the supply of electricity b-WAPDA inter alia for the following reasons:---

(i) That it has come on record that the generation of electricity from the hydro-electric stations is to the extent of about 48% of WAPDA's total generation of electricity. The balance of about 52 % comes from generation of electricity from the thermal power stations,

(ii) The cost of installation of a hydro-electric station is high as compared to thermal power station but the cost of operation is less.

(i.e) The net profits as per Explanation to clause (2) of Article 161 of the Constitution are to be computed on the basis of revenue which may accrue from the bulk supply of power from the bus-bars; whereas WAPDA has not only been generating electricity from hydro-electric stations but is also transmitting and distributing the same among the consumers and, therefore, the basis provided for in the above explanation to clause (2) of Article 161 cannot be adopted for determining the tariff for the supply of electricity to the consumers.

35. We may now refer to Mr. Khalid Anwar's contention that Advisory Board, as contemplated by Article 12 of P.O.No.1 of 1970 (Province of West Pakistan (Dissolution) Order, 1970), which was gazetted on 30-3-1970, is competent to determine the tariff for the supply of electricity by WAPDA. It 0--will not be out of context to point out that WAPDA was originally intended to cater for West Pakistan as one-unit. Upon the dissolution of one-unit and creation of four Provinces, some transitory arrangement was to be made till the the the Constitution of Pakistan was framed. Aforesaid Article 12 provided to meet the above situation. Clause (1) of the above Article provides that as from the appointed day West Pakistan Water and Power Development Authority shall continue to function under the WAPDA Act, 1958, and all powers of the Provincial Governments in relation to the said Authority shall be exercised by the President and that any reference to the Provincial Governments in any law or other legal instruments in relation to the said Authority shall be construed as reference to the President. Whereas clause (2) thereof envisages that to aid and to advise him (i.e. The President) in relation to the administration and management of affairs of the said Authority, the President shall constitute an Advisory Board consisting of such representatives from the new Provinces as he may after consultation with the Governments of those Provinces may direct. Clause (3) contemplates framing of rules by the Advisory Board with the approval of the President and in the absence of such rules to work as directed by the President. Whereas clause (4) lays down that the Advisory Board constituted under clause (2) shall exercise such powers and perform such functions relating to the administration and management of the affairs of the said Authority as the President may direct.

36. It is an admitted position that no Advisory Board as envisaged under above Article 12 was constituted till the framing of the Constitution. Upon framing of the Constitution as pointed out hereinabove because of Item 3 in Part II of the Federal Legislative List, the WAPDA had become Federal subject. Therefore, the above Article 12 of P.O.No.1 of 1972 had lost any significance. Even otherwise, the protection provided to such a provision was for a period of to years under Article 270(3) of the Constitution, during which period also no Advisory Board was constituted. However, under section 35 of the Electricity Act, 1910 (which provides that the Provincial Government may for the whole or any part of the Province by notification in the official Gazette constitute an Advisory Board, the President issued P.O.No.18 of 1972 on 20-4-1972 (gazetted on 21-4-1972) (Standing Power Rates Advisory Board Order, 1972). Article 2(1) thereof provides that the Central Government shall constitute a Standing Board Rates Advisory Board. Clause (2) of the above Article gives the period, namely, that it lays down that the life of the Board in the first instance shall be for a period of three years. Whereas clause (3) of the same describes the functions of the Board by providing that the functions of the Board shall be to advise on the power rates and tariff structures and costs of various electricity supply undertakings within the area to which said Order extends and to perform such other functions as the Central Government may from the to the direct. Pursuant to the above P.O. 18 of 1972, the Standing Power Rates Advisory Board was constituted through a notification dated 1-9- 1972, then through a notification dated 5-7-1978 and lastly through a notification dated 17-10-1981. After that no Standing Power Rates Advisory Board was constituted. In this view of the matter, no Standing Power Rates Advisory Board was functioning during the relevant period which is in issue Even otherwise. The opinion of such an Advisory Board has no binding force. In this regard, it may be pertinent to refer to the case of M/s. Hindustan Zinc Ltd. Etc. Etc. Appellants v. Andhra Pradesh State Electricity Board and others, Respondents (AIR 1991 SC 1473), wherein the facts were that section 16(5) of the Electricity (Supply) Act (1948) provided that the State Government shall constitute a State Electricity Consultative Council for the State and in cases to which sections 6 arid 7 apply, the State Government concerned shall constitute such one or more State Electricity Consultative Council or Councils and for such areas as they may by agreement determine. Subsection (5) of the above section 16 lays down the functions of the aforesaid State Electricity Consultative Council, which are more or less identical with above Article 2(3) of P.O. No.18 of 1972. The said subsection (5) reads as follows:--- "(5) The functions of the State Electricity Consultative Council shall be as follows:---

(i) To advise the Board and the Generating Company or Generating Companies, if any, operating in the State on major questions of policy and major schemes;

(ii) to review the progress and the work of the Board and the Generating Company or Generating Companies, if any, operating in the State from the to the; (i.e) to consider such other matters as the Board or the Generating Company or Generating Companies, if any, operating in the State may place before it; and

(iv) to consider such matters as the Sate Government may by rules prescribe."

The Indian Supreme Court, after comparing the above provision with the parallel provision of the English Act, held as under:--- "16. Section 37(1) of the English statute again provides: "37. Tarrifs and variation of tariffs--(1) The prices to be charged by the Generating Board for the supply of electricity by them to Area Boards shall be in accordance with such tariffs as may be fixed from the to the by the Generating Board after consultation with the Electricity Council; the different tariffs may be fixed for different Area Boards."

(rest of the section omitted as unnecessary)

The pattern of the provisions in the Indian Statute is quite different. The 'laying procedure' before the Legislature effectively controls the exercise of the delegated power of the Board. We are of the opinion that though advisable yet failure to seek advice of the. Consultative Council before revision of the tariffs does not result in invalidation of the revised tariffs. This consequence appears to us to be the logical and reasonable view to take of the requirement of section 16 along with other provisions of the Supply Act. "

37. We may observe that there is no doubt that in a democratic country, revision of rates of public utility services has political repurcussions. The Government in power in order to keep its image untarnished and popularity un- impinged is hesitant to take such action. From the record, it seems that before imposing surcharge and additional surcharge in question, thorough examination was conducted by WAPDA as well as Government of Pakistan and the matter was examined even at the level of Cabinet and E.C.C. Presided over by the Prime Minister. The Cabinet includes the public representatives, who are members of the Parliament. However, it is desirable that the representatives from the general public from various walks of life may also be associated with the revision of tariff of public utility services which is done in all democratic developed countries. In this behalf, reference may be made to para. 132 from the Halsbury's Laws of England, Fourth Edition, wherein reference has been made to the English Electricity Act, 1957, and the procedure provided for revision of electricity tariff. The said para. 132 reads as under:--- "132. Tariffs of area boards.--Subject to the provisions of the Electricity Act, 1957 with respect to railways, the prices to be charged by area boards for supply of electricity by them are to be in accordance with tariffs fixed by them from the to the after consultation with the consultative council established for their area and with the Electricity Council and those tariffs must be so framed as to show the method by which and the principles on which the charges are to be made as well as the prices to be charged, and they must be published in such manner as in the Board's opinion will secure adequate publicity for them. A tariff so fixed by an area board may include a rent or other charge in respect of electrical fittings provided by the board on the premises of a consumer. "

If we want to have a welfare State, the provisions like the one which are contained in the above English Act may be incorporated in the Act (i.e. WAPDA Act) so that the consumers may have effective participation in framing of the tariff. The least which is expected is that the above Standing Power Rates I Advisory Board should be revived and its services may be invoked in aid while revising the electricity tariff in any form.

38. It will not be out of context to mention that recently through Ordinance No.XIV of 1995 issued on 14-1-1995 and then by Ordinance No.XXVIII of 1996 issued on 7-3-1996, the National Electric Power Regulatory Authority has been established. It contains exhaustive provisions for streamlining the generation, transmission and distribution of the electricity. It envisages the establishment of National Grid Company. Section 26 of the latter Ordinance provides that notwithstanding anything contained in this Ordinance, no company or undertaking shall be allowed generation or transmission of electric power unless the K.E.S.C. Or WAPDA is fully desegregated; whereas proviso to section 31 lays down that till the WAPDA facilities are finally desegregated, it may continue to apply its own rates and charges and terms and conditions for generation, transmission and distribution in accordance with the provisions applicable before the commencement of the said Ordinance. It is hoped that the provisions of the above Ordinance are acted upon in a manner which may be beneficial to the public at large.

39. We may now take up the question as to the legality of the surcharge and additional surcharge. It was vehemently urged by Messrs Abdul Hafeez Pirzada and Khalid Anwar that the above to levies are in fact taxes and not part of tariff and, therefore, WAPDA has no power under the Act to impose the same; whereas Mr. Fakhruddin G. Ebrahim's submission was that a perusal of the documents on record indicates that in substance and in fact they are part of electricity tariff and they are not taxes. If we were to hold that the above to levies are taxes. The same would be ultra vires the power of WAPDA. However, if we were to agree with Mr Fakhruddin G.

Ebrahim's above submission, then the next question which would require consideration would be, whether the same are violative of any provisions of the Act or any law or principle of law.

We may now ascertain the nature of the above to levies. Mr. Abdul Hafeez Pirzada has referred to the definitions of the words "surcharge" and "exaction" given in Black's Law Dictionary, Sixth Edition, which read as follows--- "Surcharge, n. An overcharge; an exaction, impost, or encumbrance beyond what is just and right, or beyond one's authority or power. Term may also refer to a second or further mortgage, The amount with which a Court may charge a fiduciary who has breached his trust through intentional or negligent conduct. The imposition of personal liability on a fiduciary for such conduct.

Overprint on a stamp that changes the denomination.

An additional tax or cost onto an existing tax, cost, or charge. See Surtax. Surcharge v. The imposition of personal liability on a fiduciary for wilful or negligent misconduct in the administration of his fiduciary duties.

In equity practice, to show that a particular item, in favour of the party surcharging, ought to have been included, but was not, in an account which is alleged to be settled or complete. To prove the omission of an item from an account which is before the Court as complete, which should be inserted to the credit of the party surcharging.

Perkins v. Hart, 24 U.S. 237, 6 L. Ed. 463.

The imposition of an additional tax, impost, or cost. See Surtax. "

"Exaction". The wrongful at of an officer or other person in compelling payment of a fee or reward for his services, under colour of his official authority, where no payment is due."

Mr. Khalid Anwar has also referred to the three dictionaries for the meaning of the word "surcharge", which read as under:--- "V. Surcharge

1. Surcharge: "An overcharge of what is just and right".-- Aiyer's Judicial Dictionary, 10th Edition.

2. "An additional amount added to the usual charge, an exaction".--- Ballantine's Law Dictionary, 3rd-Edition.

3. Surcharge: "An over-charge; an exaction imposed or encumbrance beyond what is just or right, or beyond one's authority or power."--In Black's Law Dictionary, 4th Edition."

They have also referred to the documents, whereby the above surcharge and the additional surcharge were levied to demonstrate that the case of WAPDA itself was that the aforesaid surcharge and additional surcharge were not part of tariff. They were to be kept under separate heads in the accounts and secondly excise duty payable to the Punjab Government on the electricity tariff was not to be charged on the above to items as they were not part of the electricity tariff; particularly they have relied upon WAPDA's letters/orders dated 31-12-1991, 6-2-1992 and 28-9-1993 (at pages 103, 104 and 105 of paper book part-II of Civil Appeal No.60 of 1996), in which inter alia it has been stated that the account of surcharge shall be, kept separately and that the surcharge shall not to be levied on the electricity duty payable to the Provincial Government, meter rentals, service rentals, which are not part of supply charges and same method of calculation is provided for the additional surcharge in the above letter dated 28-9-1993. They also submitted that before the High Court the case of WAPDA was that the above to levies were appendages to the tariff.

On the other hand, Mr. Fakhruddin G. Ebrahim has referred to Section Officer, Government of Pakistan, Ministry of Water and Power's letter dated 8-8-1993 addressed to the Chairman, WAPDA (at page 160 of the file of Civil Appeal No.7 of 1996), which reads as follows:--- "To

1. The Chairman, WAPDA, WAPDA House, Lahore.

2. Managing Director, KESC, Karachi.

Subject: PROPOSALS FOR INCREASE AND RATIONALISATION OF ELECTRICITY TARIFFS.

Dear Sir, I am directed to inform you that Government of Pakistan has approved the following increase in electricity tariff with immediate effect:---

1. Additional Surcharge in Tariffs for Domestic Consumers in the bracket 1-50 KWH/month: 15 paisas KWH.

2. Additional Surcharge in Tariffs for Domestic Consumers in the bracket 51-150 KWH/month: 20 paisas/KWH.

3. Additional Surcharge in Tariff for all other categories of metered Domestic, Commercial Bulk, Industrial and Agricultural Consumers: 25 paisas/KWH.

4. Fixed charges for Agricultural Tubewells and FATA to be increased by 20 %

5. Fuel Adjustment Chrarge (FAC) to be increased from 70 paisas to 75 paisas/KWH to offset the recent increase in fuel prices and proposed Gas Price increases.

I would therefore, request you to please notify the above tariff/increase with immediate effect.

Yours faithfully, (Sd.), (Ch. Fateh Muhammad), Section Officer. "

He has also referred to the documents at pages 24 to 112 of paper book part-I of the documents in Civil Appeals Nos.7 to 80 of 1996 filed by WAPDA which contain various summaries placed before the E.C C and the Cabinet They also include three notifications dated 24-11-1994. 6-2-1995 and 9-7-1995 (at pages 93, 100 and 106 of the aforesaid file), whereby the tariffs were revised which included surcharge and additional surcharge. It will suffice to reproduce para. 1 of the first notification and para.1 of the tariff schedule annexed with it, which read as under:--- "In exercise of the powers conferred on it by subsection (1) of section 13, read with section 12 and subsection (2) of section 25 of the Pakistan Water and Power Development Authority Act, 1958 (Act XXXI of 1958), the Pakistan Water and Power Development Authority hereinafter referred to as "the Authority", with the approval of the Government of Pakistan, is hereby pleased to make and promulgate the annexed Schedule of Electricity Tariffs, with effect from Seventh November, 1994 to be applicable to the consumers, in the areas of supply served by the Authority."

"SCHEDULE OF ELECTRICITY TARIFFS Effective 7-11-1994)

GENERAL SUPPLY TARIFF A-1 Consumption during the month (KWH) Energy Charges (Ps/KWH)FAS00 (Ps/KWH) Additional Surcharge (Ps/KWH)

For first 50 units 54 19 or next 100 units (51-150) 68 27 For next 150 units (151-300) 77 39 For next 700 units (301-1000) 110 53 For next 1000 units (1001-2000) 147 66 For next 1000 units (2001-3000) 147 79 For next 1000 units (3001-4000) 147 87 Above 4000 units 147 96 There shall be a minimum monthly charge of Rs.11 even if no energy is consumed.

Flat Rate for FATA per month per connection Rs.90 Rs.36"

It is true that the meaning of the word "surcharge" as given in the above dictionaries also includes "exaction" which has been defined in the aforesaid Black's Law Dictionary as "the wrongful at of an officer or other person in compelling payment of a fee or reward for his services, under colour of official authority where no payment is due". However, we may again point out that the above words cannot be read in isolation but they are to be construed is the context in which hey are employed. To put it differently, their colour and contents are to be derived from their context.

We may mention that in K.G. Aiyar's Judicial Dictionary, Tenth Edition, the word "surcharge" has been inter alia defined as under:-- "Surcharge". The word 'surcharge' is not defined in the Electricity Supply Act, 1948, but etymologically, inter alia, surcharge stands for an additional or extra charge or payment. (See Shorter Oxford English Dictionary).

Surcharge is thus a superadded charge, a charge over and above the usual or current dues. Although in the instant case it is in the form of a surcharge, it in substance an addition to stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Electricity Board to fix, or revise the rates of tariff under the provisions of the Act. (Bisra Stone Lime Co. v. O.S.E. Board, (1976) 2 SCC 167: (1976) 2 SCR 307: AIR 1976 SC 127 (130)." 'Surcharge' means an additional or extra charge or payment. Shorter Oxford English Dictionary, page 2199; (D.C.M. v. Rajasthan State Electricity Board, (1986) 2 SCC 431 at p. 465). As held by the Supreme Court in Bisra Stone Lime Co. Ltd. v. Orissa State Electricity Board (1975) 2 SCC 436), a surcharge is in substance an addition to the stipulated rates of tariff and enhancement of the rates by way of surcharge is well revise the rates of tariff under the provisions of Act.--- Reference may also be made to the following cases:--

(i) The Commissioner of Income-tax, Kerala, Ernakulam (In both the Appeals), Appellant v. Srinivasan (In both the Appeals) Respondent (AIR 1972 SC 491); in which the facts were that the matter had come up before the Kerala High Court in the form of a reference under the Income Tax Act, in which opinion of the High Court was sought on the following question:-- "Whether the words "income-tax" in the Finance Act of 1964 in subsection (2)(a) and subsection (2)(b) of section 2 would include surcharge and additional surcharge."

The above question was answered by the High Court in the negative. The matter was taken up to the Indian Supreme Court. In that context, the Supreme Court concluded as under:-- "10. The meaning of the word 'surcharge' as given in the Webster's New International Dictionary includes among others ' to charge (one) to much or in addition....Also 'additional tax'. Thus the meaning of surcharge is to charge in addition or to subject to an additional or extra charge. If that meaning is applied to S. 2 of the Finance Act, 1963 it would lead to the result that income-tax and super-tax were to be charged in four different ways or at four different rates which may be described as (i) the basic charge or rate (In part I of the First Schedule); (ii) surcharge; (i.e) special surcharge, and (iv) additional surcharge calculated in the manner provided in the Schedule. Read in this way the additional charges form a part of the income-tax and super-tax. It is possible to argue and that argument has been commended on behalf of the Revenue that the word `surcharge' has been used in Article 271 for the purpose of separating it from the basic charge of a tax or duty for the purpose of distributing the proceeds of the same between the Union and the States. The proceeds of the surcharge are exclusively assigned to the Union. Even in the Finance Act itself it is expressly stated that ~`"the surcharge is meant for the purpose of the Union.

12. In the result we are unable to sustain the view of the High Court. The question that was referred must be answered in the affirmative and in favour of the Revenue. In view of the nature of the points involved the parties are left to bear their own costs in this Court, certificate is dismissed. "

"11. Etymologically, inter alia, surcharge stands for an charge or payment (see Shorter Oxford English Dictionary).

Surcharge is thus a super-added charge, a charge over and above the usual or current dues. Although, therefore, in the present case it is in the form of a surcharge, it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act. The first submission of counsel is, therefore, of no avail.

15. With regard to the second submission, which overlaps to some extent the first, Mr. Gupte points out that revision of tariff under Cl.13 cannot include levy of surcharge which is distinct from tariff. He also draws our attention to the various clauses in the Press Note where both the expressions 'surcharge' and 'tariff' are freely used. On the other hand, the learned Advocate-General submits that the import of surcharge depends upon the nature of the original charge. If the surcharge is appended to a tariff it partakes of the character of tariff.

16. When the Press Note introduces the surcharge in addition to tariff rates, not much can be made of for use of the to words separately. We have already noted the meaning of the word 'surcharge' while dealing with the first submission of the learned counsel. We may only add that this Court in Titagarh's case (1975) 2 SCC 436 (supra) put the matter beyond controversy in the following words:-- "Now, the effect of the levy of coal surcharge would be to enhance the. Rates for the supply of electricity stipulated under the agreement."

(i.e) The Treasurer of Charitable Endowments for Pakistan v. Central Board of Revenue and 2 others (1986 MLD 1731); in which a notification issued under section 3 of the Central Excises and Salt Act, 1944, imposing flood relief surcharge was assailed before the High Court of Sind on the ground that flood relief surcharge could not be treated as a Central Excise Duty. A Division Bench of the said High Court, while dismissing the writ petition, held as under:-- "12.Turning to the first contention of Mr. Mansoorul Arfin, he has argued that the expression 'flood relief surcharge' is not synonymous with 'excise duty'. According to the learned counsel, no such intention was expressed by the Legislature that 'flood relief surcharge was to be collected as additional duty of excise. For the sake of comparison reference was made to section 2, of the Finance Ordinance, where it has been expressly provided that 'there shall be levied and collected an additional custom duty as flood relief surcharge on the goods----- -."The argument of the learned counsel has been that section 4 of the Finance Ordinance fails to express the intention of the Legislature in such explicit terms as section 2 thereof. Therefore, flood relief surcharge could not be levied as additional duty of excise.

13. No doubt, the language used in sections 2 and 4 of the Finance Ordinance is not couched in similar terms. But nevertheless, it is manifest from the language used in section 4 that flood relief surcharge is to be levied and collected as additional duty of excise. Although similar words have not been used by the Legislature, as in case of customs duty, but still the intention of the Legislature does not appear to be different. From the language used in the amendment there appears to be a clear intention that flood relief surcharge is to be levied and collected as additional duty of excise. The words ' in addition to the duty leviable as aforesaid a flood relief surcharge shall be levied on sugar used in the amendment leave no doubt that flood relief surcharge was to be levied as additional duty of excise. The term surcharge' according to Oxford Dictionary means extra load or charge.

According to Black's Law Dictionary, 4th Edition, it means 'an overcharge; an exaction, impost, or encumbrance beyond what is just and right, or beyond one's authority or power------.Legal Thesaurus by William C. Burton defines it as 'added charge, additional charge, excessive burden, excessive charge, extra charge, extra fee, over assessm ent, over burden, over charge, over load penalty'.

14. According to the above definitions, 'surcharge' means something additional or in excess. Therefore, the expression 'flood relief surcharge' cannot be construed as something distinct from excise duty. The intention of the Legislature, therefore, clearly was to provide for levy or collection of an additional or excessive excise duty, for the aforesaid reasons, flood relief surcharge could be levied and collected under section 3(1) of the Act and the amendment introduced by the Finance Ordinance, in .No way appears to be in excess of powers . Conferred under section 3(1) of the Act. The first ,argument of Mr. Mansoorul Arfin, therefore, cannot be accepted. "

40. After having gone through the record, we are of the view that surcharge and additional surcharge are in substance part of electricity tariff and are not taxes. The use of the above words or use of word "levy" will not change the nature of the charge, the same is to be ascertained on the basis of the facts as a whole and attending circumstances. The above view which we are inclined to take is in consonance with the aforementioned cases. In the case of Commissioner of Income Tax,, Kerala (supra), though in sub-clauses (a) and (b) of section 2 of the Finance Act, 1964, which related to the imposition of income-tax, no reference was made to the surcharge but the Indian Supreme Court held that surcharge in fact is a part of the income-tax and, therefore, is covered by the above provision of the Act. Whereas in the case of M/s. Bisra Stone Lime Co. Ltd.

(ibid), which is directly applicable on all fours to the case in hand, it is held that a surcharge is a super-added charge, a charge over and above the usual or current dues, it is in substance an addition to the stipulated rates of tariff. It has been further held that the nomenclature, therefore, does not alter the above position and it is an enhancement of the rates of electricity by way of surcharge which was within the power of the Board to fix or to revise the rates of tariff. Reliance was placed in the above report on its earlier judgment, namely, Titagarh's case (1975) 2 SCC 436), in which it was held that the effect of levy of coal surcharge would be to enhance the rates for the supply of electricity stipulated under the agreement. It was also held that the surcharge is appended to a tariff, it partakes of the character of tariff. Whereas in the third case, namely, The Treasurer of Charitable Endowment for Pakistan (supra), it has been held that though section 3 of the Central Excises and Salt Act refers to imposition of central excise duty but flood relief surcharge was in fact part of the central excise duty.

41. It may be mentioned that the surcharge was kept in a separate account as the intention was to generate rupees to billion out of the liability of rupees 6.1 billion towards the payment of net profits under clause (2) of Article 161 of the Constitution to N.W.F.P. As per aforesaid P.O. No.3 of 1991 on account of hydro-electric stations situated in the said Province. The above item of net profits is admittedly part of operation expenses and, therefore, could have been part of tariff. Whereas the additional surcharge was kept in a separate account as it was intended to be used for discharging certain liabilities of WAPDA and also facilitating the fulfilment of covenant 4.02 of the project agreement dated February, 1990, with the World Bank, namely, to generate not less than 40 % of the annual average of WAPDA's capital expenditure (at page 115 of the WAPDA's documents file marked part-I filed in Civil Appeals Nos.72 to 80 of 1996). The above item could also be included as a part of admissible expenses for determining tariff provided the same did not go beyond the figure of reasonable return on the investment as a whole. It may be pointer out that keeping surcharge or additional surcharge in a separate account for a specific purpose is not a foreign element. It is not uncommon to have separate accounts for surcharge and additional surcharge for specific purpose as pointed out in the case of C.I.T. v. Ernakulam (ibid). In this regard, reference may also be made to the judgment of this Court in the case of Suhail Jute Mills Ltd. And another v. Federation of Pakistan through Secretary, Ministry of Finance and others (PLD 1991 SC 329), in which this Court, while maintaining the levy of surcharge and Iqra surcharge as a part of customs duty, has pointed out that distinct names are given for the purpose of being dealt with. In this regard it may be instructive to reproduce para. 20 of the above judgment, which reads as under: -- "20. It has already been pointed out while examining the nature of imposition and levy, that it is basically customs duty, that it is additional to all other customs duties, that in one case it is distinguished by the name of 'Surcharge', in the other by the name of ' Iqra Surcharge' and that under section 18 of the Customs Act it is assimilated for the purpose of being dealt with, so far as the machinery provisions requirements are concerned, by the Customs Act, the Officers and authorities dealing with it were fully authorised to deal with it.

42. It may be stated that excise duty payable to Punjab Government on the WAPDA's electricity tariff was not charged on the above to items as explained by Mr. Fakhruddin G. Ebrahim to lessen the burden of the consumers. This has not been objected to by the Government of Punjab Province which is evident from the stand taken by the learned Advocate-General, Punjab before the High Pirzada and Khalid Anwar that WAPDA had no authority not to charge the Provincial Excise Duty on the above to items if they were part of the electricity tariff. In our view, the appellants cannot have any grievance for the above alleged illegality, if any, as they have been benefited otherwise there would have been more burden on them. The decision not to charge Provincial Excise Duty on the above to items was taken by the Cabinet/E.C.C. Cabinet meetings are attended inter alia by the Chief Ministers of the Provinces.

43. We may also point out that first the excise duty on the consumption of electricity in West Pakistan as one-unit was levied by Act No.XXXIV of 1964, then inter alia in 1980 by Ordinance No.VIII of 1980 (Punjab Finance Ordinance, 1980), the Schedule to the above Act of 1964 was amended through Second Schedule annexed with the above Ordinance providing new rates of excise duty. Explanation 1 to the above Schedule lays down electricity tariff means, schedules of tariff made under provisions of sections 12, 13 and'25 of the West Pakistan Act XXXIV of 1958.

Surcharge and additional surcharge were not in the field when the above amendment was made in 1980 and, therefore, till 1991 before the imposition of surcharge, no question had arisen to include surcharge. The same is equally applicable to additional surcharge which was levied first the in 1993. The Government of Punjab has not objected to the non-inclusion of the above to items for the purpose of computing the amount of excise duty apparently with the object to lessen the burden of the consumers in Punjab.

44. The next question which requires consideration is, as to who is competent to frame the tariff for supply of electricity by WAPDA to consumers. It may be observed that the WAPDA in their notifications and orders for enforcing the tariffs including surcharge and additional surcharge for electricity supply to the consumers has referred to section 13(1) read with section 12 and subsection (2) of section 25 of the Act.

It may be mentioned that the above provisions have already been referred to hereinabove in para. 8. However, it may again be observed that subsection (1) of section 13 of the Act provides that the Authority (i.e. WAPDA) may take such measures and exercise such powers as it considers necessary or expedient for carrying out the purposes of the Act. Whereas section 12 lays down that the Authority shall for the purposes of the Electricity Act, 1910, be deemed to be a licensee and shall have all the powers and discharge all the obligations of a licensee under the said Act. However, proviso to the above section provides that nothing in sections 3 to 11, subsections

(2) and (3) of section 21, sections 22, 23 and 27 or in clauses (i) to (xii) of the Schedule to the said Act relating to the duties and obligations of a licensee shall apply to the Authority. It has been highlighted hereinabove in para. 20 that the effect of the above proviso is that a Provincial Government cannot provide maximum limit for charging electricity tariff by WAPDA which it can impose while granting a licence under the above Act to a licensee. WAPDA being a licensee by fiction of law can invoke inter alia section 23 for determining tariff for supply of electricity without being subject to the above restriction.

It may further be observed that subsection (2) of section 25 of the Act expressly empowers WAPDA to fix rates.

Before proceeding with the above question any further, it may be appropriate to deal with a new plea which Mr. Khalid Anwar has raised first the during his arguments before us, namely, that under subsection (1) of section 25 of the Act, it has been provided that WAPDA shall ordinarily sell power in bulk. According to him it was incumbent on WAPDA to have shown the special reasons as to why it had started transmitting and distributing the electricity directly to the consumers. The word "ordinarily" has been defined in various dictionaries as under:--

(i) K.J. Aiyar's Judicial Dictionary, Tenth Edition; "Ordinarily" means unless there are special reasons for not doing so. (F.M. Kolia v. G.M. Barot, (1981) 22 Guj LR 700 (1313). Transporting of foodgrain including shunting of wagons is ordinarily a part of the work of the Food Corporation of India (1973) ACJ 5 (Delhi).

"--" The word 'ordinarily' means regularly or normally but not casually, (1974 J & K LR 527).

"-" Section 177, Cr. P.C., embodies the ordinary or general rule of jurisdiction. The word "ordinarily" occurring in the section means "Except in the cases provided hereinafter to the contrary". The rule in the section should, therefore, be read subject to any special provisions of law which may modify it (Nikka Singh v. State), 6 DLR (Simla) 228 ................................................................................................

(iii) The Doubleday Roget's Thesaurus in Dictionary Form (Revised Edition): "ordinarily" adv. Usually, commonly, mostly, generally, habitually, as a rule, by and large, regularly, conventionally, customarily, normally; routinely. "

(iv) The New Webster Encyclopaedic Dictionary of the English Language: "ordinarily" adv. In an ordinary manner; usually; generally; in most cases."

The above definitions indicate that the above word inter alia carries meaning as "usually", "commonly", "mostly" and "normally" etc. It does admit acting/doing thing otherwise than as above. In other words, WAPDA is not totally prohibited under subsection (1) of section 25 of the Act from transmitting and distributing electricity directly to consumers. The above provision is to be read with sub-clause (ii) of subsection (2) of section 8 of the Act, which provides that WAPDA may provide, "the generation, transmission and distribution of power; and the construction, maintenance and operation of power houses and grids;"

Mr. Fakhruddin G. Ebrahim, learned Senior Advocate Supreme Court appearing for WAPDA, has invited our attention to section 10-A of the Act (which was incorporated by Ordinance XIII of 1959), which provides that "On and from such date as the Government may, by notification, declare and subject to such terms and conditions as it may determine, all assets including lands, works, machinery, apparatus, material and plants vested in the Government in the Electricity Department shall vest in the Authority, and all liabilities in respect of the said assets shall be the liability of the Authority". According to him, as per direction of the then West Pakistan Government issued on 28-3-1959 under the provisions of the above section, the WAPDA had to take over all the lands, works, machinery, apparatus, material and plants from the Government for distribution of the electricity within West Pakistan, for which WAPDA is still paying the price.

45. We are inclined to hold that the question, as to whether there were special circumstances which necessitated taking of work of transmission and distribution of electricity directly to the consumers by WAPDA, is a question of fact which should have been pleaded before the High Court or with permission before this Court in the Memo. Of petition, so that WAPDA might have an opportunity to meet the above question of fact by bringing on record relevant material. This was not done. In this factual background, it will not be fair and proper to hold that WAPDA's distribution of electricity to the consumers is ultra vires the provisions of the Act. All the parties proceeded before the High Court on the assumption that WAPDA has the requisite authority to enter into business of distribution of the electricity directly to the consumers. We may observe that it is also doubtful, as to whether the appellants after having entered into a formal agreement with WAPDA for the supply of electricity and having acted upon the same, can plead that WAPDA has no authority to supply the same to them.

46. It may be observed that subsection (2) of section 25 of the Act, which has been reproduced hereinabove in para. 8, lays down criteria/parameters for fixing the rates by providing that the rates on which the Authority shall sell power shall be so fixed as to provide for meeting:--

(i) operating costs;

(ii) interest charges; (i.e) depreciation of assets

(iv) the redemption on the due the of loans other than those covered by depreciation;

(v) payment of any taxes; and

(vi) reasonable return on investment.

The above items are more or less identical with the items mentioned in Explanation to clause (2) of Article 161 of the Constitution with the modifications/additions that in the above Explanation the words "return on investment" have been employed; whereas in subsection (2) the words "a Y reasonable return on investment" have been used. In the above Explanation to clause (2) of Article 161, with the word "depreciation", the words "and element of obsolescences" have been added. The words "and over-heads, and provisions for reserves" have also been added in the aforesaid Explanation

47. In our view, WAPDA has the power to determine tariff for electricity from the to the within the parameters laid down in above subsection (2) of section 25 of the Act. This position has been accepted by the superior Courts in this country. In this regard reference may be made to the following cases:--

(i) M. Daud Khan and 20 others v. Government of West Pakistan and 2 others (PLD 1971 Lahore 462); in which a Division Bench of the Lahore High Court comprising Mushtaq Hussain and Shafiur Rahman, JJ. Has held that inter alia section 25 of the Act empowers WAPDA to prescribe rates for sale of power and amend such rates from the to the unilaterally without giving notice to consumers. The facts of the above case were that the petitioners were consumers of electricity supply by WAPDA, which was used by them for running tubewells to 'irrigate their agricultural lands. They entered into separate agreements with WAPDA on stereo-typed forms at the the of installation of transmission lines to their premises. Under the agreement, they guaranteed payment of minimum charges per annum for a period of ten years. Before the expiry of the above ten years period, WAPDA through a notification dated 15-7-1969 revised the rates of tariff with effect from 1-2-1970. Mushtaq Hussain J., who authored the judgment after reviewing the various provisions of the Act, held as under as to the power of WAPDA to frame tariff:-- "12. Section 25 of the WAPDA Act which has been reproduced above gives WAPDA the Authority to fix the rates at which it shall sell power. It also lays down the criteria on which the rates shall be based. It can therefore not be denied that statutory power vests in W PDA to prescribe the rates on which it will supply power.

13. Section 13 of the West Pakistan General Clauses Act provides that whenever any Provincial Act confers any power on any Authority it may be exercised from the to the as occasion requires. The power under section 25 of Act XXXI of 1958 is thus exercisable from the to the as occasion requires. The supply of electricity to the petitioners is being specially subsidised by Government."

Whereas, while dealing with clauses 26 and 27 of the Conditions of Supply which are also applicable to the case in hand, the following conclusion was recorded:-- "16. Clause 26 of the Conditions of Supply which have to be signed by the consumer clearly provides that the "conditions shall be subject to the Act and nothing in these conditions shall abridge or prejudice the right of the Department under Act of the Government of Pakistan or West Pakistan or any rule thereunder.

17. Clause 27 goes a step further and lays down that subject to clause 26 'the Department reserves the right at any the to amend, cancel or add to any of these Schedules and Conditions'.

18. There is, therefore, no bar in the contract to a unilateral amendment of the rate, and the consent of the consumer is not required for such a change. In fact the contract positively empowers the supplier to amend the rates. The consumer is, in any case, not under any obligation to continue to purchase energy from WAPDA and can discontinue the arrangement at his sweet will. "

As regards the contention that the notification offended the principles of natural justice, the following observations were made:-- "26. The last point is that the Notification offends against the principles of natural justice because no notice to show cause was given. There is no provision in the law which requires the serving of such a notice before amendment of the rates. Moreover, the rates have to be fixed in accordance with the principles laid down in section 25 subsection (2) which relate to the meeting of operating costs, interest charges and depreciation of assets, the redemption at due the of loans other than those covered by depreciation, the payment of any taxes and a reasonable return on investment. "

(ii) The Chairman, Electricity WAPDA, Lahore and 2 others v. Ch. Muhammad Shafi, Advocate (PLD 1976 SC 254); In the above case the facts were that in the year 1962 WAPDA entered into an agreement for supply of electricity for a period of 10 years with the respondent at the rates mentioned in the agreement. However, the bill for the month of September, 1969, demanded a sum of Rs.152 towards fixed meter charges, which were not provided in the above agreement. The respondent refused to pay the same. After that, he filed a suit on 27-9-1969 in the Court of Civil Judge for a declaration that the said demand was contrary to the agreement entered into between the plaintiff and the defendants. The respondent also asked for a permanent injunction restraining WAPDA from recovering the said amount. The trial Court, though held that WAPDA was competent to revise the tariff, but also held that WAPDA was entitled to charge above fixed meter charges at the rate of Rs.75 per month under the existing agreement and not at the rate of Rs.152 per month. Accordingly, the suit was decreed. The respondent was not satisfied with the above relief and he filed an appeal before an Additional District Judge contending that WAPDA was not entitled to charge even at the rate of Rs.75 per month, but the aforesaid appeal was dismissed. However, while dismissing the appeal, the learned Additional District Judge agreed with the above finding of the trial Court that WAPDA was competent to levy the new tariff. Against the above finding, the respondent went up in revision before the Lahore High Court. A learned Single Judge of the said High Court upheld the aforementioned revision by holding that for the month of September, 1969, the bill could not exceed the amount that might be worked out on the basis of the original agreement between the parties which till then was subsisting. Against the above judgment, leave was granted by this Court. While allowing the aforesaid appeal, this Court approved the judgment in the case of M. Daud Khan and others (supra) and concluded as to the power of WAPDA under section 25 of the Act and Conditions Nos.26 and 27 of the agreement as follows:-- "Section 25 of the Act clearly empowers WAPDA to change the rates of the power in keeping with the directions given in subsection (2) of the section. As a matter of fact in the case of M. Daud Khan the learned Judges of the Lahore High Court have taken pains to indicate the reasons that led WAPDA to introduce the new Schedule of Tariffs under section 25(2) of the Act. One of the reasons indicated in the concise statement lodged on behalf of appellants is that there was a large-scale pilferage of energy supplied to private tubewells and under the new method of levying fixed charge on connected load basis a stable minimum return was ensured to WAPDA.

In the present case the agreement between the parties is consistent with the provisions of section 25 of the Act, and therefore, section 23 of the Contract Act is not attracted. Conditions Nos.26 and 27 of the agreement kept in view the requirements of law under section 25 of the Act. "

47-A. It is thus evident that it has been held inter alia by this Court that under section 25 of the Act WAPDA has the power to determine the tariff and to revise the same. It has also been held that Conditions Nos.26 and 27 of the agreement are not inconsistent with section 23 of the Contract Act. We see no reason to deviate from the above view taken in the case of Chairman, Electricity WAPDA (supra), the judgment of which was authored by an eminent Judge, Salahuddin Ahmed, sitting with him Anwarul Haq, Muhammad Gul and Muhammad Afzal Cheema. JJ.

48. We may point out that the above view found favour with the Lahore High Court and this Court is in line with the view obtaining in India. We have already referred to hereinabove the case of M/s. Bisra Stone Lime Co. Ltd.

(ibid) and the case of Mi/s. Hindustan Zinc Ltd. Etc. (ibid). In the first case levy of surcharge has been held as a part of electricity tariff; whereas in the second case, the framing of tariff by the Electricity Board was sustained though advice was not sought of the Consultative Council.

49. Besides the above judgments, reference may be made to the following cases:--

(i) M/s. Subhash Oil Industries and others v. State of Uttar Pradesh and another (AIR 1975 Allahabad 19); in which the notification containing the tariff for electricity framed by U.P. State Electricity Board pursuant to notification issued by the Provincial Government was assailed on a number of grounds including the violation of principles of natural justice. A learned Single Judge of the Allahabad High Court, while repelling the above ground, observed as follows:- "10. In Union of India v. J. N. Sinha, AIR 1971 SC 40 it was held that the 'rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. Their aim is to secure justice or to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made". See also the New Prakash Transport Co. Ltd. v. The New Suwarna Transport Co. Ltd., AIR 1957 SC 232. Thus where the Legislature prescribes a procedure the principles of natural justice cannot be superimposed over it. Proviso 3 to paragraph 1 of the 6th Schedule specifically provides for a notice to the State Government and the Bcard and to no other. It can be assumed that the omission to provide for a notice to the consumers was deliberate and they have to rest contented because the law-makers did not provide for it.

11. Further the right to enhance a rate is a unilateral right of the licensee under the Sixth Schedule. It is an inherent right of a seller. See Civil Miscellaneous Writ No.19 of 1970 connected with Civil Miscellaneous Writ No.786 of 1969 decided on 15-4-1971 (All.) In that case it was held that the consumers had no right to object. To the proposed enhancement and if it was done without an opportunity to them the enhancement could not be challenged on the ground that it was in violation of the principles of natural justice. I respectfully agree with the view expressed."

(ii) The Bihar State Electricity Board and another v. Jawahar Lal and others (AIR 1976 Patna 323); In the above case a learned Single Judge of the Patna High Court, while construing section 49 of the Electricity (Supply) Act (1948), held that the same does not confer arbitrary power to the Board to fix its tariff as it likes and, therefore, the Court has jurisdiction to examine as to whether on the facts and circumstances of the case the increment of tariff was justified.

(i.e) M/s. Rohtas Industries Ltd. And another, Appellants v. The Chairman, Bihar State Electricity Board and others, Respondents. (AIR 1984 Supreme Court 657); in which the facts were that respondent No.1 (Bihar State Electricity Board) issued supplementary bill for fuel surcharge as per revised tariff dated 1-4-1979. The same was assailed before the Patna High Court without any success. The matter came up before Indian Supreme Court with special leave. The Indian Supreme Court, while dismissing the appeals, held that the Board has the power to classify the consumers into different categories and fix differential tariffs and this power has been conferred on the Board by section 49(3) of the Electricity (Supply) Act (1948) It was further held that there was absolutely no basis for the contention urged on behalf of the appellants that the tariff fixation effected by the Board suffered from the vice and arbitrariness and was liable to be interfered with by the Court on that ground keeping in view that the Board had been selling energy at the rates which were lower than the actual cost incurred by it per unit m contravention of section 59. It was also held that in the ultimate analysis, the mechanics of price fixation was necessarily to be left to the judgment of the executive unless it was patent that there was hostile discrimination against a class of persons and that the processual basis of price fixation was to be accepted in the generality of cases as valid.

(iv) State of U.P. And others, Appellants v. Renusagar Power Co. (AIR 1988 SC 1737); In the above case, the Supreme Court of India while hearing an appeal against the judgment of High Court of Allahabad, held as under:--

(i) That in fixation of different rates for different classes of consumers or granting of exemption, power is to be exercised by Government in public interest which does not amount to excessive delegation;

(ii) That the U.P. Government, while declining the request of the respondent company to grant exemption under section 3(4) of the Electricity (Duty) Act (1952), had taken into consideration the relevant factors; (i.e) That the question of natural justice is to be viewed with reference to the facts of the case involved.

The appeal was partly allowed in terms of para. 90 of the judgment.

(v) Gulab R.I, Petitioner v. Municipal Corporation of Delhi and others, Respondents (AIR 1990 Delhi 249); In this case a Division Bench of the Delhi High Court, while dismissing a Bunch of writ petitions in which the notification providing minimum consumption guarantee charges for electricity from Rs.40 per KVA to Rs.340 per KVA in respect of Arc/ Induction furnaces with the approval of Delhi Electricity Supply Committee was assailed, held that under section 23 of the Electricity Act, 1910, it was not necessary to obtain sanction of the State Government at the the of varying the electricity rates.

50. From the above Indian reports, the following principles can be deduced:--

(i) That the Electricity Board is competent to revise rates without issuing prior notice to the consumers in accordance with the provisions of the relevant Act as the principle of natural justice is not involved.

(ii) That section 49 of the Electricity (Supply) Act (1948) does not confer arbitrary power on the Board to fix its tariff as it likes but the Court has jurisdiction to examine, as to whether on the facts and circumstances of the case, the enhancement of tariff was justified or not?

(i.e) That the levy of fuel surcharge on consumers is not arbitrary and violative of Article 14 of the Indian Constitution.

(iv) That the Electricity Board can fix different rates for different classes of consumers on the basis of reasonable classification/intelligible differential and

(v) That in the case of Gulab R.I v . Municipal Corporation of Delhi and others (supra), a Division Bench of the Delhi High Court sustained the resolution of Delhi Municipal Corporation approving the proposal of Delhi Electricity Supply Committee to enhance minimum consumption guarantee charges from Rs.40 per KVA to Rs.340 per KVA m respect of Arc/Induction furnaces.

51. It will not be out of context to deal with Mr. Khalid Anwar's submission that the Government of Pakistan did not approve the increase of additional surcharge suggested by WAPDA in the summary for the Prime Minister for increase in consumers' tariff for financial year 1955-56, wherein to proposals were made by WAPDA in paras. 2, 3 and 4 of the said summary, viz.:

(i) 21.2 per cent. Increase in the existing tariff or 21.7 per cent. If furnace oil rates were increased by 10 per cent.;

(ii) 14.5 per cent. Increase in the existing tariff if assumptions spelt out in para. 3 were to be accepted.

He has invited our attention to the Cabinet decision taken in the meeting held on 14-6-1995, which reads as under:-- "Decision The Cabinet noted the proposal of WAPDA. The decision with regard to the percentage increase in the electricity tariff should be taken by WAPDA itself and announced in the first week of July, 1995."

In furtherance of his above submission, he has referred to the case of Iqbal Akhtar v. Ch. Muhammad Mushtaq and 4 others(PLD 1977 Lahore 1318), Halsbury's Laws of England, Fourth Edition, Vo1.34, para 1004 at page 381, and Basu on Administrative Law, Third Edition, page s359, 360, 361, 368, 369 and 370, to contend that when a discretion is vested in a statutory authority, he must exercise the discretion himself independently of the instructions issued by a superior or other authority and that general maxim ' delegatus non potest delegare (that a delegatee cannot delegate his power unless he is expressly authorised so to do) is to be applied.

52. The above contention has no force as under section 25(1) of the Act. WAPDA is competent to determine the tariff and to revise the same and not the Federal Government as has been held by this Court in the case of Chairman, Electricity WAPDA, Lahore and 2 others v. Ch. Muhammad Shafi, Advocate (supra). There is no doubt that the approval is obtained from the Federal Government by WAPDA for revising the tariff of electricity not because the same is required under section 25 of the Act or under any provision thereof, but the same is obtained for the reason that the revision of tariff of electricity has adverse political repercussions on the Government in power and, secondly, under the provisions of the Act as is evident from the resume of the same given in para. 8 hereinabove, the Federal Government has administrative control over WAPDA which includes financial discipline inasmuch as by virtue of section 21 of the Act, WAPDA is obliged to submit after the end of every financial year but before the last day of September next following a report on conduct of its affairs for the year alongwith a copy of audit report for placing before the National Assembly, which, in turn, in required to refer the same to its Committee on Public Accounts for its scrutiny. Whereas under section 27 of the Act, WAPDA is to submit for approval to the Government a statement of estimated receipts and expenditure in respect of the next financial year in the month of January each year. Under section 22, WAPDA fund comprises inter alia grants made by the Government, loans obtained with the special approval of the Government. It may further be observed that under section 24, the liability of the Government to the WAPDA's creditors is limited to the extent of grants made by the Government and the loans raised by WAPDA with the sanction of the Government. In addition to that, sanction/approval of the Government is required for execution of various schemes as already highlighted in para.8 hereinabove besides that under subsection (3) of section 3, the Federal Government may from the to the issue such directives as it may consider, necessary on matters of policy and the Authority (i.e. WAPDA) is bound to comply with such directives.

It may be pointed out that WAPDA had made the above to proposals to the Cabinet, which examined the same and resolved that WAPDA should itself decide which of the to options it wanted to adopt, meaning thereby, it did not find any of the to proposals as unreasonable or unjustifiable. This amounts to tacit approval of the Government to the above proposals. WAPDA opted for the second option, namely, it decided to increase additional surcharge by 14.5 instead of 21.2 % or 21.7 % in order to reduce the burden on the consumers. There seems to be no violation of any law nor any abdication of power by the Federal Government is involved.

53. This leads us to the question, as to whether the framing of the tariff which includes surcharge and additional surcharge has violated subsection (2) of section 25 of the Act. It has been urged by Messrs Abdul Hafeez Pirzada, Khalid Anwar and Muhammad Akram Sheikh that whenever wide-worded powers conferring discretion are found in a statute, there remains always the need and the desirability to structure the discretion. Reliance was placed by them on the case of Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi (PLD 1991 SC 14), the case of Waris Meah v. The State and another (PLD 1957 SC 157), the case of Brig. (Retd.) F.B. Ali and another v. The State (PLD 1975 SC 506) and the case of Inamur Rehman v. Federation of Pakistan and others (1992 SCMR 563). The leading case is of Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi (supra), in which the facts were that under section 67 of the Motor Vehicles Ordinance, 1965, provision existed in the case of death of, injury to, a passenger in a stage carriage or a contract carriage, other than a contract carriage constructed, adopted or used to carry not more than six passengers including the driver, for payment of compensation. Such compensation was payable by the holder of the permit or by the owner of the carriage. The exact amount of compensation was specified in the Thirteenth Schedule. To reinforce the above provision, section 49 of the aforesaid Ordinance envisaged that the Regional Transport Authority while granting permits should obtain a bank guarantee of the prescribed sum as a security for payment of any compensation that the applicant may be required to pay under the aforesaid provision of section 67. It seems that no rules were framed by the Provincial Government for carrying into effect the provisions of the Chapter in which both section 67 and section 49 were contained. The result was that the designated authority/Chairman, Regional Transport Authority received application for being approved as guarantor from diverse quarters, political and non-political, and also giving the impression that the Chairman's discretion was unbounded and he could at for the benefit of any or none at all, everyone trying to influence the exercise of that discretion. In that context, the following observations were made by Shafiur Rehman, J.:-- "

17. Wherever wide-worded powers conferring discretion are found in statute, there remains always the need and the desirability to structure the discretion and the need for this has been pointed out in the Administrative Law test by Kenneth Gulp Davis in the following, words:-- 'Structuring discretion means regularising it, organizing it, producing order in it, so that decisions will achieve a higher quality of justice.....The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible the, and then, as circumstances permit, should further confine their own discretion through principles and rules. The movement from vague standards to definite standards to broad principles to rules may be accomplished by policy statements in any form, by adjudicatory opinions, or by exercise of the rule-making power---------.When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earlier feasible the, and then, as circumstances permit, should further confine their own discretion through principles and rules.'

18. ..............................................

19. .........................................

20. ..............................................

21. ..............................................

"22. The learned counsel for the appellant was somewhat sensitive to the observation made that the exercise of power by the Regional Transport Authority and its functionaries was mala fides, taking it to be mala fides of fact rather than of law. There was no ground made out nor assertion made to indicate any mala fides of fact against any functionary of Regional Transport Authority. It was mala fides in law which was alleged and found established by the High Court and it is only this finding which has been upheld by this Court."

54. The ratio decidendi of the above case seems to be that the seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure.

It may be observed that it is by now a well-settled proposition of law that even where there is no guideline or guiding rules provided for exercise of discretion, it is not unbridled or unfettered but the same is to be exercised reasonably, fairly and justly without giving any cause of complain to any person who may be interested in the exercise of such discretion. In Nawaz Sharif's case (supra), the power was exercised by the: President under Article 58(2)(b) of the Constitution, which expressly provides that the President has discretion which is not questionable but in spite of the same, it has been held by this Court that the above discretion cannot be exercised arbitrarily or in a fanciful manner.

In the present case, it cannot be argued that no guideline has been provided by the Act as to the basis for determining the tariff. We have already pointed out hereinabove in para.46 that WAPDA can determine the rates of tariff by taking into consideration six terms mentioned in subsection (2) of section 25 of the Act reproduced in para.46 hereinabove. We also find guideline on the above aspect m the Explanation to clause (2) of Article 161 of the Constitution already referred to hereinabove. In this view of the matter, the ratio decidendi of the above cases cited by the learned counsel for the appellants is not applicable to the case in hand. However, the Court can examine the question, as to whether there has been any violation of subsection (2) of section 25 of the Act while framing the tariff, which includes surcharge and additional surcharge as held by us hereinabove. This question, being a mixed question of facts and law, is preliminary suited to be gone into in a suit and not in a Constitution petition. The question, as to whether WAPDA has provided for the six items referred to in subsection

(2) of section 25 of the Act within the limits warranted by law is a complexed and complicated question of fact, which cannot be decided without having the proper analysis of the costs of the above items from the experts and without having a comparative statement of the costs of said items obtaining in some developing countries similarly placed. We asked Mr. Khalid Anwar, learned Sr. ASC for the appellants, to demonstrate that the tariffs as enforced by the impugned orders/notifications which include surcharge and additional surcharge are not reasonable or violative of subsection (2) of section 25 of the Act. His reply was that the appellants have impugned tariff on Constitutional/legal plane. However, he also submitted that the levy of surcharge and additional surcharge is excessive. We are not supposed to record any finding as a question of fact as we are of the view that since the present appeals have arisen out of judgments dismissing Constitution petitions, it will be sufficient to find out, whether prima facie there has been any violation of the above provision of subsection (2) of section 25 of the Act, as to warrant interference by this Court in exercise of its Constitutional appellate jurisdiction.

55. It may be observed that in para.2 hereinabove the reasons which prompted the imposition of surcharge have been given in detail. It will suffice to observe that the surcharge was imposed in order to raise a sum of rupees to billion against WAPDA's liability to pay rupees 6.1 billion as net profits for the financial year 1991-92 under Article 1610) of the Constitution to N.-W.F.P. On account of hydro-power stations situated in the said Province. In other words, instead of raising a sum of rupees 6.1 billion, less than 1/3rd amount was catered by the above levy of surcharge. We have already pointed out hereinabove that the payment of above net profits for using hydro-power stations situated in N.W.F.P. Is a part of operation expenses covered by subsection (2) of section 25 of the Act. The authority on the part of the Government in power and the WAPDA was to lessen the burden of the consumers inasmuch as not only aforesaid full amount of rupees 6.1 billion payable as net profits to N.W.F.P was not raised, no excise duty on the above surcharge was recovered. The said surcharge of 10.4 % was included in the tariff during the period commencing from 1-2-1992 to 16-3-1993, at the rate of 2/1-2% in the months of December, 1991, February, 1992, April, 1992 and January, 1993, i.e. It was imposed gradually and not in one go. The liability to pay not profits on the use of hydro power stations is a continuing annual liability under clause (2) of Article 161 of the Constitution. The above surcharge continued as a part of electricity tariff. The same was shown in the annual budgets in the columns of receipts.

56. As regards the additional surcharge, it may be mentioned that the reasons leading to the imposition of the same have been referred to hereinabove in para.3. The first levy of additional surcharge at the rate of 16.1 % was with effect from 10-8-1993 by way of rationalisation of electricity tariff as mentioned in the Section Officer, Ministry of Water and Power's letter dated 8-8-1993 reproduced hereinabove in para.39, to meet the covenants of the World Bank for achieving 40% I.C.G. i.e. Internal cash generation towards the yearly capital expenditure.

Further additional surcharge at the rate of 5 % to 26 % , overall 24.3 % , was raised for the reasons inter alia stated in the summary dated 31-10-1994 pursuant to the approval of the E.C.C. Dated 7-11-1994. The documents on the above levy of additional surcharge are at pages 47 to 86 of the file Part-I in Civil Appeals Nos. 7 to 80 of 1996. It will be instructive to reproduce paras.1 to 4 of the above summary from pages 47 and 48 of the above file, which reads as under:-- "SUMMARY FOR THE ECC SUBJECT: PROPOSAL OF TARIFF INCREASE OF WAPDA & KESC.

Tariff of WAPDA and KESC was last revised on 10th August, 1993. The overall tariff level increase was 17.6% and the average increase in tariff was 22.20 Ps./Kwh. Detail of increases is at Annexure-A.

2. Subsequently, prices of imported oil and natural gas were revised on 19th August, 1993. A summary for increase in FAS was submitted to the ECC but was deferred till the budget finalisation (Annexure-B). WAPDA and KESC are finding it impossible to meet their oil and gas liabilities under the existing resource position. An amount of Rs.4,025 million is outstanding against WAPDA and Rs.1,485 million against KESC as on 23rd June, 1994 on this account. The liquidity position of WAPDA has further deteriorated due to redemption of 2nd issue of WAPDA Bonds amounting to Rs.5.6 billion from own sources/short-- term borrowings for which no sinking fund was allowed in previous years. Situation is compounded by the failure of 6th issue of WAPDA bonds, and consequently development projects are being delayed

3. A meeting chaired by the Advisor to the Prime Minister for Finance and Economic Affairs was held to review the overall financial position of WAPDA which was inter alia attended by the Deputy Chairman, Planning Commission, Finance Secretary and Additional Secretary Incharge of Planning Division. WAPDA was asked to base their tariff proposals on certain specific guidelines (Annexure-C). Subsequently, the Planning and Development ( P & D) Division in consultation with Finance Division, suggested six (6) additional scenarios based on variable adjustments in different tariff components (Annexure-D) WAPDA has now prepared detailed tariff proposals (Annexure.-E), salient features of which are contained in a statement (Annexure-F)

4. All the six (6) scenarios are based upon payment of Rs.3 billion to Oil and Gas Companies out of Privatization Fund against dues currently owned to them by WAPDA and an increase of 20% in the charges of new connections and security deposits. It has also been assumed that payment of net profit to Provinces by WAPDA shall be restricted on the amount of Hydel Surcharge. These scenarios yield on overall tariff increase ranging from 20.3 % to 38.8 % ."

It will also be instructive to reproduce the above approval of the E.C.C. (at page 85 of the said file). Which reads as under:-- DECISION The Economic Coordination Committee of the Cabinet approved with immediate effect the following increase in the tariff rates for various categories of domestic consumers: Slabes % increase in tarif f

(i) 1-50 5

(ii) 51-150 7

(iii) 151-300 10

(iv) 301-1000 12

(v) 1001-2000 15

(vi) 2001-3000 20

(vii) 3001-4000 24

(viii) Above 4000 26 II. The Principal Secretary to the Prime Minister should call Chairman, WAPDA and convey to him the necessity of improving recovery of arrears from the defaulters and cutting down the losses. He should be asked to take immediate steps to root out inefficiency and corruption.

III. WAPDA should return to the Government Rs.3.0 billion made available from the Privatization Fund."

Lastly, additional surcharge at the rate of 14.5 % was levied by an order dated 9-7-1995, the summary of which has been reproduced at pages 35, 36 and 37 of the Lahore High Court's impugned judgment, whereas budget proposals are contained at pages 37 to 39 of the said judgment. It will suffice to reproduce the above summary which contains. The reasons for levying the above additional surcharge of 14.5 % as a part of tariff, which reads as follows: SUMMARY FOR THE PRIME MINISTER Sub: INCREASE IN CONSUMER TARIFF FOR FY 1995-96 The Water and Power Development Authority (WAPDA) has forwarded a proposal for the increase in consumer tariff for the fiscal year 1995-96 for approval by the Government of Pakistan (Annexure--A). The proposal is based on the following assumptions:--

(i) An investment plan of Rs.34,548 million including funds for the Ghazi Barotha Power Project will be met by WAPDA through its internal cash generation and borrowings, without recourse to the Government of Pakistan.

(ii) WAPDA will pay hydel profit of Rs.6,000 million to the Provinces from its own resources.

(i.e) WAPDA will meet all its debt servicing obligations budgeted at Rs.26,557 million including those to the Federal Government.

(iv) WAPDA will meet its payment obligations towards oil and gas companies supplying fuel to it.

(v) An amount of Rs.3,000 million will be repaid to the Privatization Commission.

(vi) WAPDA will retire its short-term liability of US $ 100 million borrowed during the year 1994-95.

(vii) An increase of 24 % in gas prices and 5 % in the prices of furnace oil will be absorbed by WAPDA.

(viii).WAPDA will meet its financial covenants agreed with the World Bank which include a 40% internal cash generation and debt service coverage ratio of 1.5 times.

2. After meeting all the financial obligations listed above, WAPDA has proposed an increase of 21.2 % in the existing tariff. (21.7 % if furnace oil rates are increased by 10 %).

3. A more acceptable alternative would be to make the following adjustments to limit the increase:

(a) An amount of Rs.3,000 million due to the Privatization Commission may be written of/deferred. This will result in a reduction of 4.5 % in the increase demanded.

(b) The profits payable to the Provinces may be maintained on the existing level of Rs.4,644 million for one more year as was done in the previous years. This will result in a further reduction of 2.25% in the consumer tariff.

4. It is recommended that WAPDA may be allowed an increase of 14.5 % over the current tariff for the fiscal year 1995-96 after taking into account the adjustments suggested in para.3 above. The above tariff will also apply ipso facto to KESC for FY 1995-96, as is practice.

5. Approval is requested for the tariff increase suggested in para.4 above. It is further proposed that Chairman, WAPDA may be allowed to announce the increase in tariff at Lahore at a suitable date and the immediately after the announcement of budget. We are of the view that this may be done on Saturday, June 17, 1995.

6. The Minister for Water and Power is away from Islamabad and could not be contacted.

(Sd.)

(M. SALMAN FARUQUI), SECRETARY, WATER AND POWER."

The Cabinet decision on the above summary has been dealt with in paras.51 and 52 hereinabove.

57. It may be noticed that the levy of additional surcharge at the rate of 14.5 % instead of 24.3 % was made possible on account of to assumptions contained in above-quoted para. 3, namely: --

(i) Rs.3,000 million which was due from WAPDA to the Privatization Commission was not to be paid and that the same was to be written of or deferred, which resulted into reduction of 4.5 % of the proposed increase;

(ii) Instead of paying to N.-W.F.P. Annual net profits amounting to Rs.6,000 million regulation has three primary elements: (1) profit control (the regulated firm's rates are not to exceed the level necessary to enable the firm to cover its cost of service, including a reasonable return on invested capital); (2) entry control (a firm may not provide a regulated service without first obtaining a certificate of public convenience and necessity from the regulatory agency); control over price structure (the firm may not discriminate in its rates). The three controls, which are discussed in the following sections, relate to the three problems of natural monopoly sketched above; a major question is whether they solve them. "

59. We have already pointed out hereinabove in para.46 that subsection (2) of section 25 of the Act provides guidelines, on the basis of which the tariff is to be determined The tariff rates are to cater for:--

(i) operating costs;

(ii) interest charges; (i.e) depreciation of assets;

(iv) the redemption on the due the of loans other than those covered by depreciation;

(v) payment of any taxes; and

(vi) reasonable return on investment If the tariff rates are fixed within the parametres laid down by above subsection (2) of section 25 of the Act, whether the same are recovered under the nomenclature of electricity charges or surcharge or additional surcharge, it does not matter. No exception can be taken to the same. However, if they violate the above provision, the consumers have every right to agitate its legality and ,enforceability. In order to satisfy ourselves, we asked Mr. Fakhruddin G. Ebrahim to demonstrate that the tariffs, which have been framed for the electricity, which include surcharge and additional surcharge, are within the above limits. He filed WAPDA's balance sheets for the years ending on 30-6-1994 arid 30-6-1995. In addition to that, he has filed the break-up of the receipts and the application of the same during the financial years 1993-94 1994-95 and 1995-96 (which contain the details of the revenue received, the costs of the various items separately), to manifest that WAPDA has acted within the parameters provided for under subsection (2) of section 25 of the Act. It will be advantageous to reproduce the above statement, which reads as follows:-- "PAKISTAN WAPDA (Power Wing?

RECEIPT & APPLICATION OF REVENUE (Billion Rupees) ACTUAL ACTUAL ACTUAL FY 93-94 FY 94-95 FY 95-96 REVENUE 49.9 60.5 58.2 APPLICATION OF REVENUE: Fuel Cost 16.5 18.3 22.1 Operation, Maint. & Admn. Exp 9.5 11.8 11.9 Hydel Profit to Provinces 3.8 4.6 4.9 Interest Charges 12.4 14.0 18.0 Depreciation/Amortization 5.9 7.8 9.0 Redemption of Loans 10.810.8 5.97.8 8.09.0 Payment of Short-Term Loans 5.0 Escrow Account for Private Power 15 Working Capital 2.4 2.3 Total 53.0 28.9 74.7 SURPLUS/ (DEFICIT (3.1) 3.6 9.5 SURPLUS/(DEFICIT) AS %AGE OF REVENUE6.21% 5.76% 11.28% WAPDA'S OWN AVERAGE INVESTMENT IN DEPRECIATED VALUE OF ASSETS72.6 82.4 101.7 SURPLUS/(DEFICIT) AGE. 4.27% 4.37% 9.34%

60. A persual of the above-1quoted statement incidates that the items of expenses which are debited prima facie fall within the ambit of above subsection (2) of section 25 of the Act. The net result seems to be that in the financial year 1993-94, there was deficit -4.27%; whereas in the financial year 1994-95, there was surplus 4.37 % .

In the financial year 1995-96, the surplus was increased to 9.34 %. In terms of the percentage of the revenue, the same come to -6.21 % , 5.76 % and 11.28 % .

Reference may also be made to the statement indicating operation, general establishment and commercial expenses of the above three financial years. The same reads as under:-- "PAKISTAN WAPDA (POWER WING)

OPERATION, GENERAL ESTABLISHMENT AND COMMERCIAL EXPENSES (Million Rupees) ACTUAL FY 93- 94ACTUAL FY 94- 95ACTUAL FY 95- 96 Sales Revenue 49,930 62,519 84,160 Operation Central Establishment5,179 10.37% 6,100 9/75% 6,558 7.79% Commercial 1,401 2.8% 1,778 2.84% 2,000 2.37% It appears that efforts have been made to reduce the separation and general establishment expenses. In the financial year 1993-94 it was 10.37 % of the total revenue, in. The financial year 1994-95, it was reduced to 9.75 % .

However in the financial year 1995-96, it was slightly increased i.e. 7.79%, an increase of 0.4 % only.

Mr. Fakhruddin G. Ebrahim has also produced a comparative statement of domestic consumers using 300 units per month as to the average rate in respect of Pakistan, three Provinces of India, Singapore and Virgina (U.S.).

The same reads as under:-- COMPARATIVE BILLS OF DOMESTIC CONSUMERS USING 300 UNITS PER MONTH Name of Country/ StateEffective date Total bill (Rs.)Average rate (Rs./Kwh)

Pakistan 9-7-95 449 1.50 Punjab (India) 17-4-95 442 1.47 Haryana (India) 28-12-94 556 1.85 Rajasthan (India) 1-1-95 305 1.02 Singapore 1-11-92 1095 3.65 Virginia (U.S.) 27-10-92 1219 4.06"

He has also filed a comparative statement of power system losses in Asian countries. However, at the same the, he pointed out that the loss will vary according to the length of the transmission lines. His submission was that since WAPDA has a national transmission line, it is very long and, therefore, the losses would be more as compared to a transmission line which is short in size. The above comparative statement reads as follows:-- "APPENDIX - XXI POWER SYSTEM LOSSES IN ASIAN COUNTRIES (1990) (Precent.)

Name of Country System Losses Auxiliaries ConsumptionTransmission & DistractionTotal*** 36.50 Afghanistan 12.12 23.48 41.13 Bangladesh 5.56 35.57 32.50 Burma 1.60 30.90 (1984)

China 6.97 7.52 14.49 Fiji 6.00 9.53 15.53 Hong Kong 6.90 4.16 11.06 Indonesia 4.92 16.86 21.78 Laos People's 2.76 5.17 7.93 Democratic Republic 4.54 11.26 15.80 Malaysia 0.70 27.00 27.70 Nepal N.A. N.A. 24.90 Pakistan (WAPDA+KESC)2.62 21.59 (1994) Prov Pakistan (WAPDA) 4.49 16.50 24.21 Philippines 5.23 5.45 (1994)

Republic of Korea 16.00 16.70 20.99 Sri Lanka 5.80 3.44 10.68 Singapore 4.05 10.56 32.70 Thailand 4.70 22.10 9.24 Vietnam 14.61 26.80 Source: Electric power in Asia and the Pacific 1989, 1990 and 1993. * T & D lbsses as a percentage of energy sent out (Gross energy auxiliary consumption) * * Total system losses as percentage of gross generation. "

61. Besides the above documents, he has also produced a number of other documents including a paper on the working of WAPDA, Power Wing, a graph showing increase in number of consumers during the period from 1959- 60 to 1994-95, namely, from 0.31 million to 9.1 million; a graph showing percentage of commercial, industrial, agricultural and domestic consumers i.e. 14.6%, 2.0 % , 1.8 % and 81.3 % respectively; a graph showing percentage of consumption of energy by various categories of consumers i.e. Commercial 4%, industrial 30 % , agricultural 18 % , domestic 38 % and others 10 % ; a graph showing the progress in generation of the power for the period from 1959-60 to 1994-95 i.e. In the year 1959-60; the installed generation capacity of hydro and thermal units was 335 M.W.; whereas in the year 1994-95, it was 10903 M.W.; a statement showing growth in power sector since the taking over by WAPDA; a graph showing village electrification during the period from 1959-60 to 1994-95 i.e. By the year 1959-60, 609 villages were electrified, whereas by 1994-95, the above figure was increased to 572000; a statement showing budgeted receipts and application of revenue in WAPDA in terms of money as well as percentage; a note of Introduction to WAPDA; table showing progress of installed generation capacity of WAPDA; a table showing energy generation by source; a table showing number of consumers by economic group; a table showing electricity consumption per consumer; a table showing Province-wise villages electrified. All these documents are contained in file Part-III of Civil Appeals Nos.7 to 80 of 1996 filed by WAPDA. The object of filing of the above documents seems to be to indicate the working and progress made by WAPDA There is no doubt that the growth during the above period of 1959-60 t 1994-95 is quite considerable. This may be relevant for the purpose of dispelling the impression that WAPDA is corrupt and inefficient in its working. We are not inclined to probe into the above factual controversy. However, it may b stated that though there are general allegations against WAPDA for being inefficient and corrupt but no reliable material has been brought on record by the appellants to substantiate the same and to show its adverse financial implications in the context of fixation of rates. We are not expected to decide the above disputed questions of facts in exercise of Constitutional jurisdiction on surmises and conjectures. However, there cannot be to opinions that WAPDA should take required steps to eliminate above vices.

The controversy in issue is, as to whether' the electricity tariff determined by WAPDA is in terms of subsection (2) of section 25 of the Act. Prima facie, there is no reliable material before us to conclude that the same is not in terms of the above provision of the Act. We are, therefore, of the view that the High Court was justified in not interfering with the aforesaid electricity, tariff, which includes surcharge and additional surcharge, in exercise of its Constitutional jurisdiction.

62. Before concluding the above matter, we may refer to Mr. Anwar Kamal, learned counsel for some of the appellants' contention that the covenant of the World Bank with WAPDA that the latter will generate 40% of the total development outlay from its resources is violative of subsection (2) of section 25 of the Act read with Local Authorities Loans Act, 1914.

We may again point out that if WAPDA earns a reasonable return on its total investment in terms of above subsection (2) of section 25 of the Act, it is for WAPDA to decide, how to apportion or apportionate the same. If it provides 40% of the total yearly development outlay out of the above reasonable return, it would not be violative of either subsection (2) of section 25 of the Act or any provision of the Local Authorities Loans Act, 1914. The upshot of the above discussion is that the appeals and petitions for leave in respect of the impugned judgment of Lahore High Court are dismissed. However, there will be no order as to costs.

63. We would now take up the appeals and the petitions for leave to appeal filed against the judgment of the Peshawar High Court. As regards the above conclusion as to the legality of the electricity tariff including the surcharge and the additional surcharge concluded in relation to the above appeals and petitions for leave arising out of the judgment of the Lahore High Court, is equally applicable to the cases relating to the Peshawar High Court. However, as regards the concession of 50% in the electricity tariff granted on 3-6-1987 in respect of the industries situated in G.A.I.E., it may be observed that the relevant facts relating to the same are mentioned in paras. 5 and 6 hereinabove and, therefore, need not to be repeated except with reference to the contentions advanced by the learned counsel for the appellants in this behalf. Mr. Abdul Hafeez Pirzada has raised three contentions in this regard referred to in para. 9 hereinabove. First we may take up the question, as to whether the withdrawal of 50 % concession in electricity charges in respect of certain industries is hit by the doctrine of premissory estoppel. To reinforce the above submission, he has submitted that the grant of concession of the nature is not a matter of pleasure but in fact the same was part of a representation for inducing the prospective investors to establish their industries in G.A.I.E. He has relied upon the following cases:---

(i) Ittefaq Foundry v. Federation of Pakistan (PLD 1990 Lahore 121); and

(ii) Associated Provincial Picture Houses Limited v. Wednesbury Corporation (1948) 1 KB 223); It will suffice to deal with the case of Ittefaq Foundry (supra), in which the facts were that a petition under Article 199 of the Constitution was filed by the petitioner seeking declaration to the effect that the notification dated 10- 7-1989 (under section 7, Sales Tax Act, 1951), the letter of C.E. & S.T. Circle II, Lahore, dated 5th July, 1989 (intimating revised rates of Central Excise Duty and Sales Tax on Billets/Ingots), and the oral order on which the aforesaid letter was based as well as the relevant provisions of Finance Act, 1989, were without lawful authority and of no legal effect. After referring the case-law from the foreign jurisdiction as well as from Pakistani Courts, Khalil-ur-Rehman Khan, J. (as he then was) found that the different treatment given to the billets/ingots, the products of the petitioner foundary was arbitrary and unreasonable and, as such, the additional burden placed was violative of equal protection of laws guaranteed by Article 4 read with Article 25 of the Constitution and, as such, charging of excise duty as well as tax at the rates given in the letter dated 5-7-1989 on the basis of the aforesaid notification was without lawful authority. He has also made the following observations with reference to the views obtaining in foreign countries and in the context of the relevant provisions of our Constitution:--- "29. Before proceeding further, I would like to add a note of caution to the effect that the precedents from the foreign jurisdiction, Indian, English o; American on the questions of Constitutional law, administrative law and public law, have to be approached and applied keeping in view the difference in the phraseology, scheme, intent and content of the respective Constitutions and the laws prevailing in these countries and also the fact that we, in this country are to be guided by our own Constitution and our own ideology. The provisions contained in our Constitution as compared to other Constitutions are more pervasive, wide in content and scope and intended to promote and preserve our own ideology. Besides Articles 4 and 25 which have already been reproduced, we have Article 2A, which must receive particular attention. Article 2 A provides that the principles and provisions set out in the 'Objectives Resolution' reproduced in the Annex are hereby made substantive part of the Constitution and shall have effect accordingly, Then comes Article 3 which provides that State shall ensure the elimination of all forms of exploitation and the gradual fulfillment of the fundamental principle, from each according to his ability, to each according to his work. In my humble understanding these Articles read alongwith the fundamental rights guaranteed in the Constitution are in no way less in meaning and import than the 'due process of law' clause contained in the American Constitution. Keeping in view the all pervasive intent, meaning and scheme of Constitution the rights guaranteed therein are to be secured and preserved. The organs of the State as well as its functionaries while performing its functions, legislative, administrative or executive, have to be careful that none of the fundamental rights are thus curtailed, infringed or in any manner violated. I may also add that even the judgments delivered by superior Courts in Pakistan under 1956 Constitution or during the period when the fundamental rights were not enforceable, are to be approached and understood keeping in view the a forenoted features of the present Constitution."

Mr. Abdul Hafeez Pirzada has also referred to the following cases in support of his contention that the case in hand is hit by the doctrine of promissory estoppel:---

(i) M/s. Motilal Padampat Sugar Mills Co. Ltd.. Appellant v. The State of Uttar Pradesh and others, Respondents (AIR 1979 SC 621);

(ii) The Union of India and others, Appellants v. M/s. Anglo-Afghan Agencies etc, Respondents (AIR 1968 SC 718); (i.e) Union of India and others, Appellants v. Godfrey Philips India Ltd., Respondents (AIR 1986 SC 806);

(iv) Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others (1992 SCMR 1652):

(v) Council of Civil Service Unions and others v. Minister for the Civil Service (1984) 3 All ER 935);

(vi) R v. Secretary of State for the Home Department, ex parte Khan (1985) 1All E R 40);

(vii) Al-Samrez Enterprise v. The Federation of Pakistan (1996 SCMR 1917); In our view, it is not necessary to dilate upon all the above reports as b, now the doctrine of promissory estoppel is well-entertained jurisprudentially. However, it will siffice to refer to the to cases.

(i) Council of Civil Service Unions and others v. Minister for the Civil Service (1984) 3 All ER 935); in which the facts were that the Government Communications Headquarters (GCHQ) was a branch of the civil service whose main functions were to ensure the security of the United Kingdom military and official communications and to provide signals intelligence for the Government. All the staff at GCHQ had a long standing right, originating when GCHQ was formed in 1947, to belong to national trade unions and most of them did so. The unions represented at GCHQ were all members of an association of civil service unions and there was an established practice at GCHQ of consultation between the management and the unions about important alterations in the terms and conditions of employment of the staff. It seems that on seven occasions between 1979 and 1981 industrial action was taken at GCHQ causing disruption. It further seems that on 22-12-1983 the Minister for the Civil Service issued an oral instruction to the effect that the terms and conditions of civil servants at GCHQ would be revised so as to exclude membership of any trade union other than a departmental staff association approved by the director of GCHQ. The above instruction was issued without prior consultation with the staff at GCHQ. The same was assailed through the Court proceeding. The matter was eventually taken up by the union to the House of Lords. Lord Diplock wrote the leading opinion, in which he made the following observation on the question which action or decision can be subject-matter of judicial review:--- "To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons) other than the decision-maker, although it may affect him to. It must affect such other person either (a) by altering rights or obligations of that person which are enforceable by or against him in private law or (b) by depriving him of some benefit or advantage which either (i) he has ir: the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational ground for withdrawing it on which he has been given an opportunity to comment or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn. (I prefer to continue to call the kind of expectation that qualifies a decision for inclusion in class (b) a 'legitimate expectation' rather than a 'reasonable expectation', in order thereby to indicate that it has consequences to which effect will be given in public law, whereas an expectation or hope that some benefit or advantage would continue to be enjoyed, although it might well be entertained by a 'reasonable' man, would not necessarily have such consequences."

Whereas on the question of procedural propriety, he commented as under:--- "My Lords, I see no reason why simply because a decision-making power is derived from a common law and not a statutory source it should for that reason only be immune from judicial review. Judicial review has I think developed to a stage today when, without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground I would call 'illegality', the second 'irrationality' and the third ' procedural impropriety'. That is not to say that further development on a case basis may not in course of the add further grounds. I have in mind particularly the possible adoption in the future of the principle of 'proportionality' which is recognised in the administrative law of several of our fellow members of the European Economic Community; but to .Dispose of the instant case the three already well-established heads that I have mentioned will suffice. "

(ii) Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others (1992 SCMR 1652); In the above case the facts were that the appellants were engaged in manufacture of sugar. Their sugar mills were situated at various places in the Province of Sind. The Federal Government, pursuant to the power contained in section 12--A of the Central Excises and Salt Act, 1944, issued a notification exempting certain goods from payment of central excise duty including sugar. The exemption relating to sugar was to be determined on the excess quantity produced by a factory as per formula contained in the above notification, excise duty would be charged on the concessional rates mentioned therein. The appellants acting on the above representation produced excess quantities but the above notification was rescinded. The matter was first agitated before the High Court without any success; then it was brought before this Court. In that context after reviewing the case-law of the foreign jurisdiction and Pakistani Courts, the following conclusion was recorded:-- - "53. We are inclined to hold that the above S.R.O. 560(1)/82 contained standing representation to the effect that if a factory would manufacture sugar in a financial year exceeding from the average production in that factory for the preceding to years, such an excess quantity of sugar shall be exempt from the payment of excise duty. The above representation could have been rescinded before it was acted upon or if it was acted upon, its effect could have been nullified by a statutory provision like section 31-A of the Customs Act (ibid) and not by an executive at. To the present case, the appellants acted upon the above representation before it was rescinded, to their detriment as, according to them, they went on with the production of sugar even when the recovery of sucrose from the sugarcane was comparatively low on account of change in the climate and thus, they had acquired vested right before the issuance of one of the to impugned S.R.Os. However. If the appellants had passed on the additional burden of the excise duty after the to impugned S.R.Os. Were issued, they are not entitled to press into service the doctrine of promissory estoppel as it will be inequitable to deny the State excise duty on the excess quantity of sugar referred to hereinabove, in terms of section 3-C of the Act. We may observe that doctrine of promissory estoppel has been evolved by the Courts as an equitable doctrine with the object to pre-empt suffering of any loss by a promises and was not designed or intended to provide a windfall profit to him, though Bhagwati, J, in the case of Motilal Padampat Sugar Mills (supra) had held that it was not necessary in order to atttact applicability of doctrine of promissory estoppel, that the promisee, acting in reliance on the promise, should suffer any detriment. But this view was contrary to the Indian Supreme Court's earlier view and also to the subsequent view taken by Bhagwati, as C.J., in the case of Union of India v. Godfrey Philips India Ltd, (supra). It may be pertinent at this juncture to refer to a passage from Law of Contract by D.W. Greig and J.L.R.

Davis (supra) on the above aspect, at pages 165 and 166, which reads as follows:---

8. Promissory estoppel is based upon equitable principles.

(a) Founded in equity.'

It was also observed that the doctrine of promissory estoppel was subject to the following limitations:---

(i) the doctrine of promissory estoppel cannot be invoked against the Legislature or the laws framed by it because the Legislature cannot make a representation;

(ii) promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out; (i.e) no agency or authority can be held bound by a promise or representation not lawfully extended or given;

(iv) the doctrine of premissory estoppel will not apply where no steps have been taken consequent to the representation on inducement so as to irrevocably commit the property or the reputation of the party invoking it, and

(v) the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise. "

64. In the above English case, though the case was decided against Council of Civil Service Unions, but important jurisprudential questions were discussed. The theory of legitimate expectation was also enunciated. It was pointed out that originally Lord Denning used the expression "a reasonable expectation" but the said expression had undergone change and the more appropriate was "legitimate expectation. " The grounds on which an executive order which may be discretionary can be assailed, were also highlighted, namely, illegality, irrationality and procedural impropriety while making the impugned decision or passing the impugned order.

Whereas the case of Army Welfare Sugar' Mills (supra), the doctrine of promissory estoppel was reiterated after reviewing the case-law and the exceptions to the application of the said doctrine were also highlighted.

65. Prima facie, we are unable to discover any illegality, or irrationality or procedural impropriety in determining the tariff by WAPDA. The percentage of increase in the surcharge or additional surcharge simpliciter will not attract the above principles if the same fall within the ambit of subsection (2) of section 25 of the Act as already discussed hereinabove. We reiterate the ratio decidendi of the case of Army Welfare Sugar Mills (supra). We have approached the above case keeping in view the above doctrine of promissory estoppel. However, we may point out that most of the cases of Indian jurisdiction as well as of Pakistani Courts in which the above doctrine has been pressed into service in aid, are of to types, namely:

(i) cases in which the period of exemption was specified. In such cases the Courts have held that if a party had fulfilled the conditions on which exemption was granted, he was entitled to enjoy the same for the period for which it was granted;

(ii) cases in which no exemption period was specified and the parties acted upon the same to their detriment before the withdrawal of the exemption.

66. Whereas Mr. Fakhruddin G. Ebrahim, learned senior counsel for WAPDA, has urged that there is a distinction between an exemption and a concession. According to him, if the exemption is granted for a specific period and is acted upon, the ratio decidendi of the judgment of this Court in the case of Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong (PLD 1970 SC 439) (in which it has been held that if the grant of exemption was subject to existence of certain conditions and the withdrawal of exemption was also made conditional on the happening of certain eventualities, that the Government could not withdraw the exemption unless the requirement of law was fulfilled) will be attracted to. He has referred to the case of Mian Nazir Sons Industries Ltd.

And another v. Government of Pakistan and others (1992 SCMR 883), to demonstrate that a concession can be withdrawn. In the above case under section 21(b) of the Customs Act, 1969, the importers of raw material mentioned in S.R.O. 605(1)/83 dated 11-6-1983 were allowed to take delivery without payment of so much of the customs duty as was in excess of 50 % ad valorem. The above concession was withdrawn which was assailed before this Court without any success. It will not be out of context to reproduce the following observation:--- "On a plain reading of section 21, it appears that the provisions contained therein at the highest authorise the delivery of goods imported without payment of whole or any part of the customs duties chargeable thereon on the principle that the goods are intended to be used, inter alia, in the manufacture of the prescribed goods.

Therefore there appears nothing in these provisions which has the effect of examining the payment of customs duty for all times in the sense of discharging the liability for the payment of customs duty. Learned counsel for the appellants also did not claim anything higher than that. In other words the section authorises the clearance of goods without immediate payment of customs duties chargeable on the goods, so that the payment is deferred. This is also reflected by the conditions appended to the initial notification which required the furnishing of bank guarantee equal to the amount of duties and taxes leviable on every consignment in excess of 50% ad valorem. In this perspective the matter appears quite simply to be that the benefit extended under section 21(b) is a concession and not an exemption. The word "concession" in some of the recognized dictionaries has the following meanings:, .

(1) Black's Law Dictionary, Fifth Edition: Concession. A grant, ordinarily applied to the grant of specific privileges by a Government; e.g. French and Spanish grants in Louisiana. A vountary grant, or a yielding to a J claim or demand; rebate; abatement.

(2) The American Heritage Dictionary of the English Language: Concession. Something granted by a Government or controlling authority, such as a land tract or franchise, to be used for a specific purpose.

(3) The Shorter Oxford English Dictionary, Volume I: Concession. A grant by Government of a right or privilege, or of land."

67. There is no doubt that there is a distinction between an exemption granted from the payment of taxes for certain period on certain conditions and a concession, which does not lessen the monetary burden of the beneficiary of the concession but it only defers his liability as was done in the above report in the case of Mian Nazir Sons Industries Ltd. (supra). However, we may observe that though in the case in hand the word "concession" was used while granting the above reduction of 50 % in the payment of electricity tariff but factually it was part of the representation for inducing the prospective investors to establish their factories in G.A.I.E. There was no period specified for the above concession. In this view of the matter, the above concession could not be for all times to come and, therefore, it could be withdrawn by giving a reasonable notice. In fact, Mr. Abdul Hafeez Pirzada has not contested the above legal position. In the instant case, WAPDA has not withdrawn the above concession in respect of all the industries situated in G.A.I.E. But has prepared a negative list containing certain industries which have been denied the above concession. The other industries continued to enjoy the above concession. Pursuant to a decision of E.C.C. WAPDA through its letter dated 23-2-1995 notified that the above concession would be up to 28-8-1999 excluding the consumers mentioned in the negative list, but by a subsequent letter dated 8-3-1995, it reduced the above terminus ad quern to 2-6-1997.

68. This leads us to the question, whether preparation of the negative list was warranted. We have gone through the record and we find that a detailed examination was carried out. A distinction was made between labour intensive industries and energy intensive industries. It may be pertinent to reproduce the summary dated 6-7- 1994 prepared for E.C.C. On the above subject:--- "SUMMARY FOR E.C.C.

Subject:SPECIAL ELECTRICITY TARIFF APPLICABLE TO GADOON AMAZAI INDUSTRIAL ESTATE, N.-W.F.P.

In order to enforce ban on poppy cultivation in Gadoon Amazai area, the Government of Pakistan decided in October, 1986 to establish an Industrial Estate which would, amongst various other incentives, provide electricity at 50% of the existing industrial tariff. WAPDA protested against this decision but in deference to orders to the Government issued necessary Notification vide Secretary WAPDA No.2125/G.M.D/Tariffs/T-78, dated 3-6-1987.

2. It may be noted that WAPDA has the and again been requesting the Federal Government to reconsider this concession which is causing a drain of Rs.120 million on WAPDA's financial resources each year. It was stated that WAPDA could neither bear this loss due to its very difficult liquidity position and its international commitment for self-- financing nor penalize other consumers as a result of this cross subsidy

3. The basic idea of the Government to provide incentive was to bring industrial development in the area for general uplift of the population affected by the ban on poppy cultivation. This purpose could have best been achieved through development of labour-intensive industry but in order to cash on the highly favourable rates of electricity in the area. The energy intensive industry like steel furnaces, steel re-rolling, plastic industry etc. Started shifting from various parts of the country to the Industrial Estate of Gadoon Amazai in N.-W.F.P. This defeated the very purpose of the Government incentives and rendered similar industries in other areas of the country non-competitive.

4. Particularly, the steel furnace industry not only brought a heavy financial burden because of subsidy but also affected the stability of the power system due to concentration of heavy fluctuating load of steel furnaces. Due to unbalanced load of Are Furnaces in particular and Induction Furnaces in general, one of the winding of the power transformers to which this load is connected is continuously over loaded exposing it to ultimate damage.

Besides, there are excessive voltage dips because to Arc furnaces which distort the wave-form and disturb all the electronic equipment of the nearby communication system, protection system etc., affecting the quality and reliability of service, In case of the close proximity of a power station this effect is much more pronounced and cause damage to the sensitive installation in the power station. It so happens that Tarbela Power Station is situated next door to Gadoon Amazai and that is no ordinary power station to take risks with,

5. The Government of N.W.F.P. Was approached to impose a ban on the steel industry in the Estate which was acceded to but was not rigidly enforced and the steel industry having been brought on the negative list was removed from the list. The concession being availed by the steel industry in this area has completely disturbed the steel market and there have been a number of protests from Pakistan Steel Melters Association to stop approval of additional steel furnaces in the Gadoon Amazai Industrial Estate.

6. Since a considerable period of the (about 7 years) has elapsed after the establishment of Industrial Estate of Gadoon Amazai, and an infant industry requiring protection from competition by the established firms may grow mature over such a long period, there is no justification for continuing various sorts of concessions of an indefinite period. That is why C.B.R. And other financial institutions have discontinued various types of concessions allowed by them in Gadoon Amazai Industrial Estate (G.A.I.E) in 1993 If any concession has to be allowed to G.A.I.E. Then WAPDA should be compensated by the Provincial Government of N.-W. F. P.

7. In the light of the above background and the proposal approved by the Advisor to the Prime Minister for Finance and Economic Affairs detailed in the Working Brief, the following recommendations are made for Industries in G.A.I.E., N.-W.F.P.:---

(i) The energy-intensive industry like steel furnaces, steel re-rolling mills and plastic industry etc. Be placed on the negative list for all times to come.

(ii) Concession of 50% may be limited to the first 15% of the monthly bill of steel industry (i.e. Energy Charges, M.D.I., F.A.S. Low Power Factor Penalty). The concession may be reduced to 25% for the next 10 % of the consumption and the concession may be eliminated altogether for the balance.

(i.e) Since the normal life of steel furnace is 10 years and the cost recovery life is 5 years, the tariff concessions given to the steel furnace industry in the Industrial Estate may be completely withdrawn after 5 years of the installation of these furnaces.

(iv) The revenue loss on account of the provision of this subsidy to consumers may be compensated to WAPDA by adjusting the revenue so lost, against the net profit on hydel power generation being paid to Government of N.-W. F. P.

8. Economic Coordination Committee of the Cabinet is requested to accord approval of the recommendations contained in para.7 above.

9. The Minister for Water and Power has seen and approved submission of the summary.

(Sd.)

(M. Salman Faruqui), Secretary'"

69. On the basis of the above summary, E.C.C in its meeting took the decision which has been reproduced in para. 5 hereinabove and, therefore, needs not be repeated. The reasons given in the above summary cannot be said to be arbitrary or unjustified but are founded on reasonable classification/intelligible differential, which is recognised by the Courts and in this regard reference may be made to a judgment of this Court in the case of I.A. Sharwani v. Government of Pakistan (1991 SCMR 1041). It will not be out of context to mention that the Government of N.W.F.P. Industries, Commerce, Mineral Development, Labour. And Transport Department, Peshawar, issued a notification No.SOII(IND) 10-342/84.V./1172-1210 dated 18-1-1990 including a number of industries in the negative list, which included the steel re-rolling and other intensive energy--oriented industries but the consumers continued to enjoy concession till the above decision of the E.C.C. In 1994. It, therefore, cannot be contended that even the industries which were included in the negative list had no prior notice.

However, Mr. Abdul Hafeez Pirzada, learned Sr.ASC, has urged that even if there was any justifiable reason to prepare the negative list, WAPDA acted discriminately by excluding 20 steel industries from the purview of the above negative list which is violative of section 25 of the Act as enunciated in I.A. Sharwani's case (supra). The E.C.C. Excluded 20 steel industries from the ambit of the above negative list on the ground that they were already established i.e. Prior to the preparation of the negative list. Since the above 20 excluded steel industries are not before us, we would not like to make any adverse comments against them. It will suffice to observe that we are not inclined to interfere with the preparation of the negative list of the industries, detail of which is given in para. 6 hereinabove, as they are founded on reasonable classification/intelligible differentia. It will be open to WAPDA to re-examine the case of above 20 steel industries and to see, whether there was any justification to make exception in respect of them.

70. As regards the reduction of the period of concession from 28-8-1990 to 2-6-1997, it has been pointed out by Mr. Fakhruddin G. Ebrahim that this was not assailed before the High Court. Since originally no period was specified for the above concession, the withdrawal of the same could have been effected by giving reasonable notice. In the present case, the reduced period for the withdrawal of above concession, namely, up to 2-6-1997 was conveyed to the consumers through WAPDA's letter dated 23-2-1995. The above notice was for more than a year, which was a reasonable period. The above terminus ad quem of 2-6-1997 has been fixed on the basis that 10 years' period would expire from the date of grant of the above concession, namely, 3-6-1987. We may point out that WAPDA has been suffering losses on account of above concession, the detail of which it has given in its M.D. (Distribution's) letter dated 20-2-1996 addressed to the Joint Secretary (Power), Ministry of Water and Power, Islamabad, the relevant portion of which reads as under:--- "Years Rs. In million 1990-91 28.73 1991-92 98.92 1992-93 168.48 1993-94 193.25 1994-95 19130 1995-96 54.77 Up to 12/95 Total: 735.45"

The prolongation of the above concession without being compensated for the same by N.-W.F.P. Government will continue to adversely affect the other consumers. Even otherwise, this point was not agitated before the High Court as pointed out by Mr. Fakhruddin G. Ebrahim. We are not inclined to interfere with the above matter in exercise of discretionary Constitutional jurisdiction.

71. Adverting to Mr. Abdul Hafeez Pirzada's contention that the consumers, who are still enjoying 50% concession in the electricity tariff, are entitled to the above concession on the items of surcharge and additional surcharge, we may observe that since we have held that the above items are part of the electricity tariff and since the concession was granted on the electricity tariff through the above letter dated 3-6-1987, the above contention of Mr. Pirzada has force. We, therefore, hold that while computing 50 % concession the above to items are also to be included -

72. The upshot of the above discussion is that the appeals and the petitions against the judgment of the Peshawar High Court are dismissed with the above modification that the consumers, who are still enjoying concession of 50% in the electricity tariff, would also be entitled to the above concession on the items of surcharge and additional surcharge. However, there will be no order as to costs.

(Sd.)

Ajmal Mian, J.

I have already written my judgment.

(Sd.)

Saleem Akhtar, J.

I agree but will be adding my separate note.

(Sd.)

Zia Mahmood Mirza, J.

I agree with my learned brother Saleem Akhtar so I have written a note.

(Sd.)

Fazal Karim, J.

I agree. I wilt also append my note.

(Sd)

Mukhtar Ahmed Junejo. J SALEEM AKHTAR, J. ---This judgment will decide all the appeals and petitions. There are to sets - one against the judgment pasted by the Peshawar High Court and the other against the judgment passed by the Lahore Higb Court. There are three categories of appeals arising from the judgment of the Pesahwar High Court:--

(i) Appeals filed by appellants belonging to N.-W.F.P. Excluding Gadoon Amazai (C.A. 23/96. 28/96, 36/96, 57; 96 & 58/96). They have challenged levy of Surcharge and Additional Surcharge;

(ii) Appeals Jlcd by appellants belonging to Gadoon Amazai and included in the negative list (C.A. 22/96. 25, 2.9 to 33, 37 and 56/96). They have challenged the levy of Surcharge and Additional Surcharge by WAPDA and the concessions withdrawn by WAPDA from the industries included in the negative list; and (i.e) Appeals filed by appellants from Gadoon Amazai not included in the negative list (C.A. 7 to 11, 15 to 21, 26, 34 and 35/96). They have challenged the levy of Surcharge and Additional Surcharge levied by WAPDA.

In the appeals filed against the judgment of the Lahore High Court, levy of Surcharge and Additional Surcharge by WAPDA has been challenged.,

2. The brief facts in appeals filed by appellants having industries in Gadoon Amazai area are that Gadoon Amazai was a backward area where poppy cultivation was the main source of livelihood of the people. In order to discourage its cultivation, which is the raw material for derivatives and drugs, the Federal and Provincial Governments launched a scheme to industrialise it and granted incentives to investors so that they may establish industries which may result in giving employment to the local populace and also provide chance to invest. In industries and discourage poppy cultivation. The Government of N.-W.F.P. Established an industrial estate, namely, Gadoon Amazai Industrial Estate in the year 1987. In pursuance of the policy to industrialise this area certain incentives were granted, which are as follows:--

(i) WAPDA by office order dated 3-6-1987 with the approval of the Federal Government ordered that all the industrial units established within the Gadoon Amazai Industrial Estate will be charged at 50 % of the normal applicable tariff rates of WAPDA Schedule of Tariffs in force under which the supply is allowed. This was applicable to fuel adjustment charge as well.

(ii) By notification dated 26-6-1988 issued by the Government of Pakistan, Ministry of Finance, Customs Department, the plant and machinery approved by the Government for industrial projects located in the Industrial Estate of Gadoon Amazai were exempted from the surcharge leviable thereon.

(i.e) By notification dated 26-6-1988 the Federal Government exempted plant and machinery imported by Government approved industrial projects located in Gadoon Amazai Industrial Estate from the whole of Iqra Surcharge.

(iv) By notification dated 3-6-1989 the Federal Government exempted such raw materials and components as were imported for the exclusive manufacture of goods b5- recognised industrial units located in the approved industrial estate of Gadoon Amazai from whole of the Customs duties and sales tax leviable thereon with certain conditions attached to it,

(v) By notification dated 3-6-1989 the Ministry of Finance directed that the plant and machinery as is not manufactured locally, shall be exempt from whole of customs duty leviable thereon and from the whole of sales tax if imported for setting up industrial projects on or before 30-6-1993 in respect of areas specified in the Table including N.-W.F.P. And Federally Administered Tribal Areas.

(vi) By notification dated 3-6-1990 issued by the Ministry of Finance, the Government directed that the plant and machinery which were not manufactured locally, shall if imported for initial installations or for balancing, modernization, replacement or expansion of the projects approved by the Government in areas including approved industrial estate in the Province of N.-W.F.P. Were to be exempted from so much of the customs duty leviable thereon as were in excess to the extent specified in the corresponding entries of column No.3 of the Table and whole of the sales tax subject to certain conditions and specifications.

(vii) By notification dated 22-1-1987 the Central Board of Revenue exempted from income-tax the industries established in Industrial Estate of Gadoon Amazai during 1-1-1987 and 30-6-1988.

(viii) By circular dated 3-5-1987 the State Bank of Pakistan decided to provide finance at concessional rate of mark-up to the industrial units in Industrial Estate Gadoon Amazai. On the loans taken for establishment of industrial units the mark-up was not to exceed 3 % .

(ix) By notification dated 28-6-1989 the Government of Paistan, Ministry of Finance made amendments in SRO dated 26-6-1988 by which the concession was extended to raw material imported by Government approved industrial projects located in the approved Industrial Estate of Gadoon Amazai.

(x) By notification dated 22-11-1989 customs duty and sales tax on the component parts were exempted.

3. The above documents produced by the appellants demonstrate that from the very beginning i.e. The year 1987 till 1990 the Federal Government, the Provincial Governments and the WAPDA were granting concessions in order to attract persons to make investments and develop the industrial area. The appellants established their industries based on the representation made by the Government and their agencies, which provided employment to the local population. It seems that certain concessions were withdrawn, which were challenged by the appellants which is not relevant for the present controversy and therefore need not be stated here in detail. However, in compliance with the decision of Economic Coordination Committee of the Cabinet (ECC) dated 29-8-1994 WAPDA issued a circular dated 23-2-1995 notifying its officers that all the existing or future units of industries included in the negative list with the exception of 20 industrial units established before the formulation of the list shall, with immediate effect, cease to have fifty per cent concession in the electricity bills. It further provided that the 50 % concession to industries excluded from the negative list shall be available up to 28-8-1999. Again by another circular dated 8-3-1995 WAPDA in compliance with the decision of ECC dated 3-1- 1995 issued a Memo. Dated 8-3-1995 by which 50% concession on electricity bills in respect of industries in the negative list with the exception of 20 industries established before the formulation of the negative list was withdrawn. 50% concession to industries not included in the negative list was to continue up to 2-6-1997. It further provided that up to 2-6-1997, 20 existing units of metal industry shall be charged according to the latest tariff or any revised tariff and a credit of Ps.49 per KWH worked out on the basis of electricity rate of 1989 shall be given. The following industries from Gadoon Amazai Industrial Estate (GAIE) as approved by ECC were included in the negative list:-- A- Edible products, i.e. Vegetable, Ghee/cooking oil manufacturing units; B- Plastic products:--

(i) Plastic film.

(ii) Plastic bags.

(i.e) Rigid/flexible pipes,

(iv) Plastic bottles.

(v) Adhesive tapes, manufactured from coated film.

(vi) Plastic utensils all sorts and plastic crockery.

(vii) Poly-uethane foam and products made thereof.

(viii) Poly-propylene woven bags.

C- Chemicals/Dye-stuff:--

(i) Caustic Soda.

(ii) Manufacture where only mixing or repacking is involved.

D- Metals:--

(i) Furnaces and rolling/re-rolling mills.

(ii) Galvanization units.

(i.e) Corrugation units.

(iv) Metal containers and untensils, all sorts.

The appellants challenged these actions of the respondents but failed.

4. In all the appeals arising from the judgment of the Lahore High Court and the appeals against the judgment of the Peshawar High Court, the levy of the surcharge and additional surcharge by WAPDA has been challenged.

The facts in all these appeals on this aspect are common and are stated hereunder.

5. WAPDA by its office orders imposed "SURCHARGE", on SUPPLY CHARGES from the to the starting 2.5% from 1-1- 1992 which was progressively raised to 10.4 % . Before a surcharge .Of 2.5 % was levied a summary dated 19-11- 1991 was submitted to the Cabinet that as WAPDA has expressed its inablility to pay the net profit amounting to Rs.6.1 million as determined by CCI to N.-W.F.P. Arrangements should be made to ensure transfer of net profit. The following proposals were submitted:-

(i) WAPDA may be authorised to levy a fixed surcharge of paisas 8 per unit on all consumers; or

(ii) WAPDA may be authorised to levy a surcharge equivalent to 2.5 of the total tariff on all consumers every three months for the current financial year. Thus the proposed levy will be staggered in three small installments of December, February and April.

The Cabinet cleared proposal No.(ii) which was approved by the Prime Minister. Thereafter WAPDA issued the following orders:--

(1) Imposition of SURCHARGE Q 2.5% from 1-1-1992 by office order dated 31-12-1991, which reads as follows:-- "CONFIDENTIAL PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY Office of General Manager (Customer Services)

G-39,WAPDA House, Lahore.

Dated 31-12-1991 No. GMCS/Tariffs/T-21 (Vol. VII)/1191-1213

1. Chairman, AEB, WAPDA, Lahore

2. Chairman, AEB, WAPDA, Gujranwala

3. Chairman, AEB, WAPDA, Islamabad

4. Chairman, AEB, WAPDA, Faisalabad

5. Chairman, AEB, WAPDA, Multan

6. Chairman, AEB, WAPDA, Hyderabad

7. Chairman, AEB, WAPDA, Peshawar

8. Chairman, AEB, WAPDA, Quetta Subject: Imposition of Surcharge at 2.5 per cent. On Supply Charges It has been decided to impose "SURCHARGE" at the rate of 2.50 (to and half per cent.) on the "Supply Charges as defined in WAPDA Schedule of Tariffs on all electricity bills to be issued on or after 1-1-1992. This "SURCHARGE" shall be in addition to the 10% late payment surcharge which becomes due on account of late payment of electricity bills after due date It may please be noted that the 2.5 per cent. "SURCHARGE" shall be written as "SURCHARGE" in capital letters whereas the existing surcharge levied at the rate of 10 % on the supply charges due to late payment of electricity bills after due date will be shown as "late Payment Surcharge" or "L.P. Surcharge" to make a distinction between the to. This surcharge will be levied on:--

(1) Fixed charges for the Authority's reservation of power for the consumer's billing demand in kilowatt as defined in WAPDA Schedule of Tariff.

(2) The charges for the amount of energy actually consumed by the consumer in kilowatt-hour.

(3) The fuel adjustment Surcharge.

(4) The penalty for low power factor. .

The account of this new 2.5 % "SURCHARGE" shall be kept separately. It is clarified that the 2.5 per cent.

"SURCHARGE" will not be levied on the electricity duty payable to the Provincial Governments, meter rentals, service rentals which are not part of "Supply Charges" as defined in WAPDA Schedule of Tariffs.

It is requested that all concerned including Revenue Officers of your region may please be informed telephonically/fax/telex or through special messenger to bill the consumers accordingly.

(Sd.)

(Muhammad Ikram-ul-Haq)

G.II, (Customer Services.)"

(2) Imposition of SURCHARGE @ 5.1 % from 1-2-1992 by office order dated 6-2-1992 which reads as follows:-- CONFIDENTIAL PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY Office of the G.M. (Customer Services)

WAPDA House, Lahore.

Dated 06-02-1992 No.65 - 88 GMCS/Tariffs/T-21 (VOl.VII)

1. Chairman, AEB, WAPDA, Lahore

2. Chairman, AEB, WAPDA, Gujranwala

3. Chairman, AEB, WAPDA, Islamabad

4. Chairman, AEB, WAPDA, Faisalabad.

5. Chairman, AEB, WAPDA, Multan

6. Chairman, AEB, WAPDA, Peshawar

7. Chairman, AEB, WAPDA, Hyderabad

8. Chairman, AEB, WAPDA, Quetta SUBJECT: IMPOSITION OF SURCHARGE AT 5.1 PER CENT. ON SUPPLY CHARGES In supersession of this office Memo. No.54-61/GMCS/T-21 (VOl.VII), dated 01-02-1992 it has been decided to increase "SURCHARGE" at the rate of 5.1 % (Five point one per cent.) on the "Supply Charges as defined in WAPDA Schedule of Tariffs as against the existing 2.5% "SURCHARGE" levied in accordance with Memo.

No.GMCS/Tariffs/T-21 (Vo.VII)/ 1191-1213 dated 31-12-1991 on all bills to be issued on or after 1-2-1992. It may please be noted that this 5.1 % SURCHARGE should be written against the column provided for "SURCHARGE". The surcharge levied at the rate of 10% on the supply charges due to late payment of electricity bills after due date will be shown as "Late Payment Surcharge" or "L. P. Surcharge" as already informed. This "SURCHARGE" will be levied on:--

(1) Fixed charges for the Authority's reservation of power for the consumer's billing demand in kilowatt as defined in WAPDA Schedule of Tariff.

(2) The charges for the amount of energy actually consumed by the consumer in kilowatt-hour.

(3) The fuel Adjustment Surcharge.

(4) The penalty for low power factor.

The account of the "SURCHARGE" shall be kept separately from late payment surcharge as already clarified. It is intimated that this "SURCHARGE" will not be levied on the electricity duty payable to the Provincial Governments, meter rentals, service rentals which are not Tariffs.

It is requested that all concerned including Revenue Officers of your region may please be informed telephonically/fax/telex or through special messenger to bill the consumers accordingly.

(Sd.)

(NASEER AHMAD QURESHI), G.M. (CUSTOMER SERVICES).

(3) By office order dated 22-3-1992 the SURCHARGE was imposed @ 7.7% on all the bills to be issued on or after 1- 4-1992. The contents of this order are identical to order dated 6-2-1992 except the figures of SURCHARGE and the date of enforcement.

(4) By office order dated 19-1-1993 which is in terms of the earlier order SURCHARGE was imposed @ 10% on the SUPPLY CHARGE on bills issued on or after 16-1-1993.

(5) By office order dated 1-4-1993 containing identical terms as in the preceding order SURCHARGE on SUPPLY CHARGES was imposed 10.4% on bills issued on or after 16-1-1993.

6. The salient features of these five orders are:--

(1) The orders notifying rate of SURCHARGE from the to the were issued in pursuance of the decision of the Cabinet and not by a decision taken by WAPDA.

(2) Within a period from 1-1-1992 to 1-4-1993 surcharge starting from 2.5 % reached 10.4 % on same terms and conditions. .

(3) SURCHARGE was imposed on SUPPLY CHARGE as defined in WAPDA Schedule of Tariffs.

(4) SURCHARGE was levied on

(i) Fixed charges for Authority's reservation of power,

(ii) Charges for amount of energy consumed in kilowatt-hour, (i.e) The Fuel Adjustment Surcharge

(iv) The penalty for low power factor.

(5) SURCHARGE was not to be levied on:

(i) Electricity Duty payable to the Provincial Governments;

(ii) Meter rentals; and (i.e) Service rentals as they-were not treated part of SUPPLY CHARGES.

(6) A separate account of SURCHARGE was to be maintained as distinguished from Surcharge levied @ 10% on the Supply Charges due to late payment which was to be named as Late Payment Surcharge.

(7) At no stage the WAPDA disclosed to the consumers the purpose for and circumstances in which SURCHARGE was levied.

7. After the imposition of Surcharge WAPDA by office order dated 9-8-1993 imposed ADDITIONAL SURCHARGE on energy consumption w.e.f. 10-8-1993 which reads as follows:-- OFFICE ORDER In exercise of the powers conferred on it by subsection (1) of section 13, read with section 12 and subsection (2) of section 25 of the Pakistan Water and Power Development Authority Act, 1958 (Act XXXI of 1958), the Water and Power Development Authority hereinafter referred to as "the Authority", with the approval of the Government of Pakistan, is hereby pleased to levy an "ADDITIONAL SURCHARGE" on all categories of consumers at the rates given below with effect from 10-8-1993.

CLASSIFICAITON RATE OF ADDL. SURCHARGE

(1) GENERAL SUPPLY TARIFF A-1

(a) Consumption Block 1-50 Units Ps. 15 per KWH

(b) Consumption Block 51-150 Units Ps.20 per KWH

(c) Consumption Blocks of 151-300, 301-1000 and above 1000 UnitsPs.25 per KWH

(d) Flat Rate for FATA Rs.18/Month per connection

(2) General Supply Tariff A-2 Ps.25 per KWH

(3) Industrial Supply Tariffs (B-1, B-2, B-3, B-4 including TOP Tariffs for B-3 and B-4 consumers)Ps. 25 per KWH

(4) Bulk Supply Tariffs (C-1, C-2, C-3) Ps.25 per KWH

(5) Agricultural Supply Tariff: D-1 Ps.25 per KWH

(6) Private Agricultural Flat Rate Tariff: D-1

(a) Punjab and Sindh Rs.29/HP/month

(b) N.-W.F.P. And Balochistan Rs.24/HP/month

(7) Temporary Supply Tariffs E-1 and E-2 Ps.25 per KWH

(8) Seasonal Industrial Supply Tariff - F. Ps.25 per KWH

(9) Public Lighting Tariff-G Ps.25 per KWH

(10) Tariff - H for Residential colony attached to the industrial premises.Ps.25 per KWH

(11) Railway Traction Tariff- I Ps.25 per KWH

(12) Co-generation Tariff - J Rate No. l (For sale by WAPDA) Ps.25 per KWH The additional surcharge of paisas 25/KWH shall also be applicable, in toto, to industrial supply consumers of Gadoon Amazai Industrial Estate; N.-W.F.P. And Bulk Supply to Government of Azad Jammu and Kashmir.

By orders of the Authority.

(Sd.)

BRIG. (RETD.)

(IDREES MOHSIN), SECRETARY WAPDA."

This order was followed by the following memorandum dated 12-8-1993 clarifying that Additional Surcharge does not form part of Supply Charges. It reads as follows:-- SUB: INCREASE AND RATIONALIZATION OF ELECTRICITY TARIFFS Please refer to this office orders No.747-93/GMCS/Tariffs/T-21 (Vol-VIII) dated 09-08-1993, and No.794- 843/GMCS/Tariffs/T-21 (Vol-VIII), dated 09-08-1993. Which were issued for implementation of decision by the Government of Pakistan on the subject noted above.

It is to be noted that the "Additional Surcharge" is to be levied on all bills to be issued on or after 10-8-1993.

Moreover, this "Additional Surcharge" does not form a part of "Supply Charges" and, therefore, it is not to be taken into account while working out 14.4% "SURCHARGE" levied vine Memo. No.353-79/GMCS/Tariffs/T-21 (Vol-VIII), dt.

01-04-1993, and "Electricity Duty". It may further be pointed out that the account of this "Additional Surcharge" and 10.4% "SURCHARGE"

An abstract of the revised WAPDA Schedule of Tariffs is enclosed herewith for guidance and proper implementation. It is requested that sufficient copies of the revised Tariffs be produced at local level and supplied to all concerned.

(Sd.)

(Naseer Ahmed Qureshi), G.M. (Customer Services)."

Soon thereafter WAPDA on the orders of the Government of Pakistan issued a notification dated 24-11-1994 notifying tariff increase w.e.f. 7-11-1994 which date was later amended to 24-11-1994 by another notification dated 6-2-1995. Again in pursuance of a Summary of Ministry of Water and Power dated 12-6-1995, the Cabinet made the following decision:-- "DECISION The Cabinet noted the proposal of WAPDA. The decision with regard to the percentage increase in the electricity tariff should be taken by WAPDA itself and announced in the first week of July, 1995. "

On 9-7-1995 WAPDA issued the following notification for increased Schedule of Electricity Tariffs:-- "In exercise of the, powers conferred on it by subsection (1) of section 13, read with section 12 and subsection (2) of section 25 of the Pakistan Water and Power Development Authority Act, (Act XXXI of 1958), the Pakistan Water and Power Development Authority hereinafter referred to as "the Authority", with the approval of the Government of Pakistan, is hereby pleased to make and promulgate the annexed Schedule of Electricity Tariffs with immediate effect.

2. The rules, procedures and Abridged Conditions of Supply, issued from the to the, but not specifically covered by the "definitions" and '"other Special conditions of Supply" contained in these Tariffs shall remain in force until amended, altered, changed, omitted or substituted by the Authority.

3. "SURCHARGE" will continue to be charged as heretofore.

4. The provisions of this Schedule of Tariffs shall have effect notwithstanding anything inconsistent therewith contained in sub--sections (2) and (3) of sections, 21, ",23 and 27 or in clauses 1 to XII of the Schedule to the Electricity Act, 1910, relating to the duties and obligations of a licensee, or in other law or instrument having effect by virtue of the aforesaid provisions of the said Act.

5. The Authority reserves to itself the right at any the to amend, cancel or add to any clause of the annexed Schedule of Tariffs and the "Definitions" and "Other Special Conditions of Supply".

6. The Authority further reserves to itself the right to interpret any of the "Definitions" and "Other Special Conditions of Supply", of the annexed tariff.

By orders of the Authority.

(Sd.)

Brig. (Recd.)

(IDRESS MOHSIN), SECRETARY WAPDA."

The appellants challenged the levy of Surcharge and Additional Surcharge but their Constitutional petitions were dismissed. The learned Judges of the Lahore High Court held that the Surcharge and Additional Surcharge are not a tax but an appendage/a part of tariff and can be imposed under section 25 of the WAPDA Act. It was further held that the tariff rate is neither arbitrary nor unreasonable.

8. We would first deal with the appeals in which the levy of Surcharge and Additional Surcharge has been challenged. Mr. Khalid Anwar and Mr. A.H. Pirzada have challenged it on Constitutional and statutory grounds.

They have contended that under the Constitution it is the Council of Common Interests (CCI) which is competent to determine electricity rates and charges and the executive authority in this regard does not vest in the Federal Government. The creation of CCI has a historical background which was intended to harmonize the relationship between the Federation and the Provinces in respect of entries and subjects contained in Part II of the Federal Legislative List, to formulate and regulate the policy in respect thereof and exercise, control and supervision on the related institutions. Before the cessation of East Pakistan, Pakistan consisted of to provinces, viz., East Pakistan and West Pakistan. The entire Constitutional structure relating to sharing of power between Central Government and Provincial Governments was built on these to pillars. However, by Province of West Pakistan (Dissolution) Order, 1970, President's Order No.1 of 1970 (P.O.1/1970) Province of West Pakistan ceased to exist and four new Provinces, viz., Baluchistan, North-West Frontier Province, the Punjab and Sind were constituted. The Islamabad Capital Territory and the Centrally Administered Tribal Areas administered by the President under the Order were called Centrally Administered Area. After the cessation of East Pakistan, the area formerly called West Pakistan and the Centrally/Provincially Administered Areas constituted the territory of Pakistan. From the Constitutional debris arose problems mainly the relationship of Federation and Provinces, which required change of concepts and strategies. The question arose about the control of subjects like Railways, WAPDA and Electricity which under the former dispensation were Provincial subjects. The framers of the Constitution were faced with ticklish question of relationship and division of power between the Federation and the Provinces. In a meeting of the Parliamentary Party Leaders, historic accord on Constitution was arrived at on 20th October, 1972 which was recorded and is included in National Assembly Publication, 1973 entitled 'Constitution Making in Pakistan'. For the present controversy suffice to say that division of power was based on Federal Legislative List and Concurrent Legislative List. Electricity was included in the Concurrent List while WAPDA was placed in Part II of the Federal List. The Accord provided for creation of CCI. In respect of WAPDA and item of electricity in so far as it relates to the affairs of the Federation was placed in Part II of the Federal Legislative List. It was provided that CCI shall supervise and have control on policy. The Provincial Governments shall be competent to levy taxes on consumption of electricity within their respective Provinces. It was on the basis of this accord that the Constitution of 1973 was framed creating CCI. Articles 153 and 154 read as follows:-- "153.--(1) There shall be a Council of Common Interests, in this Chapter referred to as the Council, to be appointed by the President.

(2) The members of the Council shall be--

(a) the Chief Ministers of the Provinces, and

(b) an equal number of members from the Federal Government to be nominated by the Prime Minister from the to the.

(3) The Prime Minister, if he is a member of the Council, shall be the Chairman of the Council but, if at any the he is not a member, the President may nominate a Federal Minister who is a member of the Council to be its Chairman.

(4) The Council shall be responsible to Majlis-e-Shoora (Parliament).

154.--(1) The Council shall formulate and regulate policies in relation to matters in Part II of the Federal Legislative List and, in so far as it is in relation to the affairs of the Federation, the matter in Entry 34 (Electricity) in the Concurrent Legislative List, and shall exercise supervision and control over related institutions.

(2) The decisions of the Council shall be expressed in terms of the opinion of the majority.

(3) Until Majlis-e-Shoora (Parliament) makes provision by law in this behalf, the Council may make its rules of procedure.

(4) Majlis-e-Shoora (Parliament) in joint sitting may from the to the by resolution issue directions through the Federal Government to the council generally or in a particular matter to take action as Majlis-e--Shoora (Parliament) may deem just and proper and such directions shall be binding on the Council.

(5) If the Federal Government or a Provincial Government is dissatisfied with a decision of the Council, it may refer the matter to Majlis-e--Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final."

9. Under Article 153 of the Constitution, CCI was constituted and its functions and rules of procedure were provided in Article 154. Significant and unparalleled features are that the Council shall be responsible to the Majlis-e--Shoora (Parliament) and not to the President or the Federal Government, The CCI was constituted as an independent body in which all the Provinces were equally represented. All items in Part II of the Federal Legislative List are under the control of CCI. It provides a safeguard to the Provinces and also exercises power to decide issues brought before it. The Council is authorised to formulate and regulate policies in relation to matters in Part II of the Federal Legislative List. So far electricity which is Entry 34 of the Concurrent Legislative List is concerned, CCI has the power only to the extent it relates to the affairs of the Federation. It shall also exercise supervision and control over related institutions. As the CCI is composed of the representatives of Federation and Provinces, its decision is to be expressed in terms of opinion of majority. Under Article 154(3), Majlis-e-Shoora (Parliament) in its joint sitting by resolution has been authorised to issue directions through the Federal Government to the Council, which shall be binding on it. It is significant to note that the Federal Government has not been authorised to give any direction to the CCI. Clause (5) of Article 154 provides a procedure in a case where the Federal Government or a Provincial Government is dissatisfied with the decision of the Council. Any of the aggrieved Governments may refer the matter to the Majlis-e-Shoora (Parliament) in joint sitting whose decision in that behalf shall be final. Thus, CCI is in no way under the control of the Federal Government. It may be clarified that although electricity is in the Concurrent Legislative List, the authority of CCI has been limited to the extent the matter relates to the affairs of the Federation. In respect of electricity CCI will have the authority and power to formulate and regulate policy in so far it is in relation to the affairs of the Federation and also to supervise and control the related institutions.

10. WAPDA being in Part II of the Federal Legislative List falls within the domain of ,CCI which shall formulate and regulate its policies. There is no dispute about it but on question whether supervision and control on it can also be exercised by CCI, the learned counsel for the parties have different views. Article 154 vests power in CCI to formulate and regulate policies and exercise supervision and control over institutions related to the matters in Part II of the Federal Legislative List including WAPDA. This interpretation finds full support from the Constitutional Accord, clause 25 of which provides that in respect of Railways, mineral oil and natural gas; liquids and substances declared by Federal law to be dangerously inflammable and the items now enumerated in Entry 3 in Part II of the Federal Legislative List and the item of electricity in so far it relates to Federation, "the Council shall exercise control on Policy. The institutions relating to these items shall function under the control and supervision of this council". This clearly indicates that the CCI has not only to formulate and regulate policy but shall also exercise supervision and control as well. Article' 154 has to be read with Part II of the Federal Legislative list. For purposes of the present case it must be read in conjunction with Entry 3 of Part II. It seems anomalous that CCI shall formulate and regulate policies without having any control or supervision. The word 'regulate' in this context must be given wider meaning. The words 'formulate and regulate policies' used in Article 154 have great significance and their meaning and interpretation will define the jurisdiction, power and sphere of activity of CCI. The word 'Policy' means, "general principles by which a Government is guided in its management of public affairs or Legislature in its measures. This term as applied to law, ordinance or rule of law, denotes its general purpose or tendency considered as directed to the welfare or prosperity of the state of community". The dictionary meaning of the word 'formulate' is to "set forth systematically". Formulation of policies is a systematic at to provide rule, regulation, scheme, plan and principles for managing, administering, organizing, running, developing and controlling an organization, authority, corporation, institution or Government. The dictionary meaning of the world 'regulate' is to control, govern or direct by rule or regulation (The New Shorter Oxford Dictionary, (1993) "to control, direct or govern according to a rule, principle or system; to make uniform, methodical, orderly." (Webster's New World Dictionary, Second College Edition. In Karachi Electric Supply Corporation v. National Industrial Relations Commission (PLD 1982 SC 113) while considering the meaning of word 'regulate' as used in section 6 (1) of the Pakistan Essential Services (Maintenance) Act, 1952, it was observed:-- "In Chamber's Twentieth Century Dictionary at page 1138 this word is defined to mean, 'to control, to adapt, or to adjust by rule". It is synonymous with the word 'control' or 'govern'. Accordingly, in ordinary parlance it implies the right to prescribe and enforce all such proper and reasonable rules as may be deemed necessary and wholesome in conducting an avocation in a proper and orderly manner. "

We respectfully agree with the above observation. Any person authorised to regulate any matter will have the right to prescribe rule and enforce and govern by exercising control and supervision over it. Unless the context otherwise permits, word 'regulate' is capable of broad meaning and wide implication. So far WAPDA is concerned, CCI has the authority not only to lay down rules and chalk out plan for its development, finances and administration, but to supervise, control and oversee it.

11. The learned Senior ASC for the respondent contended that the power conferred on CCI is of general nature, is merely required to lay down guidelines and it is not possible for it to supervise and control the institutions which may be many in number. Mr. Pirzada while referring to rules framed by CCI contended that for matters in Part II of the Federal Legislative List, CCI is a substitute for the Cabinet and its decisions are to be implemented in the same manner as that of the Cabinet. From the Rules framed by CCI it is clear that for its functioning Committee system has been introduced as is prevalent for the Cabinet. Under rule 8 of the "Rules of Procedure of the Council of Common Interests" framed by CCI under clause (3) of Article 154 of the Constitution (hereinafter referred as 'CCI Ruels'), any proceeding can be initiated by submitting a summary prepared in the manner provided therein.

It should contain (1) name of the Sponsoring Federal Division or Department of the Provincial Government, (2)

Subject of the summary and (3) name and designation of the officer forwarding the summary who should be Secretary/Additional Secretary in charge in the case of Federal Divisions and Chief Secretary/Additional Chief Secretary in the case of Provincial Government. Rule 10 provides manner of preparing sugary and requires 40 copies of summary to be sent to the Cabinet Division. Rule 11 gives detailed procedure for cases where they concern more than one Division or Province. In cases of disagreement, points of difference should be stated in the summary. In such cases the Provinces and the concerned Ministries/Divisions of the Federal Government should furnish their comments which should be circulated by the Cabinet Division. Rule 14 provides procedure for implementation of the decision of CCI. The Cabinet Division is to pass on decision to all concerned for necessary action but the Sponsoring Secretary or I the Chief Secretary would be primarily responsible for its implementation and passing on the decision to all agencies concerned. Under sub-rule (4) the Cabinet Secretary shall watch implementation of the decision. These Rules leave no room for doubt that CCI is not to formulate guidelines in general terms only. It not only formulates and regulates the Policy but makes decision and has at its command full machinery for its implementation. By introducing the concept of "decision" in Article 154 and power to decide the issues by majority CCI is not merely a recommendatory body but it has to thrash out the issues objectively and then decide the same. CCI- is thus an important and powerful Constitutional organization, not limited to lay guideline but also to effectively decide issues before it against which appeal is provided to the Parliament. For implementing such decisions, as explained above, an effective machinery at the higher level of administration has been provided. The control and supervision is thus exercised by CCI through the concerned Ministries and the Cabinet Division. The nature, character and the unique position CCI holds in the Constitutional scheme was noted in Federation of Pakistan v. United Sugar Mills Ltd (PLD 1977 SC 394) and it was observed:-- "Again in one significant respect the Federal executive authority has been abridged under the Constitution and has been entrusted to a newly created institution called 'the Council of Common Interests'. It is a body quite apart from the Federal executive. (See Articles 153-156). The administration of matters falling in Part II of the Federal Legislative List (Railways, mineral oil, natural gas etc.) and item 34 of the Concurrent List (Electricity) are entrusted to the Council of Common Interests. This is a body consisting of the representatives of the Federal Government and the four Provinces. Any dispute arising between one or more Provinces inter Se or between the '

Federation or a Province regarding aforesaid subjects is referable to the Parliament in joint session for final decision. This Constitutional arrangement also abridges the original jurisdiction of the Supreme Court under Article 184 and correspondingly new power essentially quasi judicial in character has been conferred on the Parliament in joint sitting. "

With respects in my humble opinion it may indirectly affect the jurisdiction of the Supreme Court under Article 184(1) only. The question whether finality --attached to the decision of the Parliament under Article 154(5) excludes the jurisdiction of the Supreme Court under Article 184(1) .In all circumstances requires further consideration because if on a reference under Article 154(5) the parliament decides it during a sitting when it lacked quorum and many such unforeseen situations may arise which may require deeper consideration in detail in an appropriate case. In Ahmed Tariq Rahim v Federation of Pakistan (PLD 1992 SC 646), Shafiur Rahman, J expressed his opinion that by refusing to make Constitutional institutions like CCI and National Finance Commission functional., "Constitutional obligations were not discharged thereby jeopardising the very existence and sustenance of the Federation". Sidhwa, J. Observed that "failure to allow CCI and NFC to function created bitterness and political deadlock between the Federation and the Provinces, contributing to a breakdown of the functional working of the Federal Government" and thus had nexus with the "breakdown of Constitutional machinery". Again in Muhammad Nawaz Sharif v. Federation of Pakistan (PLD 1993 SC 473) while dealing with the issue that for privatization of WAPDA and industries CCI was bypassed, Ajmal Mian, J. After referring to Ahmed Tariq Rahim and analysing Articles 153, 154 and 160 of the Constitution, observed:-- "In my view, the Federal Government should have brought the matter of privatization in respect of the items covered by the above Constitutional provisions before the CCI, The petitioner's plea that, it was not mandatory is not sustainable."

In the same judgment I had observed that "the Council of Common Interests is an important Constitutional institution which irons out differences, problems and irritants between the Provinces inter se and the Federation in respect of matters specified in Article 154". In Khalid Malik v. Federation of Pakistan (PLD 1991 Karachi 1), while dealing with Articles 153 and 154 and the pivotal position CCI occupies in the Constitutional field I had observed:- - "Its object is to strengthen and integrate Federation and Provinces, iron out their differences and provide Constitutional justice to the Provinces. Similar provisions are found in Federal Parliamentary Constitutions.

Section 135 of the Government of India Act and Article 263 of the Constitution of India provide for Inter-State Council for inter-provincial conflicts and problems relating to common interest. Pleading for a broader spectrum of Inter-State Council and appointment of the Leader of Opposition as its member Justice V.R. Krishna Iyer in his book 'A Constitutional Miscellany' observed as follows:-- 'The purpose is not to weaken the Centre nor to exaggerate the autonomy of the States, nor to usurp powers rightfully lodges elsewhere. Indeed, India can be strong only if the Union is strong. The Union can be strong only if the units are equally strong and operate on a common wave length in matters fundamental to the governance of India. Notionalism is more than romantic rhetoric, democracy more than periodic ballot convulsions. The Constitution is what the Constitution does.'

The Constitution requires the Federation and Provinces to function in harmony on 'mutually complementary and cooperative basis'. This can be achieved if each one of them observes the letter. And spirit of the Constitution, respect and recognize the rights and duties towards each other. The Provinces in the subservient position they have been placed in from the point of view of finances and resources are bound to have a feeling of frustration, helplessness and injustice. To avoid acrimony, confrontation and sense of deprivation a forum. Viz. CCI has been provided where claims, grievances, and injustices, within the limits provided by the Constitution have to be discussed and sorted out."

12. It is now well-settled that CCI occupies an important and pivotal position in the structure of the Constitution and it cannot be ignored, bypassed, surpassed or obstructed in performance of its Constitutional duties and obligations. Any attempt to obtain decisions in respect of matters referable to CCI, by any other person, authority, Government or corporation will be in violation of the Constitution lacking legal sanctity. From a close scrutiny of the relevant provisions of the Constitution and the judgments referred above it is clear that CCI is a completely separate and independent body quite apart from the Federal Executive. In respect of matters falling in Part II of the Federal Legislative List, the executive and administrative authority has been entrusted to CCI.

Article 97 defines the extent of executive authority of the Federation and reads as follows:-- "97. Subject to the Constitution, the executive authority of the Federation shall extend to the .Matters with respect to which Majlis-e-Shoora (Parliament) has power to make laws, including exercise of rights, authority and jurisdiction in and in relation to areas outside Pakistan: Provided that the said authority shall not save as expressly provided in the Constitution or in any law made by Majlis-e-Shoora (Parliament), extend in any Province to a matter with respect to which the Provincial Assembly has also power to make laws."

The executive authority of the Federation extends to all such matters and subjects in respect of which Majlis-e- Shoora (Parliament) has power to make laws. But this authority under Article 97 is subject to the Constitution.

Thus, if Constitution anywhere limits the executive authority of the Federation conferred under Article 97, it shall stand so curtailed to that extent. Article 97 is subservient to the other provisions of the Constitution. Although the executive authority of the Federation extends to the matters in respect of which the Parliament has power to make laws, restriction has been placed in respect of matters mentioned in the Concurrent Legislative List. The proviso to Article 97 has placed embargo on the executive authority of the Federation it of matters in the Concurrent Legislative List.

The Federation can exercise executive authority in matters which also fall within the legislative competence of the Provincial Assembly only if it is specifically so provided by the Constitution or in any law made by the Parliament. Thus, the Federation does not enjoy unfettered executive authority over the matters with respect to which to Provincial Assembly has also power to make laws. At this stage to complete the entire picture it is appropriate to mention that under Article 137 the executive authority of the Province extends to matters with respect to which Provincial Assembly has power to make law. Proviso to Article 137 incorporates the same principle which is contained in proviso to Article 97, viz., in matters with respect to which both Parliament and Provincial Assembly of a Province have power to make laws, the executive authority of the Province shall be subject to, and limited by, the executive authority expressly conferred by the Constitution or the law made by the Parliament upon the Federal Government or authorities thereof. It is by express provision in the Constitution or under the law made by the Parliament that the Federation can exercise executive authority in respect of subjects and matters in the Concurrent Legislative List.

13. It is to be considered how far Federation can exercise executive authority in respect of electricity. Article 157 reads as follows: -- "157.---(1) The Federal Government may in any Province construct or cause to be constructed hydro-electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter- Provincial transmission lines.

(2) The Government of a Province may--

(a) to the extent electricity is supplied to that Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province;

(b) levy tax on consumption of electricity within the Province;

(c) construct power houses and grid stations and lay transmission lines for use within the Province; and

(d) determine the tariff for distribution of electricity within the Province.

14. Under Article 157 different matters relating to electricity have been assigned separately to the Federal Government as well as the Provincial Governments. The Federal Government is authorised to construct hydro- electric or thermal power installations or grid stations for generation of electricity and also to lay down inter- provincial transmission lines. The function of the Federal Government is mainly generation of electricity, ordinarily to sell it in bulk to the Provinces and transmit it to the Provinces through inter-provincial transmission lines laid by it. The Provincial Governments after receiving it from the grid stations may transmit and distribute within the Province. They are authorised to' levy tax on consumption of electricity irrespective of the fact who is the distributor and determine the tariff for distribution of electricity within the Province.

15. Article 157 demarcates the line between the matters in respect of electricity which are in relation to the affairs of the Federation and those which fall within the authority of the Government of a Province. Clause (1) enumerates the matters which fall within the authority of the Federation, while clause (2) of Article 157 lays down four specific items which are to be dealt with by the Government of a Province. According to the learned counsel for the appellants each of the four sub-clauses of clause (2) confer independent powers and authority to the Government of a Province. On the other hand the learned counsel for the respondents, as upheld by the High Court, under clause (d) a Provincial Government can determine tariff only if supply of electricity is made, in bulk from the national grid for transmission and distribution within the Province. The language of Article 157 (2) does not permit imposition of such precondition for determination of tariff by the Government of a Province. All the sub-clauses are disjunctive dealing with separate items. If supply of electricity to a Province is a condition precedent for clause (d), then it should be so applicable to clauses (b) and (c) as well. But the actual position is completely contrary. Although WAPDA is generating and distributing electricity, the Provincial Government has imposed tax on consumption of electricity within the Province. Therefore, merely because a Provincial Government does not receive electricity in bulk is not sufficient to hold that it cannot determine tariff for supply of electricity to the consumers. There may be any other valid reason, but not in the manner Article 157 (2) is sought to be interpreted. CCI has not only the authority to formulate and regulate policies in matters of electricity to the extent it relates to the affairs of the Federation, but to exercise control and supervision over related institutions. CCI could not exercise power to determine the tariff for distribution of electricity within the Province by the Provincial Government or any corporation or authority under the executive authority of the Government of a Province to which it (Provincial Government) supplies electricity for distribution or permits its distribution by such Corporation or authority to the consumers. In all such cases the Government of a Province shall determine the tariff. However, admittedly in the Punjab and N.-W.F.P, WAPDA has taken over the duties of distribution of electricity to consumers within these Provinces to which these Provinces have not objected. In case of WAPDA as it is in Part II of the Federal Legislative List, the executive and administrative authority, the supervision and control in this respect is subject to the Policy formulated and regulated by CCI. The tariff or rate for supply of power to consumers should be fixed in accordance with the Policy formulated by CCI. WAPDA independently without reference to CCI cannot determine rates of tariff under any decision, direction or approval of the Federal Government as Federation does not exercise executive authority over WAPDA.

16. The learned Sr. ASC for the respondents has contended that .CCI has not laid down any guideline for determining the rate therefore, while fixing the tariff and imposing Surcharge and Additional Surcharge, mandate of Constitution (Article 154) has not been violated. CCI rules provide a procedure as discussed above under which summary for proposed action/plan is initiated. Instead of adopting this procedure the relevant Ministry and WAPDA routed the proposals to Task Force, ECC and the Cabinet instead of CCI. In adopting this procedure the Constitutional mandate was ignored and overlooked the and again. If the proposals would have been sent to CCI, it would have given its decision. It therefore cannot be a valid excuse to say that CCI has not laid any guideline nor formulated any Policy particularly when WAPDA had been seeking determination and orders from authorities, agencies and, persons not vested with power and authority to do so.

17. It is a misconception that CCI will examine and provide for day to day working of WAPDA. It will formulate Policy and guidelines leaving the operation and machinery part to WAPDA for implementing the Policy. This is the accepted role of all Policy-making, supervisory and regulatory institutions.

18. We will now refer to the statutes relating to WAPDA to determine whether it has the power to determine tariff.

WAPDA was created. In 1958 by the West Pakistan Water and Power Development Authority Act, 1958 (Act XXXI of 1958), which was a Provincial Act. Likewise East Pakistan Water and Power Development Authority was also created for that Province. At that the power and electricity were Provincial subjects. By the Province of West Pakistan (Dissolution) Order, 1970 (President's Order I of 1970), the Province of West Pakistan was dissolved. As a consequence, provision was made for continuance of WAPDA. Under Article 12 of P.O. I/1970, WAPDA was to continue to function under WAPDA Act, 1958 subject to modification which inter alia provided that all the powers of the Provincial Government shall be exercisable by the President and any reference to the Provincial Government shall be construed as reference to the- President. Thus, all power and authority exercisable by the Provincial Government were to be exercised by the President for the purposes of the new Provinces. Thereafter the, West Pakistan Water and Power Development Authority (Financing) P.O. No.7 of 1971 was enforced w.e.f. 1-7- 1970. Article 2 provided that the manner of financing of WAPDA shall continue as before except that the loans used to be made before 1-7-1970 by the Government of West Pakistan to WAPDA shall be made by the President on behalf of the Provinces. The financial control thus remained in the hands of the President for the new Provinces. In order to complete legislative history of WAPDA, reference may be made to other statutes, namely, Standing Power) Rates Advisory Board (P.O. No. 18/1972) by which the Central Government shall constitute Standing Power Rates Advisory Board consisting of the members mentioned in section 2, which shall be 12 in number, one of whom was to be nominated by the WAPDA to represent that Authority. The function of the Board is to advise on the .Power rates, tariff structure and costs of various electric supply undertakings within the area in which the order extended. Thereafter on 20-4-1978, Ordinance No.XVIII of 1978 (Standing Power) Rates Advisory Board (Amendment) Ordinance, 1978 was promulgated amending President's Order 18 of 1972. By this Ordinance, the members of the Chamber of Commerce and Industry, agriculturists and domestic consumers to be nominated by the Provincial Government have been included in the Advisory Board. On 1-8-1975, President's Order 4 of 1975 (Federal Adaptation of Laws Order IV of 1975) was promulgated under Article 268 of the Constitution by which adaptations were made in several enactments including the WAPDA Act, 1958. By this adaptation, in subsection (2) of section 1, for words "West Pakistan except the Karachi area and the Tribal area", the words "Pakistan except the District of Karachi" were substituted, while in section 2, clause (iv), "Government of Province of West Pakistan" was substituted by "Federal Government". Likewise, in clause (viii), for "Provincial Government", the word "Government" was substituted while in section 8(1) for "West Pakistan", the word "Pakistan" was substituted. Similarly in subsection.(2) of section 21, for "Provincial Assembly of West Pakistan" and "Provincial Assembly", the words "National Assembly" were substituted while in subsection (2-A), for "Provincial Government", "Federal Government" was substituted. The effect of these adaptations was that WAPDA which was under the control and executive authority of the Provincial Government came under the control and executive authority of the Federal Government. Thereafter by Constitution (Fifth Amendment) Act, 1976 (Act LXII of 1976), in place of "West Pakistan Water and Power Development Authority", the words "Pakistan Water and Power Development Authority" were substituted in item No.3 of Part II of the Federal Legislative List. By the West Pakistan Water and Power Development Authority (Amendment) Ordinance, 1979 (Ordinance LXXII of 1979), in sections 1, 2 and 3 of WAPDA Act, 1958, for the words "Water and Power Development Authority", words "Pakistan Water and Power Development Authority" were added. In section 17 of the Act, Explanations and subsection (1-C) relating to services and employees were added. On. 2-6-1991, Distribution of Electricity Profits from Hydro-Electric Stations to Provinces Order, 1991 (P.O. 3 of 1991), was promulgated, which provided that in view of the decision of CCI made in pursuance of Article 161(2) of the Constitution WAPDA shall pay the net profit from the bulk generation of power to the Province where the hydro-electric station is located. WAPDA Act was amended by Ordinance XXXIX of 1994 by Pakistan Water and Power Development Authority (Amendment) Act, 1994 promulgated on 6-7-1994 which inter alia added clause (vii) in section 8(2) whereby WAPDA may frame scheme in respect of Privatisation or otherwise restructuring any operation of the Authority except the hydle---generating power stations and National Transmission Grids. By Pakistan Water and Power Development Authority (Amendment) Ordinance, 1994 (Ordinance XXXIX of 1994) dated 19-5-1991, Water and Power Development Authority (Second Amendment)

Ordinance, 1.994 (Ordinance No.LXVI of 1994) dated 19-9-1994 and Pakistan Water and Power Development Authority (Fourth Amendment) Ordinance, 1995 (Ordinance CXXIV of 1995) dated 2-12-1995, same amendments were repeated. The noticeable amendment was made in section 3 in which the following clause (i.e) it, subsection (3) was added:-- "(iii) The Federal Government may, from the to the, issue such directives as it may consider necessary on matters of policy and the Authority shall comply with such directives; and if a question arises whether any directive relates to a matter of policy, the decision of the Federal Government shall be final."

19. The learned counsel for the appellants has challenged that the adaptation made by President's Order 4 of 1975 is unconstitutional and illegal as it is beyond the scope and power conferred . By the Constitution. It was further contended that it ignores the previous amendments and status, which were in the field. Article 268(1) confers validity to all existing laws which shall continue in force, subject to the Constitution, with necessary adaptation until altered or amended by the .Appropriate Legislature. Such power of adaptation by way of modification, addition or omission as may be deemed necessary or expedient was conferred on the President under clause (3) of Article 268 for a period of to years from the commencing day. The object of conferring such power of adaptation on the President was to bring the existing laws in conformity with the provisions of the Constitution during the transitory period. There was no power to amend any law under these provisions as adaptation connotes a completely different meaning from amendment. Such provision of adaptation is usually inserted in the Constitution where, after Constitutional deviation, a Constitutional set up is put on rails. Article 224 of the Constitutions of 1956 and 1962 were similar to Article 268. Article 224 of 1956 Constitution had empowered adaptation by way of amending or repealing the existing law. In Article 268 of 1973 Constitution the word 'repeal' has not been used. Reference can be made to Fazlul Quader Chowdhry v. Muhammad Abdul Haque (PLD 1963 SC 486). The aforementioned adaptations bring WAPDA under the control and executive authority of the Federal Government. According to the learned counsel, such adaptation was not necessary as under President's Order 1 of 1970 (Article 12), the President was to exercise and control the WAPDA for the Provincial Governments, therefore, as the adaptation does not bring the WAPDA Act in accord with the Constitution, it should be declared illegal, ignored and the Court should, under Article 268(6) interpret the Act to bring its provisions in accord with the Constitution. It, however, can be seen that till the promulgation of P.O.1/1970, WAPDA was in the Provincial Legislative List, therefore, all the amendments made by it were legal and proper. After the promulgation of Constitution of 1973, WAPDA was placed in Entry 3 of Part II of the Federal Legislative List. In these circumstances, it may have become necessary to make adaptations to bring WAPDA Act in accord with the Constitution. As discussed above, WAPDA being placed in Part II of the Federal Legislative List, the formulation and regulation of policies vested in CCI. Therefore, at all appropriate places which relate to the formulation and regulation of Policy, CCI should have been substituted/read.

20. Mr. Fakhruddin G. Ebrahim, the learned Sr. ASC .For WAPDA contended that as under Article 268(1), the existing laws were to continue in force subject to the Constitution, in view of Articles 270(1), and (3), P/O.1/1970 ceased to be valid law after the expiry of to years from the commencing day. The validation of existing law was subject to the Constitution. Under Article 270(1) the Legislature is required to validate the President's Orders, Proclamations, Martial Law Regulations, Martial Law Orders and other laws made between 25-3-1969 and 19-12-1971. For'such laws moratorium was provided from challenging their validity before any Court on any ground whatsoever (Article 270(3)). During this period of to years the Legislature did not validate P.O.1./1970 and thus it ceased to be a valid law. Such a view could justify adaptation made by P.0.4/1971. The adaptation, however, seems to be defective, invalid and not in terms of the provisions of the Constitution. As discussed above, CCI exercises executive authority over WAPDA, therefore, the same power could not be exercised by the Federal Government. It follows that in view of Article 268(6) wherever necessary the word CCI should be read in the WAPDA Act. Clause (i.e) in subsection (3) of section 3 of WAPDA Act as inserted by various Ordinances as mentioned in para. 18 above is void.

21. M/s. Khalid Anwar and A.H. Pirzada, learned counsel for the appellants, whose arguments have been adopted by all the advocates appearing for the appellants in other appeals, have contended that WAPDA does not have the authority to fix or determine the rates at which the electricity is to be supplied to the consumers or to levy surcharge and additional surcharge. On the other hand Mr. Fakhruddin G. Ebrahim, learned Senior Advocate Supreme Court for WAPDA has contended that under the WAPDA Act, 1958, which is the charter of WAPDA, power has been vested in WAPDA particularly under section 25 of the Act to determine and fix the rates. It was further contended that even otherwise as WAPDA generates electricity and distributes it, it has the inherent power to determine and fix the rates and vary the same from the to the. In support of this argument, reference has also been made to Abridged Terms and Conditions which a consumer accepts at the the electricity connection is granted. In order to appreciate these arguments it is necessary to examine the provisions of the WAPDA Act as much reliance has been placed by both the parties on interpretation of the relevant provision, namely, section 25 of the Act.

22. WAPDA is a corporation constituted under the WAPDA Act. According to the preamble of the Act, it was to provide for the unified anti coordinated development of the water and power resources of Pakistan. The Authority was constituted under section 3 of the Act for the above purpose and for carrying out the purposes of the Act. It was empowered to hold and dispose of property as a body corporate and was authorised to sue and be sued in its name. Clause (i.e) of subsection (3) of section 3 was added by Ordinance XXXIX of 1994 dated 19- 5-1994, Ordinance LXIII of 1994 dated 19-9-1994 and Ordinance CXXIV of 1995 dated 2-12-1995, which provided that the Federal Government may, from the to the, issue such directives as ii may consider necessary on matters of policy and the Authority shall comply with such directives and in case a question arises whether any directive relates to a matter of policy, the decision of the Federal Government shall be final. The powers and duties of the Authority are specified in Chapter 3 of the Act in which general powers and duties of the Authority and framing of schemes, (section 8), the schemes framed by other agencies (section 9), survey and experiment (section 10), and control over water and power houses and grids (section 11) have been mentioned. Section 8, subsection (2), clause (ii) provides that the Authority may frame a scheme or schemes for a Province or any part thereof providing for the generation, transmission and distribution of the power, construction, maintenance and operation of the power houses and grids. W Such schemes which are mentioned in subsection (2) of section 8 are subject to W the approval of the Government, which in the present dispensation means the Federal Government. Section 11, subsection (1) inter alia provides that the Authority shall have control over the operation of its power houses and grids and such works as may be necessary for their proper operation, maintenance of power houses and grids and may make recommendations to the Government for permitting simplification of methods of charge or supply of electricity and standardization of the system of supply. The exercise of authority under, subsection (1), clause (i) of section 11, is subject to notification by the Government in respect of the area over which and the extent to which the control was intended to be exercised. The Authority for the purposes of the Electricity Act, 1910, shall be deemed to be a licensee and shall have all the powers and discharge all the obligations of the licensee under the Act. However, being deemed to be a licensee under the Electricity Act, sections 3 to 11, subsections (2) and (3) of section 21 and sections 22, 23 and 27 or clauses (1) to (XI) of the Schedule to the said Act relating to duties and obligations of a licensee shall not apply to the Authority.

Therefore, these provisions in which duties and obligations of the licensee have been provided are inapplicable to the Authority. It may be mentioned that under section 21, the Authority has to submit to the Government as soon as possible after the end of every financial year but not before the last day of September next following, a report on the conduct of its affairs for that year which shall be placed in the National Assembly together with copy of the audit report which shall be referred by the National Assembly to the Committee of Public Accounts for scrutiny and examination. Section 25 reads as follows:-- "25. Rates for sale of power.---(1) The Authority shall ordinarily sell power in bulk.

(2) The rates at which the Authority shall sell power shall be so fixed as to provide for meeting the operating costs, interest charges and depreciation of assets; the redemption at due the of loans other than those covered by depreciation, the payment of any taxes and a reasonable return on investment.,"

In this regard the learned counsel for the respondents has referred to the provisions of the Electricity Act, 1910 and contended that the applicability of all such provisions of this Act by which any interference in the working of WAPDA could be made, has been excluded. It is true that the provisions of the Electricity Act mentioned above will not apply to WAPDA to the extent they provide for duties and obligations of the licensee. Reference may also be made to section 10-A of the WAPDA Act added by the West Pakistan Electricity 'Ordinance, 1959 (Ordinance No.XIII of 1959), which provides that from the date notified by the Government, all assets including lands, works, machinery, apparatus, material and plants vested in the Electricity Department shall vest in the Authority and all liabilities in respect of the said assets shall be the liability of the Authority from such date as may be notified in the Gazette. Such notification seems to have been issued, but has not been brought on record. After such gazette notification the machinery, plants, assets and liabilities of the Electricity Departments of the Provincial Government, namely, Government of West Pakistan at that the, vested in WAPDA. It is not disputed that at that the the distribution of electricity to consumers was undertaken by the Provincial Governments or electricity companies which were then operating. This section speaks only of Electricity Department and not the companies and corporations which were in the field at that the, but no material has been placed on record to certify which of the companies and to what extent and in which area they were operating and distributing electricity, therefore, we have no option but to ignore this aspect of the case. Section 25, as can be seen, authorises the WAPDA to ordinarily sell power in bulk. The learned counsel for the appellants have contended that the WAPDA could not have undertaken distribution to the consumers. By virtue of section 10-A, the distribution work operated by the Government was taken over by WAPDA and thus at least to that extent the distribution to the consumers was undertaken by it. According to Mr. Fakhruddin G. Ebrahim there is no bar in the Act to distribute and supply electricity to the consumers. Mr. Khalid Anwar has contended that the word ordinarily' governs the power of the WAPDA to sell which should be in bulk and according to the learned counsel only in extraordinary situation which may be of a temporary nature, distribution may be carried out by WAPDA.

According to Mr. Fakhtuddin G. Ebrahim the taking over of the assets of the Electricity Department of the Government was an extraordinary situation which was of a permanent nature and. Therefore even if the Authority was empowered to sell only in bulk, in these circumstances, distribution to consumers was neither illegal nor beyond its powers. This contention seems to be reasonable and proper because under section 10-A WAPDA has taken overall the plants, machinery, assets, liabilities and business of the Electricity Department of the Government, which was undisputedly responsible for distribution. So by implication the vesting power in WAPDA empowered it to carry out distribution work. This is not the real controversy. The main question is whether rate can be determined by the WAPDA. According to Mr. A.H. Prizada, the rate should be determined by the Provincial Government which is empowered to fix it and if it does not, only then CCI can do it. However, according to Mr. Khalid Anwar it is CCI which is to formulate and regulate Policy for determination of tariff rates and alternatively the Provincial Government. In spite of this variance both have submitted that the Federal Government has no power to determine tariff or levy Surcharge. Section 25(2) of the WAPDA Act provides that the power rate shall be so fixed as to provide for the operating cost, depreciation, redemption of loan, payment of interest charges, taxes and reasonable return on investment. A close scrutiny of section 25(2) will show that it enumerates the factors and guidelines which shall be taken into consideration for determining the rates, but does not mention the person or authority who is empowered to fix that rate. Therefore, one will have to search where this Authority lies. At the moment, we are restricting ourselves to section 25 of the Act to find out whether it empowered WAPDA to determine the rate for selling power to the consumers. The learned counsel for the respondents has referred to Abdul Aziz v. Multan Electricity Co. Ltd. (PLD 1958 Lahore 614). Multan Electric Supply Co. Ltd., which was a licensee under section 3 of the Electricity Act, after great difficulty and intervention of the authorities concerned, was obliged t9 enter into an agreement with the appellant and imposed a high rate of 5 annas per unit although from other ice factories it was charging 3 paisas per unit. The appellant in view of sections 22 and 23 of the Electricity Act and also in terms of agreement demanded that same rate may be charged from him which was being charged from other ice factories. The company, inter alia, pleaded that under clause (6) of the agreement it was empowered to revise rates in given circumstances and under clause

(14) the method of charging may be such as may from the to the be fixed by the licensee-company in accordance with the Electricity Act. It was held that the agreement gives full liberty to the licensee to enter into any agreement which does not contravene the provisions of the Electricity Act. As in the licence a maximum rate had been fixed, any agreement up to the maximum rate was valid. In this case the authority to fix the rate was not challenged. The rate was challenged only on the ground of undue preference as provided by section 23 of the Electricity Act and that similar terms of agreement should be applied to all the ice factory owners. Section 25 of the ' WAPDA Act was not under consideration therefore this judgment hardly supports the contention of the learned counsel particularly as sections 22 and 23 of the Electricity Act do not apply to WAPDA.

23. The next case relied upon by the learned counsel for the respondents is Chairman, Electricity, WAPDA v.

Muhammad Shafi (PLD 1976 SC 254). In the year 1962, the respondents had entered into an agreement with WAPDA for supply of electricity for a period of 10 years under the minimum consumption guarantee condition.

During the subsistence of this period, in 1969, WAPDA introduced a new schedule of tariffs refitting the power rates and doing away with the maximum consumption guarantee condition. The respondent filed a suit for declaration that the demand made on the basis of new tariff was illegal and injunction was sought against WAPDA. The suit was decreed and the appeal filed against it was dismissed by the learned District Judge while the revision was also dismissed by the High Court. Leave was granted to consider whether WAPDA Act empowered WAPDA to prescribe rates of sale of power and enhance such rates from the to the unilaterally without giving notice to the consumers. The provisions of section 25 of WAPDA Act and conditions Nos.26 and 27 of the Abridged Conditions of Agreement were noted and referring to the judgment in M. Daud Khan v.

Government of West Pakistan (PLD 1971 Lahore 462), it was observed that the agreement between the parties is consistent with the provisions of section 25 of the Act and therefore section 23 of the Contract is not attracted.

Conditions Nos.26 and 27 of the Agreement kept in view the requirement of law under section 25 of the Act. It was observed that "section 25 of the Act clearly empowers WAPDA to change the rates of power in keeping with the provisions of subsection (2) of the section". In this judgment, with respect, we may observe that the reasons and interpretation for holding that section 25 empowering WAPDA to change the tariff were not discussed. It merely concentrates on the agreement. Furthermore as the case had emanated in 1969 before the enforcement of the Constitution of 1973, its provisions relating to WAPDA, CCI and Electricity were not under consideration nor they were referred. These provisions have brought radical changes in the Constitutional structure, control and regulation of WAPDA by, CCI in matters of Electricity. Once these factors are taken into consideration, a new approach to the problem will have to be made which is bound to bring different result. With respect we may observe that the observations in the referred judgment relate to pre---Constitution position and is not relevant in the post-Constitutional dispensation. No judgment has been cited by the learned counsel for the respondents in which after taking into consideration the provisions of the Constitution referred above it has been held that WAPDA has the power to determine tariff and levy Surcharge and Additional Surcharge. The judgments cited by the learned counsel for the appellants only deal with the nature, importance and functions of CCI. Reference may also be made to M. Daud Khan v. Government of West Pakistan (PLD 1971 Lahore 462) approved in Muhammad Shafi (supra). In M. Daud Khan, the petitioner had entered into an agreement with WAPDA guaranteeing payment of minimum charge per annum for a period of 10 years. Before the expiry of this period WAPDA by a notification dated 15-7-1969 unilaterally varied the existing conditions to the disadvantage of the petitioner and introduced 14 different tariffs. The petitioner challenged in the High Court on the grounds that it amounted to novation of contract, could not be changed without the consent of the consumer, was hit by section 23 of the Contract Act, violated sections 22 and 23 of the Electricity Act, it was a tax and thus beyond WAPDA's authority and that it offended against principles of natural justice. The grounds of attack were based on the contractual aspect and not on the authority of WAPDA to fix and change the rate under section 25 of the'

WAPDA Act. In this case the new tariff was notified by WAPDA in the following manner:-- "In pursuance of the decision of Government of West Pakistan that WAPDA should achieve a return of 8 per cant.

On its average net assets, the power tariffs were examined and reviewed in a series of meetings. A revised tariff schedule has emerged as a result of this examination. It has been approved by the Martial Law Administrator, Zone "A", and it will come into effect from 1st of July this year. It is intended to review this tariff structure after about to years when it is expected that the position of implementation of major power projects in hand will become clearer and more definite. It .May be recalled that a Power Commission was set up by Government of Pakistan in 1961. As a result of consideration of its recommendations, it was decided by the Government of West Pakistan to constitute an Advisory Board for power rates in March, 1967. It consisted of Secretary to Government in the Irrigation Department, the Engineering Adviser to the Ministry of Industries, Deputy Secretary, Finance, Director of Agriculture, a Member of WAPDA and some others. It presented its report in May, The Board decided that the tariff should be rationalized. It has also considered that the rate of return obtained by WAPDA was inadequate inasmuch as the actual net profit after clearing interest liabilities amounted to about one per cent. Only in the year 1965-66, and in 1966-67 there was no profit at all, the accounts being closed with a deficit due to general power shortage and breakdown of the Multan Power House. The rates recommended by the Tariff Sub-Committee and approved by the Advisory Board were further considered by the Economic Co- ordination Committee, and were finalized after a series of meetings and sent up to the Martial Law Administrator and Governor The tariff was thus determined by the Martial Law Administrator and Governor after it was approved by the Advisory Board on the recommendations of Tariff Sub-Committee which was further considered by the Economic Coordination Committee. Thus the WAPDA had only notified the new enhanced tariff which was decided by the afore stated agencies and the Governor. It was however observed that section 25 of the WAPDA Act gives WAPDA "the authority to fix the' rates at which it shall sell power". Such observation was based on the background of the case with reference to the contract between the parties. Apart from this after the enforcement of the Constitution 1973 the Constitutional and legal position with .Regard to determination of rates has undergone a radical x change curtailing WAPDA's power to determine tariff. It follows that any enhancement in the existing rates or change of tariff as well is not within the domain of WAPDA. Such determination can be made only where CCI has formulated a Policy requiring any increase or change in the tariff.

24. The learned counsel for the respondents has referred to Wali Muhammad and another v. Karachi Development Authority (PLD 1979 Karachi 449), Pakistan Aluminium and Industrial Ltd. v. Karachi Metropolitan Corporation (1993 CLC 2226) and Ghulam Dastgir v. Muhammad Yar and 5 others (PLD 1987 Quetta 19). It was contended that in terms of contract between WAPDA and the consumers the former is entitled to fix, amend or enhance the rate or tariff. Reference has been made to clauses 26 and 27 of the Abridged Conditions, which read as follows:-- "26. Interpretation.--These conditions shall be subject to the Act and nothing in these conditions shall abridge or prejudice the right of the Department under Act of the Government of Pakistan or the West Pakistan or any rule thereunder.

27. Right of Department to revise Schedules of tariffs and charge and conditions of supply--Subject to Clause 26 above the Department reserves the right at any the to amend, cancel or add to any of these Schedules and Conditions.

" Both these provisions basically enshrine the rule that no person can contract out of statute. Any agreement made in conflict or contravention of law shall be void. Further it is well-recognized principle that a public authority cannot by agreement fetter its rights and discretion vested in it by law. Clause 26 makes the terms and conditions of the agreement subject to WAPDA Act and the right conferred by the said Act cannot be abridged or prejudiced by the agreement. Clause 27 is subject to clause 26. Therefore, although WAPDA to has reserved the right to amend, cancel or add to the conditions, it will always be subject to WAPDA Act and the law. Even such contractual power to amend, add or cancel the Schedule of Tariff and conditions is restricted within the provisions of law. All actions of WAPDA in this regard are subject to law. WAPDA cannot do under this agreement which it is not permitted to do under the law. Therefore the exercise of contractual authority to add or amend the schedule will have to pass the touchstone of the relevant Act. As discussed earlier WAPDA has no independent power to fix or enhance the rates or change Schedule of Tariff unless a policy to that effect has been approved by CCI. This is a Constitutional obligation which is superior to statutory and contractual obligations. All such obligations, duties and rights are subservient and subject to the Constitutional provisions. This Constitutional aspect was not considered in earlier judgment of this Court cited at the Bar nor was it adverted to in the impugned judgment.

25. In Babulal v. Chopda Electric Supply Co. (AIR 1955 Bombay 182) unilateral levy of additional surcharge on consumers under new head was struck down as it was imposed without the sanction of the Government or without approaching the rating Committee as required by section 57 read with clause (1) of Schedule of the Electricity (Supply) Act, 1948.

26. In this regard some other judgments of the Supreme Court of India may be examined which were referred during the arguments. In Indian Aluminium Co. v.. Kerala State Electricity Board (AIR 1975 SC 1967) the Electricity Board under agreements with the petitioner agreed to supply energy on fixed rate as Board was authorised under subsection (3) of section 49 to fix special tariff. The Board claiming that under the Act it has the power to fix and refix charges, revised the tariff and enhanced the rate. The Board pleaded the agreement was void as it hindered and fettered the power to fix and change the tariff.. This plea was rejected and the revised tariff was struck down mainly on the principle that since the stipulations contained in agreements were made in exercise of the statutory power to fix special tariffs conferred under subsection (3) of section 49, there could be no question of such stipulation being void as fettering or hindering, the exercise of the statutory lowers under that provision. It was further observed that under section 59 of the Electricity (Supply) Act, "the Board is directed as far as possible not to carry on-its operation at a loss and to adjust its charges accordingly from the to tune:".

Considering the nature of duties assigned to Board particularly to accelerate the rate of industrial growth and development in the State, it may have to supply electricity at a rate which may not meet the cost of generation and distribution, it was observed:-- "The Legislature, therefore, did not issue a rigid directive to the Board that it shall on no account carry on its operations at a loss, and if there is a loss for any reason whatsoever, it shall adjust its charges so as to wipe of such loss. But it merely administered a caution to the Board that ' as far as practicable' it shall not carry on its operations at a loss, that is, if it is 'practicable' for it to avoid operating at a loss by adjusting its charges, it should try to do so. That is why this Court pointed out in Maharashtra State Electricity Board v. Kalyan Borough Municipality (1968) SC 991) that "cost....Is not the sole or only criterion for fixing the tariff". Now, obviously, where, by a stipulation validly made under subsection (3) of section 49, the Board is under a contractual obligation not to charge any thing more than a specified tariff, it would not be 'practicable' for it to enhance its charges, even if it finds that it is incurring operational loss."

In this judgment although guidelines for managing finances were given, in every case the Board was not required to fix tariff to earn profits. Here binding force of the agreement was emphasized as it had statutory backing. In the present case there is nothing on record to show that the agreement relied upon by WAPDA had any statutory backing. In fact under the WAPDA Act there is no specific provision authorising WAPDA to enter into agreement to supply energy, fix and refix the rate at its discretion. Being a corporate body it can claim to have right to enter into contract but no power to fix and refix the tariff has been given. Section 25 being general in nature does nor carry anywhere and in any case it does not specifically authorise to fix and change tariff as provided by sections 49 and 59 of Electricity (Supply) Act, 1948 of India. Therefore, the agreement cannot have the same statutory force as in the Indian Aluminium Co.

27. The other case cited at the Bar is Rohtas Industries Ltd v. Chairman, B.S.E.B. Etc.(AIR 1984 SC 657) where the Electricity Board with specific power under section 49 of the Electricity (Supply) Act to fix different tariff having regard inter alia to the nature of service to any person not being licensee, levied fuel surcharge on particular category of consumers. The levy was held to be legal and not arbitrary inter alia for the reason that the Board was selling energy at rates which were lower than the actual cost incurred by it per unit of production. On the same reasoning and line the stipulation in the agreement with the Board to pay minimum guaranteed charges irrespective of whether energy was consumed or not was held to be valid and reasonable in Bihar State Electricity Board, Patna v. M/s. Green Rubber Industries (AIR 1990 SC 699). In Gulab R.I v. Municipal Corporation, Delhi (AIR 1990 Delhi 249), the petitioner had challenged the resolution of the Corporation respondent whereby it had approved the proposal of the Delhi Electricity Supply Committee to enhance the minimum guaranteed charges from Rs.40 per KWA to Rs.340 per KWA in respect of Arc Induction Furnace. The High Court held levy valid and not arbitrary. On facts and applying sections 22 and 23 of the Electricity Act, 1910 the increase was held to be reasonable. The increase in minimum guaranteed charges was justified as under sections 277 and 283 of Delhi Municipal Corporation Act, 1957, the Corporation has the power to fix the rates for supply of electricity and that the agreement also provided the same. Here also the Corporation, was specifically authorised by law to fix the rate. All the afore stated judgments as discussed are either distinguishable or do not apply to the present case.

28. Now we will turn to deal with the meaning and legal character of Surcharge and Additional Surcharge as given in several dictionaries, which are as follows:-- Balentine's Law Dictionary, 3rd Edition "an additional amount added to the usual charge, an exaction."

Black's Law Dictionary. 4th Edition "an overcharge; an exaction imposed or encumberance beyond what is just and right, and beyond one's authority and power." , lyer's Judicial Dictionary, 10th Edition "an overcharge of what is just and right.

The learned Judges of the High Court while referring to these meanings as well as to various authorities which will be discussed hereunder, observed that the nature of charge is the same as the levy in relation whereto it is imposed. In case it is levied with reference to rate and tariff, it will be an appendage thereof. It was further held that the Surcharge and Additional Surcharge have been imposed with reference to the tariff for consumption of electricity therefore the same is appendage/part of the tariff and nothing else although a different nomenclature has been given to it in the break-up of electricity bills separately. It is well-settled that mere nomenclature is not a decisive factor in determining the nature and meaning of Surcharge or charge. The Court must look to the attending factors and circumstances of the case, the reality involved in it, the conduct of parties, the manner and object of levy and then decide what in effect is this levy. The circumstances which have been relied upon by the appellants to show that the Surcharge is not a part of tariff are that WAPDA has deliberately not used the word 'tariff' and therefore the initial presumption is that apparently for purposes of public consumption and for consumers to whom the bills are sent, Surcharge and Additional Surcharge are different from tariff. As all the necessary information and documents are with the WAPDA, the burden is upon them to show that Surcharge and Additional Surcharge are part of the tariff. The specimen produced in the High Court which has not been denied, shows that Additional Surcharge and Surcharge are different from supply charges and therefore not part of the tariff. It is significant to note that fuel adjustment surcharge has been treated as part of the supply charge, but Surcharge and Additional Surcharge have been excluded from this category. In the written statement filed by WAPDA in the High Court, it was stated that the Surcharge and Additional Surcharge are not part of tariff. Under the Punjab Finance Ordinance, 1980, a duty had been imposed on consumption of electricity which was to be collected by WAPDA. While computing the duty the amount of Surcharge arid Additional Surcharge had been excluded from supply charge and no duty is charged on them.

These factors were pressed to show that Surcharge and Additional Surcharge on the face of it and by the conduct of WAPDA are riot supply charges or part of the tariff. Even in the document which according to Mr. Fakhruddin G. Ebrahim is an internal document, it has clearly been stated that Additional Surcharge is not part of the tariff. When one is required to go behind the nomenclature to find out the real intention of the party, these factors will materially influence the decision to find out the real nature. The learned counsel for the respondent and the learned Advocates-General and the Deputy Attorney-General seem to be of the view that if WAPDA is not recovering duty on Surcharge and Additional Surcharge and the Provincial Governments have not raised any objection to it, then the matter ends there. No, the matter does not end there. In fact this shows that the Provincial Governments have not objected to this manner of recovery and have impliedly accepted that Surcharge and Additional Surcharge as represented by WAPDA, are not part of the tariff. In not charging duty on Surcharge and Additional Surcharge the learned counsel for the respondent and learned Advocates-General of the Punjab and N.-W.F.P. Stated that it was a benefit 10 , conferred on the consumers with a view not to load them with financial burden. The law does not permit to dole out amounts to public on benevolent ground and show mercy. The West Pakistan Finance Ordinance imposes a duty on Supply Charges. It does not permit any such exception. The only conclusion which can legally be drawn is that the amount on which duty has not been charged is not included in Supply Charges. The authorities are duty bound to charge duty on supply charges.

They cannot exempt any amount on grounds of benevolence although it is supply charge. This is financial Mismanagement and maladministration. It is very strange that the authorities charged with duty to audit, check and scrutinize WAPDA's account have not raised any objection to this effect. This also shows that none of the authorities at different stages have treated Surcharge and Additional Surcharge as Supply Charge. Then why such a meaning should be adopted for consumers alone?

29. In this background we will now examine the judgments cited at the Bar. The respondents have relied on Sohail Jute Mills v. Federation of Pakistan (PLD 1991 SC 329). In this case the Court was to consider the question of levy of Iqra Surcharge as additional customs duty when in exercise of statutory powers under section 19 of the Customs Act, 1969, the Federal Government had already exempted the charging of the customs duties either wholly or partly. The Iqra Surcharge was held to be additional customs duty. The main reason being that first Surcharge introduced by Finance Ordinance, 1982 (Ordinance XII of 1982) in the following manner:- "Section 2. Surcharge on imported goods.--(I) There shall be levied and collected an additional customs duty as surcharge on the importation of goods specified in the First Schedule to the Customs Act, 1969 at the rate of 5 % of the value of the goods as determined under section 25 of the said Act.

Provided that for the purposes of the Sales Tax Act, 1951 the additional customs duty shall not constitute a part of the duty paid value. "

Finance Act, 1985 (Act I of 1985) imposed Iqra Surcharge by the following provision:- "Section 5..Igra Surcharge on imported goods.--(1) There shall be levied and collected an additional customs duty as Igra Surcharge on the importation of the goods specified in the First Schedule to the Customs Act, 1969 (IV of 1969), at the rate of five per cent. Of the value of the said goods as determined under section 25 of the said Act Provided that, for the purpose of the Sales Tax Act, 1951 (III of 1951), the additional customs duty shall not consti:ute a part of the duty paid value.

(2) The Federal Government, subject to such conditions, limitations or restrictions, if any, as it thinks fit to impose, may, by notification in the official Gazette, exempt any goods imported into Pakistan front the whole or any part of the additional customs duty leviable under subsection (1), and no exemption from payment of customs duty under the Customs Act, 1969, or any other law for the the being in force shall apply to the additional customs duty leviable under the said subsection. "

It was observed that Surcharge has been used in the charging provision, which would be complete only if it is read as an additional customs duty as surcharge on importation of goods specified in the First Schedule to the Customs Act. The levy was therefore held to satisfy in name and substance the strictest legal definition of customs duties. As regard Iqra Surcharge, it was observed:-- "16. In the Finance Act, 1985, the expression used was an additional customs duty as Iqra Surcharge on the importation of the goods specified in the First Schedule to the Customs Act, 1969. Here also , it was clear from the reading of the taxing provision that an additional tax was being imposed. It was in the nature of customs duty. It was to be distinguished as Iqra Surcharge. It was leviable on import of goods only such as were mentioned in the First Schedule to the Customs Act, 1969. "

30. It can be seen that Surcharge was imposed by Finance Ordinance, 1982, which clearly stated that the levy shall be an additional customs duty as Surcharge on importation of the goods. Therefore it had a direct link with the Customs Act and the customs duty. So is the case of Iqra Surcharge which has been described as additional customs duty imposed by Finance Act, 1985. In the present case the Surcharge and Additional Surcharge have not been levied or imposed by any enactment, but by an office order. The order itself does not state it to be part of the tariff. Although in the summary and documents produced by the learned counsel for the respondent, Surcharge and Additional Surcharge have been described as part of the tariff, on the principle discussed above, it is the real meaning which has to be seen instead of confining to a particular term. Thus one would be compelled to conclude that Surcharge and Additional Surcharge can hardly form part of tariff.

31. WAPDA is a pubic utility company whose object is to develop energy resources and to supply it to the consumers not like a commercial company, but a public utility corporation with an object to develop and serve the country. Its motive is not to earn commercial profit and pay dividend, but to charge reasonable rate without suffering any loss. Such a corporation should place the Summary for determining increasing tariff before its administering or consultative body, as required under law and not before any executive authority, committee or commission which is not authorised under law to determine tariff or levy Surcharge/Additional Surcharge. By adopting the later process and complying with their direction to levy Surcharge or increase tariff makes the entire levy illegal.

32. Mr. Fakhruddin G. Ebrahim has heavily placed reliance on M/s. Bisra Stone Lime Co. Ltd. v. Orissa State Electricity Board and another (AIR 1976 SC 127) in which levy of Surcharge was challenged by a consumer. After referring to the dictionary meaning of the word 'Surcharge' it was observed that "it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of Surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.....If the Surcharge is appended to a tariff it partakes of the character of tariff". The salient feature of this judgment is that the Board had specific power to fix or revise the rates under the Electricity (Supply) Act and unlike in the present case, the Board had taken the stand that Surcharge was an addition to the rates of tariff.

The respondents' stand and conduct had been that Surcharge and Additional Surcharge are not part of tariff.

They have taken a somersault during arguments which factually by their conduct, as discussed above, is belied.

Furthermore, WAPDA does not possess any power as was vested in the Board by statute.

33. Reference was also made to the Treasurer of Charitable Endowments in Pakistan v. Central Board of Revenue and 2 others (1986 MLD 1731). In this case the Finance Supplementary Ordinance, 1973 made amendment in the First Schedule of the Central Excise and Salt Act, 1914 adding in item 7 in addition to the duty leviable aforesaid, a flood relief surcharge shall be levied on sugar at the rate of Rs.27.50 per hundred weight". Exercising power under sections 3(4) and 37 of the Central Excises and Salt Act the Excise Duty on Production Capacity Sugar Rule was also accordingly amended. It was challenged mainly on the ground that as flood relief surcharge has not been defined by the Finance Ordinance as excise duty, the same cannot be collected under section 3(1) of the Act.

This contention was repelled and it was held that the words "in addition to the duty leviable as aforesaid, a flood relief surcharge shall be levied on sugar", leave no doubt that flood relief surcharge was to be levied as additional duty of excise. Here 61so the terminology used in the Ordinance and in the rules was completely different from the one used in the notification issued by WAPDA which clearly manifested that the flood relief surcharge was in addition to the excise duty. As the Finance Supplementary Ordinance itself provided that the flood relief surcharge shall be levied and collected as excise duty, nothing turned on the meaning of the word 'Surcharge'.

34. In order to show what was the real nature of surcharge and additional surcharge and the manner in which they were levied, Mr. Fakhruddin G. Ebrahim has taken us through various summaries, notifications and letters.

The summary of surcharge dated 19-11-1991 was entitled "Payment of Net Profit from Bulk Generation of the Hydel Electricity". It referred to the decision of CCI for payment of not profit on hydel generation to the Provinces by WAPDA and noted that a payment of 6.1 billion was involved in it. The Federal Budget did not make any provision and WAPDA expressed its inability to transfer the net profit. The summary recited as follows:-- "The matter was considered by the ECC which has recommended that WAPDA may be allowed to levy a fixed surcharge of paisas 8 per unit/KWH on all consumers, without exempting any class of consumers, so as to recover at least one-third of the amount payable i.e. Rs.2.0 billion. As a result of the increase in WAPDA charges, a corresponding increase will have to be made in Karachi Electric Supply Corporation (KESC)'s charges in view of the ECC decision to keep the rates of WAPDA and KESC at par. This charge will be adjusted against Government subsidy to KESC on FAC. Minutes of the ECC are at Annex. 1.

Ministry of Finance is of the view that the following options may be considered:--

(i) WAPDA may be authorised to levy a fixed surcharge of paisas 8 per unit on all consumers; or

(ii) WAPDA may be authorised to levy a surcharge equivalent to 2.5 % of the total tariff on all consumers every three months for the current financial year. Thus the proposed levy will be staggered in three small installments of December. February and April. The above arrangement would enable WAPDA to raise Rs.2 billion on an annualised basis."

The Cabinet after consideration authorised the Prime Minister to take appropriate decision on the above proposal. The Prime Minister decided for proposal in para. 4(ii) of the summary. Accordingly WAPDA issued a circular/notification dated 31-12-1991 which has been reproduced in para. 5 above. This notification speaks of surcharge @ 2.5 % on the "supply charges" on all electricity bills. Thereafter on 6-2-1992 surcharge was increased to 5.1 % on the supply, charge. Again on 22-3-1992 surcharge was increased @ "7.7 % on the supply charge". On 17-1-1993 the following telex was addressed by the Ministry of Water and Power, Islamabad to the Chairman, WAPDA:-- "M/O Water and Power IBD Telex Dated 17-1-1993 From: Ch. Fateh Muhammad, Section Officer To: Chairman, WAPDA, WAPDA House, Lahore.

Repeat: General Manager (Customer Services) WAPDA, Lahore.

No.- P1-4(12) 90-Vo1.V Dated 17-1-1993 Subject: Levy of Additional Surcharge at 2.5 % on all consumers of electricity Further to our correspondence on the above subject, Government has decided to levy an additional surcharge at the rate of 2.5 % on all consumers of electricity with effect from 16-1-1993 in addition to the existing surcharge of 7.5 % already levied. This surcharge will continue for future until a decision to the contrary is taken."

On 19-1-1993 WAPDA notified to various Chairmen, Area Electricity Boards the increase in Surcharge to the level of 10 % on supply charges as against existing 7.7% Sur barge w.e.f. 16-1-1993. On 17-2-1993, Ministry of Water and Power again addressed the following telex: "Ministry of Water and Power IBD TLX MSG No.180 Dated 17-2-1993 From: S.M. Junaid, Deputy Secretary (Power)

To: The Chairman, WAPDA, WAPDA House, Lahore RPT:- The Secretary WAPDA, WAPDA House, Lahore No: Pl-4 (12)/91-VPT SUB: Imposition of Surcharge at the rate of 2.5 w.e.f. 16-1-1993 in addition to the existing Surcharge Reference G.M. (Customer Services) Letter No.39--65/GMCS/Tariffs/T-21 (Vol.III), dated 19-1-1993 addressed to the various Chairmen, Area Electricity Boards on the subject noted above. It is reiterated that the Federal Government has approved the levy of surcharge of 2.5 % in addition to the existing 7.7 % thereby cumulative surcharge would be 10.4%. In the abovementioned letter the surcharge has been levied of 10% only. In order to implement the decision of the Federal Government and also in the order to bring it in line with the surcharge levied in the jurisdiction of KESC you are requested to please issue fresh instructions to the various Chairmen Area Electricity Boards to impose surcharge at the cumulative rate of 10.4. "

Complying with the direction surcharge was increased to 10.4 % by WAPDA on 1-4-1993. Therefore, at all material the WAPDA levied the surcharge under the instructions of the Federal Government.

35. The Ministry of Water and Power prepared a proposal stating that the Task Force had approved a proposal for levy of surcharge in electricity tariffs to meet the covenants of World Bank for achieving 40% I.C.G. It also approved increase in FAC from 70 paisas to 75 paisas. It mentions that such levy and increase "will achieve partial rationalisation and remove some of the distortions as required by World Bank and Asian Development Bank as conditionality for future loans". It further reads that the proposal has the approval of Government of Pakistan which should be implemented by WAPDA and KESC at once. It was approved by the Minister concerned on 8-9-1993. On the same day WAPDA issued to office orders, one revising FAC w.e.f. 12-8-1993 @ paisas 75 per unit. The other office order levied additional surcharge on all categories of consumers at the rates given there.

This additional surcharge of paisa 25/KWH was also made applicable to industrial supply consumers of Gadoon Amaza: Industrial Estate. All these levies were declared to have been made under section 13(1) read with section 12, subsection (5) of section 25 of the WAPDA Act. The purpose of these levies was to meet the World Bank Covenant for achieving 40% of ICG. WAPDA in a letter issued to Chairmen of Area Electricity Boards while intimating about the Additional Surcharge stated that "this additional surcharge" does not form part of "supply charges" and therefore it is not to be taken into account while working out 10.4 % Surcharge levied vide Memo.

No.353-79/GMCS/Tariff T21 (Vol.VIII) dated 1-4-1993 and 'Electricity Duty'.

36. The Advisor for Finance and Economic Affairs, Ministry of Water and Power, in a meeting held on 26-3-1994, directed to submit proposal for consideration of ECC for increase in electricity tariff due to increase in fuel prices.

Accordingly the Ministry submitted a summary dated 9-4-1994 suggesting three options. It also recorded the Minister's opposition for increase in tariff on the ground that "due to rise in price of all commodities and flour

(Atta) there will be considerable public resentment which would be capitalised by disruptive elements to motivate strike and demonstration. The increase in price of furnace oil although international price of fuel oil had declined sharply and the proposed increase in the electricity tariff would not proportionately generate additional revenue but would lead to increased theft and administrative corruption". The ECC considered the summary and by a decision dated 3-5-1994 deferred any change in electricity tariff till the budget. Proposals were required to be re-examined. It further decided that Chairman, WAPDA should take immediate steps to improve efficiency and sort out corruption and maladministration in WAPDA. Energy leakages should be prevented. Action should be taken against inefficient and corrupt employees. Thereafter due exercise was carried out for increase in the tariff and six scenioros were prepared. On 7-11-1994 the ECC decided as follows:--- "The Economic Coordination Committee of the Cabinet approved with immediate effect the following increase in the tariff rates for various categories of domestic consumers: Slabs % increase in tariff

(i) 1-50 5

(ii) 51-150 7

(iii) 151-300 10

(iv) 301-1000 12

(v) 1000-2000 15

(vi) 2001-3000 20

(vii) 3001-4000 24

(viii) above 4000 26 II. The Principal Secretary to the Prime Minister should call Chairman, WAPDA and convey to him the necessity of improving recovery of arrears from the defaulters and cutting down the losses. He should be asked to take immediate steps to root out inefficiency and corruption.

III. WAPDA should return to the Government Rs.3 billion made available from the Privatization Fund."

By letter dated 24-11-1994 the Ministry of Water and Power conveyed the decision to WAPDA for implementation.

A notification dated 24-11-1994 was issued by WAPDA notifying new schedule of tariff w.e.f. 17-I1-1994, but by notification dated 6-2-1995 effective date was changed to 24-11-1994.

37. After this increase a summary was submitted to the Prime Minister entitled "Increase in Consumers' Tariff for 1995-96", reads as follows:--- "SUMMARY FOR THE PRIME MINISTER Sub: INCREASE IN CONSUMER TARIFF FOR FY 1995-96 The Water and Power Development Authority (WAPDA) has forwarded a proposal for the increase in consumer tariff for the fiscal year 1995--96 for approval by the Government of Pakistan (Annexure-A). The proposal is based on the following assumptions:---

(i) An investment plan of Rs.34,548 million including funds for the Ghazi Barotha Power Project will be met by WAPDA through its internal cash generation and borrowings, without recourse to the Government of Pakistan.

(ii) WAPDA will pay hydel profit of Rs.6,000 million to the Provinces from its own resources.

(i.e) WAPDA will meet all its debt servicing obligations budgeted at Rs.26,557 million including those to the Federal Government.

(iv) WAPDA will meet its payment obligations towards oil and gas companies supplying fuel to it.

(v) An amount of Rs.3,000 million will be repaid to the Privatization Commission.

(vi) WAPDA will retire its short-term liability of US$ 100 million borrowed during the year 1994-95 ,

(vii) An increase of 24% in gas prices and 5% in the prices of furnace oil will be absorbed by WAPDA.

(viii) WAPDA will meet its financial covenants agreed with the World Bank which include a 40 % internal cash generation and a debt service coverage ratio of 1.5 times.

2. After meeting all the financial obligations listed above, WAPDA has proposed an increase of 21.2% in the existing tariff. (21.7% if furnace oil rates are increased by 10 %

3. A more acceptable alternative would be to make the following adjustments to limit the increase:---

(a) An amount of Rs.3,000 million due to the Privatization Commission may be written of/deferred. This will result in a reduction of 4.5 % in the increase demanded.

(b) The profits payable to the Provinces may be maintained on the existing level of Rs.4,644 million for one more year as was done in the previous years. This will result in a further reduction of 2.25 % in the consumer tariff.

4. It is recommended that WAPDA may be allowed an increase of 14.5 over the current tariff for the fiscal year 1995-96 after taking into account the adjustments suggested in para. 3 above. The above tariff will also apply ipso facto to KESC for FY 1995-96, as is practice.

5. Approval is requested for the tariff increase suggested in para. 4 above. It is further proposed that Chairman, WAPDA may be allowed to announce the increase in tariff at Lahore at a suitable date and the immediately after the announcement of budget. We are of the view that this may be done on Saturday, June 17, 1995.

6. The Minister for Water and Power is away from Islamabad and could not be contacted.

(Sd.)

(M. SALMAN FARUQUI).

SECRETARY WATER AND POWER."

In pursuance of the decision of the Cabinet made on 14-6-1995, which has been reproduced in para. 7 above, WAPDA referring to the same provisions as in earlier notifications enforced new schedule of tariff with immediate effect. In C.A. No.92/1996 WAPDA had filed a specimen bill under the old and new tariff (domestic), which spells out the increase and are reproduced below:

(I) SPECIMEN BILLS GOVERNED UNDER TARIFF A ---1 (DOMESTIC) (NEW)

AFTER 9-7-1995.

Units Energy charges Fixed charges Fuel Adjustment Surcharges Supply Charrhangeas Cols.

2+3+4 Supply Rs.10,43 Of Col.5, Additional Surcharge Total WAPADA Charges Columns 5+6+7Electricity duty 7 % of Col.2 Income Tax Grand Total 1 2 3 4 5 6 7 8 9 10 11 50 27.00 3.50 30.50 3.17 14.00 47.67 1.89 50.00 150 95.00 10.50 105.50 10.98 60.00 176.48 6.65 183.00 300 210.00 33.00 243.50 25.33 180.00 448.83 14.74 464.00 1000 930.00 558.00 1538.50 160.01 1,181.00 2879.51 68.64 2,946.00 2000 2450.50 1308.00 3758.50 309.88 3101.00 7250.38 171.54 7,422.00 3000 3920.50 2058.00 5978.50 621.76 5181.00 11761.26 274.44 12,056.00 4000 5390.00 2808.00 8198.50 852.64 7411.00 16462.14 377.34 16,839.00 5000 6860.00 3558.00 10415.00 1083.47 9781.00 21282.00 480.24 21,763.00

(II) SPECIMEN BILLS GOVERNED UNDER TARIFF A ---1 (DOMESTIC) (OLD)

BEFORE 9-7-1995.

Units Energy charges Fixed charges Fuel Adjustment Surcharges Supply Charrhangeas Cols.

2+3+4 Supply Rs.10,43 Of Col.5, Additional Surcharge Total WAPADA Charges Columns 5+6+7Electricity duty 7 % of Col.2 Income Tax Grand Total 1 2 3 4 5 6 7 8 9 10 11 50 27.00 3.50 30.50 3.17 9.50 43.17 1.89 45.00 150 95.00 10.50 105.50 10.98 36.50 152.95 6.65 160.00 300 210.00 33.00 243.50 25.33 93.50 362.33 14.74 377.00 1000 930.00 558.00 1538.50 160.01 464.50 2163.01 68.64 2,232.00 2000 2450.50 1308.00 3758.50 309.88 1124.50 5273.38 171.54 5,445.00 3000 3920.50 2058.00 5978.50 621.76 1914.50 8514.76 274.44 8,789.00 4000 5390.00 2808.00 8198.50 852.64 2784.50 11835.64 377.34 12,213.00 5000 6860.00 3558.00 10415.00 1083.47 3744.50 15246.50 480.24 15,727.00

38. One significant aspect is that all the levies made from the to the were the result of exercise undertaken by the Ministry of Power and Water, Task Force and ECC, which was finally decided by the Cabinet. At no stage CCI was involved in the exercise. Not even a reference was made to it. As observed earlier the CCI has the executive authority over WAPDA and not the Federal Government. It will be violation of Constitutional obligations, duties and command to ignore, bypass or failure to refer the matter to CCI even under the mistaken belief that it does not concern CCI.

39. Mr. Khalid Anwar has contended that where any discretion is vested in any authority, unless otherwise provided by law, it should be exercised by it by applying its independent mind and should neither at on instructions or dictates of any other authority nor delegate its power. The learned counsel has referred to Administrative Law by Wade, 6th Edition, page 357, which reads as follows:--- "An element which is essential to the lawful exercise of power is that it should be exercised by the authority upon whom it is conferred, and by no one else. The principle is strictly applied, even where it causes administrative inconvenience, except in cases where it may reasonably be inferred that the power was intended to be delegable. Normally the Courts are rigorous in requiring the power to be exercised by the precise person or body stated in the statute, and in condemning as ultra vires action taken by agents, sub-committees, or delegates, however expressly authroised by the authority endowed with the power. "

40. Reference has also been made to Administrative Law by Basu, in which it has been stated that "the. General rule is that where a statute directs that certain acts shall be done by a specified person; their performance by any other person is impliedly prohibited". This rule is so well-settled that needs no further elaboration. Any authority vested with a discretion must exercise it himself by applying his independent mind uninfluenced by irrelevant and extraneous considerations. He should neither accept any dictation nor delegate his authority to any other person. Violation of these rules for exercise of discretion will render such decision illegal. If the argument that WAPDA has independent power under section 25 of the WAPDA Act to determine rate/tariff, then it has defaulted in exercise of its power and discretion by accepting the dictates of Task Force, Ministry of Water and Power and ECC approved by the Prime Minister ignoring CCL.

41. Mr. A.H. Pirzada, Mr. Khalid Anwar and Mr. Muhammad Akram Sheikh have contended that where discretion is vested by statute in wide terms, it needs restructuring and the discretion is to be exercised in a cautious and open manner. References has been made to Waris Meah v. The State and another (PLD 1957 SC 157), Brig. (Rtd.)

F.B. Ali and another v. The State (PLD 1975 SC 56), Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Co. Ltd. (PLD 1991 SC 141) and Inamur Rehman v. Federation of Pakistan (1992 SCMR 563). The rules for structuring discretion have been summed up by Shafiur Rehman, J. In Chairman," Regional Transport Authority when he observed:--- "The seven instruments that are most useful in structuring discretionary power are open plans, open policy statements, open rules, open finding, open reasons, open precedents and fair informal procedure. "

WAPDA has hardly followed anyone of the rules enumerated above Assuming that WAPDA has the power to determine tariff, it failed to exercise discretion, kept all material secret, internal nothings and public pronouncements were different and irrelevant considerations were dominant. It may not be out of place to mention that although pointed out by the Minister and Secretary, loss of revenue by theft of electricity, high loss in transmission, administrative corruption and failure to recover arrears of charges were never taken into consideration for assessing the financial position and entire emphasis was on foreign loan and commitment to foreign agencies. These irregularities pointed out above are borne out from the documents produced by WAPDA, but it did not supply any material to identify the extent of such losses nor offered at explanation to these aspects and information which were in its possession. Mere production of audited account or tailored statements can hardly provide any defence to such serious charges of irregularities pointed out by the authorities concerned. In the face of such accusations it was not the duty of appellants to produce material to substantiate them. The defence must come from WAPDA which it failed to produce. The provisions in WAPDA Act for audit and laying down accounts before the Assembly seem to be mechanical and illusory.

42. To make exercise of discretionary power valid it is necessary that apart from being legal it is also' reasonable.

While conferring discretion on an authority the statute does not intend to arm such Authority with unfettered discretion which may be beyond the limits of reason, and comprehension of a man of ordinary intelligence.

Wade in Administrative Law has traced the principles of reasonableness which according to him is firmly established at least from 16th century and has quoted Rooke's case (1598) 5 Co. Rep. 99b where the Commissioner of Sewers had levied charges for repairing a river bank on one adjacemt owner instead of apportioning it among all the owners, who had benefited. Although the power to levy charge was there, it was disallowed as inequitable and unreasonable. Coke observed:--- "....And notwithstanding the words of the commission give authority to the commissioners to do according to their discretions, yet their proceedings ought to be limited and bound with the rule of reason and law. For discretion is a science or understanding to discern between falsity and truth, between wrong and right, between shadows and abstance, between equity and colourable glosses and pretences, and not to do according to their wills and private affections; for as one saith, talis discretio discretionem confundit. "

This view has prevailed throughout till the modern times.

43. In Brean v. Amalgamated Engineering Union (1971) 2 QB 175) Lord Denning MR. Observed as follows:--- "The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law.

That means at least this; the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith, nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food which, is a landmark in modern administrative law."

44. The exercise of discretion by executive or quasi judicial authorities and its judicial review has always been agitating the minds and thoughts of jurists and judges. However, it is well-settled that even in cases where authorities have been given wide power and discretion, they have to at reasonably, fairly and without any ulterior motive. In Pyx Granite Co. Ltd v. Ministry of Housing and Local Government (1958) 1 QB 554) while considering the provisions of section 14(10) of the Town and Country Planning Act, 1947 which empowered the authorities to impose 'such conditions as they think fit' while granting permission to develop, Lord Denning observed:--- "Although the planning authorities are given very wide powers to impose 'such conditions as they think fit', nevertheless the law says that those conditions, to be valid, must fairly and reasonably relate to the permitted development. The planning authority are not at liberty to use their powers for an ulterior object, however, desirable that object may seem to them to be in the public interest."

45. The fairness is reflected if the action does not suffer from partiality, discrimination, arbitrariness, bias and is not manifestly unjust. In Kruse v. Johnson (1898) 2 QB 91) while dealing with the unreasonableness of by-laws, it was observed:--- "If, for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad- faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the Court might well say, 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires'. "

The rule of reasonableness is so embedded in the jurisprudence that even where statute confers arbitrary powers on any authority, it is to be read in such statute that the authority while exercising its discretion shall at reasonably. The reasonableness of any action by an authority is eroded where it acts with improper motive, on irrelevant considerations, or without regard to relevant considerations, allowing the dictates of others instead of applying its own independent and judicious mind or delegates unless provided by law or surrenders its power to any other authority whether it is superior, equal or inferior to him

46. The Courts when examining the validity of any action of any authority, on ground of reasonableness must examine the nature, object and scheme of the statute, the exact parameters within which power has been conferred and also the manner in which the authority has exercised such power. The exercise of discretion will be reasonable if it takes into consideration the conditions or the qualifications required by law to be considered or complied with before making any decision. Any extraneous, consideration or completely unreasonable view which may shake the conscience of a man of common intelligence cannot be called a reasonable action or reasonable exercise of discretion. The true test of reasonable exercise of discretion has been laid down by Lord Greene MR in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948) KB 223 at 229 as follows:--- "It is true that discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warringten LJ in Short v.

Pooie Corporation (1926) Ch. 66 give the example of the red-haired teacher, dismissed because she had red hair. This is unreasonable in one sense. In another it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another. "

47. In cases of public utility corporations the authority has also to take into consideration public interest as well.

Wade in his aforesaid book has analysed this situation in the following words:--- "The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependants dispose of his property just as he may wish. He may at out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. So a City Council acted unlawfully when it refused unreasonably to let a local rugby football club use the city's sports ground, though a private owner could of course .Have refused with impunity. Nor may a local authority arbitrarily release debtors, and if it evicts tenants, it must at reasonably and 'within the limits of fair dealing'. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good."

48. A public authority or corporation is a creature of statute and its sphere of activities and actions are circumscribed by the relevant law. Such juristic person is permitted to do what it is authorised to do by law, unlike a human being who is permitted to do what he is not forbidden by law to do. The corporation created by statute mainly for public purpose with the object of rendering service, providing facilities, conveniences and amenities to public, are required to mould their decisions and actions within the frame of law for the benefit of public. De Smith in Judicial Review of Administrative Action, Fourth Edition, at page 317, observed as follows:--- "A public authority cannot effectively bind itself not to exercise a discretion if to do so would be to disable itself from fulfilling the primary purposes for which it was created. It has been said that ' if a person or public body is entrusted by the Legislature with certain powers and duties expressly or impliedly for public purposes, those persons or bodies cannot divest themselves of these powers and duties. They cannot enter into any contract or take any action incompatible with the due exercise of their powers or duties'. So to at would be 'to renounce a part of their statutory birthright'.

49. On the basis of the above principle the decision of WAPDA to levy Surcharge and Additional Surcharge (assuming that it has power to levy it) suffers from legal infirmity, having abdicated its power and being dictated by the executive authorities which do not have the power to determine rates of tariff, Surcharge or Additional Surcharge. Further, the purpose and object for such levy is also beyond the pale of statutory framework under which WAPDA was created and operates. These levies do not serve public interest.

50. WAPDA has filed several documents during hearing, which include the comparative statement of electricity tariff for domestic consumers in various countries and statement showing comparative list of domestic consumers using 300 units per month in Pakistan. On 9-7-1995 for 300 units the total bill is Rs.449 at an average rate of Rs.1.50 kwh. In Punjab, India it is Rs.442 at an average rate of Rs.1.47 kwh. In Hariyana the bill for Rs.556 comes to an average rate of 1.85 rupees/kwh. In Rajisthan for 300 units the bill is Rs.305 1.02/kwh while in Singapore it comes to 3.65 and in Marginia, U.S. It is 4.06. According to the specimen bill filed in the High Court, for 300 units the total bill comes to Rs.458.81 comprising of energy charge at Rs.210.50, Rs.33 fuel adjustment charges while surcharge is Rs.25.33 and additional surcharge comes to Rs.180. In respect of consumption of 2000 units the energy charge is Rs.2,450, fuel adjustment charges Rs.1,038, surcharge Rs.390.88 while additional surcharge is Rs.3,101 and after adding duty the total charge comes to Rs.7,422. In the case of 5000 units while energy charge is Rs.6,860, fuel adjustment charges Rs.3,558, the surcharge is Rs.1,083.47 and additional surcharge is Rs.9,781 and after adding electricity duty it comes to Rs.21,763. It can be seen here that the additional surcharge is one and a half times more than the energy charges. WAPDA has also filed statement of receipts and applications of revenue and also operations, general establishments and commercial expenses, but at the moment it cannot be examined or scrutinized from auditing point of view. In the comparative statement of power system losses in Asian countries, the system loss of WAPDA is 21.59 % while in Afghanistan, Bangladesh, Burma and Nepal losses range between 23 % to 35 % but in Sri Lanka it is 16.70 % , Singapore 3.44 % , Malaysia 11.25 % , Indonesia 16.84 % , Hongkong 4.16 % and China 7.52 % . In countries lesser developed than Pakistan, transmission and distribution loss is higher. This statement does not contain the system loss in India.

WAPDA has shown transmission and distribution loss, but has not clarified whether it includes theft losses as well.

In a recent report in The Nation dated 4-3-1996 Islamabad, it has been stated that 2273 million units of power were stolen inflicting a loss of approximately Rs.3.75 billion to WAPDA during the first quarter of fiscal year 1995-

96. In the summaries and comments as well as the observations made in the impugned judgment, serious note has been taken of losses by theft, corruption in administration and it is assessed that they are so wide and great that if they are controlled, there may be no need for levy of Surcharge or Additional Surcharge. A comparative statement can be relevant if it is scrutinized by referring to all the relevant facts and circumstances. If in an organization theft, corruption, maladministration, heavy administrative expenditure are involved, which are causing loss, then there is no justification to make up those losses by imposing high levies on consumers. Except that the system loss has been reduced by 1% nothing has been brought on record how and what arrangements have been made to minimise the theft loss. The collection of arrears which runs in billions from institutions and Governments and streamlining its own administration to eliminate corruption. Considering all these facts, one may be persuaded to conclude that the decision to levy surcharge or additional surcharge in the name of payment of debt servicing charges and for payment of royalty and construction of Ghazi Brotha can hardly stand the test of reasonableness.

51. Mr. Khalid Anwar contended that from the summary placed before the Cabinet it is clear that the reasons and grounds advanced for increase in tariff or levy of Additional Surcharge relate to policy matter of higher level.

52. A perusal of the summary will show that the basis for increase in tariff is the investment plan of Rs.34,548 million including funds for Ghazi Brotha Power Project, payment of hydel profit of Rs.6,000 million to the Provinces, debt servicing obligations amounting to Rs.26,556 million, retirement of short term liability of U.S.$ 100 million and to comply with financial covenants agreed with the World Bank which include a 40% internal cash generation and debt service coverage ratio of 1.5 times. All these matters on the face of it relate to subject in which the decision is not to be taken either by WAPDA or by the Federal Government. They relate to the policy at the highest level to be decided by such person, institution, or department which is authorised under the Constitution and law to make decision on the proposals and to implement them. In fact it is CCI which is entrusted with such job under the Constitution and any decision made on such policy matters without reference to CCI would be completely unconstitutional and without any lawful authority.

53. We will now consider the alternative argument of the learned counsel for the appellants that even if it is competently made, it is unreasonable and should not be allowed to operate. In this regard reference has been made to the specimen bills which have been reproduced above. It shows astronomical rise in the total bill and at one stage of higher slab the Surcharge and Additional Surcharge surpass the supply charge by many a the. The basis for levying Additional Surcharge inter alia is collection of funds for Ghazi Brotha, payment of net profit to the Provinces and payment of debt servicing charges. So far payment of Ghazi Brotha is concerned, it amounts to collecting fund from the consumers for establishing another power project for future. This can hardly be an object for which Additional Surcharge can be levied. Surcharge and Additional Surcharge or an increase in tariff should have nexus with the supply of electricity and the supply charge within the framework and limitations provided in section 25(2). Any levy or imposition which does not meet this requirement will have no legal sanction and cannot be termed as reasonable levy.

54. We now revert to the appeals and petitions arising from the judgment passed by the Peshawar High Court.

The facts have already been stated, suffice to add that these appeals are in to categories; one in which the appellants had filed writ petitions against the levy and imposition of Surcharge, Additional Surcharge and Fuel Adjustment Surcharge and in the alternative they claim 50% rebate on electricity tariff and even on Surcharge, Additional Surcharge and Fuel Adjustment Surcharge. In the second category besides claiming these reliefs the negative list and subsequent action taken have been challenged. So far the first category is concerned, observations made hereinabove will apply to the legality of imposition and levy of Surcharge and Additional Surcharge. So far Fuel Adjustment Surcharge is concerned, learned counsel have not challenged it before us. The question remains whether the appellants are entitled to 50% concession in case the Surcharge and Additional Surcharge are held to be a valid levy. Since we have held that WAPDA had no authority to impose Surcharge and Additional Surcharge, the question of 50% concession on it does not arise and need not be dealt with.

55. Reverting to the appeals relating to the negative list, it has been pleaded by the appellants that the respondents have bifurcated in Industrial units of Gadoon Amazai in to categories, namely (1) the units which are not included in the negative list shall continue to avail 50% concession on the normal applicable tariff as stated in letter dated 3-6-1987 and this concession would continue up to 2-6-1997, and, (2) the industrial units which were included in the negative list and were not allowed 50% rebate on electricity after 8-3-1995. This has affected 24 appellants (C.A.Nos.12, 22, 25, 29, 30, 31, 32, 33, 37, 56, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72 and 73 all of 1996). Before withdrawing concession and issuing negative list a summary was prepared for ECC regarding electricity tariff applicable to Gadoon Amazai Industrial Estate, N.W.F.P. It is revealing and sums up the case of WAPDA to justify that such a list does not offend any provision of the Constitution or the statute. The summary reads as follows:--- "Draft Summary for ECC regarding Electricity Tariff applicable to Gadoon Amazai Industrial Estate, N. W . F. P.

1. In order to enforce ban on poppy cultivation in Gadoon Amazai area, the Government of Pakistan decided in October, 1986 to establish an Industrial Estate which would, amongst various other incentives, provide electricity at 50% of the existing industrial tariff. WAPDA protested against this decision but in deference to orders of the Government issued necessary notification vide Secretary, WAPDA No.2125/GMD/Tariffs/T-78 dated 3-6-198".

2. It may be noted that WAPDA has the and again been requesting the Federal Government to reconsider this concession which is causing a drain of 120 millions of rupees on WAPDA's financial resources each year. It was stated that WAPDA could neither bear this loss due to its very difficult liquidity position and its international commitment for self-financing nor penalize other consumers as a result of this cross subsidy.

3. The basic idea of the Government to provide incentive was to bring in the area for general uplift of the population affected by the ban on poppy cultivation. This purpose could have best been achieved through development of labour-intensive industry but cashing on the highly favourable rates of electricity in the area, the energy intensive industry like steel furnaces, steel re-rolling, plastic industry etc. Started shifting from various parts of the country to the Industrial Estate of Gadoon Amazai in N.-W.F.P. This defeated the very purpose of the Government incentives and rendered similar industries in other areas of the country uncompetitive.

4. Particularly, the steel furnace industry not only brought a heavy financial burden because of subsidy but also affected the stability of the power system due to concentration of heavy fluctuating lead of steel furnaces. Due to unbalanced load of Arc Furnaces in particular and Induction Furnaces in general, one of the windings of the power transformers to which this load is connected is continuously overloaded exposing it to ultimate damage.

Besides, there are excessive 'Voltage dips because of switching surges. The worst of all are the harmonies specially in Arc Furnaces which distort the waveform and disturb all the electronic equipment of the nearby communication system, protection system, etc., affecting the quality and reliability of service. In case of the close proximity of a power station this effect is much more pronounced and can cause damage to the sensitive installation in the power station. It so happens that Tarbela Power Station is situated next door to Gadoon Amazai and that is no ordinary power station to take risks with.

5. The Government of N.W.F.P. Was approached to impose a ban on the steel industry in the Estate which was acceded to but was `not rigidly enforced and the steel industry having been brought on the negative list was removed from the list. The concession being availed by the steel industry in this area has completely disturbed the steel market and there have been a number of protests from Pakistan Steel Melters Association to stop approval of additional steel furnaces in the Gadoon Atnazai Industrial Estate.

6. Since a considerable period of the (about 7 years) has elapsed after the establishment of Industrial Estate of Gadoon Amazai, and an infant industry requiring protection from competition by the established firms may grow mature over such a long period, there is no justification for continuing various sorts of concessions for an indefinite period. T11at is why CBR and other financial institutions have discontinued various types of concessions allowed by them in GAIE in 1993. 1` any concession has to be allowed to GAIE then WAPDA should be compensated by the Federal Government or Provincial Government of N.W. F. P.

7. Recommendations: It is, therefore, recommended that: The energy-intensive industry like steel furnaces, steel re-rolling' mills and plastic industry etc. Be put on negative list for all times to come as the current production of these industries is far in excess of the requirement.

Since steel furnace usually recovers its total investment within the first to to three years of its operation, the subsidy to the existing steel furnaces may be withdrawn on completion of their operation of five years.

Concession of 50% may be limited to the first 15% of the monthly bill of steel industry (Le. Energy Charges, M.D.I., F.A.S., Low Power Factor Penalty). The concession may be reduced to 25 % for the next 10% of the consumption and the concession may be eliminated altogether for the balance.

The revenue loss on account of the provision of this subsidy to consumers may be compensated to WAPDA by adjusting the revenue so lost, against the net profit on hydle power generation being paid to Government of N.- W.F.P.

8. Economic Coordination Committee of the Cabinet is requested to accord approval of the recommendations contained in para.7 above."

Mr. Pirzada and Mr. Yousuf Zai, learned counsel for the appellants have contended that the appellants have established the industry on the representation made by the respondents that certain concessions shall be granted to them. Such incentives according to the learned counsel were given merely to eliminate poppy growing in the area and for providing alternative employment to the local population. The learned counsel contended that in the facts and circumstances of the case withdrawal of 50 % concession is hit by the principles of promissory estoppel. Before considering this aspect we may examine whether withdrawal of concession is reasonable.

56. The representations contained in various letters and notifications have been reproduced in the opening part of the judgment. It is an established fact that the appellants had not demanded any concession, but it was offered to them for establishing industry in a far of underdeveloped area. The purpose was to eliminate poppy cultivation which is a source of manufacturing heroin and for which international pressure was also exercised and aids were also offered by international agencies. Therefore, these concessions cannot be equated with those concessions which the Government grants of its own under certain provision of law like Sales Tax Act, Customs Act, Excise and Salt Tax Act, etc. Under the provisions of these statutes the concessions or exemptions are granted as a matter of policy of the Government and also to provide incentive to industry, trade and commerce: The concessions/incentives in the shape of offer and representation are at a more firm pedestal than the exemptions granted under the statute without any representation made to a third party. The question raised whether this concession should continue for all times to come or for any limited period. The learned counsel for the parties have not disputed that no period was fixed and therefore they also agree that the period of concession should be a reasonable period in the circumstances of the case. WAPDA has put up summary to prove its bona fides and reasonableness in bifurcating the industries and issuing the negative list. The industries in the negative list inter alia include steel and plastic industries which. According to WAPDA consume higher electricity. They are more power consuming industries than labour oriented industries. It has also been pointed out that taking advantage of the concessions several industrialists are rushing to Gadoon Amazai Industrial Estate to establish such industry, which was causing dis-balance and a drain of 120 billion rupees on WAPDA's financial resources each year to which WAPDA had showed its inability to bear in the difficult liquidity position and its international commitments. Due to unbalanced load of arc furnaces in particular and induction furnaces in general the power transformer to which this load is connected is continuously overloaded causing damage to it. There are excessive voltage dips caused by switching surges which disturb the electronic equipment of the nearby communication system affecting the quality and reliability of service. The object of providing incentive was to develop industries in the area for general uplift of the population affected by the ban on poppy cultivation. Such purpose has partly been achieved and in the circumstances to achieve such object to the maximum, stress should be given on labour-oriented factories and industries instead of power consuming industries. It was also taken into consideration that the concession to such industry had been allowed and protection was given to them for about seven years and therefore it was reasonable and proper that these concessions and incentives from such industries be withdrawn.

57. On the other hand the appellants have mostly relied on the representation and have not brought anything on record to show that the grounds pressed by WAPDA were not correct or were unreasonable. Where concessions have been granted on particular representation without fixing the the limit, the authority granting concession can on reasonable grounds and taking into consideration facts and circumstances of the case, fix a reasonable the limit for such concession. According to the learned counsel the the limit fixed is not reasonable. We are unable to subscribe to this view. The facts stated above justify that withdrawal of concession is reasonable.

However, one aspect which requires consideration is that by letter dated 22-3-1995 50% concession given to industries excluded from the negative list was to continue up to 28-8-1999. By a subsequent letter dated 8-3- 1995 concession of 50% of electricity tariff in respect of industries not included in the negative list was ordered to rte curtailed to 2-6-1997. This decision was taken hardly within to weeks of issuing the negative list. Nothing has been shown that within a period of to weeks conditions and circumstances had arisen which compelled WAPDA to curtail the period. This may be unreasonable but Mr. Fakhruddin G. Ebrahim the learned Sr. ASC has pointed out that as the appellants were notified in March, 1995 limiting the period of concession to 2-6-1997, it was a sufficient notice and no objection can be taken on this ground. It is well-settled that concession can be withdrawn provided requirement of law are complied with. Reference can be made to Mian Nazir Sons Industries Ltd. And another v. Government of Pakistan and others (1992 SCMR 883). The respondents have withdrawn concession on reasonable ground and have given notice of such withdrawal well ahead of the cut of date, which is not arbitrary or unreasonable. The withdrawal therefore cannot be challenged on this plea as well.

58. The learned counsel for the appellants contended that there was no rationality in issuing the negative list, but as observed earlier sufficient material has been produced to justify that reasonable grounds existed for such action.

59. The .Learned counsel then contended that the grant of concession was a vested right and in view of the representations made the respondents were estopped from issuing negative list or curtailing the period for enjoying the concession. Only 20 industries were picked up by the executive order which according to the learned counsel suffers from violation of principles of equality contained in Article 25 and the principles of promissory estoppel. So far the question of equality before law is concerned, the learned counsel has referred to the following judgments:---

(1) Waris Meah v. The State (PLD 1957 SC 157).

(2) Brig. (Rtd.) F.B. Ali and another v. The State (PLD 1975 SC 506).

(3) Shireen Munir and others v. Government of Punjab (PLD 1990 SC 295).

(4) I.A. Sharwani and others v. Government of Pakistan (1991 SCMR 1041).

(5) Ziaullah Khan and others v. Government of Punjab and others (PLD 1989 Lahore 554).

(6) Baluchistan Bar Association v. Government of Baluchistan (PLD 1991 Quetta 7).

(7) Inam-ur-Rehman v. Federation of Pakistan (1992 SCMR 563).

(8) Government of Baluchistan v. Azizullah Memon.

(9) The Employees of the Pakistan Law Commission v. Ministry of Works (1994 SCMR 1548).

(10) The Board of Trustees of the Federal Employees Benevolent Fund and another v. Nazir Alam Shah (1996 SCMR 1073), and

(11) Mst. Zohra v. Government of Sind (PLD 1996 Karachi 1).

The principles of equality before law have been enunciated in these authorities in detail and need not be discussed here. On assessm ent of various authorities the main principles governing the equality clause were enumerated by Ajmal Mian, J. In I.A. Sharwani as follows:---

(i) that equal protection of law does not envisage that every citizen is to be treated alike in all circumstances, but it contemplates that persons similarly situated or similarly placed are to be treated alike;

(ii) that reasonable classification is permissible but it must be founded on reasonable distinction or reasonable basis; (i.e) that different laws can validly be enacted for different sexes, persons in different age groups, persons having different financial standings, and persons accused of heinous crimes;

(iv) that no standard of universal application to test reasonableness of a classification can be laid down as what may be reasonable classification in a particular set of circumstances, may be unreasonable in the other set of circumstances;

(v) that a law applying to one person or one class of persons may be constitutionally valid if there is sufficient basis or reason for it, but a classification which is arbitrary and is not founded on any rational basis is no classification as to warrant its exclusion from the mischief of Article 25;

(vi) that equal protection of law means that all persons equally placed be treated alike both in privileges conferred arid liabilities imposed;

(vii) that in order to make a classification reasonable, it should be based---

(a) on an intelligible differentia which distinguishes persons or things that are grouped together from those who have been left out;

(b) that the differentia must have rational nexus to the object sought to be achieved by such classification."

Applying the above principles, we are of the opinion that the action is based on justifiable classification having rationality and nexus with the main purpose. There is a reasonable classification within the industries which has reasonable basis and where such classification has been made as a class from the other one which falls within a different class, then the question of violation of principles of equality will not arise. The negative list is not hit by Article 25 of the Constitution.

60. Mr. Pirzada has contended that as the industries were established on the basis of representation made by the respondents, the impugned action is illegal on the principle of promissory estoppel. The learned Sr.ASC has relied on the following judgments:---

(1) Al-Samrez Enterprises v. The Federation of Pakistan (1986 SCMR 1917);

(2) Pakistan through Secretary, Ministry of Commerce and 2 others v. Salahuddin and 3 others (PLD 1991 SC 546);

(3) M/s. Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others (1992 SCMR 1652);

(4) Union of India v. Anglo Afghan Agencies (A.I.R. 1968 SC 718);

(5) M/s. Motilal Padampat Suagr Mills Co. Ltd. v. The State of Uttar Pradesh and others (AIR 1979 SC 621);

(6) Union of India and others v. Godfrey Philips India Ltd. (AIR 1986 SC 806);

(7) Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948) 1 KB 223);

(8) Council of Civil Service Unions and others v. Minister for the Civil Service (1984) 3 AER 935); and

(9) R v. Secretary of State for the Home Department, ex parte Khan (1985) 1 AER 40)

The principles of promissory estoppel as enunciated by the judgments of the superior Courts find a unique place in our jurisprudence. Mr. Pirzada has laid great emphasis on the observations made in Padampat, Army Welfare Sugar Mills Ltd. And last to judgments from the British Court. In Army Welfare Sugar Mills Ltd, leading judgments from our Court and the Indian jurisdiction have been analysed and thoroughly considered and need not be reconsidered or reproduced here as law relating to promissory. Estoppel is now well-settled. If on the basis of representation made, any third party bona fide and legally enters into any transaction, contract or deal which gives rise to rights and liabilities enforceable at law, then a vested right is created and the benefits or concessions arising from the representation made cannot be suddenly and abruptly withdrawn. In Army Welfare Sugar Mills Ltd, our learned brother Ajmal Mian, J. Has observed as follows:---

(i) the doctrine of promissory estoppel cannot be invoked against the Legislature or the laws framed by it because the Legislature cannot make a representation;

(ii) promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out; (i.e) no agency or authority can be held bound by a promise or representation not lawfully extended or given;

(iv) the doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it; and

(v) the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the, enforcement of the promise"

61. English judgment in Council of Civil Service Unions needs to be mentioned as it extends the scope of judicial review. In that case the oral instruction of the Minister of Civil Service was challenged which was issued by him without prior consultation with the staff at GCHQ as was the practice, revising the terms and conditions of civil servants at GCHQ depriving them of benefits of trade union membership. All the staff at GCHQ were members of national trade union as a matter of right recognised since GCHQ was formed. The instructions were challenged and question was whether civil servants had legitimate expectation that they would be consulted and whether denial of legitimate expectation can be a ground for judicial review. Lord Diplock observed:--- "To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons) other than the decision-maker, although it may affect him to. It must affect such other person either (a) by altering rights or obligations of that person which are enforceable by or against him in private law or (b) by depriving him of some benefit or advantage which either (i) he has in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational ground for withdrawing it on which he has been given an opportunity to comment or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn. (I prefer to continue to call the kind of expectation that qualifies a decision for inclusion in class (b) a 'legitimate expectation rather than a 'reasonable expectation', in order thereby to indicate that it has consequences. To which effect will be given in public law, whereas an expectation or hope that some benefit or advantage would continue to be enjoyed, although it might well be entertained by a 'reasonable' man, would not necessarily have such consequences. The recent decision of this House in Findlay v. Secretary of State for the Home Department (1984)

3 All ER 801, (1984) 3 WLR 1159 presents an example of the latter kind of expectation. 'Reasonable' furthermore bears different meanings according to whether the context in which it is being used is that of private law or of public law. To eliminate confusion it is best avoided in the latter)."

It is significant to note that Lord Diplock by sheer judicial activism enlarged the scope of judicial review by coining a new nomenclature of 'legitimate expectancy' instead of 'reasonable expectancy'. This principle of legitimate expectancy has found recognition in Al-Jehad Trust v. Federation of Pakistan (Appointment of Judges' case) (PLD 1996 SC 324).

62. Promissory estoppel. Is based on equitable principles founded in equity and as observed in Army Welfare Sugar Mills Ltd., "this equitable doctrine has been evolved by Courts with the object of avoiding suffering of any loss by any promisee and was not designed or intended to provide windfall profit to him". As observed earlier, WAPDA has shown equitable and reasonable grounds for issuing the negative list and therefore where the object of the promissor is on higher and better equitable grounds and for welfare of larger number of public, it will supersede the limited concessions given to a party and he will not be estopped from taking such action. The principle of legitimate expectancy for continuing the concession cannot be applied here. As observed earlier the cut of date is based on reasonable grounds and the appellants cannot be expected to continue with the concessions for all times to come. .In the result the appeals filed against the judgment of the Lahore High Court are allowed. The petitions against the said judgment are converted into appeals and are allowed. It is declared that the imposition and levy of-Surcharge and Additional Surcharge are without lawful authority and of no legal effect. The appeals filed against the judgment of the Peshawar High Court are allowed only to the extent that imposition and levy of Surcharge and Additional Surcharge is declared to be without lawful authority and of no legal effect. The appeals so far they challenge the negative list and withdrawal of concessions are dismissed.

The petitions filed against the judgment of the Peshawar High Court will be governed by the judgment passed in appeals against the said judgment. Parties to bear their own costs.

(Sd.)

Saleem Akhtar, J. (Sd.)

Fazal Karim, J.

FAZAL KARIM, J.---I respectfully agree with the conclusions arrived at by my learned brother Saleem Akhtar, J.

These appeals raise questions of great public importance. In fact no class of case affects the average citizens of Pakistan more than these questions do. This, and the duty that I owe to the parties to these appeals, their learned counsel a galaxy of legal talent and to the electricity consumers at large is my justification for adding this note.

2. The Water and Power Development Authority claims to derive the power to levy the charges in question from section 25 of the Pakistan Water and Power Development Authority Act, 1958 (the Act of 1958). That section uses the expression 'rates', and much confusion would have been avoided if the power had been exercised in terms of that section. However, I shall, in this judgment, proceed on the basis that in substance these charges are 'rates'.

3. The Constitutional and legal landscape that is presented by the Constitutional and statutory provisions so admirably set out in the judgments proposed to be delivered by my learned brothers, Ajma1 Mian, J. And Saleem Akhtar, J., which I gratefully adopt is as follows: Under the Constitution of 1956 as also under the Constitution of 1962, electricity was, for the purpose of legislation, a Provincial matter and the existing law on the subject was the Electricity Act, 1910. By section 3 of that Act the Provincial Government has power to grant to any person licence to supply energy in any specified area, and also to lay down or place electricity supply-lines for the conveyance and transmission of energy. By section 4 thereof the Provincial Government can revoke a licence, if in its opinion the public interest so requires. That Act also makes detailed provisions as to the rights and obligations of the licensees and empowers, by its section 23, a licensee to "make such charge for the supply of energy as may be agreed upon, not exceeding the limits imposed by his licence". The Provincial Legislator of the Province of West Pakistan had, therefore, no Constitutional difficulty in enacting the West Pakistan Water and Power Development Act, 1958 (now the Pakistan Water and Power Development Act, 1958 to be referred to as the Act of 1958), by which the Water and Power Authority (the Authority) was established. Nor had it any such difficulty in levying duty on the consumption of electricity by the West Pakistan Finance Act, 1964, section 13. Thus electricity being a Provincial subject and the whole of the erstwhile West Pakistan being one Province, the executive authority to that Province undoubtedly extended to the Authority. But when East Pakistan ceased to be part of this country and the Province of West Pakistan was dissolved by President Order No.1 of 1970 and in its place, four new Provinces known respectively as

(a) the Baluchistan, (b) the North-West Frontier Province, (c) the Punjab and (d) the Sind were constituted, a special situation arose, as respects the Authority, for which special measures had to be adopted. Those special measures, obviously of an interim nature, are to be found in President Order No.1 of 1970; by that Order the Authority was allowed to continue to function but all the powers of the Provincial Governments in relation to that Authority became vested in the President, to be exercised on behalf of the new Provinces. But the founding fathers of the Constitution of 1973 were confronted with the problem of finding a permanent solution to the question as to how to deal with the statutory corporations such as the Authority, whose operation extended to the entire territory of Pakistan and was not confined to one Province. This was the backcloth in which the special provisions contained in Chapter 3 of Part V of the Constitution of 1973 came to be adopted. It is agreed on all hands that these provisions were the result of the Constitutional accord dated October 20, 1972. The change brought about by the Constitution of 197? Was that electricity, as a legislative matter, was included in the Concurrent Legislative List, WAPDA was treated as a legislative matter distinct from 'electricity' and WAPDA was, as a legislative matter, included in the Federal Legislative List. (See Item 3 of Part 11 of the Federal Legislative List).

The special measures adopted in consequence of the Constitutional accord of October 20, 1972, are to be found reflected in Chapter III of Part V of the Constitution of 1973. The special measures with which we are concerned in these appeals are those in Articles 153, 154, 157 and 161 thereof.

4. In order to appreciate how these -special Constitutional measures impinge upon the Authority and its powers under the Act of 1958, a brief survey of the provisions of the Act of 1958 as they stand at present will be helpful.

The Authority was established under section 3 of the Act of 1958, to carry out its purposes namely "to provide for the unified and coordinated development of the water and power resources of Pakistan". The Authority is a body corporate, and is entitled to acquire and hold property, and has perpetual succession and a common seal and may by the said name sue and be sued. (Section 3(2)). By subsection (3) of section 3, which was added by the Act No. 13 of 1994, the Government is empowered to "from the to the, issue such directives as it may consider necessary on matters of policy" and requires that the Authority shall comply with such directives; significantly enough, this subsection makes the decision of the Government as to whether a directive relates to a matter of policy or not, final. Section 8 of the Act of 1958 ordains the Authority to prepare for the approval of the Government, a comprehensive plan for the development and utilization of the water and power resources of Pakistan on a unified and multi--purpose basis, to frame a scheme or schemes for all or any of the matters enumerated therein, including the generation, transmission and distribution of power and the construction, maintenance and operation of power houses and grids. By subsection (3) of section 8 every scheme prepared by the Authority is to be submitted for the approval of the Government. Subsection (5) of section 8 which was also added by Act 13 of 1994 provides for the consequences which are to flow from a scheme being sanctioned by the Government. Section 11 vests the Authority with the control of underground water resources of any region in a Province and over the operation of its power houses and grids, including such ancillary works as may be considered necessary for their proper operation. Section 12 of the Act introduces a fiction, which is that the Authority is for the purposes of Electricity Act, 1910 "deemed to be a lisensee and shall have all the powers and discharge all the obligations of a lisensee under the said Act"; however that section excludes the application of sections 3 to 11 and subsections (2) and (3) of section 21 and sections 22, 23 and 27 and clauses (1) to (12) of the Schedule to the said Act relating to the duties and obligations of a lisensee to the Authority. Section 13 empowers the Authority to take such measures and exercise such powers as it considers necessary or expedient for the carrying out of the purposes of the Act; it also enumerates some of those powers. Section 21 requires the Authority to submit to the Government at the end of every financial year a report op the conduct of its affairs for that year, which report is to be placed by the Government before the National Assembly for being referred to its Committee on public accounts for scrutiny and examination. Section 22 defines what shall be the 'Authority Fund' which shall be utilised by the Authority to meet charges in connection with its functions under the Act. Section 23 makes the Authority, for the purpose of Local Authorities Loans Act, 1914, a local Authority to enable it to borrow money under the said Act. Section 25 reads: "(1) The Authority shall ordinarily sell power in bulk.

(2) The rates at which the Authority shall sell power shall be so fixed as to provide for meeting the operating costs, interest charges and depreciation of assets; the redemption at due the to loans other than those covered by depreciation, the payment of any taxes and a reasonable return on investment."

5. It is significant to note that the expression "Government" was defined by clause (iv) of section 2 of the Act of 1958 to mean "the Government of the Province of West Pakistan" but as a result of Federal Adaptation of Laws Order, 1975 (P.0.4 of 1975), the definition was adapted to read "Government" means the Federal Government:.

6. The special provisions contained in Chapter 3 of Part V of the Constitution of 1973 which have a special relevance to the Authority are as follows. By section 153, a Council of Common Interests to be appointed by the President was brought into existence. Its members are -

(a) the Chief Ministers of the Provinces, and

(b) an equal number of members from the Federal Government to be nominated by the Prime Minister from the to the.

The Prime Minister, if he is a member of the Council is its Chairman but, if at any the he is not a member, the President may nominate a Federal Minister who is its member to be - its Chairman. The Council "shall be responsible to (Majils-e-Shoora)". Article 154 provides for the functions and the rules of the procedure of the Council. It reads:---

(1) The Council shall formulate and regulates policies in relation to matters in Part 11 of the Federal Legislative List and, in so far as it is in relation to the affairs of the Federation, the matter in Entry 34 (Electricity) in the Concurrent Legislative List, and shall exercise supervision and control over related institutions.

(2) The decisions of the Council shall be expressed in terms of the opinion of the majority.

(3) Until "Majils-e-Shoora' (Parliament) makes provision by law in this behalf, the Council may make its rules of procedure.

(4) 'Majils-e-Shoora' (Parliament) in joint sitting may from the to the by resolution issue directions through the Federal Government to the Council generally or in a particular matter to take action as ' Majils-e--Shoora (Parliament) may deem just and proper and such directions shall be binding on the Council.

(5) If the Federal Government or a Provincial Government is dissatisfied with a decision of the Council, it may refer the matter to ' Majils-e--Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final.

Article .157 makes special provisions for electricity. It runs:--- "(1) The Federal Government may in any Province construct or cause to be constructed hydro-electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter---Provincial transmission lines.

(2) The Government of a Province may--

(a) to the extent electricity is supplied to that Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province;

(b) levy tax on consumption of electricity within the Province;

(c) construct power houses and grid stations and lay transmission lines for use within the Province; and

(d) determine the tariff for distribution of electricity within the Province."

7. Article 161 though it finds place in Part IV, Chapter 1 of the Constitution has also some relevance to the question under consideration. By its clause (2) it provides that "the net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated"; its explanation empowers the Council of Common Interests to determine the rate of the net profits to be computed according to the formula prescribed therein.

8. The Authority is indeed an important statutory corporation; it is a public utility instrumentality of the State, with monopoly in the generation, distribution and supply of electricity throughout Pakistan. Its importance has been recognized by the Constitution of 1973 by expressly treating it as a distinct legislative matter and mentioning it in Article 154 and Part II of the Federal Legislative List. Yet it is not a sovereign body. Three principles as regards such statutory corporations are well established:---

(i) that they can only do such things as are expressly or impliedly authorised by the Legislature, creating them '

Hazell v. Hammersmith '(1992) 2 A. C. 1, 22, 39). In the of-quoted words of Lord Blackburn in Attorney-General v.

Great Eastern Railway Co. (5 A.P.P. Cases 4.73 at p. 481) 'Where there is an Act of Parliament creating a corporation for a particular purpose, and giving it powers for that particular purpose what it does not expressly or impliedly authroise is to be taken to be prohibited'. It was said by Viscount Haldane delivering the advice of the Privy Council in Bonanza Creek Gold Mining Co. Ltd. v. The King ((1916) 1 AC 566): 'that it is wrong, in answering the question what powers the corporation possessies when incorporated exclusively by statute, to start by assuming that the Legislature meant to creat a company with a capacity resembling that of a natural person, such as a corporation created by charter would have at common law'.

(ii) That no pecuniary burden by whatever name it may be called, can be I imposed upon the citizen except under clear and distinct legal Authority, established by those who seek to impose the burden.

'The rule is that a charge cannot be made unless the power to charge is given by express words or by necessary implication. These last words impose a rigorous test going far beyond the proposition that it would be reasonable or even conducive or incidental to charge for the provision of a service Reg. v. Richmond L.B.C. Ex.P.

Mccarthy & Stone (1992) 2 A.C. 48, 70).'

(i.e) That a corporation such as the Authority dealing with public money is in the exercise of its power limited by the provisions of the Act creating it.

9. These principles are exempilified by the precedent cases Hazell v. Hammersmith and Reg v. Richmond L.B.C. In Hazell case a local council had entered into a number of transactions known as "swap transactions" of which the majority were ones in which the council would benefit if interest rates fell and loss if interest rates rose. Those transactions were tried to be justified on the basis of the borrowing powers of the Council.

It was held that such swa p transactions could not be said to facilitate borrowing; nor were such transactions incidental to the power of borrowing. In Reg v. Richmond the question was of the legality of charge of pounds 25 for consultation between developers and the council's planning officers preliminary to the making of formal applications for planning permission. The charge was for the service of consultation, that is, for the service rendered; it was held that the charge was ultra vires the planning authority. One of the cases referred to with approval in reaching that conclusion was Attorney-General v. Wilts United Dairies Ltd. (1921) 37 T.L.R. 884) Atkin L.J. Observed: "It makes no difference that the obligation to pay the money is expressed in the form of an agreement. It was illegal for the Food Controller to require such an agreement as a condition of any licence. It was illegal for him to enter into such an agreement. The agreement itself is not enforceable against the other contracting party, and if he had paid under it he could, having paid under protest, recover back the sums paid, as money had and received to his use."

10. It, is universally recognized that rate-making, as it is called in the United States of America, is a legislative function and that the power vesting in the Legislature to make rates may be exercised by it either directly or through some appropriate agency. (See 64 American Jurisprudence 2D, S-240). This statement of law is based upon a large number of decided cases. In America there have been established various Public Service Commissions which, among others, have been given the power to determine rates of public utility services such as gas, electricity. The Federal Power Act embodies a complete and comprehensive plan for the development and improvement of navigation and for the development, transmission, and utilization of electric power in any of the streams or other bodies of water over which Congress has jurisdiction under its commerce powers, and upon the public lands and reservations of the United States under its property powers. The central purpose of the Act is to provide a comprehensive system of control over those uses of the nations' water resources in which the Federal Government is interested; another major purpose of the Federal Power Act is to protect the power consumers against excessive price. (See 5.244 of 64 of American Jurisdiction 2D. The decided cases were those in which by the charter incorporating a company power was given to the company to fix, regulate and receive rates, but the Commission, under its statutory authority, interfered with the rate-making, by reducing the rates.

The company's claim was that the Commission could not do so. It has been held that such renunciation of legislative power was not to be presumed and the Legislature could intervene. I should be content to refer to to representative cases. In Stone v. Farmers Loan and Trust Co. (116 U.S. 307) the charter incorporating a railway company authroised it to "from the to the fix, regulate, and receive the toll and charges". Upon this was founded the company's claim that the State had granted to it for the term of its corporate existence, that is to say, for ever, the right to manage its own affairs. It was held that the company was put in the same position as a natural person would occupy if engaged in the same or like business, and that as the natural person would be subject to legislative control as to the amount of his charges, so must the company be. In Malwaukee Electric Railway and Light Company v. Railroad Commission of Wisconsin (238 U.S. 174), the plaintiff, a street railway company, organized under the laws of Wisconsin, and authroized to conduct a street railway business in the city of Milwaukee, brought a suit to enjoin the Railway Commission, organized under the laws of that State of 1905, from enforcing a certain order against the company, whereby the right of the railway company to charge fares upon its railway system had been reduced below what it was contended had been previously fixed by an ordinance of the city of Milwaukee, which it was alleged, upon acceptance, constituted an irrevocable contract between the company and the city. It was held that the fixing of rates which may be charged by public service corporations, of the character here involved, is a legislative function of the State, and while the right to make contracts which shall prevent the State during a given period from exercising this important power has been recognized and approved by judicial decisions, it has been uniformally held that the renunciation of a sovereign right of this character must be evidenced by terms so clear and unequivocal as to permit of no doubt as to their proper construction.

11. The position then is that the Authority has been, under section 25 of the Act of 1958, vested with the discretionary power to fix rates at which electricity power will be sold to the consumers. But this discretion is not unlimited and unfettered discretion. It is subject to to limitations; one, internal, that is, to be found in section 25, subsection (2) itself and to, external, to be found in Article 154 of the Constitution. As has been observed, subsection (2) of section 25 of the Act of 1958 mentions the factors which must guide the exercise of the Authroity's power to fix rates. As to the second limitation, it is significant to note that when the Act of 1958 was enacted, there was no such Constitutional provision limiting the Authority's power. But the Act of 1958 being a sub---Constitutional law, must be read subject to the higher law, that is the Constitution. From this theory of the Constitution being a higher law must flow the consequence that if there is a policy decision under Article 154 of the Constitution by the Council of Common Interests, in respect of a matter which by Article 154 is within its power, then that policy decision is binding upon the Federal Government and the Authority. For this reason, of the pre - 1973 Constitution cases on the powers of the Authority to fix rates. Cannot be of any assistance.

12. It was in pursuance of this decision that the WAPDA issued the notification dated 9-7-1995. The surcharge in question was levied for the first the by means of a notification dated 1-12-1992. Before this levy, the matter had been placed before the Cabinet. Our attention was called to the summary for the Cabinet which stated that according to the decision of the Council of Common Interests, net profits on hydle generation had to be transferred to the Provinces by. WAPDA. This involved a payment of Rs.6.1 billion by WAPDA to the provinces. No provision for such payment had however been made in the Federal Budget and WAPDA expressed its inability to transfer the net profits to the Provinces for the following reasons:---

(i) Under international covenant WAPDA is required to raise 40% of the total development outlay. Unless this is achieved WAPDA would not be able to utilise foreign assistance.

(ii) The indicated amount far exceed the net profits of WAPDA.

(i.e) The amount has not been provided in the budget of WAPDA for the current year.

In order, therefore, to ensure the transfer of the requisite amount of the Government of N.W.F.P., the Economic Committee of the Cabinet recommended that WAPDA be allowed to levy a fixed surcharge of paisa 8 per unit/kwh on all consumers, so as to recover at least one-third of the amount payable i.e. Rs.2 billion. The Ministry of Finance was however of the view that the following to options be considered:

(i) WAPDA may be authorised to levy a fixed surcharge of paisas 8 per unit on all consumers; or

(ii) WAPDA may be authroised to levy a surcharge equivalent to 2.5 % of the total tariff on all consumers every three months for the current financial year. Thus the proposed levy will be staggered in three small installments of December, February and April.

Consequently by its letter dated 31-12-1991, the Authority made the decision "to impose 'SURCHARGE' at the rate of 2.5 % (to and a half per cent. On the "Supply Charges" as defined in WAPDA Schedule of Tariffs on all electricity bills to be issued on or after 1-10-1992. Learned counsel for WAPDA informed us that the surcharge was to be levied only on the supply charges. The letter dated 31-12-1991 clarified that "the account of this new 2.5% 'SURCHARGE' shall be kept separately", and "that the 2.5 % 'SURCHARGE' will not be levied on the electricity duty payable to the Provincial Governments, meter rentals, service rentals which are not part of 'supply charges' as defined in WAPDA schedule of tariffs". The rate of this surcharge was increased to 5%, 7.7% and 10.4% vide notifications dated 1-2-1992, 1-4-1992 and 16-1-1993 respectively. Then by a notification dated 8-9-1993 the Authority imposed what is called 'additional surcharge' at the rate of Rs.16.1 % with effect from 1-8-1993 which was increased by notifications dated 24-11-1994 and 9-7-1995, by 24.3 % and 14.5 % of the gross tariff, respectively. Before the increase effected by means of the notification dated 9-7-1995, a summary was submitted to the Federal Government for obtaining its prior approval. That summary contained the reasons in support of the proposal "for the increase in consumer tariff for the fiscal year 1995-96". The proposal was based on the following assumptions:---

(i) An investment plan of Rs.34,548 million including funds for the Ghazi Barotha Power Project will be met by WAPDA through its internal cash generation and borrowings, without recourse to the Government of Pakistan.

(ii) WAPDA will pay hydle profits of Rs.6,000 million to the Provinces from its own resources.

(i.e) WAPDA will meet all its debt servicing obligations budgeted at Rs.26,557 million including those to the Federal Government.

(iv) WAPDA will meet its payment obligations towards oil and gas companies supplying fuel to it.

(v) An amount of Rs.3,000 million will be repaid to the Privatization Commission.

(vi) WAPDA will retire its short-term liability of U.S.$ 100 million borrowed during the year 1994-95.

(vii) An increase of 24 % in gas prices and 5 % in the prices of furnace will be absorbed by WAPDA.

(viii) WAPDA will meet its financial covenants agreed with the World Bank which include a 40 % internal cash generation and a debt service coverage ratio of 1.5 times.

13. The summary went on to say that after meeting all the financial obligations, the Authority had proposed "an increase of 21.2 % in the existing tariff...." A more acceptable alternative was to make the following adjustments to limit the increase:

(a) An amount of Rs.3,000 million due to the Privatization Commission may be written of/deferred. This will result in a reduction of 4.5 % in the increase demanded.

(b) The profits payable to the Provinces may be maintained on the existing level of Rs.4,644 million for one more year as was done in the previous year. This will result in a further reduction of 2.25 % in the consumer tariff.

This was followed by the recommendation that "WAPDA may be allowed an increase of 14.5 % over the current tariff for the fiscal year 1995-96 after taking into account the adjustments suggested in para 3 ....", and approval was requested for the increase so suggested. The Federal Government in its Cabinet meeting held on 14-6-1995 decided that the decision as to the percentage increase in the electricity tariff "should be taken by WAPDA itself and announced in the first week of July, 1995".

14. The main contentions pressed upon us by learned counsel for the appellants were that in levying the surcharge and the additional surcharge, the Authority had acted ultra vires its powers under section 25(2) of the Act, 1958, and that in fixing the rates it took into consideration extraneous matters; that the matter of the levy of the surcharge and additional surcharge was a matter of policy which fell squarely within the powers of the Council of the Common Interests under Article 154 of the Constitution and as the matter was never placed before the Council and no policy decision was taken by it on this matter, the levy is unconstitutional; and that the power to determine the tariff for distribution of electricity within the Provinces vests by Article 157, clause (2), of the Constitution in the Provincial Governments and for that reason also the Authority had no power to levy the surcharge and the additional surcharge.

15. Before, considering these main contentions I can briefly deal with what I regard a specious argument; it is based upon Article 268 of the Constitution, the purport of the contention being that contrary to the provisions of Articles 97 and 154 of the Constitution, the provisions of the Act of 1958 were so adapted as to extend the executive authority of the Federal Government to the Authority. In particular our attention was called to the adaptation in clause (iv) of section 2 of the Act 1958, whereby the expression 'Government' was adapted to read: "Government means the Federal Government". Article 97 provides that the executive authority of the Federation shall extend to the matters with respect to which Parliament has power to make laws; this is, however, subject to the proviso that "the said authority shall not, save as expressly provided in the Constitution or in any law made by 'Majils-e-Shoora' (Parliament) extend in any Province to a matter with respect to which the Provincial Assembly has also power to make laws". Learned counsel for the appellants pointed out that the provisions of Article 97 are subject to the Constitution and Article 97 must, therefore, be read subject to the provisions of Article 154, and, therefore, the executive authority, as regards the Authority, vests in the Council of Common Interests and not in the Federal Government.

16. It has been seen that WAPDA is, as a legislative matter, in the Federally Legislative List; therefore, the executive authority of the Federation must extend to the Authority, unless the provisions of Article 154 compel a different conclusion. The proviso to Article 97 also would not in that case help the appellants, for that applies to matters in the Concurrent Legislative List. True that 'Electricity' is -in the Concurrent Legislative List, but in view of the fact that WAPDA has been recognized as a distinct legislative matter, that to cannot affect the position that the Federation's executive authority extends to WAPDA. As regard Article 154, that indeed authorises the Council of Common Interests to perform certain functions in relation to the Authority; those functions are to formulate and regulate policies but to formulate and regulate policies does not comprehend the whole of the executive authority. In other words the combined effect of Article 154 and WAPDA being in the Federal Legislative List, is that the generality of the executive authority, as regard the Authority, vests in theFederation but that is subject to the powers vested in the Council of Common Interests under Article 154. Of course there can be a possible argument that some of the powers which stand vested under the Act of 1958 in the Federal Government are in reality the powers of the Council of Common Interests under Article 154 but we are not called upon to decide that larger question in these appeals, and we, therefore, leave it open to be raised and decided in an appropriate case.

17. Of the main contentions I deem it convenient to first deal with the one based upon Article 157 of the Constitution. The contention was that the powers given to the Provincial Government by paragraphs (a),(b),(c) and (d) are four independent powers; that the power given by paragraph (d) namely the power to determine the tariff for distribution of electricity within the Province is dependent neither upon paragraph (a), which applies where a Province requires supply to be made from the national grid in bulk, nor upon paragraph (c) which empowers a Province to construct power houses and grid stations and lay transmission lines for use within the Province. They sought to derive support for this view from the fact that even though electricity is being supplied to the consumers in the Punjab by the Authority, yet, tax on consumption of electricity within that Province is being levied under the Finance Act, 1964 as amended by the Finance Act, 1980 and that is referable to the power vesting in the Government of that Province by paragraph (b) of clause (2) of Article 157. Learned counsel for the Authority was however of the view that the powers given by paragraphs (c) and (d) can be exercised when a Province has exercised its option under paragraphs (a); in other words, the powers under paragraphs (c) and

(d) are dependent upon paragraph (a). My learned brother; Ajmal Mian, J., is of the view (if I am forgiven its para-phrasing) that while paragraph (b) which gives the power to impose tax on consumption of electricity, is an independent power and can be exercised irrespective of the fact that the supply of electricity is by the Province or its licensee or that the supply is by WAPDA. My learned brother thinks also that Article 157 is an enabling provision and a province may or may not exercise its power under paragraph (d). In any case, this power has not been exercised by the Provinces and nothing, therefore, turns upon it.

18. In my humble opinion, the powers given by paragraphs (a), (b), (c) and (d) of clause (2) of Article 157 must be treated as independent powers, because they were obviously intended to be so treated. The exercise of the one does not appear to depend upon the exercise of the others. There seems to be no logical reason for treating clause (b) as an independent power. The way to avoid the inconsistency inherent in treating the power given by paragraph (b) as an independent power but not so treating the other powers is to harmonise the power under paragraph (d) with the power of the Authority to fix rates. In recognizing WAPDA as a distinct legislative matter, the Constitution was not recognizing a mere abstraction. The necessary implication of so recognizing WAPDA was to recognize it as the statutory body created by the Act of 1958, entitled to perform the functions, that is the powers and duties, vested in it under the Act of 1958. One of those powers is the power to fix rates under section 25 of the Act of 1958. As has been shown above, the power to make or fix rates is a legislative power and the WAPDA must be deemed to exercise that power as a delegate.

19. The rate making power, like the power to taxation, is a power which, in its own nature, is capable of residing in and being exercised by different authorities at the same the. But this is subject to the important condition that the power vesting in one authority is not exercised by the other. It could not have been intended that the same power as is vested in the Authority under section 25 of 'the Act of 1958 should also vest in the Provincial Government under Article 157, clause (2) of the Constitution. To harmonize these powers each must exercise its power in such a way as not to interfere with the power of the other. Thus if the Provincial Government fixes rates for electricity, generated and supplied by WAPDA, it will be exercising the very power which under section 25 of the Act of 1958 read with item 3 of the Federal Legislative List, Part II and Article 154 of the Constitution vests in the Authority. I derive some assistance for this view from a case from the American Jurisdiction. In George Ashwander v. Tennessee Valley Authority (297 U.S. 288). The Tennessee Valley Authority, an agency of the Federal Government, entered into a contract with the Allabama Power Company, providing (1) for the purchase by the Authority from the power company of certain transmission lines, subsections, and auxiliary properties, (2) for purchase from the power company of certain real property, (3) for an interchange of hydroelectric energy, and in addition for the sale by the Authority to the power company of its surplus power on stated terms, and (4) for mutual restrictions as to the areas to be served in the sale of power. The Alabama Power Company was a corporation organized under the laws of Alabama and was engaged in the generation of electric energy and its distribution generally throughout that State. The transmission lines to be purchased by the Authority extended from Wilson Dam, at the Muscle Shoals plant owned by the United States on the Tennessee River in Northern Alabama. The plaintiffs were holders of preferred stock of the Alabama Power Company. Conceiving the contract with the Tennessee Valley Authority to be injurious to the corporate interests, they had brought a suit to have the invalidity of the contract determined and its performance enjoined. It was held that the rights reserved to the States or people were not encroached upon by a disposal by Federal Government of electricity generated at a dam constructed by it in the exercise of its Constitution power to dispose of property belonging to the United States.

20. In this view of the matter it is not necessary to decide whether Article 157, clause (2) is an enabling provision and the Provincial Government may or may not exercise the .Powers given by it. I should observe, however, that the view proposed to be taken by my learned brother Ajmal Mian, J. Is open to the remarks that the power conferred by paragraph (d) of clause (2) of Article 157 is for the benefit of the electricity consumers and that the rule that applies in such cases was stated by Lord Cairns, L.C. In 'Julius v. Lord Bishop of Oxford ((1980) 5 Appeal Cases 214), as follows:- ".... That where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised."

In such cases the power is coupled with a duty and the public authority in whom it resides must exercise it for the benefit of those identified by the power --conferring provision.

21. That brings me to Article 154 of the Constitution. This Article has no ancestry; no such provision existed in the earlier Constitutional instruments. As has been observed above, this special provision was introduced in the Constitution of 1973 to give effect to the Constitutional accord reached on October 20, 1972. Mr. Abdul Hafeez Pirzada (mover of the Constitution Bill in the National Assembly who incidentally has appeared as counsel for the appellants in some of these appeals) introduced these special provisions in the National Assembly, with the following observations:-- "Chapter III, Sir, deals with the special provisions, The special provisions are in respect of those subjects which find place in Part II of the Federal Legislative List and I mentioned about that yesterday and also one subject of electricity from the Concurrent List in so far as it relates to the Federation a new concept has been evolved in order to give public participation to the Provinces in respect of matters and subjects which according to them are of enormous and tremendous interest to them. These are the subjects like WPIDC, heavy industry, water and power, generation and development, railways, electricity, hydro-electricity stations. These are some of the matters which come in Part 2 of the Federal Legislative List. In respect of these subjects guidance and control over the Ministries concerned in the Federal Government has been entrusted to the Council of Common Interests. The Council of Common Interests is the creation of the Constitution. It is an institution which is coming into being for the first the. The Council of Common Interests shall be equally represented from the Provinces as well as from the Federal Government. There shall be four Chief Ministers from the four Provinces which shall ex officio be members of the Council of Common Interests and on the other side four Federal Ministers shall be nominated by. The Prime Minister and the Prime Minister may also nominate himself. In case the Prime Minister decides to nominate himself, he shall be ex officio Chairman of the Council of Common Interests. He shall be the President of the Council of Common Interests. If he does not, then some other Minister, a Federal Minister, would become the Chairman or the President of the Council of Common Interests. The Council of Common Interests shall decide by majority. This Council consisting of 8 persons, shall have its own office: it shall also give directions to the Ministries concerned as how to operate and how to work to control our policy and other matters shall be exclusively that of the Council of Common Interests and in order to safeguard the rights of the Provinces, the Council of Common Interests has not been made subordinate to the Cabinet, but it has been made answerable directly to both Houses of Parliament in joint sitting through the Prime Minister. We have also provided that if there is any difference of opinion between the Members of the Council of Common Interests, any Province or the Federal Government can take the matter directly to Parliament, Parliament shall, in joint sitting, decide the dispute and give directions and resolve in the matter, and the Council of Common Interests shall then be bound by the decision taken by the Parliament sitting jointly. It has also been provided that Parliament shall be competent, in joint sitting, to give directions from the to the to the Council of Common Interests directly through the Prime Minister. Therefore, the Provinces enjoy participation in major fields of economic development, like heavy industry, railways, gas and mineral development of gas and mineral oil, development of heavy industries which would be beyond the competence of a single Province to undertake, like setting upon a steel mill etc. These are the matters in which their interest was crucial and vital and by this innovation, by the creation of Council of Common Interests, we have been able to bring about the participation of the Provinces directly answerable to the Parliament without any interference from the Cabinet or the executive Government in the Federation."

22. This Article has also been judicially considered and valuable guidance is to be gained from the decided cases. In Federation of Pakistan v. United Sugar Mills Ltd. (PLD 1977 SC 397), this Court highlighted that in one significant respect the Federal Executive Authority has been abridged by this Article and has been entrusted to a newly-created institution called "the Council of Common Interests". It was pointed out that Council is a body quite apart from the Federal Executive and that the "administration of matters falling in Part II of the Federal Legislative Listare entrusted to the Council of Common Interests. This is a body consisting of the representatives of the Federal Government and the four Provinces" and "any dispute arising between one or more Provinces inter se or between the Federation or a Province regarding aforesaid subjects is referable to the Parliament in joint session for final decision". My learned brother Saleem Akhtar, J. As Judge of the High Court of Sind, in the Full Bench case of Khalid Malik (PLD 1991 Karachi 1) "highlighted the object, function and the pivotal position CCI occupies in the Constitutional field". The object of the Council, so observed my learned brother, "is to strengthen and integrate Federation and Provinces, iron out their differences and provide Constitutional justice to the Provinces". This Court had the occasion to consider this Article in to other cases, both arising out of the dissolution of the National Assembly under Article 48 of the Constitution namely, Khawaja Ahmad Tariq Rahim case (PLD 1992 SC 646) and Mian Muhammad Nawaz Sharif case (PLD 1993 SC 473). In the first case failure to make the Constitutional institutions like the Council of Common Interests, National Finance Commission functional was described as failure to discharge Constitutional obligations "thereby jeopardizing the very existence and sustenance of the Federation". In Mian Muhammad Nawaz Sharif case, this Court repelled the contention that it was not mandatory to bring the question of privatisation of industries referred to in Item No.3 of Part II of the Federal Legislative List (the Authority being one of them) and Item 34 of the Concurrent Legislative List before the Council and it was held that it was mandatory for the Federal Government to bring the question of privatisation in respect of, among others, WAPDA before the Council.

23. The question posed is as to the interpretation of Article 154 of the Constitution. To interpret is to understand.

For a purposive construction of the statutory and Constitutional provisions, the Courts now freely make use of their parliamentary history, policy statements of the movers of the Bills and the l concerned Ministers in particular. That is interpreting the Constitutional provisions in the light of the well-known circumstances that produced them. Even in England, the historic rule that the Court must not look at the parliamentary history of legislation as an aid to the interpretation of a statute has been recently relaxed in Pepper (Inspector of Taxes) v.

Hart (1993) 1 All ER 42). From the guidance to be gleaned from the parliamentary history of these special provisions, Article 154 in particular, and, the decided cases the position that emerges is--

(i) that the matters dealt with in Article 154 are matters in which the Provinces have a crucial and vital interest;

(ii) that the purpose of the creation of the Council of Common Interests was to enable the participation of the Provinces in the policy decision-- making in respect of these matters; (i.e) that the Council of Common Interests is an independent Constitutional body, with an important Constitutional role to play, answerable directly to the Parliament "without any interference from the Cabinet or the executive 'Government of the Federation;

(iv) that the executive authority of the Federation stands, to the extent defined in Article 154, abridged, and to that extent, it stands vested in the Council; and

(v) that the provisions of Article 154 are mandatory in character.

24. The consequences that inevitably flow from the provisions of Article 154 are: First, that if a matter falls within the powers of the Council of Common Interests under Article 154, it must be placed before it. It is wrong to think that the function of the Council is to resolve disputes and that it is to be activated only when there is a dispute to be resolved. Secondly, the policy decision by the Council of Common Interests must precede any decision by the Federal Government or for that matter any of its instrumentalities such as the Authority. For instance if it is a policy decision to be taken by the Council of Common Interests whether or not the Authority should obtain a loan from a foreign agency, then that decision must be taken by the Council before the loan is obtained. Some stress was laid upon the fact that the Authority has to submit, under section 21 of the Act of 1958, to the Government a report on the conduct of its affair at the end of every financial year and a copy of that report, together with the copy of the Audit report referred to in section 28 of that Act is to be placed before the National Assembly for being referred to its Committee of Public Account for scrutiny and examination. This consideration by National Assembly or its Committee on Public Accounts can at best be described as an ex post facto consideration of the decisions which have already been taken by the Authority. It is plain that this ex post facto consideration of the Authority's report cannot be equiparated with the policy decision of the Council of Common Interests which the Council and not the National Assembly must take in the discharge of its Constitutional functions. Thirdly, if the Council has made a policy decision in the performance of its functions under Article 154, it is binding upon the Federal Government and the Authority. That is the necessary result of Article 154 being a Constitutional provision and it being of mandatory character. In Colorado Interstate Gas Co. v. Federal Power Commission (324 US 581), it was held that if' the Congress had prescribed a formula, it was the duty of the public Service Commission concerned to follow it.

25. The heading of Article 154 is: "Functions and Rules of Procedure". The expression 'functions' is a compendious expression; it comprehends the powers and duties of the Council. The power, coupled with a ditty, of the Council is to formulate and regulate policies in relation to matters in Part II of the Federal Legislative List. To formulate means to make, or to prescribe a formula. To regulate is a power of governance continuing in its nature. See Stone v. Farmers Loan and Trust Co. (116 US 307). The power to formulate and regulate policies is in relation to matters in Part II of the Federal Legislative List. The expression 'matters' obviously means all the matters mentioned therein. Item 3 of that part includes WAPDA. One other item, which to has, in my view, some relevance is item 5: "Fees in respect of any of the matters in this Part but not including fees taken in any count". Reading items 3 and S together, it should follow that the matter of 'Fees' in relation to WAPDA also falls expressly and squarely within the powers of the Council. And, learned counsel for the Authority conceded, on my enquiry, that fees means money received for services rendered and in that sense, electricity rates are fees. However that may be, the crucial question is to ascertain the meaning of the expression "policies".

26. We have been referred to various dictionaries and law lexicons for the meaning of the expression' 'policy'. The meaning of the expression which learned counsel for the Authority invited us to adopt was that a policy has of necessity to be of a general nature and fixation of rates is not covered by it. Learned counsel for the Authority went so far as to say that no Court can strike down a tariff on the ground that it was not according to the policy of the Council of Common Interests.

27. In ascertaining the meaning of the expression 'policy', it must be brone in mind that it occurs in a Constitutional provision; to quote the famous words of Chief Justice Marshall, "we must never forget that it is a Constitution we are expounding".

28. The word 'policy' as descriptive of a decision to pursue a particular course of conduct is a protein word. Like any other general word, it has several meanings, even in the dictionary. Our task, therefore, is to define the 5ettse in which the expression "policies" was intended to be understood in Article 154, But as Judge Learned Hand said (quoted in 1994 Harward Law Review 1437), "it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary". That great American Judge, justice Holmes said in Gompers v. United States (233 US 604, 610): "The provisions of the Constitution are not mathematical h~nulq5 having their essence in their form; they are organic living institutions ' ---...Their significance is vital not formal; it is to be gathered not simply by taking the words and a dictionary, but by considering their origin and the line of their growth."

29. Thus, the question is not what according to the semasiologists, the word ' policy' means. The question is what is the meaning of that expression in the context (I use "context" here in its widest sense) of Article 154. It will be noted that when the Council has performed the function of formulating and regulating policies in relation to the matters mentioned in clause (1) of Article 154, that becomes a decision of the Council. The words 'decision of the Council' as used in clause (2) of Article 154 in my judgment provide the key to the understanding of the expression 'policy'. This coupled with the fact that the matters in respect of which the Council of Common Interests is required to formulate and regulate policies are matters concerning the whole population of Pakistan, must, in my opinion, compel the conclusion that while what affects a particular local interest only may or may not be a policy decision but what affects the entire nation, every citizen, rich or poor, and what has a national impact is a policy decision which must be taken in a wider forum such as the Council of Common Interests. Thus a decision to construct a nationwide network of motorways by reference to the future traffic needs could properly be described as a Government policy. (See Bushell v. Secretary of State (1980) 2 All ER 608, 614). In the same case, Lord Edmund-Davies said that matters of policy are matters which involve the exercise of political judgment. Ronald Dworkin in hi book "Taking Rights Seriously" while distinguishing argument of policy from argument of principle says (at page 82): "Arguments of policy justify a political decision by showing that the decision advances or protects some collective goal of the community as a whole, Thus, the argument in favour of a subsidy for aircraft manufacturers, that will protect national defence, is an argument of policy.

30. It is of some significance to notice that in an Indian case M/s. Hindustan Zinc Ltd. Etc. v. Andhra Pradesh State Electricity Board and others (AIR 1991 SC 1473), the High Court had held that increase in prices was a matter of policy, and before the Supreme Court, both parties had proceeded on the basis that revision of tariff was a question of policy (See pages 1482-1483).,

31. Aristotle remarked long ago that the first step in any investigation is to ask the right questions. This is necessary because where premises are misunderstood, inferences must be unsound. The right question to ask here is not whether the rate-making power or the power to fix rates for the supply of electricity to the consumers a function of the Council of Common Interests under Article 154 of the Constitution. The right question is whether in the facts and for the purpose highlighted by the Authority, there should or should not have been an increase in the existing rates of tariff by means of the levy of surcharge and additional surcharge. There is, if I may say so with great respect, a world of difference between fixing the amount by which the existing rates should be increased and deciding whether there should or should not be an increase in the rates at all. While the former may not be a policy decision, the latter certainly is. Indeed, if there is a policy decision that there should be an increase the fixation of rates in accordance with that policy will follow.

32. It has been seen that surcharge was levied with a view to raising a sum of money for payment as net profits to the Provinces, and the additional surcharge was levied to meet the covenants of the loans agreement with the World Bank, whereby the Authority was to generate 40% of I.C.G. For its development schemes. For that purpose, proposals for increase and rationalisation of electricity tariffs were approved by the Task Force, and the proposals were then placed before the Vederal Government for approval. The Federal Government accorded its approval on 8-8-1993. Now what in my opinion makes the levy of surcharge a policy decision within the meaning of Article 154 of the Constitution is the fact that had all the necessary facts and figures been placed before the Council of Common Interests e.g. The facts showing the total revenue of the Authority, the losses it suffers on account of electricity, theft and the arrears of electricity dues, the Council would have reached an informed decision whether there was need for an increase in the tariff E3 rates. To illustrate my point, I have before me a news item in the daily 'The 8 Nation' Islamabad dated 5-4-1996 which says that "the WAPDA, line staff in g connivance with corrupt consumers have stolen 2.273 million units of power e during the first quarter of the current fiscal year 1995-96 inflicting a loss of around Rs.3.75 billion to WAPDA during this period", and that this "is also contributing to the frequently increasing power tariffs and fair consumers have to pay for the pilferage done by the corrupt consumers and WAPDA line staff". I do not know if this news item was contradicted; no contradiction was brought to our notice. Then it is a fact acknowledged on all hands that arrears of electricity dues running into billions of rupees are outstanding. In this behalf, reference may be made to the decision of the Economic Coordination Committee (reproduced at page 219 of the proposed judgment of my learned brother Ajmal Mian J.), where to the Chairman of the Authority was conveyed "the necessity of improving the recovery of arrears from defaulters and approval to the increase in the tariff rates of various categories of domestic consumers at the rates mentioned therein was given. Now if the Council of Common Interests had the losses which the Authority suffers on account of electricity theft and the deficit in its revenue occasioned by its failure to recover the arrears of electricity dues before it, it might well have decided that instead of enhancing the tariff rate and thereby further burdening the honest consumers, the Authority should concentrate upon reducing the losses that it suffers on account of electricity theft and should also take stringent measures to recover the arrears of electricity dues. On these grounds, the Council would have been within its Constitutional right to refuse to enhance the tariff rate by means of surcharge and additional surcharge and to tell the Authority to generate the sums of money required to pay the net profits and to satisfy the conditionalities set by the World Bank by reducing electricity theft and by recovering the arrears. The Council would then, like any other body of reasonable men, might well have told the Federal Government and the Authority to break, what a newspaper writer has described, a cycle which is very simple to understand, that is "some steal and create a shortage of funds and then 'they' raise prices of all goods, services, utilities, so as to make up what has been stolen":

33. This is what makes the decision to levy the surcharge and the additional surcharge a matter of policy decision. You must ask the right question; you must look at the matter from the right angle and only then can the right answer to the question whether the levy of surcharge and additional surcharge was a function of the Council of Common Interests committed to it to the exclusion of the Federal Cabinet or for that matter any other body such as the Economic Coordination Committee of the Cabinet. My learned brother Ajmal Mian, J. Has noted that the approval of the Federal Government to these measures was obtained not because it was required under the Act of 1958 but because "the revision of tariff electricity has adverse political repurcussions on the Government in power and, secondly, under the provisions of the Act as is evident from the resume of the same given in para.8 hereinabove, the Federal Government has administrative control over WAPDA". But that is, if I may ~ again say with profound respect, precisely what makes the levy of surcharge and additional surcharge a matter of political judgment and hence a matter of policy within the meaning of Article 154. The conclusion must, therefore, be that the levy of surcharge and additional surcharge was a matter of policy and, therefore, R for the Council of Common Interests and that the consideration of this matter by the Federal Government or any other Authority amounted to its consideration in the wrong forum. At the end of the day one may, therefore, ask the rhetoric question, as did Mr. Khalid Anwar, Advocate, what is a matter of policy if the question whether the rate of tariff should or should not be increased by way of surcharge and additional surcharge was not?

34. A Constitutional provision is not made on the principle that a painter paints a picture, viz. To be looked at. As the great Chief Justice Marshall put it in the famous case of Gibbons v. Ogden (1824) 6 LEL 23, at 76: "Powerful and ingenious minds, taking, as postulates, that the powers expressly granted to the Government of the Union are to be contracted, by construction, into the narrowest possible compass, and that the original powers of the States are retained, if any possible construction will retain them, may, by a course of well-digested, but refined and metaphysical reasoning, founded on these premises, explain away the Constitution of our country, and leave it a magnificent structure indeed, to look at, but totally unfit for use". The function of this Court is to guard the ark of the Constitution and my endeavour in construing the provisions of Article 154 of the. Constitution has been to enforce it in the trembling hope to save it from being reduced to a painting or a "magnificent structure indeed, to be looked at, but totally unfit for use", which it will be if the view of this Article contended for on behalf of the Authority is allowed to prevail.

35. In the classic phrase of Chief Justice Marshall, "the power to tax is the power to destroy". Similarly, the power to determine rates for public utility services, like the power to tax, may be so exercised as to destroy. But, "this, as has often been observed, is a Government of law, and not a Government of men, with its Constitutional limitations and guarantees ...."(Smyth v. Ames 169 US 464 (at page 841). There is, therefore, no room here for the philosophy that the end justifies the means. As I have tried to demonstrate, the power of the Authority, under section 25 of the Act of 1958, to fix rates, is subject to the Council of Common Interests' powers under Article 154 of the Constitution, and if there has been no compliance with Article 154, the end, however laudable, cannot be justified. Therefore, the power to determine rates is not, in the words of Justice Holmes (277 US 218, 222) "the power to destroy while this Court sits".

36. There remains the question whether the provision of tariff by enhancing it by way of the surcharge and the additional surcharge in question is ultra vires the Authority's power under section 25 of the Act of 1958. The object of the doctrine of ultra vires is the protection of the public and this has been sufficiently demonstrated by the to English cases Hazell v. Hammersmith and Reg v. Richmond L.B.C.' referred to above. It has been noticed that the primary object of the levy of surcharge was to raise money to enable the Authority to discharge its Constitutional obligation under Article 161 of the Constitution to pay the net profits to the Provinces; and that the object of the levy of additional surcharge was to generate 40 % of internal cash generation for its further development schemes to enable it to obtain loan from the World Bank, which imposed the condition that 40% of I.C.G. Should be generated by the Authority. I agree that payment of the net profits being the Authority's obligation under Article 161 of the Constitution is part of the operating costs of the Authority. However I cannot agree that the generation of 40% of I.C.G. For further development schemes such as Ghazi Barotha Power Project was a factor which the Authority was entitled to take into consideration in the exercise of its powers under section 25 of the Act of 1958. In determining the rates at which the Authority shall sell power, it is required to provide for meeting

(i) operating costs, (ii) interest charges and depreciation of assets; (i.e) the redemption at due the of loans other than covered by depreciation, (iv) the payment of any taxes and (v) a reasonable return on investment. It is plainly clear that generating funds by increasing the rates of tariff for a future scheme is not one of the factors which section 25, subsection (2) of the Act, 1958 empowers the Authority to take into consideration. This was, therefore, a case in which the Authority in deciding to increase the rates of tariff based their decision on a matter which it had no authority to take into account and must on the ratio of the landmark case Anisminic Ltd. v.

Foreign Compensation Commission (1969) 2 AC 147) be held to be ultra vires the Authority's power under section 25 of the Act of 1958. To hold otherwise would amount to this that the present consumers are being made to pay for a generation of future consumers, who will benefit only if a scheme or schemes for producing electricity in future is implemented. That is plainly not permissible to be done under section 25 of the Act of 1958.

37. Admittedly the matter of the levy in question was never placed before the Council of Common Interests for its policy decision under Article 154 of the Constitution.

38. I would hold, therefore, that the levy of the surcharge and the additional surcharge in question is Constitutionally invalid and also ultra vires the Authority's power under section 25 of the Act of 1958.

Consequently, I would accept these appeals and set aside the judgments of both the Lahore High Court, Lahore dated 19th December, 1995 and the Peshawar High Court dated 2nd October, 1995.

(Sd.)

Fazal Karim, J.

ORDER

By majority view all the appeals and petitions for leave against the impugned judgments of Peshawar High Court and Lahore High Court are dismissed with no order as to costs, with the observation that consumers in G.A.I.E., who are still enjoying 50% concession in the electricity tariff, shall also be entitled to the same on Surcharge and Additional Surcharge as they are parts of the tariff.

(Sd.)

Ajmal Mian, J.

(Sd.)

Saleem Akhtar, J.

(Sd.)

Zia Mahmood Miraza, J.

(Sd.)

Fazal Karim, J.

(Sd.)

Mukhtar Ahmed Junejo, J.