P L D 2015 Lahore 661 (PLP)

MRS. AYESHA A. MALIK J.

The appellant is aggrieved of judgment dated 3-12-2014 passed by the learned judge in chambers, wherein the term full strength of the Authority in Rule 16(6) of National Electric Power Regulatory Authority (Tariff Standards and Procedure) Rules, 1998 ("Tariff Rules") has been interpreted to mean all the five Members of the Authority (or NEPRA) including the Chairman as per section 3 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 ("Act").

2. Brief facts are that against the tariff determined by the Authority (Appellant) on 6-2-2014, a motion for leave to review was filed by the respondent Company before the Authority under Rule 16(6) of the Tariff Rules, which was decided by the Authority on 16-6-2014. At the time, the Authority consisted of only three Members, as the office of the Chairman and one Member was vacant, hence the motion for leave to review was decided by three Members of the Authority.

3. Learned counsel for the appellant argued that the three available and appointed Members represented the full strength of the Authority, at the time. He further argued that all acts and proceedings of the Authority, irrespective of any vacancy or defect in its constitution are valid and protected under section 3(6) of the Act. He argued that Rule 16(6) of the Tariff Rules is subordinate to section 3(6) of the Act and cannot be given an overriding effect.

4. Learned counsel for the respondent in the first instance raised a preliminary objection with regard to the maintainability of the ICA. He argued that under section 3 of the Law Reforms Ordinance, 1972 ("Ordinance"), if the petition under Article 199 arises out of any proceedings in which the law applicable provides for at least one appeal, review or revision to any Court, Tribunal or authority against the original order, appeal (ICA) before this Court is not maintainable. He pointed out that the remedy of appeal is available to the appellant under section 12A of the Act. On merits, learned counsel argued that full strength of the Authority under Rule 16(6) is the mandate of the law and cannot be dispensed with. He further submitted that full strength does not mean the available full strength but the statutory strength of five members. He submits that section 3(6) of the Act does not apply to the instant case, as 'vacancy' and 'defect' under the said Section assume that the constitution of the Authority is otherwise complete.

5. Responding to the preliminary objection, learned counsel for the appellant argued that the remedy of appeal, review or revision should have been available under the Act to the appellant. He went on to argue that section 12A of the Act does not provide for any remedy to the appellant, hence, the appellant cannot be deprived of its right to approach this Court in an ICA.

6. We have heard the parties and have gone through the record. Preliminary Objection

7. The appellant decided the motion for leave to review vide order dated 16-6-2014, which was impugned before the learned judge in chambers, who set aside the said order, holding that Rule 16(6) of the Tariff Rules required full strength of the Authority to hear the motion for leave to review. The Authority has impugned the judgment of the learned single judge before us and is not aggrieved of the order issued in the motion for leave to review as the said order was actually the order passed by the Authority itself. The Act read with Tariff Rules cannot possibly contemplate a remedial forum for the Authority where it would challenge its own orders as the Authority itself is the appellate and reviewing authority under the Act and the Tariff Rules. Therefore, section 12A has no applicability to the case of the appellant. The provision of one appeal, review or revision against the original order, under section 3 of the Ordinance must be available to the parties to the dispute in order to question the maintainability of the ICA. No such remedy is available to the appellant under the Act and therefore the appellant cannot be deprived of its right of appeal (ICA) before us. Any such interpretation would also be against the right to access to justice. Hence, the preliminary objection, being without any substance is overruled. Full strength of the Authority

8. The legal question, arising from the impugned judgment is the interpretation of the term full strength of the Authority as provided under Rule 16(6) of the Tariff Rules. However, deeper examination of the case reveals that the question that requires our consideration is much broader, that is, what is the strength or composition of the Authority required for the purposes of tariff determination or alternatively, whether full strength of the Authority is required for the determination of tariff and motion for leave to review. We have examined these questions under the structure of the Act and the Tariff Rules and in the larger constitutional context of federalism and provincial autonomy and the consequent fundamental rights of the people (consumers) of various Provinces.

9. The term full strength of the Authority appears for the first time under Rule 16(6) of the Tariff Rules in the following manner: Rule 16(6): Within ten days of service of a final order, determination or decision of the Authority, a party may .file a motion for leave for review by the full strength of the Authority of such final order, determination or decision, as the case may be. The Authority is established under Section 3 of the Act consisting of a Chairman and four Members, one from each Province. Section 7 of the Act provides for the powers and functions of the Authority and one of the powers and functions of the Authority is to determine the tariff under section 7(3)(a) of the Act. All the powers and functions of the Authority, enumerated under section 7, can be delegated to the Chairman or any Member of the Authority except the following under section 12 of the Act: (a) The power to grant, reject, amend, vary or revoke licenses or any condition thereof (b) The power to determine or modify tariff (c) The power to approve, disapprove or modify an investment program or a power acquisition program; (d) the power to make or repeal rules and regulations made under the Act; and (e) the power to make orders on an application for review of its orders. In the instant case, the power to determine tariff cannot be delegated by the Authority. Hence, the Authority established under Section 3 of the Act i.e., five Members including a Chairman and no one else, can determine tariff and decide upon a motion for leave to review of the tariff. In this regard, Rule 9(5) of the Tariff Rules provides that all the final decisions and determinations of tariff are to be made by the Authority itself on the basis of the recorded proceedings.

10. The preamble of the Act provides for regulation of generation, transmission and distribution of electric power and matters connected thereto. The Authority enjoys the mandate under the law to determine tariff for all the generation, transmission and distribution companies in the country and it is for this reason that the constitution of the Authority has representation from the four Provinces by having four members, one from each province. "Electricity" falls within Part-II of the Federal Legislative List of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") which is to be overseen by the Council of Common Interests under Article 154 of the Constitution. The purpose of the Council is to support and strengthen federalism and democracy. It is to ensure that the interests of all the Provinces are weighed and considered equitably. Electricity being a basic utility, every Province (and the consumers therein) has the right to have equal representation in the Authority and in the consequent decision making of the Authority regarding determination of tariff. This right flows from the right to fair determination under Article 10A of the Constitution and as it deals with electricity which is a basic utility it also borders on the right to life under Article 9 of the Constitution.

11. Determination of Tariff of electricity is not an insulated unitary act, but a result of deliberative participatory process involving all the stakeholders. The Authority entrusted with this task under the Act, is therefore, not a mere unstructured amalgam of people, but enjoys a unique character of provincial representation and in a way microcosmically represents the Federation by allowing representation of all the four Provinces on the Authority. The presence of every Member is important, as each of them represents a Province. If the Authority is short of the total statutory strength, it is in fact dysfunctional, as far as, performance of its core essential functions are concerned. These essential functions are enumerated under section 12 of the Act and the Authority is not allowed to delegate these powers amongst the Chairman or the Members. Any proceedings for the determination of tariff without a Member will deprive the whole Province and its people from participating and deliberating in the determination of electric power for the Province. This would be discriminatory under Article 25 and violative of the right to fair determination under the Objectives Resolution and upholds the constitutional ethos and values of cooperative federalism and participatory democracy. Therefore, the establishment of the Authority, with proportional representation of the four Provinces, has a constitutional significance and its full strength cannot be diluted or altered when performing its essential functions.

12. The term full strength under Rule 16(6) of the Tariff Rules is not the available strength but the statutory strength as provided under section 3 of the Act i.e., five Members including a Chairman because under the said Rule, the Authority discharges one of its essential functions. Rule 16(6) simply reiterates this principle that the Authority has to act with full strength in matters which fall within the core essential functions of the Authority and where delegation is not permissible. It is important to highlight that it is not only at the time of hearing a motion for leave for review that the Authority must have full strength, but the full strength of the Authority must be there when the tariff is to be determined by the Authority or while performing the other functions issued under Section 12 of the Act.

13. The Authority has other administrative powers and functions listed under section 7 of the Act. These administrative functions and its decisions are taken in the meetings of the Authority. Section 5 deals with this administrative character of the Authority and its secretarial provision, regulating the procedures for holding a meeting. These meetings and the decisions taken thereunder have no co- relation with the core and essential quasi-judicial powers and functions of the Authority e.g., the determination of tariff or deciding the motion for leave to review. Hence, the argument that if the quorum is complete the Authority can call a meeting and determine tariff, is hopelessly misconceived as it incorrectly mixes two different functions of the Authority. Section 5 deals with administrative meetings and is a secretarial provision with no nexus with the determination of tariff which is a quasi-judicial function of the Authority.

14. Learned counsel for the appellant has relied on section 3(6) of the Act to argue that decisions of the Authority cannot be declared to be void if only three Members have made the determination of tariff or have decided the motion for leave to review: Section 3(6) provides: No act or proceeding of the Authority shall be invalid by reason only of the existence of a vacancy in, or defect in, the constitution of the Authority. This is an operational provision which applies once the Authority has been duly constituted in terms of Section 3 and its composition is complete. The reference to the terms "vacancy" and "defect" pertain to absence of the member or a procedural defect or irregularity in the membership. Both these disqualifications assume that the Authority has been fully constituted. Section 3(6) addresses a temporary problem and, therefore, protects the acts or proceedings of the Authority to allow smooth operability of the Authority. There could be a situation where a duly appointed member refused to attend the proceedings of the Authority for tariff determination or some irregularity in the appointment of any member who is part of these proceedings. The purpose of section 3(6) is to ensure that such hiccups do not derail the Authority or its decisions. In the case of determination of tariff, while full strength is mandatory, there could be a situation where the Member is genuinely not able to attend the meeting or his appointment suffers from any irregularity making it difficult for him to attend, in such a situation, which should be duly recorded in the minutes of the proceedings, the Authority can proceed and determine the tariff or decide the motion for leave for review. This exception is few and far between but in the present case, section 3(6) has no relevance as the Authority was not properly and lawfully constituted to begin with, as the Chairman and one other Member had not been appointed. Section 3(6) does not empower the Authority to proceed without proper constitution in terms of section 3 of the Act. Any such interpretation can lead to absurd results, as the Chairman or a few Members, under the garb of section 3(6) can proceed on their own and continue to determine tariff for the longest time. In such an eventuality, the Federal Government will have no incentive or obligation to appoint Members under the Act or complete the constitution of the Authority. Any such interpretation is also violative of the fundamental rights and the Constitutional vision as discussed above.

15. For the above reasons, we uphold the judgment of the learned single judge and set aside the decision of the Authority dated 16-6-2014 passed on a motion for leave to review. We also declare that the Authority while determining the tariff, including the motion for leave to review, must have full strength i.e., five members including the Chairman, fully representing the four Provinces, subject to exceptions discussed above. As a consequence, the case is remanded to the Authority to hear the motion for leave to review of the respondent Company afresh, by the statutory full strength of the authority. This appeal is therefore, dismissed in the above terms. KMZ/N-22/L Case remanded.