Stereo. H C J D A 38.

Judgment Sheet
IN THE LAHORE HIGH COURT AT LAHORE
JUDICIAL DEPARTMENT

WP No.48379/2019
Ghani Global Glass Limited
Versus
Federation of Pakistan through Secretary Energy (Power
Division), Islamabad etc.

JUDGMENT
Date of Hearing 20.11.2019
Petitioners by the Mr. Ahmed Pervaiz,
Advocates: Mr. Muhammad Mohsin Virk,
Mr. Muhammad Aslam Sheikh,
Mr. Sher Baz Ali,
Mr. Majid Jehangir,
Mr. Khalil ur Rehman,
Mr. Mustafa Kamal,
Mr. Lisan Ullah Khan,
Mian Muhammad Hussain Chotya,
Malik Sohail Ashiq Shujra,
Sheikh Muhammad Akhtar Shahzad,
Rana Mehboob Alam Khan,
Syed Najaf Hussain Shah,
Sayyed Alamdar Hussain Naqvi,
Mr. Imran Anjum Alvi,
Mian Mahmood Rashid and Rubi Saleha,
Malik Kashif Rafique Rajwana and Rabia
Hassan
Mr. Arshad Nazir Mirza,
Mr. H.M. Majid Siddiqui,
Mr. Moiz Tariq,
Rana Muhammad Arshad Khan,
Rai Muhammad Azam Kharal,
Mian Ali Akbar,
Rana Ahmed Tayyab Shahid,
Mr. S.M. Raheel,
Mr. Sohail Javed Chughtai,
Chaudhary Muhammad Ajmal Haq,
Mr. Muhammad Irfan Liaqat,
Mr. Muhammad Farooq Sheikh,
Mr. Khalid Gulzar,
Rana Sajid Rasool,
 2
WP No.48379/2019

Chaudhary Asim Iqbal,

Mr. Muhammad Abbas Nasir Chaudhary,
Mr. Muhammad Umer Tariq Gill,
Mr. Sajid Naseer Chaudhary,
Rai Zameer ul Hassan,
Mr. Muhammad Anas Aftab,
Mr. Mashood Iqbal,
Mr. Ijaz Ahmad Awan,
Mr. Muhammad Iqbal Akhtar,
Syed Amjad Iqbal Hussain,
Mr. Salman Afzal Malik,
Mr. Muhammad Nawaz Sheikh,
Mr. Sajjad Ahmad Jatoi,
Mirza Bilal Zafar,
Mr. Salman Ahmad Chaudhary,
Mian Irfan Ahmad Sial,
Mr. Ehsan Elahi Sheikh,
Mr. Shoaib Yousaf Awan,
Ch. Waqar Hassan,
Mr. Muhammad Baqir Hussain,
Rana Jamshed Khan,
Mr. Nasrullah Sattar Pasha,
Syed Habib Ullah,
Mr. Jan Muhammad Chaudhary,
Mr. Fawad Akram Sufi,
Mian Waqas Khalid,
Mr. Mudassar Shuja-ud-Din,
Mr. Muhammad Qaiser Amin Rana,
Mr. Jahanzaib Khan,
Mr. Muhammad Saqib Sheikh,
Mr. Khalid Nawaz Ghumman,
Mr. Shehzad Riaz Chattha,
Mr. Hassan Jalees Tarar,
Chaudhary Habib-ur-Rehman,
Mr. Tahir Attique Piracha,
Mr. Mubashar Hassan Sheikh,
Mr. Naveed Anwar Chohan,
Rana Mushtaq Ahmad Toor,
Mr. Shaukat Ali Tanweer,
Mian Tariq Mahmood,
Mr. Hashim Aslam Butt,
Mr. Adnan Ahmad,
Mr. Tahir Mahmood Mughal,
Malik Saqib Karim,
Mr. Iftikhar Gull Khan,
Mr. Muhammad Siddique Butt,
 3
WP No.48379/2019

Chaudhary Imtiaz Ullah Khan,

Malik Muhammad Ashfaq,
Mr. Arslan Arshad,
Mian Masroor Ahmad,
Mr. Ghulam Farid-ud-Din,
Mr. Faisal Ghafoor Khokhar,
Mirza Khurram Baig,
Mr. Shahid Abrar Basra,
Ch. Shafqat Ali Sulehria,
Mr. Faisal Hanif Khokhar,
Mr. Uzman Umar Khokhar,
Mr. Shahid Shaukat Chaudhary,
Mr. Adnan Qamar Malik,
Mr. Adil Naeem Sheikh,
Mr. Asif Hayat Khattak,
Chaudhary Yasir Ali,
Rana Shafqat Hussain,
Mr. Abdul Sami Qureshi,
Syed Muhammad Ghazanfar,
Mr. Nadeem Hussain,
Mr. Amir Hussain,
Chaudhary Muhammad Awais Kamboh,
Rai Tanveer Arshad Khan,
Chaudhary Farid Anwar,
Mr. Shakeel Ahmad Basra,
Mr. Shaukat Ali Tanveer,
Mr. Muhammad Ramzan Chaudhary,
Mr. Zabi Ullah Nagra,
Mr. Asif Amin,
Mr. Muhammad Rashid,
Chaudhary Mumtaz ul Hassan,
Malik Bashir Ahmad Khalid,
Respondents by the Ms. Ambreen Moeen, DAG.
Advocates: Mr. Muhammad Shafique and Mr. Umer
Sharif, Advocates for NEPRA.
Mr. Muhammad Shoaib Rashid, Mr. Furqan
Naveed and Ms. Manahil Khan, Advocates for
LESCO.
Mian Muhammad Mudassar Bodla, Advocate
for LESCO.
Sheikh Muhammad Ali, Advocate for FESCO
along with Rana Muhammad Rafique, Chief
Financial Officer, FESCO, M. Ismail Khalid,
SDO and Ayaz Haider, Revenue Officer,
FESCO.
Raja Akhtar Nawaz, Advocate for FESCO.
 4
WP No.48379/2019

Malik Asad, Advocate for FESCO.

Mian Ashiq Ali, Advocate for Respondent
FESCO.
Chaudhary Fiaz Ahmad Sanghaira, Advocate
for IESCO.
Chaudhary Imtiaz Elahi, Advocate for
Respondent FBR.
Mr. Shahid Sarwar Chahil, Advocate for
Respondent FBR.
Mr. Raza Bashir, Advocate for Chairman,
WAPDA.
Mr. Aurangzeb Mirza, Advocate for
Respondent GEPCO and FESCO.

Ayesha A. Malik J: This judgment decides upon the issues

raised in the instant Petition as well as connected Petitions detailed in
Schedule “A” as all Petitions raise common questions of law and
facts.
2. The Petitioners have challenged the imposition of quarter tariff
adjustment (“QTA”) in the electricity bills issued by the relevant
distribution company, who are the Respondents in these petitions. The
Petitioners have also challenged the decision dated 14.6.2019 issued
by the National Electric Power Regulatory Authority (“NEPRA”) and
the Notification dated 28.6.2019 issued by the Federal Government.
3. The basic relief sought for by the Petitioners is that the
Respondents be restrained from recovering QTA on the consumption
of electricity through their electricity bills. The Petitioners before the
Court are all consumers of electricity who are aggrieved by the
imposition of QTA in their bills on the basis of which the tariff has
been adjusted retrospectively. Learned counsel for the Petitioners
argued that as per the billing mechanism, the distribution company, on
the basis of the monthly readings, issues bills to consumers in
accordance with the tariff notified by the Federal Government. Once
the bill is paid, it becomes a past and closed transaction as the
Petitioners have paid the bill along with all relevant taxes and on the
 5
WP No.48379/2019

basis thereof have built that payment into their costs for the purposes
of their business. Furthermore once the bill has been paid, there is no
justification to seek any adjustment against a paid bill nor does the
law provide for the same.
4. Learned counsel further argued that the tariff was first
determined on 8.3.2016 being a multi year consumer end tariff for the
years 2015 to 2020. Against this tariff, LESCO filed a motion leave to
review which was dismissed by NEPRA vide order dated 19.5.2016.
The Federal Government made a request to reconsider the tariff which
was also dismissed on 1.7.2016 by NEPRA. The Respondent
distribution companies approached the Hon’ble Islamabad High Court
through various different petitions, consequent to which the matter
was remanded to NEPRA to re-determine the tariff for the financial
year 2015-16 to 2019-20. On 23.10.2017 NEPRA on its own made
some adjustments to the tariff for the financial year 2016-17 and for
the first time notification for the financial year 2015-16 and 2016-17
was issued on 22.3.2018. In the meantime on 27.4.2018, Regulation of
Generation, Transmission and Distribution of Electric Power Act,
1997 (“the Act”) was amended, such that several amendments were
made to Section 31 of the Act of which Section 31(4) is relevant for
the purposes of the dispute before the Court. The Federal Government
made a request before NEPRA for making uniform tariff and NEPRA
issued its decision on 19.12.2018 for the financial year 2016-17 and
2017-18. This was notified on 1.1.2019. On 14.6.2019 NEPRA made
its second decision whereby adjustments were made in the tariff that
had already been notified on 1.1.2019. These adjustments were
notified on 28.6.2019 after following the requirements of law for
public notices and calling for objections. Learned counsel further
argued that all adjustments made are in violation of Section 31(2)(a),
31(2)(c), 31(3)(a) and 31(3)(d) of the Act. Learned counsel further
argued that the decision was taken by only three members of NEPRA
 6
WP No.48379/2019

without any Chairman, which is against law. Reliance is placed on

“Sh. Rahmatullah v. The Deputy Settlement Commissioner, Centre,
‘A’ Karachi and others” (PLD 1963 SC 633), “Sheikh Fazal Ahmad
v. Raja Ziaullah Khan and another” (PLD 1964 SC 494), “Islamic
Republic of Pakistan through the Secretary, Ministry of Commerce
and Local Government (Commerce Division), Islamabad” (1977
SCMR 509), “Imtiaz Ahmad and others v. Punjab Public Service
Commission through Secretary, Lahore and others” (PLD 2006 SC
472), “Province of Punjab through Secretary to the Government v Dr.
Muhammad Zafar Iqbal and 10 others” (2018 PLC (C.S) 152) and
“Syeda Shazia Irshad Bokhari v. Government of Punjab through
Secretary Health and another” (PLD 2005 Lahore 428).
5. Report and parawise comments have been field by the
Respondent LESCO. Learned counsel for the LESCO stated that the
Respondents are Distribution Licensees who filed petitions before
NEPRA for determination of consumer end tariff in accordance with
the National Electric Power Regulatory Authority (Tariff Standards
and Procedure) Rules, 1998 (“1998 Rules”). A public hearing is
always given when adjustments are made and any member of the
public can raise objections at the hearing. Quarterly adjustments are
made on account of the variations in the components of the Power
Purchase Price (“PPP”) which includes transmission and distribution
losses amongst other components. LESCO challenged the
determination made on 8.3.2016 and ultimately the matter went to the
Hon’ble Islamabad High Court wherein the issue of tariff
determination was remanded to NEPRA in terms of the judgment
cited at Lahore Electric Supply Company Limited (LESCO) and
others v. National Electric Power Regulatory Authority and others
(PLD 2018 Islamabad 20). Learned counsel argued that NEPRA
issued the tariff and made all adjustments as per the rules; that it has
not violated any provision of the Act, the Rules or the National
 7
WP No.48379/2019

Electric Power Regulatory Authority Guidelines for Determination of

Consumer End Tariff (Methodology and Process) 2015 (“the
Guidelines”) and that in fact this issue has been decided several times
all the way up to the august Supreme Court of Pakistan. Learned
counsel further stated that the Petitioners have no vested right to
challenge the tariff. He argued that a public hearing is given and any
objection that the Petitioners have to the prudency of the costs should
be raised at that time and that such matter cannot be challenged in
Constitutional petition. Learned counsel places reliance on ICC
Textiles Limited through Authorized Representative and 31 others v.
Water and Power Development Authority (WAPDA), WAPDA House,
Lahore through Chairman and 15 others (2009 CLC 1343), Flying
Board and Paper Products Ltd. and others v. Government of Pakistan
through Secretary Cabinet Division and others (2010 SCMR 517)
and in WP No.25437/2015 titled Hameed Steel etc. v. LESCO etc.
vide order dated 2.9.2015. He further clarified that essentially QTA
has always been made, however, it is for the first time that this has
been depicted in a separate box in the bill in terms of the requirements
stipulated in the Notification dated 28.6.2019 issued by the Ministry
of Energy (Power Division), Islamabad. On the issue of the number of
the members who can take a decision with respect to tariff he stated
that the matter in issue stands decided by the august Supreme Court of
Pakistan in “National Electric Power Regulatory Authority v.
Faisalabad Electric Supply Company Limited” (2016 SCMR 550)
hence this objection cannot be raised before this Court.

6. Report and parawise comments have also been filed by the

Respondent NEPRA. Learned counsel for the Respondent NEPRA
argued that NEPRA is statutory body established under the Act for the
regulation of provision of electric power service in Pakistan. In terms
of the Act, NEPRA is responsible for the determination of tariff.
Every distribution licensee files a petition before NEPRA seeking
 8
WP No.48379/2019

determination of consumer end tariff in accordance with the provision

of the 1998 Rules. The salient features of the petitions are published
in the newspaper inviting comments, objections and interveners and a
public hearing is granted. Subsequently, the tariff determination is
made by NEPRA. In the case before the Court a multiyear consumer
end tariff was determined for LESCO for a period of five years from
2015 to 2020. Essentially the determination was made on 08.08.2016
after carrying out a public hearing, however, LESCO was aggrieved
by this determination, hence it filed a motion for leave for review,
which was decided by NEPRA on 19.05.2016. Subsequently,
reconsideration request was filed by the Federal Government, which
was decided on 01.07.2016. LESCO being aggrieved filed a petition
before the Hon’ble Islamabad High Court, Islamabad, which
ultimately remanded the matter to NEPRA for reconsideration in
terms of PLD 2018 Islamabad 20 (supra). Learned counsel stated that
tariff methodology for determining PPP and quarterly adjustment are
provided for in the Guidelines. The consumer end tariff is determined
to ensure recovery of the revenue requirements of the distribution
company in accordance with the Act and 1998 Rules. The Petitioners
before the Court had efficacious remedy available to them under the
Act in the form of an appeal, which remedy has not been availed by
them. Furthermore, they can always participate in the public hearing if
they have any objection or comments with respect to the quarterly
adjustment. However, the contention that the quarterly adjustments
are against the mandate of the law or that they are applied
retrospectively is totally without basis as it is part of the mechanism
for tariff determination which is prescribed under the law and which
has been followed by NEPRA regularly. He explained that quarterly
adjustment can only be made after the actual consumption of
electricity, hence the Guidelines prescribes for adjustment to be made
at end of each quarter, once the actual figures are available. With
 9
WP No.48379/2019

respect to the arguments made on the composition of NEPRA and the

fact that only three members were available at the time when the
decision was taken, learned counsel stated that the matter in issue has
already been decided by the august Supreme Court of Pakistan in
2016 SCMR 550 (supra), hence the said issue cannot be raised again
before this Court.

7. Report and parawise comments have also been filed by the

Respondent FESCO, GEPCO and IESCO. They have adopted the
arguments raised by the learned counsel for the Respondent LESCO
and NEPRA. On behalf of Federal Government, learned Deputy
Attorney General for Pakistan also adopts the arguments made on
behalf of NEPRA.

8. Heard and record perused. The impugned decision dated

14.06.2019 by NEPRA is related to the periodical adjustment in Tariff
for the 1st and 2nd Quarters of the FY 2017-18. As per the decision,
XWDISCOs filed their quarterly adjustment request on account of the
variation in the PPP, which includes the impact of transmission and
distribution losses for the first and second quarters being July to
September, 2018 and October to September, 2018. A public hearing
was held on 13.03.2019 and subsequently NEPRA gave due
consideration to the comments, objections and interveners. A decision
was made on 14.06.2019, which was communicated to the Federal
Government for notifying in the official Gazette. The Petitioners are
aggrieved by this decision on the ground that it is not in accordance
with the Act; that it has retrospective effect and that the NEPRA was
not duly constituted at the time. They rely on Section 31 of the Act to
urge their point of illegality and being against the mandate of the law.

9. The basic frame work of the law for tariff determination falls
under the Act. Section 7 provides for the powers and functions of the
Authority, wherein Section 7(2)(i) prescribes that the Authority shall
 10
WP No.48379/2019

issue guidelines and standard operating procedures for tariff

determination. Section 7(3)(a) prescribes that NEPRA shall determine
tariff, rates, charges and other terms and conditions for supply of
electric power service by the generation, transmission, and
distribution companies and recommend to the Federal Government for
its notification. Section 31 provides that the Authority shall in the
determination, modification or revision of rates, charges and terms
and conditions for the provision of electric power service be guided
by the national electricity policy, the national electricity plan and such
guidelines as may be issued by the Federal Government in order to
give effect to the national electricity policy and national electricity
plan. In terms of Section 31(3) the general guidelines applicable for
tariff determination have been provided in which it is stated that tariff
should allow the licensees the recovery of any and all cost prudently
incurred to meet the demonstrated needs of their customers. Section
31(4) provides that NEPRA shall determine a uniform tariff for
distribution licensees on the basis of their consolidated accounts. Once
the tariff has been approved, it has to be notified by the Federal
Government in the official Gazette under Section 31(7). The Act also
provides for an appeal under Section 12G against any decision or
order of the Authority and the quorum of the Appellate Tribunal is in
terms of Section 12E. The 1998 Rules prescribes for the procedure to
be followed by the Distribution Licensees when filing its tariff
petitions such that Rule 5 of the 1998 Rules requires publication and
service of notices for a public hearing and in terms of Rule 9 the
hearing is given by the Authority. Rule 17 of the 1998 Rules provide
for the standards and guidelines on the basis of which tariff shall be
determined and again in terms of Rule 17 (3)(i) of the 1998 Rules
tariff should allow licensees the recovery of any and all costs
prudently incurred to meet the demonstrated needs of their customers.
 11
WP No.48379/2019

10. In exercise of power under Section 7(2)(i) of the Act, NEPRA

has issued Guidelines which provides for the methodology to be
adopted with reference to tariff determination. In terms of Guideline
49 quarterly and bi-annual PPP adjustments are prescribed with
reference to the PPP components being adjustments pertaining to the
capacity and transmission charges, the impact of T&D losses and
adjustment of variable O&M. Each component of the PPP is provided
for in the revenue requirement of the distribution licensees on the
basis of projected figures which are subject to adjustment as per actual
figures as it is a pass through item. Also since there is a requirement
for a uniform consumer and tariff at a national level, this is
determined by NEPRA and notified by the Federal Government. The
XWDISCOs file their adjustment requests on account of PPP
variation in terms thereof. The objective of quarterly adjustment is to
ensure that all pass through costs are factored into the tariff as per the
requirement of the Act and 1998 Rules. The Distribution Companies
does not have to bear these costs and is entitled to recover all
prudently incurred costs. Hence the requirement of quarterly or bi-
annual adjustment. It is noted that as per the Guidelines only fuel
adjustment is made on a monthly basis.

11. NEPRA determines tariff as per Section 31 of the Act after a

distribution licensees file the petitions as per the 1998 Rules and the
Guidelines. NEPRA determines the consumer end tariff for each
distribution licensee after assessing the different components of its
revenue requirements. In this context, there is a public hearing, which
is duly published in the newspapers inviting all comments, objections
and interveners request. The formulas and principals for determining
the revenue requirement is provided under the Guidelines. The
Guideline prescribes for quarterly adjustment of capacity and
transmission charges, the impact of transmission and distribution
losses and the adjustment of variable O&M. As per the Guidelines,
 12
WP No.48379/2019

fuel adjustment is made on a monthly basis whereas the costs, charges

and losses are made on a quarterly basis. This is necessitated because
every tariff determination is based on presumptive figures at the
beginning of the financial year, which figures have to be actualized on
the basis of actual data. This exercise is carried out periodically on a
quarterly basis after holding a public hearing. In this way every tariff
determination is for a fixed period and every quarterly adjustment is
also for a fixed quarter. Hence QTA is as per the prescribed
methodology and falls within the frame work of the Act. These are
technical issues, based on projections and data for which NEPRA has
laid out a transparent and comprehensive procedure, which should be
followed. Therefore, the contention of the Petitioners with reference
to QTA is without basis as the structure of the Act read with 1998
Rules and the Guidelines clearly provides for periodical adjustment of
the PPP components which have to be determined based on actual
costs incurred.

12. Consequent to the decision given by the Hon’ble Islamabad

High Court, PLD 2018 Islamabad 20 (supra), NEPRA set out to re-
determine the tariff for the FY 2015-16 which included costs and
adjustments pertaining to the entire financial year. A public hearing
was held for the benefit of all stakeholders and the prudency of all
costs claimed for that quarter were duly considered. At the time,
NEPRA decided to include the impact of the component of the PPP
for the entire FY 2015-16 as considerable period had lapsed from
when tariff was earlier determined and when the matter was remanded
to NEPRA vide the decision of the Hon’ble Islamabad High Court.
Since there was a public hearing, the Petitioners should have
participated in the same and could should have raised their objections
at the time with respect to the prudency of the costs being claimed. At
this stage, raising these objections before this Court in Constitutional
jurisdiction is without basis as there is no vested right in favour of the
 13
WP No.48379/2019

Petitioners which they seek to enforce nor is there any basis on which
they can claim that the periodical adjustments are illegal or have been
even given retrospective effect. The periodical adjustments are in
terms of the prescribed procedure under the scheme of the Act, hence
no illegality is made out. Furthermore, remedy of appeal is provided
under the Act, which was never availed by the Petitioners.

13. So far as the Petitioners, objection with respect to the

composition of the authority and the fact that at the time they were
only two members and one Vice Chairman, it is noted that this matter
has already been decided by the august Supreme Court of Pakistan in
“National Electric Power Regulatory Authority v. Faisalabad Electric
Supply Company Limited” (2016 SCMR 550), hence no grievance is
made out in this respect before this Court.

14. In view of the aforesaid, this petition as well as all connected

petitions are dismissed. At this stage learned counsel for the
Petitioners requested that in the event that their prayer is not accepted
by the Court, NEPRA should be directed to make installments for the
sake of payment of QTA. It is observed that in this regard any request
for installment should be raised before NEPRA or the Distribution
Companies.

(AYESHA A.MALIK)
JUDGE
Allah Bakhsh*