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1997 SCMR 641

Per Ajmal Mian, J

The ratio decidendi of the above case–(Chairman Regional Transport Authority Rawalpindi vs. Pakistan Mutual Insurance Company Limited Rawalpindi, P L D 1991 S C 14)–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 complaint 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 President has the 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. [732-733] BB

Per Saleem Akhtar, J

—-Principles for exercise of discretion.

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. [p. 799] DDD

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. [p. 800] FFF

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. [p. 800]GGG

Even in case where authorities have been given wide power and discretion, they have to act reasonably, fairly and without any ulterior motive. [p. 801]HHH

The fairness is reflected if the action does not suffer from partiality discrimination, arbitrariness, bias and is not manifestly unjust.
[p. 801]III

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 act 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 playing 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.

The courts when examining the validity of any action 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. [p. 802]JJJ

In cases of public utility corporations the authority has also to take into consideration public interest as well. Wade in his aforesaid book has analyzed 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 act out of malice or a spirit of revenge, but in law this does not effect 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 act 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.”

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 purpose 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 purpose, 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 act would be to renounce a part of their statutory birthright.

(a) Constitution of Pakistan(1973) Art. 157

Interpretation of Art. 157 of the constitution–scope and application– Article 157, constitution of Pakistan is an enabling provision and is not a mandatory one–Electricity–Federal government and the Government of a province have discretion either to act under Art. 157 of the constitution or not to act–No constitutional obligation thus exists to carry out works or to take action mentioned in the Article.

Clause (1) of Article 157 of the constitution of Pakistan indicates that 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-clause; 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, require supply to be make in bulk for transmission and distribution within the province; whereas sub-clause (b) empower 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.

In Article 157, the word may has been employed and not the word shall, meaning thereby it is an enabling provision and not a mandatory provision. The federal Government and the Government of a province have discretion either to act under the above Article or not to act. In other words, there is no constitutional obligation to carry out works or to take action mentioned in the above Article. [p. 691]G

(b) Constitution of Pakistan(1973) Art. 157

Electricity–Power of Provincial Government to levy tax on consumption of electricity within the province–Extent–Determination of tariff for the distribution of electricity in the province by provincial Government Essential.

Government of a province has power to levy tax on consumption of electricity within the province irrespective of the fact it has not purchased electricity in bulk for distribution in the province or that it has not constructed power houses and grid stations and not laid transmission lines for use within the province. To put it differently, sub-clause (b) of clause (2) of Article 157 is independent and can be pressed into service without invoking other sub-clause. However sub-clause (d) of clause (2) is not independent. 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 province under above sub-clause (C). In other words, the operation of sub-clause under sub-clause (d) is depended on the factum whether the government of a province has acted under sub-clause (a) and/or under sub-clause (c) of clause (2) of Article 157 of the constitution. [p. 692]H

(c) Constitution of Pakistan(1973) Art. 161

Explanation–fixation of tariff for supply of electricity to consumers by WAPDA–criteria/parameters–WAPDA has the power to determine tariff for electricity from time to time within the parameters laid down in S. 25 of the Act. Subsection (2) of section 25 of the Act, 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 charge:
(iii) Depreciation of asserts:
(iv) the redemption on the due time 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 constitution with the modifications/additions that in the above Explanation the word “return on investment” have been employed; whereas in subsection (2) of section 25 of the Act the word “a 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 overheads, and provisions for reserves “have also been added in the aforesaid Explanation.

WAPDA has the power to determine tariff for electricity from time to time within the parameters laid down in subsection (2) of section 25 of the Act. [p. 723]Y

(d) Constitution of Pakistan(1973) Art. 199 & 161

Explanation–Determination of tariff for supply of electricity to consumers by WAPDA–constitutional petition, exercise of–Scope–WAPDA can determine the rate of tariff by taking into consideration six items mentioned in s. 25 of the WAPDA Act. 1958–Guide-line on such aspect are also found in Explanation to Art. 161(2) of the constitution of Pakistan (1973)–Court, however, can examine the question as to whether there has ben any violation of S. 25(2) of the Act while framing the tariff which includes surcharge and additional surcharge–such question, being a mixed question of fact and law, is pre-eminently suited to gone into in a suit and not in constitution petition.

WAPDA can determine the rates of tariff by taking into consideration six item mentioned in subsection (2) of section 25 of Act. There is guide-line on the above aspect in the Explanation to clause (2) of Article 161 of the constitution. 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. This question being a mixed question of fact and law, is pre-eminently suited to be gone into in a suit and not in a constitutional 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 items warranted by law is a complex and complicated question of fact, which cannot be decided without having the proper analysis of the costs of the above item from the experts and 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 item obtaining in some developing countries similarly placed. [p. 733]CC

(e) Constitution of Pakistan(1673) Art. 199

Determination of tariff for supply of electricity to consumers by WAPDA –surcharge and additional surcharge–constitutional jurisdiction, exercise of–Where, prima facie, there was no reliable material before the High Court to conclude that determination of tariff by WAPDA was not in terms of S. 25(2) of the Act, High Court, in its constitutional jurisdiction, was justified in not interfering with the tariff which includes surcharge and additional surcharge.[p. 743]EE

(f) Constitution of Pakistan (1973) Art. 157

West Pakistan Water and Power Development Authority Act (XXXI of 1958), S. 25—Electricity—Power of WAPDA under Art. 157, Constitution of Pakistan and West Pakistan Water and Power Development Authority Act, 1958—Nature. [pp. 824, 821] VVV & UUU

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