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Apr 08, 2013, 11.18 AM IST | Source: PTI

HC rules in favour of BEST, MTNL is commercial consumer

The Bombay High Court has upheld the decision of a power distribution company categorising telephone exchanges of Mahanagar Telephone Nigam Ltd (MTNL) as 'commercial consumer' for the purpose of charging tariff.

The Bombay High Court has upheld the decision of a power distribution company categorising telephone exchanges of Mahanagar Telephone Nigam Ltd ( MTNL ) as 'commercial consumer' for the purpose of charging tariff.

MTNL had filed a petition challenging the decision of Brihanmumbai Electric Supply and Transport Undertaking (BEST) to change its category from 'industrial consumer' to 'commercial consumer'.

BEST contended that the Appellate Tribunal for Electricity had recently held that telephone exchanges were liable to be charged on the basis of commercial category (non-residential supply category) and that the arguments that telephone exchanges are 'industrial users' was not accepted by the Tribunal. This communication was sent to MTNL but this had not been challenged in the petition, BEST said.

Hearing the petition recently, a bench headed by Chief Justice Mohit Shah refused to grant relief saying they were prima facie satisfied with the arguments of BEST that MTNL was not an 'industrial power user' but a commercial consumer. The court also took into account the submission of BEST that MTNL have been paying electricity charges on the basis of
rates applicable to commercial consumer right from 1987 to 2006 and again from June 2009 onwards.

It, however, said that as far as past bills were concerned they were even for the period prior to May 2009. MTNL has calculated its charges from its consumers on the basis of tariff rate which was levied by BEST during the relevant period from January 2007 to May 2009. The bench granted stay against recovery of amount by the power company on the basis of impugned bills for the period January 2007 to May 2009 and for any prior period.

From June 2009 onwards, the court, however, ordered MTNL to pay on the basis of tariff rate applicable for commercial consumers. 

The bench clarified that the payments made by MTNL on the basis of commercial rate shall be without prejudice to its rights and contentions and if it succeeds in the petition, the court would pass an order regarding the refund of amounts with interest at a rate as may be specified in the final order.

The petition has been posted for final disposal on April 29. MTNL contended that it would fall under the category of 'Industrial user' and not 'Commercial user.' It also relied upon a communication dated January 16, 2007, wherein it was stated by Divisional Engineer Commercial (South) of BEST that the electricity tariff of MTNL telephone exchanges will be changed from commercial to industrial consumer with effect from April 1, 2007.

MTNL submitted that it was rendering IT services. It also relied upon similar orders of the High Court in petitions filed by Tata Telescopes Services (Maharishi) Ltd and Bharat Sanchar Nigam Ltd. Opposing any interim relief, BEST argued that MTNL was paying power charges as per the rates applicable to commercial consumers from 1987 to 2006.

It contended that the communication of January 16, 2007 sent by the then Divisional Engineer Commercial (South) of BEST to MTNL was without any authority. BEST further contended that if MTNL did not pay as per
commercial rates, it would be put to irreparable loss as it was a statutory undertaking of Brihanmumbai Mumbai Corporation which renders public utility services likes power distribution and transport.

MTNL stock price

On November 28, 2014, Mahanagar Telephone Nigam closed at Rs 27.65, up Rs 0.10, or 0.36 percent. The 52-week high of the share was Rs 39.10 and the 52-week low was Rs 13.00.


The company's trailing 12-month (TTM) EPS was at Rs 134.30 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 0.21. The latest book value of the company is Rs 80.01 per share. At current value, the price-to-book value of the company is 0.35.

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