Companies & Sectors
Appellate Tribunal dismisses Tata Power's plea over cross subsidy surcharge

The Tribunal dismissed Tata Power's petition challenging MERC's order to impose cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC

Mumbai: The Appellate Tribunal for Electricity (ATE) has dismissed the petition of Tata Power Company (TPC) challenging the Maharashtra electricity regulator's order on imposing cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC, reports PTI.


Tata Power had challenged the Maharashtra Electricity Regulator Commission's (MERC) order, which allowed Anil Ambani-led RInfra to collect cross-subsidy surcharge from its high-billing customers, who have migrated to rival Tata Power in the interest of the consumers as well as the licensees.


In a September last year, the MERC had said that if high-end consumers of a supplier move to another one under open access system, they will have to continue to cross subsidise the lower-end consumers of their previous supplier.


The ATE, in its order dated 21st December said: "Without reasonable subsidy, there is a possibility that all the consumers in RInfra may move to TPC and in that event, the monopoly of the TPC would be created.


"This action of imposing cross subsidy surcharge is to preserve the competition in order to promote the industry and simultaneously to protect the interest of the consumers".


Under the cross-subsidisation regime, consumers with higher power usage compensate for lower costs per unit charged from those consuming less than 300 units a month.


After the consumers were given the choice to switch power discoms, some high-end customers shifted to Tata Power, which had lower rates as a result of no obligations to serve low-end consumers at cheaper rate, the spokesperson said.


Upholding the decision of the state Commission, the ATE said: "MERC is required to look after not only the interest of the consumers but also the interest of licensees.


"Therefore, the Commission, while deciding that the change over consumers are liable to pay cross subsidy surcharge to RInfra for using their network has in fact taken into consideration the interest of the consumers as well as the interest of the licensees. Therefore, findings and directions given (by MERC), which would promote healthy competition are perfectly justified".


RInfra is at present serving around 28 lakh consumers in its distribution areas in suburbs, out of which, almost 23 lakh consumers are low-end ones, including 12 lakh coming from the unstructured developments in the suburbs, who are cross subsidised.


On the contrary, nearly 90% (bulk) of Tata Power customers include railways, refineries, large housing and commercial complexes and multiplexes.


PSUs, insurers face tough time in consumer fora during 2012

Pulling up PSUs for behaving 'penny-wise, pound-foolish', the consumer fora in 2012 also made clear its displeasure with insurance companies -- private or state-run -- for denying rightful claims of consumers by asking the Centre to examine the issue and take action against the erring companies

New Delhi: Insurance companies and public sector units (PSUs) had to face some tough time in 2012 from the consumer fora which pulled up these entities for causing a rise in frivolous litigation, reports PTI.

The apex consumer commission pulled up PSUs for behaving 'penny-wise, pound-foolish' and spending more money in fighting cases than they might have to pay to the claimants.

The National Consumer Disputes Redressal Commission (NCDRC) made the observation while pulling up Haryana Urban Development Authority (HUDA) for "gross negligence, deliberate inaction and lack of bonafides" in delaying by 204 days filing of a plea against a state consumer commission's order.

The NCDRC also imposed a fine of Rs50,000 on HUDA while blaming the legal staff of the PSUs for not examining cases properly and forcing litigants to approach courts, resulting in a rise in frivolous litigation.

Apart from PSUs, the consumer fora made clear its displeasure with insurance companies -- private or state-run -- for denying rightful claims of consumers by asking the Centre to examine the issue and take action against the erring companies.

The fora had also asked the Union finance ministry to deal strictly with private insurance firms and consider cancelling their licences for harassing customers and illegally rejecting their claims.

State-run insurance company LIC was also not spared, with the Delhi State Consumer Commission saying that it has become the "richest" organisation in the country by rejecting rightful claims of insured under mediclaim policies on "flimsy" grounds.

Airlines, banks, auto majors, insurance firms, hospitals, food joints, manufacturers of electronic gadgets, government wings like Railways and postal department, none escaped the stringent scrutiny of consumer fora on complaints of their indulgence in unfair and deceptive trade practices.

While the telecom sector managed to avoid scrutiny of the consumer fora in cases of billing disputes due to a 2009 Supreme Court ruling, matters related to value added services -- like caller tunes, number portability, SIM activation -- offered by the telecom majors were taken up by the fora.

The apex court had ruled that as per section 7B of the Indian Telegraph Act of 1885, a dispute between a consumer and a telephone service provider can be resolved only through arbitration and the consumer is barred from moving a consumer forum for redressal of grievances against a telephone company.

Despite the ruling, Bharti Airtel was ordered by a consumer forum here to pay Rs25,000 to a post-paid subscriber as compensation for harassing him by demanding fresh documents to verify his six-year-old connection and then stopping outgoing calls on his number.

The aviation sector also faced ire with several major airlines -- international as well as Indian -- being rapped for providing deficient service to fliers.

While Kuwait Airways was ordered by NCDRC to pay Rs25 lakh as compensation to Rajasthan Art Emporium for delaying the delivery of its consignments of handicrafts to the US, Air India was asked to cough up over Rs one lakh by a Delhi district consumer forum to make its "rude" staff "learn a lesson" for their "callous" service towards a flier.

Continuing to safeguard the interests of travellers, be it by air or by rail, a district consumer forum ordered Indian Railways to pay Rs60,000 to a woman whose purse was stolen in 2009 during her journey from Secunderabad to Delhi on Andhra Pradesh Rajdhani Express. It also advised Railway Board to provide lockers in trains for passengers to keep their expensive articles safe. .

In another case involving the state monolith, a consumer forum held that a passenger's failure to check the requisite date of his train ticket during the booking does not absolve Railways from the liability of giving him the wrong ticket and of rendering deficient service.

Issues related to consumers' health and medical negligence by doctors and hospitals were also addressed by the various consumer fora.

In one such case, a leading children's hospital in the national capital -- Kalawati Saran Children Hospital -- was ordered by Delhi Consumer Commission to pay Rs10 lakh as damages to the parents of a child for transfusing HIV-infected blood to him 14 years ago in his infancy.

The children's hospital, affiliated to Lady Hardinge Medical College, and its doctor were held guilty by the commission of committing "sheer medical negligence" in giving the HIV-infected blood to the then three-day-old child.

In another case, Escorts Heart Institute and Research Centre was ordered by the NCDRC to pay Rs50,000 to a woman who had contracted Hep-B due to transfusion of tainted blood to her during her cardiac surgery.

On what constitutes accidental death for availing benefits due to the same, a district consumer forum here held that death due to mosquito bite is accidental and the NCDRC ruled that a patient's death due to rash or negligent act of a doctor is also an accident.

The banking and financial services sector also came under the scanner of the consumer fora, which pulled them and their officials up on issues ranging from forceful seizure of vehicles bought on loan to leaking of customers' account details to a third party.

While HDFC Bank was directed by a district consumer forum to pay Rs3 lakh as compensation to a borrower for seizing his car bought on loan without giving him notice, a Citi Bank branch manager was ordered by Delhi State Consumer Commission to pay Rs15 lakh as compensation to a credit card holder for leaking his account details to a third party.

Electronics companies like Samsung, Nokia and Sony were pulled up for sale of defective goods to consumers as well as deficiency in after sales services provided to buyers.

In one case, Nokia was directed to pay Rs67,000 for selling a defective mobile handset and failing to repair it.

Eating joints, be it a local sweet shop or a food lounge run by a luxury hotel chain in the IGI airport in Delhi, were made to compensate their customers for serving sub-standard food.

While a local eatery was made by a consumer forum to cough up Rs20,000 as fine and compensation to a customer for serving her 'sambar' having a dead lizard in it, ITC-Welcome Group was ordered to pay Rs15,000 to a passenger as compensation for serving him "stale food" at its IGI Airport lounge and making him fall ill after its consumption.

Even auto giants were not spared with Maruti Udyog Ltd being asked by a district consumer forum to pay Rs 1 lakh to one of its customers as compensation for "inducing" him to buy a car through misleading advertisements on its mileage.

Luxury car manufacturer Skoda was directed by the Delhi State Consumer Commission to pay one of its car buyers Rs20.17 lakh, including compensation of Rs2.5 lakh, for selling him a defective car.


SEBI bars Tata Finance's former MD Dilip Pendse from markets for two years

SEBI barred Dilip Pendse, former MD of erstwhile Tata Finance, for two years on charges of involvement in fraudulent and unfair trade practices in four companies including TELCO and Infosys


Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has barred Dilip Pendse, former Managing Director of erstwhile Tata Finance, for two years from the securities market on charges of involvement in fraudulent and unfair trade practices in four companies including TELCO (now Tata Motors) and Infosys more than ten years ago, reports PTI.



In its order, SEBI said that it has restrained "Dilip S Pendse from accessing the capital market and prohibit him from buying, selling or otherwise dealing in the securities market, directly or indirectly, for a period of two years."


The market regulator had conducted a probe into the dealings of one Inshaallah Investments in the scrips of Himachal Futuristic Corp (HFCL), Tata Engineering and Locomotive Company Ltd (now known as Tata Motors), Infosys and Software Solutions India Ltd (SSI) following a complaint by Tata Finance in 2002.


The complaint alleged that certain illegal carry forward transactions in these scrips at the behest of Pendse in 2001.


Further, the transactions were executed on behalf of Inshaallah, in which a Tata Finance subsidiary, Niskalp Investment and Trading Company Ltd, had vital financial interest. It was stated in the complaint that Pendse was the director in both Niskalp and Inshaallah.


It was alleged that Pendse in association with two brokers -- Jhunjhunwala Stockbrokers and Pratik Stock Vision -- executed the transactions.


SEBI said that Inshaallah had agreed to buy a specific quantity of shares of HFCL, TELCO, Infosys and SSI on 'Principal to Principal' basis at specified prices on various dates.


Interestingly, on the same days Anjudi Property agreed to sell a similar quantity of shares of these companies on 'Principal to Principal basis' at price very close to the prices given by Inshaallah.


Later it was found that instead of settling these carry forward positions on the market, the shares were sold by Anjudi Property to the brokers on 'Principal to Principal' basis.


SEBI said such transaction cannot be said to be valid, as under the normal circumstances, the brokers should not have purchased shares not in possession of Anjudi Property.


It also said that the brokers also should not have sold similar quantities of shares to Inshaallah as they were not in the possession of such number of shares.


Pendse had submitted before SEBI that there has been an inordinate delay in the proceedings, but the regulator said that "the proceedings have been prolonged as the investigation had to deal with complex facts and records.


"After the issuance of SCN (Show Cause Notice), the inspection of the documents also consumed time. However, delay cannot be a ground for exoneration," SEBI's Whole-Time Member Prashant Saran said in his order.


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