Patna High Court
Castings India Ltd. And Ors. vs Bihar State Electricity Board And Ors. on 3 March, 1978
Equivalent citations: 1978(26)BLJR513
JUDGMENT B.S. Sinha, J.
1. In all these four applications, the petitions are Small Scale Industries established in the districts of Singhbhum, Hazaribagh and are engaged in the manufacture of Re rolled steel products. These Industries were set up during the period 1972 to 1975. As in these applications, common questions are involved and the facts pleaded are similar, by the consent of parties, they have been heard together and are being disposed of by this judgment, which will govern them all. The prayer of the petitioners in all these applications is to issue a writ of mandamus commanding the Bihar State Electricity Board (hereinafter to be referred to as 'the Board' and their Officers as to desist from demanding and realising the minimum guarantee charges by way of short-fall and the increased fuel surcharge.
2. The case of the petitioners is that electricity is supplied to them under the incentive schemes sponsored by the Government of Bihar in the Department of Industries (Technical Education) and Cane, made under several resolutions providing for incentives and reliefs to Small Scale Industries, Large and Medium Scale Industries and Sick and Closed Industries. By a notification No. 5057, dated the 20th November, 1973, copy of which is Annexure-1 in C.W.J.C. No. 328 of 1977 (R) (In this judgment unless expressly stated, reference will be to C.W.J.C. No. 328 of 1977 (R)), it was provided that Small Scale Industries, which had started production from the 2nd October, 1973 would be subsidised at the rates of 9 paise per unit inclusive of electricity duty, which would be payable from the 1st of April, 1974. It was further provided that the Board in billing the consumer would deduct the subsidy as mentioned above. It was further provided that the Board would directly bill the Bihar State Industrial Development Corporation for the estimated amount of subsidy in two half-yearly installments beginning from the following financial year in the months of June and December. Small Scale Industries were also made eligible to be exempted from minimum guarantee charges. By resolution No. 16808 dated the 29th September, 1973, copy of which is Annexure-2, Government further stated that the Board had offered to grant a rebate of l/3rd of the normal tariff for Industries operating between 10-30 P.M. to 8-30 A.M. and for electricity consumed during that period. The Board entered into an agreement with the petitioners on a Performa known as High Tension Agreement Form and the supply of energy to the petitioners by the Board is under general high tension service at 11 KV. copy of this agreement is Annexure-3. The annual minimum guarantee bill which was earlier paid by the Industries Department, Govt. of Bihar, on the basis of a Circular bearing No. 16807, dated the 29th September, 1973, copy of which is Anpexure-4 has been withdrawn. It is stated that this withdrawal is mala fide and illegal. It is further stated in the petition that the charges in regard to the supply of electricity has been increased from time to time against different heads arbitrarily and illegally which has resulted in increase in charge under different heads from 40 per cent, to 600 per cent. Statement in support of this has been appended and marked as Annexure-5. It is also the case of the petitioners that the basis of calculation of minimum guarantee for every connected load is at 11 K.V. The consumption of energy fixed by the Board at 7008 units per year is arbitrary and impracticable. It is further said that the agreement entered into between the petitioners and the Board is arbitrary as it confers unilateral power and liberty to the Board at any time to alter tariff including fuel charge and minimum guarantee charge. In a supplementary affidavit filed by the petitioners on 1st November, 1977 it has further been stated that the request to the petitioners to the Board against the excessive and surplus charges and had remained unheaded and even the Managing Director of Adityapur Industrial Area Development Authority, Adityapur, had written to the Board for the same but no action had been taken thereon.
3. A counter-affidavit has been filed on behalf of the Board in which, it is stated that what has exempted by the Government was minimum guarantee charge and not minimum fixed charge. It has further been said that as the Department of Industries stopped contributing the minimum guarantee charge with effect from the 1st April, 1976 the Board had no alternative but to realise the same by directly billing the consumers which under the agreement, the consumer was bound to pay. It has further been said that the annual minimum guarantee charge is based only on the 25 per cent, load factor for higher tension consumer availing supply at 11 K.V. It is asserted that the electricity charges were not arbitrarily raised but were lawful. The Board has further asserted that the supply of electricity is maintained regularly except for some interruptions which are unavoidable and occur in natural course in the regular supply and maintenance of electricity. The minimum guarantee charges are based on tariff which had been framed under statutory sanction after taking into account the costs of different component used in the generation of electricity. It is pointed out that the Board has the statutory right to frame its own tariff, in accordance with the provisions of Sections 46 and 49 of the Indian Electricity (Supply) Act, 1948 (hereinafter referred-to as 'the Act'). Fuel charge and minimum guarantee charge included in tariff in accordance with the provisions of law.
4 As I have stated above the prayer of the petitioners is only to restrain the Board and its officers from demanding annual minimum guarantee charge by way of short-fall and fuel surcharge. Mr. Debi Prasad, appearing for the petitioners urged the following point for our consideration:
(i) that during the subsistence of an agreement the Board had no power to enhance the tariff unilaterally ;
(ii) that the statement in Clause 4(a) of the agreement that the minimum charges as specified in the schedule appended thereto shall be paid irrespective, of the consideration whether energy to that extent has been consumed or not cannot, be enforced, as it was not possible for the Board to perform its obligation ;
(iii) that the withdrawal of incentive by the State Government was illegal;
(iv) that the Board had no power to levy fuel surcharge ; and
(v) that under Clause 13 of the agreement, the petitioners were entitled to retable reductions in various charges.
5. In order to consider whether the Board unilaterally has the power to enhance tariff during the subsistence of an agreement, it would be relevant to refer to certain sections of the Act. Clause 8 of the agreement provides that the agreement shall ordinarily be in force for a period not less than three years in the first instance, except in exceptional cases in which the written consent of the Board will be taken from the date of commencement of supply and thereafter shall continue from year to year until the agreement is determined as hereinafter provided. It is not disputed that the agreement is in force and it has not been determined. Section 49 of the Act reads thus:
49. (1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.
(2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely,-
(a) the nature of the supply and the purposes for which it is required;
(b) the co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time' being served or adequately served by the licensee ;
(c) the simplification and stander disation of methods and rates of charges for such supplies ;
(d) the extension and cheapening of supplies of electricity to separately developed areas.
(3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors. (4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person." Bearing in mind Sub-section (1) of the above mentioned section, it will be seen that the Board has the power to supply electricity upon such terms and conditions as the Board thinks fit and for that purpose shall frame uniform tariff, in framing of which it has got to take into consideration the factors mentioned in Sub-section (2). Section 59 of the Act further provides that as far as practicable and after taking credit for any subventions from the State Government under Section 63 of the Act, the Board shall not carry on its operations at a loss, and shall adjust its charges accordingly from time to time. By going through these provisions, it will be seen that the Board has the power to alter its tariff in accordance with the provisions referred to above.
6. It was contended in this very context that the power given to the Board to increase the tariff under Section 49 of the Act is unguided and arbitrary. In the case of Maharashtra State Electricity Board v. Kalyan Borough Municipality , it was observed in paragraph 30 as follows:
(30). That next ground of attack against Section 49 is that it gives an unguided and arbitrary power to the Board to fix the tariff as it likes and not maximum limit for the tariffs that may be fixed by the Board has been stated. On first blush, it may appear that this contention has considerable force ; but we are satisfied that no such unguided or arbitrary power has been conferred on the Board either in the matter of framing uniform tariff or in the matter of fixing different tariffs for the supply of electricity to any person, not being licensee. No doubt, the maximum, as such, not been fixed in the statute. But, in our opinion, there are sufficient restrictions placed upon the power of the Board. In this connection, reference may be made to some of the sections of the Supply Act. Section 16, as we have already indicated, provides for the State Government constituting a State Electricity Consultative Council for the State. That Council consists of the representatives of the various interests including representatives of other than licensees under Section 49. In our opinion, all these provisions have the effect of properly guiding the activities of the Board, in its dealings with the consumers including the levy of tariffs. Section 49 itself is hedged in by various restrictions and directions which the Board will have to comply in the matter of framing uniform tariffs or in the matter of fixing different tariffs and that section, also in our opinion, provides a power guideline for framing uniform tariffs and different tariffs. Therefore, in particular, it may be noted that extension and cheapening of supplies of electricity to sparsely developed areas under Clause (d) of Section 49(2) of the Act can only be complied with the keeping the uniform rates at a minimum, consistently with the requirement, under Section 59 of not running at a loss. Therefore, we are satisfied, that Section 49 is not, in any way, bad on the ground that it gives an unguided and arbitrary power to the Board to fix its tariffs as it lies.
7. Mr. Prasad referred to the decision in case of Indian Aluminium Co. v. Kerala State Electricity Board in support of his submission that the Board could not unilaterally enhance its tariffs. In that case, an agreement had been entered into by the Government of the then native State of Travancore and the Aluminium Company to supply electric power to the company at a reasonable fate for a period of 20 years in 1941, which was in 1948 accepted by the new State of Travancore-Cochin, which was then created on the integration of those two States. The first agreement was varied and modified by a supplemental agreement in 1954 which was deemed to have been made in the exercise of the executive power when the State of Kerala was formed and all the rights and obligations under that agreement became the rights and obligations of the State of Kerala. 1 herefore, when the Kerala Electricity Board was formed, the Board again modified the supplemental agreement and a second supplemental agreement was entered into in 1963 which did not affect either the rights or the duration of the principal agreement. Thereafter, again third supplemental agreement was entered into and when that was in force, in the exercise of its powers under Section 79(j) read with Sections 49 and 59 of the Act, the State Electricity Board of Kerala issued an order fixing the rates of tariff for supply of electric power to all high tension consumers. The Board claimed to recover from the company the rates of tariff as fixed by that order, which was manifestly higher than the rates of tariff stipulated in the earlier agreements, which was challenged by the Company. In dealing with the question whether such unilateral enhancement of tariff by the Board was permissible, Bhagwati, J. speaking for the court held that the stipulations as to charges contained in agreements entered into between the Board and the company were made in the exercise of the statutory power conferred under Sub-section (3) of Section 49 and, therefore, such stipulations could not be considered to be void as fettering or hindering the exercise of the statutory power under that provisions. On the contrary, they represented the exercise of that statutory power and hence, it was held that the Board was not entitled to enhance the charges in derogation of the stipulations as to charges contained in the agreement entered into between the Board and the company. It will thus be seen that in this case, it was laid down that if an agreement was made under Section 49(3) of the Act, then the tariff could not be unilaterally increased. In the instant case, however, there is nothing to indicate that the agreement was made under Section 49(3) of the Act. On the contrary, the agreement shows that it was an agreement entered into in accordance with the schedule referred in the agreement. The schedule is the tariff notification of 1970 bearing No. Com/RII-108/70-1353 published in the Bihar Gazette (Extraordinary) dated the 18th July, 1970. The notification relates uniform tariff of various classes, namely-
(i) Low Tension Supply, Domestic Service (Symbol D.S.-I & D.S.-II) ;
(ii) Commercial Service (Symbol-C.S.) ;
(iii) L.T. Industrial Service (SymboKL.TJ.S.-I & L.T.I.S.-II);
(iv) Irrigation and Agricultural Service (Symbol-I.A S.) ;
(v) Mixed Load Service (Symbol-M.L.S.) ;
(vi) Street Light Service (Symbol-S.S.I and S.S.-II) ;
(vii) High Tension Supply, Special High Tension Service (Symbol-S.H.T.);
(viii) General High Tension Service ;
(ix) Licensee High Tension Service ;
(x) Railway Traction Service (Symbol-R.T.S.) ;
(xi) Special condition and charges applicable to High Tension Service; Fuel Surcharge.
Accordingly, the submission on behalf of the petitioners that the agreement entered into between the petitioners and the Board was one under Section 49(3) cannot be accepted and accordingly, the decision in the case of Indian Aluminium Company is of no avail to the petitioners.
8. In this context, it would also be relevant to refer to the decision in the case of the Adoni Cotton Mills Ltd. etc. v. The Andhra Pradesh State Electricity Board and Ors.
, where it was held that the power to enhance the tariff is included in Section 49 of the Act and Sub-section (1) of Section 49 confers power on the Board to supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit. This power contains the power to regulate and ration supply, the terms and conditions to which reference has been made make explicit what is implicit in the power. It was further pointed out in this decision that in the case of Indian Aluminum Company the Supreme Court held that under Section 49(3) of the Act, the Board stipulates for special tariff for supply of electricity at specified rates from time to time, I have already held above that the agreement entered into between the petitioners and the Board do not stipulate for special tariff for supply of electricity at specified rates.
Reliance in this connection, was also placed on the decision in Northern India Iron and Steel Co. v. The State of Haryana and Anr. . In that case, the question that fell for consideration was whether in the case of inability of the Board to supply energy due to power cut, the Board would still be entitled to receive monthly demand charge from the consumer and if so, to what extent. After pointing out the respective arguments of both sides, Untwalia, J. held that it was not necessary to resolve the extreme stand taken on either side because of the fact that a just, equitable and legal solution was provided during the course of argument on either side by reference to Sub-clause (f) of Clause 3 of the tariff itself. Therefore, this case is also of not much assistance to the petitioners.
10. Clause 14 of the agreement read thus:
14. The Board shall be at liberty at any time to alter the demand charges, energy charges and the minimum guarantee as set out in the schedule hereafter.
This provision apart from the reason given above clearly stipulates that the Board will be free to alter the tariff as provided in the schedule.
For the reasons given above there is no substance in the first submission advanced on behalf of the petitioner.
11. With regard to the second submission of the petitioners that the minimum charges provided under Clause 4(a) of the agreement is illegal, as it was impossible for the Board to perform its part of obligation. Reference was made to paragraph 13 of C.WJ.C. No. 328 of 1977 (R), which reads thus:
13. That consumption of energy fixed by Electricity Board of 7008 units per year is arbitrary and impracticable and is improbability as will appear from following amongst others :-
(a) The Board charges minimum guarantee every year given for the period when the Electricity Board is not able to maintain perenial supply of energy.
(b) The supply of energy is dislocated, disturbed and hampered by breakdown, fluctuation power failure.
(c) No consideration is given to the compulsory closure of factories required under statutes such as weekly closure days, compulsory closures on Independent Day, Republic Day, Mahatma Gandhi's Birth Day etc, under Factories Act and other Acts, and these arising out of the strikes, lock-outs, Bund and other exigencies including for maintenance condolences.
(d) That further calculation is made on 100% of the load factor (i.e. number of horse powers in the establishments) whereas actual of the horse power of the establishments are not constant use in the industries,
(e) That there is disparity in the system in the levy of charges which all appear from the fact that if the total unit is consumed the consumer is liable to pay at the rate of 8 paise per unit and in case of non-consumption of the total unit charge is raised at 17 paise per unit.
Para 9 of the counter-affidavit filed by the Board read thus:
9. That the statements made in paragraph 13 to 13 (e) of the writ application are wholly incorrect and denied. The Minimum Guarantee based not on 10% load-factor but only on 25% of the load-factor for HT. Consumer availing supply at 11 K.V. as such the question of not taking into consideration the closure of units on various accounts does not hold good. The supply of electricity is maintained regularly except in some momentary interruptions which are unavoidable and occurs in natural course in the regular supply and maintenance of electricity and/or by vis-major unit consumption is charged under various States as provided in the tariff. The unit charge for H.T. Consumer has been framed in a manner that the consumer consuming more unit will avail the lower rate and that consuming lesser units will pay higher rate which is based on commercial consideration and giving impetus on industry.
The general statement that the supply of energy is disclosed disturbed and hampered by breakdown, fluctuation in power failure has been re-butted by the Board by stating that the supply is maintained regularly except for some interruption which are unavoidable and occur in natural course of supply and maintenance of electricity and/or by vis-major. It has also been stated in the counter-affidavit that the minimum guarantee is not based on 100% load-factor but only on 25 load-factor for High Tension consumers availing supply at 11 K.V. and as such, non-consideration of closure of units on various accounts does not hold good. In the absence of specific facts to show that the Board was not able to perform its part of the obligations, it cannot be held that this stipulation stands frustrated either under Section 36 or 56 of the Indian Contract Act and as such this submission also fails.
11. The next submission of the learned Counsel for the petitioners was that the incentive given by the State Government under the various annexures could not be withdrawn and for this submission, reliance was placed on the principle of promissor estoppel. Learned counsel, in this connection also refers to the decision in the case of The Union of India and Ors. v. Anglo Afghan Agencies etc. A.I.R. 1968 S.C. 718. In support of this submission, reliance is placed on paragraph 10 of the writ petition, which runs as follows:
10. That the aforesaid annexure has been withdrawn and the Annual Minimum Guarantee Bill is now being required to be paid by the consumers. Annual Minimum Guaratee Bill, hereinafter is referred to as AMG Bill, is being calculated for 24 hours of each 365 days of a year and as such the AMG Bill in actual is an Annual 'Maximum' Guarantee Bill to be realised from the consumers. The withdrawal of earlier circular 1089 dated 29-9-73 is in breach of the policy, incentive and the assurances, based upon which the petitioners setup the Small Scale Industries and as such the withdrawal of Annexure No. 4 is mala fide and is illegal. By going through it, it will be seen that the very general statement that the petitioners had set up their Small Scale Industries on the basis of the incentives given is very vague. There is no material to show that in the absence of such incentives, the petitioners would not have set up the small Scale Industries. I am accordingly of the view that if the incentives given have been withdrawn, the petitioners cannot make a grievance of it. In this context, might also be relevant to refer to paragraph 6 of the counter-affidavit filed on behalf of the Board wherein it is stated that Industrial Department stopped contributing the minimum guarantee charges with effect from the 1st April, 1976 and consequently the Board had no other alternative but to realise the minimum guarantee charges directly from the consumers. It would also be noticed that under Clause 4(a) of the agreement, the consumer is liable to pay the minimum charges as specified in the Schedule. The decision in Anglo Afghan Agencies case cannot be brought in aid to support the petitioners' case ; inasmuch as in that case, M/s. Anglo Afghan Agencies had acted on the trade notices offering inducement to the prospective exporters and thereafter, on the basis of those trade notices, the Anglo Afghan Company had claimed for an equivalent amount of import entitlement. In the instant cases, there is no material for the conclusion that on the incentives given by the industries. Accordingly, this submission also fails. It may also be noted in this context that in C.W J.C No. 328 of 1977 (R), the State has not been made a party and hence, this submission was not available to the petitioner of this case.
13. The next submission was that the Board has no power to levy fuel surcharge. I have said above that in the agreement itself, reference has been made to the notification in which the schedules of rates of tariff are provided and one of the items there is fuel surcharge. There is no reason to hold why such fuel surcharge is not recoverable from consumers like the petitioners. Merely because in Clause 14 of the agreement, there is only reference to demand charges, energy charges and minimum guarantee, it cannot be said that fuel surcharge could not be imposed upon the consumers. In the case of Birsa Stone Lime Co. Ltd. v. Ortssa State Electricity Board and Anr. , it was held as follows:
The word surcharge is not defined in the Act, but etymologically, inter alia, surcharge stands for an additional or extra charge or payment (See Shorter Oxford English Dictionary). Surcharge is thus a super-current dues. Although, therefore, in the present case it is in the form of a surcharge, it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act." In that view also, there seems to be no reason why the fuel surcharge will not be included in the word 'tariff' as used in the provisions of the Act. Incidentally, it might be stated that in Annexure 7 series filed in the writ petition which are some of the bills served on the petitioners by the Board, fuel surcharge has only been levied against the petitioner in C.W J.C. No. 336 of 1977 (R). This submission also made on behalf of the petitioner has to be rejected.
14. Lastly it was submitted that under Clause 13 of the agreement, the petitioners were entitled to retable reductions in various charges which reads thus:-
13. If at any time the consumer is prevented from receiving or using the electricity energy to be supplied under this agreement either in whole or in part due to strikes, riots, fire, floods, explosions, Act of God or any other cause reasonably beyond control or if the Board is prevented from supplying or unable to supply such electrical energy owing to any or all of the causes mentioned above, then the demand charge and guaranteed energy charge set out in the Schedule shall be reduced in proportion to the ability of the consumer to take or the Board to supply such power and the decision of the Chief Engineer, Bihar State Electricity Board, in this respect shall be final.
15. In this context, our attention has been drawn to the fact that no consideration has been given by the Board with regard to the holidays that the petitioners have to give to their workers during the year, such as the closure of factories under the statute as weekly closure days compulsory closures on Independence Day, Republic Day, Mahatma Gandhi's Birth Day etc. and those arising out of strikes, lock-out and Bund. Under Clause 13 of the agreement if the consumer is prevented from receiving or using electrical energy either m whole or in part due to strikes, riots, fire, flood, explosion Act of God or any other cause beyond control or if the Board is prevented from supplying or is unable to supply such electrical energy due to same causes as mentioned above, there can be reduction in the demand charge and guaranteed energy charge in proportion to the ability of the consumer to take or the Board to supply such power. For the purpose of this reduction the decision of the Chief Engineer of the Board will be final. No material has been placed before us to show that the petitioner ever approached the authorities for such reduction. In such circumstances, there is no substance in this submission as well.
16. For the reasons given above, there is no substance in the applications, which are accordingly dismissed. I would however, make no order as to costs.
M. Prasad, J.
17. I agree.