Patna High Court
Pyrites, Phosphates And Chemicals Ltd. vs The Bihar Electricity, Board And Ors. on 29 March, 1995
Equivalent citations: 1995(2)BLJR1285, AIR 1996 PATNA 1, (1995) 2 PAT LJR 10 1995 BLJR 2 1285, 1995 BLJR 2 1285
JUDGMENT S.K. Chattopadhyaya, J.
1. The point for consideration in this writ application is as to whether the petitioner is entitled for remission in annual minimum guarantee charges and maximum demand charges preferred by the petitioner.
2. The fact of the case lies in a narrow compass. The petitioner-company entered into an agreement with the Bihar State Electricity Board (hereinafter referred to as the Board) for supply of High Tension electrical energy at 33 KVA supply. Originally the agreement was for a contract demand of 4000 KVA but subsequently the contract demand was revised at the request of the petitioner and fresh agreements were entered into. The said agreement was for:
From 15.10.1988 to 28.2.1988-4000 KVA.
From 1.3.1989 to 26.2.1992-9000 KVA.
From 1.3.1992 to till date-7000 KVA.
3. Bills were raised by the Board lor shortfall in annual minimum guarantee charges (in short AMG charges) for the period 1988 to 1992 based on uninterrupted supply of electricity by the Board for 24 hours each day and for 365 days in the year. According to the petitioner, this bill was raised without giving any proportionate reduction for the duration of non-supply by the Board even though the supply was interrupted with frequent trappings and load sheddings. The petitioner filed claims for all the aforesaid years and made repeated requests to the respondent No. 2 for expeditious hearing and disposal of their pending claims. As the disposal of the claim was being delayed at the respondents and the petitioner moved this Court in CWJC No. 3386/94 and this Court directed the respondent No. 2 to dispose of the claims of the petitioner. By an order dated 22.6.1994 the respondent No. 2 decided the claims of the petitioner for all the said years by reason of a composite order, which is impugned in this application an Annexure-1.
4. Mr. Bajla, learned Counsel appearing on behalf of the petitioner, has firstly contended that the claim of the petitioner was for remission in respect of the period of two hours after each interruption and ground for such claim was that the machineries and equipments installed in the factory are so sophisticated that any interruption in supply of power makes it impossible for the petitioner to use electrical energy for at least two hours even after resumption of supply. Such claim, it is contended, was being a question of factual verification. The respondent No. 2 directed the Electrical Superintending Engineer, respondent No. 3 to hold physical inspection of plants and machineries of the petitioner and to submit his report. The respondent No. 3 submitted his report after visiting the plants as well as after physical verification of the process and perusing the literatures and manuals submitted to him by the petitioner in respect of the sequence of starting the operations. The report of the respondent No. 3 is dated 5th May, 1994 as contained in Annexure-7.
5. The grievance of Mr. Bajla is that though the respondent No. 3 made physical verification of the process and inspected the plants on the basis of the order passed by the respondent No. 2 himself but unfortunately the respondent No. 2 did not even care to mention about the report of the respondent No. 3 in the impugned order. It is contended by the learned Counsel that the respondent No. 2 has failed to consider the very important words in Clause 13 of the High Tension Agreement which is.... "any other case reasonably beyond control..."
6. Lastly it is contended that in view of the illegal impugned order, the bills as contained in Annexure-8 which were raised on the basis of the said order, are fit to be set aside.
7. Mr. Shiv Kriti Singh, learned Counsel appearing on behalf of the Board, while countering the submissions of Mr. Bajla, has raised a preliminary point regarding maintainability of the writ application. It is urged that the agreement entered into between the petitioner and the Board is a contractual agreement and not a statutory one and as such, the petitioner cannot move this Court under Article 226 of the Constitution for enforcement of any contractual obligation. According to Mr. Singh, the respondent No. 2 is not a statutory Arbitrator inasmuch as he is appointed as an Arbitrator by mutual agreement by the parties and as such, any decision of the General Manager under Clause 13 of the agreement cannot be said to be a quasi judicial decision which can be challenged in the writ court. Alternatively, it is urged that even if the decision is taken to be on the basis of a statutory contract and amenable to writ jurisdiction, the High Court can issue writ only when there was failure of principle of natural justice and/or the decision is error of law apparent on the face of it. In support of his contention, he has relied upon the decisions reported in AIR 1954 SC 440 AIR 1975 SC 2151 and AIR 1989 SC 1030.
8. On the merit of the case, learned Counsel for the Board submits that the petitioner has not pressed relief against the finding arrived at paragraphs 2 (c),2 (d) and 2 (e) its contained in Annexure-1. Regarding the grievance of the petitioner in respect of finding at paragraph 2 (a) of the impugned order, Mr. Singh submits that the claim for remission for shortfall duration has been rejected on the basis of Chart 'A' and Log Book maintained by the Board which were taken into consideration. The real contested finding is the finding of the respondent No. 2 at paragraph 2 (b) of the impugned order.Mr. Singh submits that it is for the petitioner to satisfy the General Manager that it was beyond the capacity of the petitioner to use electricity for mechanical incapabilities and reasons of process for not utilising the electricity for the said period. The satisfaction of the General Manager as to whether the petitioner was prevented from using the electricity for the reasons beyond his control is a subjective one and as such, cannot be interfered, It is further, contended that it is an admitted fact that the petitioner is having four generators of 1000 KVA each for maintaining the temperature of his machines and as such, interruption of electric supply for a short period cannot be a reason for the petitioner being prevented from availing full supply of power by the reasons of process and mechanical incapabilities.
9. Mr. Bajla, in all fairness, has not pressed the relief in relation to findings arrived at sub-paras (c), (d) and (e) of paragraph 2 of the impugned order, by reason of which the respondent No. 2 has rejected certain other claims of the petitioner. However, Mr. Bajla, refuting the argument of Mr. Singh, submits that Chart (Annexure-A) annexed to the impugned order could not have been taken into consideration by the respondent No. 2 inasmuch as the Chart was prepared on the basis of Log Book of the Board itself. The said Log Book or extracts therefrom were neither given to the petitioner nor produced during the course of hearing in his presence and as such, the same could not have been relied upon by the respondent No. 2.
10. On the other hand, learned Counsel urged that the document produced by the petitioner in support of his claim has not even been mentioned in the impugned order. With reference to the report of Senior Manager (Operation) of the plant, it is contended that even the said report has not been taken into consideration by the respondent No. 2.
11. In order to appreciate the preliminary objection raised by Mr. Singh, some of the provisions of the Indian Electricity Act, 1910 (hereinafter referred to as 'the Act') have to be looked into. The Act provides the law relating to the supply and use of electrical energy. "State Electricity Board" has been defined in Section 2(11) of the Act in relation to any State means the State Electricity Board, if any constituted for the State under Section 5 of the Electricity (Supply) Act, 1948 (in short 'the Supply Act') and includes any Board which functions in that State under Sections 6 and 7 of the said Act. The respondent-Bihar State Electricity Board is a Board. In view of Section 2(h) "licensee" means any person licensed under Part II to supply energy. The Board is such a licensee under this provision. Similarly the word "Consumer." has been defined in Section 2(c) which means any person who is supplied with energy by a licensee or the Government or by any other person engaged in the business of supplying energy to the public under this Act or any other law for the time being in force, and includes any person whose premises are for the time being connected for the purpose of receiving energy with the works of a licensee, the Government or such other person, as the case may be. It is not controverted that the petitioner is a consumer.
12. In view of Sub-section (1) of Section 23 of the Act, in order to prevent any undue preference to any person by the licensee in making any agreement for the supply of energy, this provision envisages making of an agreement by the licensee with the consumer for supply of energy. Thus the agreement entered into between the petitioner and the Board, in the instant case, has to be held as one envisaged by this provision.
13. Section 49 of the Supply Act makes provision for the sale of electricity by the Board to persons other than licensees. Other provisions are also there in Section 49, with which we are not concerned in this case.
14. The statutory basis for the terms in the agreement providing for minimum annual charge is to be found in Section 22 of the Act and Section 48 of the Supply Act. Section 22 deals with obligation of licensee to supply energy provided the person entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration, Section 48 of the Supply Act empowers the licensee to carry out arrangement under that Act. It is not in dispute that the agreement for supply of electricity with the Board empowers it to revise the rates.
15. In this context, the observation of the Hon'ble Supreme Court in the case of Bihar State Electricity Board, Patna v. Green Rubber Industries and Ors., reported in AIR 1990 SC 699 is to be noted. Their Lordships have observed that agreement is in a standard form of contract and the standard clauses of this contract have been settled over the years and have been widely adopted because experience shows that they facilitate the supply of electric energy. It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone. The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion. It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them and even though he is ignorant of the precise legal effect, It is further observed that every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavoring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause. Difference between this contractual element and the statutory duty have to be observed. A supply agreement to a consumer makes his relation with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual.
16. On the premises of the aforesaid discussions, it can very well be said that even if the agreement between the petitioner and the Board was a contractual one but the basis of supply of electricity is a statutory one rather than contractual. Under these circumstances, in my opinion, the Ffigh Court, in its writ jurisdiction, has ample power to find out as to the reasonings given by the respondent No. 2 in the present case were justified/illegal or not.
17. The matter can be looked into from a different angle. It is now well settled that writ of certiorari can be issued whenever any body of persons having legal authority to determine question affecting rights of subjects; having the duty to act judicially and act in excess of their legal authority. In course of time, the above traditional view has been expanded by extending this remedy even to administrative proceedings where there may not be any statutory obligation to proceed quasi judicially.
18. I may usefully refer in this context the observation of the Hon'ble Supreme Court in the case of Raja Anand Brahma Shah v. State of Uttar Pradesh and Ors. report in AIR 1967 SC 1018. While discussing the scope of ambit of Section 17 (4) of the Land Acquisition Act, 1894, their Lordships have held "but even though the power of the State Government has been formulated under Section 17(4) of the Act in subjective terms, the expression of opinion of the State Government can be challenged as ultra vires in a court of law if it could be shown that the State Government never applied its mind to the matter or that the action of the State Government is mala fide.
19. Moreover, the courts in India are becoming more and more conscious of arbitrary action taken by administrative authority in spheres where the relevant statute does not lay down any quasi-judicial obligation. It is a now well settled that old distinction between a judicial and administrative act has withered away and we have been liberated from the pestilent incantation of administrative action. The direction in which the Apex Court has developed the law is more vital and intriguing and the attempt now is to disregard the old distinction between administrative and quasi judicial decision for the purpose of requiring that an administrative authority, in respect of whom the court cannot predicate a quasi-judicial obligation even by implication, must comply with the minimal requirements of justice and fair play. See AIR 1958 SC 1018 AIR 1970 SC 150 AIR 1978 SC 851 and AIR 1981 SC 136.
20. The requirement of "fairness" implies that even an administrative authority must act in good faith; and without bias; apply its mind to all relevant considerations and must not be swayed by irrelevant considerations; must not act arbitrarily or capriciously and must not come to a conclusion which is perverse or is such that no reasonable body of persons properly informed could arrive at. The principle of reasonableness would be applicable even in the matter of exercise of executive power without making a law. It is settled principle of law now that the court would strike down an administrative action which violates any of the foregoing conditions.
21. Having considered the settled principle of law, let me examine as to whether the General Manager, the respondent No. 2 was under any obligation to act reasonably and with fairness. This court in the case of Asia Insulated Wires Pvt. Ltd. and Anr. v. The South Bihar and Chotanagpur Area Electricity Board, Ranchi and Ors. CWJC No. 642 of 1987 (R) disposed of on 29th August, 1991 upon taking into consideration various decisions of the Apex Court has held as follows:
The respondent No. 2 has, thus, a public duty to perform when adjudicating upon claim of consumer for proportionate reduction in the AMG charges and particularly when its order is.final, it is required to consider the genuine claim of a consumer with objectivity. It must act judicially and its decision must be supported by reason.
22. This decision has further been relied upon by a learned Single Judge of this Court in the case of Banarsilal Jhunjhunwala and Sons v. The South Bihar and Chotanugpur Area Electricity Board, Ranchi and Ors. reported in 1993 (1) PLJR 462.
23. In view of Clause 13 of the agreement, the consumer may file his claim for proportionate reduction in the bill before the authority appointed by the Board itself. The decision of such authority, in this respect, shall be final. If one looks to the different clauses of the agreement as well as Clause 13 in particular, it is crystal clear that the authority concerned to decide the claim of the consumer must act fairly and reasonably.
The expression "the decision of the Chief Engineer, Bihar State Electricity Board, in this respect, shall be final" is very important and it cannot be doubted that when finality has been attached to a decision of an authority, the authority must act not only in accordance with law and by following principle of natural justice but also with all fairness and reasonableness. In my view thus, the decision of the respondent No. 2 even if taken to be a decision of an administrative authority, can be scrutinised under the writ jurisdiction. The decisions relied by Mr. Singh, in my considered opinion, cannot be applicable to the facts and circumstances of the case and as such, the preliminary objection raised by the respondent has no leg to stand.
24. Now coming to the merit of the case, it is to be seen as to whether the respondent No. 2 was justified in rejecting the petitioner's claim regarding remission lor two hours besides duration of each tripings on account of revival of the process. The petitioner's claim for such remission was on the basis of the facts that he was prevented from availing full supply of power by the reasons of process and mechanical incapabilities. According to the respondent No. 2, this was not hit by Clause 13 of the agreement and as such, the claim of the petitioner was not entertainable.
25. Clause 13 of the agreement reads as follows:
13. If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole or in part due to strikes, riots, fire, Hoods, explosions, act of (God or any other case-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.
26. I have already observed that relevant provisions of any instrument has to be read as a whole so as to cover the intention of the parties thereto. Clause 1(a) of the agreement imposes a contractual obligation on the part of the Board to make constant supply of electrical energy. The Board has a statutory obligation to supply electrical energy to a consumer in terms of the provisions of the Supply Act read with the Act and the rules framed thereunder. It, therefore, does not matter as to whether at a given point of time the consumer is required to supply electrical energy or not because a consumer may at his convenience run his factory for a part of the day or for the whole day. Even when the machines are not operating, the consumer may require supply of electrical energy lor the purpose of maintenance of machinery, security etc. The provisions of the contract of supply of electrical energy vis-a-vis the power of the Board of charge minimum guaranteed charges and maximum demand charges have to be viewed in that context.
27. In the case of Bihar State Electricity Board v. Dhanawal Rice and Oil Mills. reported in AIR 1989 SC 1030, the Supreme Court has clearly held that in me cases of trappings, load shedding and power cuts, as also in the cases where the consumer was unable to take supply of electrical energy for one or the other reasons enumerated in Clause 13 of the agreement will be entitled to proportionate reduction in annual minimum guaranteed charges.
28. In the case of Suprabhat Steels Ltd. v. Bihar State Electricity Board and Ors. CWJC No. 7679/92 and other analogous cases, disposed of on 11th April, 1994, a Division Bench of this Court has held as follows:
In terms of the agreement the consumer is liable to pay the maximum demand charges on the basis of the recording in the maximum demand in dictator as if the same had been the contract demand for the month in question; but the same, in my opinion, does not mean that if for the rest of the period the Board is unable to supply electrical energy or the consumer is unable to consume electrical energy for one or the other reasons enumerated in Clause 13 of the agreement, it would not get proportionate reduction in the maximum demand charges.
29. Relying on the several decisions of the Apex Court, the Division Bench further held that the consumer is not only entitled to proportionate reduction to the extent of the trippings, load sheddings and power cuts but would also be entitled thereto to the extent he was unable to consume electrical energy if his case comes within the purview of Clause 13 of the agreement.
30. From a bare perusal for the provisions laid down in Clause 13 of the agreement, it is clear that this clause is not only attracted when the Board is unable to supply electrical energy but also to a case where the consumer is prevented from receiving or using the electrical energy to be supplied under the agreement either in whole or in part. The words 'prevented from receiving or using the electrical energy by a contract' are significant. The words 'receiving or using', in my opinion, signify different contexts. Receiving of electrical energy by the consumer may have a direct nexus with supply of the electrical energy but Clause 13 is also attracted in a case where the consumer is prevented from using the electrical energy. Clause 13 is also not a vis major clause simpliciter. It embraces within its fold not only acts of God but also acts of men like strikes, riots, fire and explosions.
31. In the case of Suprabhat Steels Ltd. (supra), the Division Bench after dealing with the relevant clauses of the agreement have held that the words 'any other cause reasonably beyond control' must be read as illustrative but cannot be read as ejusdem generis to the words 'act of God'. The words 'any other cause reasonably beyond control do not signify only vis major. However, what would be the reasonable beyond control of the consumer would depend on the facts and circumstances of each case.
32. Similarly, Clause 13 of the agreement cannot be interpreted in a restrictive manner as argued by Mr. Singh. Clause 13 as noticed hereinbefore, on the other hand, must be construed liberally.
33. In the case in hand, the General Manager, as would appear, on receiving the claim of the petitioner directed its own subordinate to inspect and verify the inability of the petitioner to utilise electricity for the cause reasonably beyond its control for two hours after each interruption in the supply of energy.
34. Annexure-6 is order dated 15.3.1994, by reason of which the respondent No. 3 was directed to hold physical inspection of the plants and machineries of the company and to submit a report accordingly. From bare perusal of the order, it appears that the General Manager of the petitioner had assured to submit papers concerning the guidelines/ instructions of the manufacturer-company of the electrical equipments installed in the plants to justify their claim.
35. Annexure-7 is a report of the respondent No. 3 dated 5th May, 1994, which was submitted to the respondent No. 2. In his report, it appears, the respondent No. 3 clearly mentioned that he visited the workship of the petitioner on 5.5.1994 and checked up regarding non-functioning of the plants due to power interruption and low frequency. He has given his finding that the contentions of the petitioner are correct that they could not operate their plants for at least two hours after resumption of power supply after each interruption because of lot of rechecking activities involved and preheating of converter to 400 deg. cent. @ 10-15 deg. cent. per hour etc. The respondent No. 3 also found that the petitioner could not operate their plants at the frequency lower than 48.5 cycles. According to him, he reached to the conclusion aforesaid after also going through the literatures and manuals submitted by the petitioner-company in support of above and the start-up sequence was enclosed therewith. While enclosing the relevant literatures alongwith his report the respondent No. 3 has observed that motors have been designed as per I.S.S. which comprises that these motors should not be operated out of the limit i.e. 3% of supply frequency, which is 50 cycles. Literatures of original plant manufacturer was also enclosed with the report.
36. The contention of Mr. Singh that the claim for adding two hours to each and every interruption has rightly been rejected by the respondent No. 2 in my opinion, is not tenable. Even the petitioner having four generators could have maintained the machineries but it is the case of the petitioner that after sudden power cut, some time is required to operate the generators and this short time is also enough to bring the aforesaid machineries in a stand still. Moreover all these facts ought to have been discussed by the respondent No. 2 inasmuch as he has required to take into consideration the relevant facts which admittedly he has not done while rejecting the claim of the petitioner in this regard.
37. Further argument of Mr. Singh that the burden of proof and claim advantage as per Clause 13 is not on the Board but on the petitioner, is also have no force inasmuch as it is admitted fact that on the direction given by the respondent No. 2 himself, the respondent No. 3 made a physical verification of the plant and after such verification and going through the relevant literatures, the respondent No. 3 had come to a conclusion that the claim of the petitioner was correct. Uncontrovertedly the report was submitted by the respondent No. 3 to the respondent No. 2 but even then the respondent No. 2 has failed to apply his mind to the said report. If the said report would have been considered in its true perspective, probably the respondent No. 2 could have come to a conclusion that the petitioner was able to prove his claim before him. That not being done, in my opinion, it is futile to argue on behalf of the Board that the respondent No. 2 has committed no illegality in refusing the said claim.
38. From the impugned Annexure, it is found that while rejecting the claim of the petitioner in respect of the said incapabilities to consume electricity, the respondent No. 2 has not even whispered about the report submitted by the respondent No. 3. While rejecting the said claim he has only held that the claims are untenable as prevention from availing full supply of power by reasons of process and mechanical incapabilities is not hit by Clause 13.
39. In my considered opinion, the respondent No. 2 has completely mis-directed himself in arriving at this finding. The respondent No. 2 under Clause 13 of the agreement was deciding the matter as a quasi-judicial authority and as such" it was his bounded duty to consider the report of the respondent No. 3 as well as other documents filed on behalf of the petitioner. Moreover, when this report was submitted on his own direction, the same could not have been ignored. When impugned order does not disclose about discussion of the report, it is futile for the respondent Board to submit in the counter-affidavit that the report was not considered as because respondent No. 3 based his findings only on the literatures in relation to the plant and machineries. If the respondent No. 2 was not satisfied with the said report of respondent No. 3 he could have very easily directed either the respondent No. 3 to make another physical verification or in order to do justice, could have personally inspected the plant for satisfying himself as to whether the claim of the petitioner was justified or not. One should remember that public authorities are required to do justice in accordance with law and justice not only to be done but must seem to have been done.
40. Considering this aspect of the matter, in my opinion that part of the impugned order, by reason of which the respondent No. 2 has rejected the claim of the petitioner in respect of relief tor total hours of tripping, load sheddings etc. as well as amount of remission for the hours of non-supply on the basis of petitioner's failure to consume electricity during the total work of supply, cannot be sustained in law and fit to be set aside.
41. This application is allowed to the extent that the findings of the respondent No. 2 as given in paragraphs 2 (a) and 2 (b) of the impugned order are set aside and the respondent No. 2 is directed to assess the claim of proportionate reduction of the annual minimum guarantee bill in respect of disputed years on the basis of the documents available on record. It is further directed if the respondent No. 2 is of the opinion that a fresh physical verification/Inspection report and other documents are required for considering the claims of the petitioner for such remission, he is at liberty to do the same. It is further directed that until this is not done, the power supply will not be disconnected on the basis of failure to pay the annual minimum guarantee bills for the period stated above. It is made dear that the respondent No. 2 will give adequate opportunity to the petitioner to prove its claim for remission and if the petitioner wants personal hearing, the same should be given by him. However, alter disposing the matter if fresh demand is made, the Board will be entitled to take recourse to the normal procedure if the consumer fails to pay.
42. In view of the aforesaid discussions, the writ application is allowed to the extend indicated above. In the facts and circumstances of the case, there will be no order as to costs.