Patna High Court
Tata Iron And Steel Co. Ltd., Jamshedpur vs Bihar State Electricity Board And Ors. on 20 August, 1988
Equivalent citations: AIR1989PAT119, AIR 1989 PATNA 119, (1989) PAT LJR 337 1988 BLT (REP) 428, 1988 BLT (REP) 428
Author: B.P. Singh
Bench: B.P. Singh
ORDER
1. Both these cases are being disposed of by this judgment.
2. In C.W.J.C No. 1527/86(R) the petitioner has challenged the order dated 6-10-86 (Annexure 3) passed by respondent No. 2 rejecting the representation of the petitioner claiming relief under Clause 13 of the H.T. Agreement and also for other reliefs.
The petitioners are claiming that they are not liable to pay Annual Minimum Guarantee (in short A.M.G.) and Maximum Demand Charges (in short, M.D.C.) at the contract rate as the electrical energy was not supplied to the Adityapur complex of the petitioner company (TISCO) continuously and to the extent of contract demand. It has also challenged the validity of the claim of the Board demanding delayed payment surcharge.
3. In C.W.J.C. No. 1526/86(R) the petitioner has challenged the validity of the notice vide Section 24 of the Indin Electricity Act, 1910 (Annexure-1) threatening disconnection for non-payment of the dues to the tune of more than Rs. 4 crores. The notice (Annexure-1) was issued after the issuance of Annexure-3 of the other writ petition.
4. We have heard the counsel at length only on the question whether the petitioner can claim relief in terms of the agreement, a sample of which is Annexure-8 to CW.J.C. No. 1527/86(R), particularly because under Clause 1(a) the Board was not only required to arrange to supply electrical energy at the pressure of 33000 Volts, 50 cycles, 3 phase, 3 wire, alternating current system subject to standard variations as provided in Indian Electricity Rules, 1956, or any other statutory modification thereof as may be in force from time to time for the purpose and up to the maximum specified (hereinafter referred to as the contract demand) and under the conditions laid down in the Schedule, but also supply it continuously during the working hours of the factories at the Adityapur complex of the petitioner. Learned counsel appearing on behalf of the petitioner submitted that the supply must be for 24 hours a day because the factories at Adityapur complex of the petitioner company work for 24 hours a day. There had been default on the part of the Board not only in supply of energy at the contract demand but the supply was also not continuously for 24 hours a day during the period 1977-78, 1978-79 and 1982-83 and, therefore, the Board was not entitled to charge either AMG or MDC as per agreement. The petitioner was only liable to pay for the energy actually consumed by it.
Learned counsel for the Board on the other hand submitted that it is true that the Board had imposed restrictions on drawing of electrical energy as per the contract demand, and directions were issued to draw energy at varying MVAs. which in all cases was less than the contract demand, but TISCO did not abide by it and drew energy at the same level at which it usually drew. It was also urged that the Board was not obliged to supply electricity 24 hours a day as 'constant supply' in Clause 1(a) of the agreement refers to constant supply as per the contract demand. We are, therefore, to see the terms and conditions of the agreement, particularly, Clauses 1(a) and 13 which read as follows : --
1(a). "The Board shall furnish to the consumer and the consumer shall accept at the point of supply mentioned in the Schedule hereto, on and from the date on which the said premises shall be connected with the supply distributing mains and during the continuance of this agreement, a constant supply of electrical energy at the pressure of 33000 volts, 50 cycles, 3 phase, 3 wire, alternating current system, subject to standard variations as provided in Indian Electricity Rules, 1956, or any other statutory modification thereof as may be in force from time to time for the purpose and up to the maximum specified (hereinafter referred to as the contract demand) and under the conditions laid down in the Schedule. The Board will not, however, be responsible for any interruption or diminution or stoppage of the supply due to lock-outs, strikes, breakdown of machinery or plant, floods or other force majore or other causes beyond the control of the Board."
"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, 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"
The dispute between the parties is as to whether the Board is not only obliged to constantly supply electricity at contract demand, but also to supply it all the hours in which the factories of the petitioner company at the Adityapur complex work, that is, for all the 24 hours.
5. The Board charges A.M.G. on the ground that for supplying electrical energy to a particular H.T. consumer at a particular pressure, at a particular place, it is required to make capital investment in the form of transmission lines, transformer, other apparatus and/or infra structure and in order to ensure that the Board gets a reasonable return on the money it so invests, it requires that the consumer guarantees that it would consume at least the specified minimum energy, and in the event it fails to consume it, guarantees payment of it so that the investment made by the Board may be found viable. The consumer also taking into consideration his need guarantees the minimum energy that it would consume and/or pay for. The obligation is reciprocal and the document, therefore, must be read as a commercial document and must be interpreted following the general rule of interpretation of such documents, that is, with a view to finding out the intention of the parties contract for a commercial purpose. When the Board calls upon a consumer to guarantee minimum consumption of energy, it certainly does so keeping in view that the Board is not put to a loss by making capital investment in transmission lines, transformer etc. The consumer also takes into consideration the energy that it is expected to consume throughout the year for the purpose of running its factory which he has definitely set up for profit. For both the supplier and the consumer, it is a commercial venture.
6. The agreement for the supply of electrical energy is a detailed agreement containing various terms and conditions. It also provides for various eventualities and the consequences that ensue therefrom. For instance, it provides for proportionate reduction in the annual charges in situations envisaged under Clause 13 of the agreement. The agreement also provides for disconnection of electrical energy if the bill is not paid in time, and for its reconnection if payment is made within a certain period It also provides for a situation where reconnection may be granted on payment of charges if payment of the bill is not made within stipulated period. Various terms and conditions of, the agreement, therefore, visualise situations where supply to the consumer may be interrupted or even stopped. The agreement provides for the remedy that may be available in such cases to the consumer. No doubt the agreement provides for constant supply of electrical energy. But the question that arises frequently is whether mere interruption of electrical energy for a short duration would disentitle the Electricity Board from claiming annual charges, in this connection we must notice two judgments of this Court; the first judgment rendered by a learned single Judge of this Court (Hon'ble Birendra Pd. Sinha, J. in Dipte Input v. Bihar State Electricity Board delivered on February 21, 1986 in C.W.J.C 991/81). The case has been reported in 1987 BLJ 494. In this case, the learned Judge held : --
"It does not lie in the mouth of the Board to say that the agreement does not include the words 'for the entire 24 hours'. Failure to supply or immunity to supply electrical energy constantly i.e. for 24 hours a day and throughout the year for any of the reasons not mentioned in Clause 1 immediately brings to an end the contract so far the annual minimum guarantee charges are concerned The consumer cannot be saddled with any liability for the inefficiency and callousness on the part of the supplier."
The learned Judge held that if there was any interruption in the matter of supply of electrical energy and the non-supply of electrical energy was not for the reasons mentioned in Clause 1 of the agreement, the Board was not entitled to recover any amount by way of annual minimum guarantee charges.
7. The matter was considered in another batch of writ applications being C.W.J.C, Nos. 254, 253, 265, 255, 260, 266, 267 and 555 of 1986 (Jai Bharat Udyog etc. v. Bihar State Electricity Board and another). The judgment in the aforesaid batch of writ petitions was delivered by a Division Bench of this Court and S. K. Jha, J. observed as follows: --
"How funny will it look that if the respondent namely the supplier on its part when it is ready and willing to supply and the consumer does not utilies the same, the customer would be liable for the A.M.G. and if the consumer namely the petitioner, who has entered into an agreement for 6 hours of constant supply of electrical energy is not complied with by the respondent Board, still it will be liable to pay the A.M.G. charges. The terms of the agreement quite unequivocal as they are taken as a whole give a picturesque reading of the entire agreement excepting for activities major if the company (supplier) who is the respondent is not in a position or unable to supply constant electrical energy for such a period of 6 hours during 24 hours a day, the consumer (petitioner) shall not be liable to pay the A.M.G. demand charges."
It, thus, appears that a Division Bench of this Court held that to entitle the Board to claim annual charges, the Board must supply constant electrical energy for a period of at least six hours during a day of 24 hours. To this extent, the judgment in Jai Bharat Udyog (supra) has not approved the judgment of the learned single Judge in Dipte Input (supra). It has been held that the Board must supply electrical energy continuously for at least six hours in 24 hours to entitle to claim annual charges. It was not disputed before us that for calculating the amount which should be paid by way of annual minimum guarantee charges, the Board takes into consideration the quantity of electrical energy which can be supplied to the consumer within a period of six hours having regard to the contract demand. This is because the load factor is taken to be 25% in the formula prescribed for working out the guaranteed units. Obviously, therefore, if electrical energy is not supplied for at least six hours in twenty four hours, no consumer can possibly consume even the minimum guaranteed units. In Jai Bharat Udyog therefore, this Court took the view that the Board will not be entitled to claim annual minimum guarantee charges unless it supplied electrical energy constantly for at least six hours in 24 hours. The Court had no occasion to consider as to whether a consumer is entitled to claim a reduction in annual charges if the supply of electrical energy was for more than a period of six hours but not constantly and continuously for all the 24 hours. In our view this aspect of the matter did not fall for consideration in Jai Bharat Udyog since it was found in that case that the Board had failed to supply electrical energy even for a continuous period of six hours in 24 hours.
8. While on this aspect of the matter we cannot resist noticing the last part of paragraph 17 of the judgment in Jai Bharat Udyog where this Court observed that the judgment of the learned single Judge of this Court passed in C.W.J.C. 991/81 decided on 21-2-86 (reported in 1987 BLJ 494) (Dipte Input case) was sketchy enough and did not set down any principle of law even, if that order could be called by the name of judgment or not. Their Lordships proceeded to observe that if that order be construed as judgment and if any ratio be able to be culled from it, it must be overruled. We have earlier referred to the aforesaid judgment of the learned single Judge in Dipte Input. We have no doubt that the learned Judges who decided the Jai Bharat Udyog apparently had in mind some other judgment which they overruled, but referred to Dipte Input judgment by its number and date, which is an obvious mistake. We have carefully considered the judgment of the learned single Judge in Dipte Input case and we find that the learned Judge has given a reasoned judgment based on legal principles, and even if one may not agree with the conclusion reached by the learned single Judge that judgment is certainly not one which can be characterised as either sketchy or not laying down any principle of law. In fact, we find that to some extent the decision in Jai Bharat Udyog approves of the principle laid down by the learned single Judge in Dipte Input case, though the learned Judges did not wholly uphold the principle laid down by the learned single Judge in Dipte Input case by laying down that the Board will be disentitled from claiming annual charges only if it failed to constantly supply electrical energy for at least a period of six hours during 24 hours.
9. In the instant case, we are dealing with a situation where the supply of electrical energy may have been for more than six hours a day but not continuously for the entire period of 24 hours. It may be that the non-supply of electrical energy was on account of any of the events mentioned in Clause 1(a) of the agreement or in Clause 13 thereof. Clause 13 provides for reduction in annual charges in the situations envisaged under that clause. It has been held by this Court in Sahu Gupta Industries (C.W.J.C 1695/86(R) disposed of on 8-9-87 (reported in AIR 1989 Patna 8) that the enumeration of the events mentioned therein which prevent the consumer from receiving or using the electrical energy, or the supplier from suppling the same, is not exhaustive. The use of the words 'or any other cause reasonably beyond control' makes it clear that apart from the causes enumerated, there may be other causes which would justify a claim under Clause 13 of the agreement as long as those other causes are akin to those mentioned in Clause 13.
10. In the instant case we are also not called upon to decide whether the annual minimum guarantee charges levied by the Board are justified and reasonable. The levy of annual charges finds justification in the fact that the Board has to make investment for supply of electrical energy to H.T. consumers andthe annual charges are justified because they provide a reasonable return to the Board on its investment. In several other writ applications pending before this Court, the justification has been challenged on the ground that, though the Board has granted connection to a large number of consumers and is realizing annual minimum guarantee charges from them, it does not generate, nor does it have the capacity to generate, the quantity of electrical energy that it is required to generate if it were to supply electrical energy to all its consumers continuously as per the contract demand. We, therefore, do not express any opinion on this question.
11. In the light of the above legal position, we may now refer to only the relevant facts of this case. In paragraph 9 of the writ petition, the petitioner has stated that the Board did not supply electricity constantly for periods sufficiently long enough for the petitioner to put all its units into operation, and totally cut off power at times. This has been traversed by the respondents in paragraphs 15 and 16 of the counter-affidavit. In paragraph 16, it has stated that it was wrong to State that for charging A.M.G., maintenance of constant and continuous supply is condition precedent. The understanding of the Board, therefore, of Clause 1(a) of the agreement is that it was not required to make continuous supply of electricity.
12. The words 'constant supply of electrical energy' must mean that continuous supply of electrical energy. That to us appears to be the plain meaning of the words used. In the modern context where even our day to day life is so much dependent upon supply of electricity, it is not too much to expect that the Board should supply electrical energy throughout the 24 hours. However, having regard to the fact that annual charges are payable by consumers who generally require electrical energy in larger quantities than any ordinary domestic consumer for carrying on his business or establishment, the annual charges payable by him have a direct relationship with the supply of electrical energy to him at a time when he can consume the supply. The minimum guaranteed consumption itself implies that the energy is upplied when it can be consumed. No doubt, even beyond his normal working hours, such a consumer requires electrical energy for other purposes, such as security lighting etc. However, the consumption for such purposes is so small as compared to the main purpose for which electrical energy is taken, that it may be ignored in the matter of determining the liability for annual charges. So viewed, 'constant supply' in the context of annual charges must mean continuous supply during the normal working hours of the consumer when the supply can be consumed. This to us appears to be a fair intepretation of the agreement having regard to its purpose, commercial nature and preacticability. We are of the view that when the Board wants a guarantee from the consumer about minimum units it would consume, any prudent businessman would agree to pay that amount only if the Board fulfils its obligation. If in fact it is found that there had not been constant supply of electricity at the contract demand during the period the factory of the petitioner was expected to work, the petitioner can certainly claim that it is entitled to a reduction in annual charges proportionate to the period for which there was no supply of electrical energy or supply as per the contract demand The case of TISCO is that its units at Adityapur complex work 24 hours and electrical energy at the contract demand is required for all 24 hours. It was urged that in this case, constant supply must, therefore, mean constant supply for 24 hours. On behalf of the Board it was not stated that TISCO's units at Adityapur complex do not work for 24 hours.
13. Learned counsel for the Board submitted that there cannot be straight-jacket formula laying down what will mean 'constant supply' of electricity and apply it to all cases for the purpose of rasing of AMG and MDC. The contention of the learned counsel is correct. We are of the opinion that all HT consumers cannot be heard to say that they are not liable to pay AMG and MDC because there was no constant supply of electricity at the contract demand, unless they further show that in their units normal working hours are 24 hours a day. Therefore, there may be cases where the factory works for one shift, say from 8 am. to 4 p.m. The Board, in that case, shall be required to supply electricity constantly at the contract demand between 8 a.m. and 4 p.m. because if electricity is supplied to that factory before and after working hours, obviously, the consumer cannot consume it. The demand for payment of AMG and MDC, therefore, will depend on the following facts ; --
A. Whether there was constant supply of electricity at the contract demand;
B. What were the normal working hours of factory or undertaking of the consumer for which electric connection was taken and whether there was constant supply of energy during working hours;
C. The situations envisaged in Clause 13 of the agreement.
14. Broadly speaking the following principles emerge : --
1. The Board is obliged to supply electrical energy to its H.T. consumers constantly and continuously for all 24 hours;
2. If the Board fails to supply at least 6 hours of electrical energy constanly and continuously at the rate of contract demand, it cannot claim the annual charges ie. A.M.G. and M.D.C.
3. If the Board supplies electrical energy for more than 6 hours a day but not continuously for all 24 hours, where the factory runs all 24 hours, the consumer shall be entitled to claim reduction in annual charges;
4. In each case it must be determined as to what were the working hours of the undertaking for which the connection was taken and minimum consumption guaranteed. The reduction must be proportionate to the non-supply of electrical energy during such working hours. Supply or non-supply of electrical energy beyond such working hours is of no consequence in the matter of reduction of annual charges.
5. In all cases the consumer must establish the working hours of the factory and that it was in a position to consume the electrical energy if supplied.
15. It was, therefore, necessary for respondent No. 2 to take into consideration if there had been any interruption in the constant supply of electrical energy to the units of TISCO at Adityapur complex at the contract demand for all 24 hours for the periods 1977-78, 1978-79 and 1982-83. If in fact it found that there had been any interruption, the Board shall be liable to proportionately reduce the annual charges. That the petitioner is entitled to this relief is also supported by the decision reported in AIR 1976 SC 1100 (Northern India Iron and Steel Co. Ltd. v. State of Haryana). From the perusal of Annexure-3 to C.W.J.C. No. 1527/86(R) it appears that respondent No. 2 has not taken into consideration all the relevant facts while disposing of the representation of the petitioner. Consequently the ultimate finding recorded by him, that is, rejecting the representation of the petitioner, cannot be sustained
16. We, therefore, allow this application and remit the matter to respondent No. 2. The petitioner shall be entitled to file further detailed representation, if so advised, within three weeks from today, and if such detailed representation is filed, respondent No. 2 shall consider the representation already filed by the petitioner and also the representation that may be so filed. He shall, after hearing the parties, dispose of the representations keeping in view the observations made in this judgment.
17. In view of the fact that we are remitting the matter to respondent No. 2, we have not applied our mind to the other points raised in the writ petitions and the petitioners shall be at liberty to raise all such points, if so advised, if they are aggrieved by the ultimate order that may be passed by respondent No. 2.
18. We, therefore, allow both these writ petitions and quash Annexure-1 in C.W.J.C. No. 1526/86(R) and Annexure-3 in C.W.J.C. No. 1527/86(R).
The Board shall not till the matter is decided by Respondent No. 2 raise any bill claiming AMG and MDC and/or delay, payment surcharge for the period 1977-78, 1978-79 and 1982-83. We are informed that in terms of an interim order passed by this Court the petitioner has already paid Rs. 1/- (one) crore and ten lakhs to the Board.