Bombay High Court
Union Of India Through General Manager, ... vs The Tata Hydro Electric Power Supply Co. ... on 17 December, 1999
Equivalent citations: AIR2000BOM272, 2000(2)BOMCR547, 2000(3)MHLJ856, (2000) 4 CURCC 4, AIR 2000 BOMBAY 272, (2000) 1 ALLMR 475 (BOM), 2000 (2) ARBI LR 340, 2000 (1) ALL MR 475, (2000) 3 CIVILCOURTC 419, (2000) 3 MAH LJ 856, (2000) 2 ARBILR 340, (2000) 4 CIVLJ 380, (2000) 2 BOM CR 547
Author: D.K. Deshmukh
Bench: D.K. Deshmukh
ORDER D.K. Deshmukh, J.
1. By this petition filed under section 34 of the Arbitration Act, the petitioner challenges the award made by the sole arbitrator. It appears that the reference was made to the arbitrator in view of the agreement between the parties dated 7th July, 1971. Clause 20 of that agreement provides for reference of the disputes arising between the parties to an arbitrator. The disputes between the parties were regarding the amount of electricity consumption by the petitioner for the period from October, 1991 to May, 1993. The arbitrator has made an award directing the petitioner to pay an amount of Rs. 4,00,00,000/- (Rupees four corers).
2. The learned Additional Solicitor General Dr. Chandrachud challenges the award on the ground that the dispute that has been decided by the arbitrator was non-arbitrable. In the submission of the learned Counsel, in view of the provisions of section 26 of the Indian Electricity Act, there is exclusive jurisdiction vested in the Electrical Inspector to decide the dispute regarding any meter referred in sub-section (1) of section 26 of the Act. In the submission of the learned Counsel, therefore, the arbitrator had no jurisdiction to entertain the dispute. The learned Counsel points out that even the agreement which provides for arbitration by Clause 2.1 provides that the agreement is to be read and construed in all respects in conformity with the licences and with all the provisions of the Indian Electricity Act, and Rules made thereunder. In the submission of the learned Counsel, therefore, the agreement does not 'have overriding effect over the provisions of the Indian Electricity Act and as the Indian Electricity Act creates exclusive jurisdiction in an Electrical Inspector for deciding the dispute of such nature, the arbitrator could not have made an award on this subject. The learned Counsel relies on two judgments of the Supreme Court (i) in the case of Belwal Spinning Mills Ltd. v. U.P. State Electricity Board, and (ii) in the case of U.P.S.E.B. v. Atma Steels, , in support of his submissions. The leaned Counsel further submits that it was the case of the petitioner even before the arbitrator that in view of the provisions of section 26 of the Indian Electricity Act, the matter was not arbitrable.
3. The learned Counsel appearing for the respondents, on the other hand, submits that in view of the agreement between the parties the parties had consciously decided to refer such dispute to the arbitrator, the arbitrator has jurisdiction to make an award. The learned Counsel also invited my attention to paragraph 1.3 of the award and points out that as the parties agreed before the arbitrator that their claim is not based on the meter being defective, therefore, provisions of section 26 are not attracted. In the submission of the learned Counsel in view of this concession made by the petitioner before the arbitrator it cannot now argue before this Court that section 26 of the Act applies. The learned Counsel further submits that even the petitioner has accepted that the meter was showing wrong reading. It can also be demonstrated from the comparison of the figure of consumption of the electricity after the meter was corrected with the figure of consumption of electricity by earlier meter. The learned Counsel also submits that as the question of applicability of the provisions of section 26 was specifically referred to the arbitrator, the decision of the arbitrator on that question of law even if found to be erroneous by this Court, it cannot be corrected by this Court.
4. Now, if in the light of these rival submissions the record of the case is perused, it is clear that the dispute between the parties was about the consumption of electricity by the petitioner for the period mentioned above. It is also clear that according to the respondents there was defect in Current Transformer (C.T.), which resulted in the petitioner paying the consumption charges at a drastically lower level. Perusal of the judgment of the Supreme Court in the case of U.P.S.E.B. v. Atma Steels referred to above shows that the controversy whether current transformer (C.T.) & potential transformer (P.T.) are integral parts of the same system and whether a defect in C.T. or P.T. can be construed as a dispute relating to the meter has been resolved by the Supreme Court. The Supreme Court in paragraph 8 of its judgment in the case of U.P.S.E.B. v. Atma Steels referred to above has clearly held that the instrument P.T. has to be regarded as a meter for the purpose of section 26 of the Indian Electricity Act. The observations of the Supreme Court in paragraphs 7 & 8 are material, which read as under :-
7. We have heard the Counsel for the parties and seen the material on record and we see no reason to disagree with the conclusion of the High Court regarding the Inspector entertaining the application under section 26(7) specialty in view of the fact that in the Manual of H.T. Consumers Metering published by the Central Board of Irrigation and Power regarding the potential transformer with relation to salient feature of metering equipments it is stated as under:-
"(i) The metering equipments consist of C.T. and P.T. units. For L.T. meters (i.e. for 3 phase 4 wire) only three single phase V.T's are required. For H.T. metering 3 phase P.T. and two C.T's in R & B phases are required. C.T's and P.T's or only C.T's for L.T. metering are to be tested for their correct polarity and ratio as per their terminal markings and name plate details respectively, beside their insulation resistance etc. since the C.T. and P.T. ratios have a direct relation with the consumption recorded by a meter."
5. Perusal of paragraph 1.3 of the award shows that because it was found that the dispute between the parties did not relate to the meter, but it related to the current transformer, the arbitrator held that the provisions of the Electricity Act are not applicable. Now because of the judgment of the Supreme Court in the case of U.P.S.E.B. v. Atma Steels, the position is absolutely clear that the dispute relating to the Current Transformer is also covered by the provisions of section 26 of the Act. It is, therefore, clear that the provisions of section 26 would be attracted also in relation to the dispute regarding current transformer. Therefore, it becomes necessary to look into the provisions of section 26 of the Act. Section 26 of the Electricity Act reads as under:-
"26. Meters: (1) In the absence of an agreement to the contrary, the amount of energy supplied to a consumer or the electrical quantity contained in the supply shall be ascertained by means of a correct meter, and the licensee shall, if required by the consumer, cause the consumer to be supplied with such a meter:
Provided that the licensee may require the consumer to give him security for the price of a meter and enter into an agreement for the hire thereof, unless the consumer elects to purchase a meter.
(2) Where the consumer so enters into an agreement for the hire of a meter, the licensee shall keep the meter correct, and, in default of is doing so, the consumer shall, for so long as the default continues, cease to be liable to pay for the hire of the meter.
(3) Where the meter is the property of the consumer, he shall keep the meter correct, and in default of his doing so, the licensee may, after giving him seven days notice, for so long as the default continues, cease to supply energy through the meter.
(4) The licensee or any person duly authorised by the licensee shall, at any reasonable time and on informing the consumer of his intention, have access to, and be at liberty to inspect and test, and for that purpose, if he thinks fit, take off and remove any meter referred to in sub-section (1): and except where the meter is hired as aforesaid, all reasonable expenses of, and incidental to, such inspecting, testing, taking off and removing shall, if the meter is found to be otherwise than correct, be recovered from the consumer; and, where any difference or dispute arises as to the amount of such reasonable expenses, the matter shall be referred to an Electrical Inspector, and the decision of such Inspector shall be final;
(5).....
(6) Where any difference or dispute arises as to whether any meter referred to in sub-section (1) is or is not correct, the matter shall be decided, upon the application of either party, by an Electrical Inspector, or a competent person specially appointed by the State Government in this behalf; and where the meter has, in the opinion of such Inspector or person, ceased to be correct, such Inspector or person shall estimate the amount of the energy supplied to the consumer or the electrical quantity contained in the supply, during such time as the meter shall not in the opinion of such Inspector or person have been correct; and where the matter has been decided by any person other than the Electrical Inspector, an appeal shall lie to the Inspector, whose decision shall in every case be final; but save as aforesaid, the register of the meter shall, in the absence of fraud, be conclusive proof of such amount of quantity:
Provided that before either a licensee or a consumer applies to the Electrical Inspector under this sub-section, he shall give to the other party not less than seven day's notice of his intention so to do."
(7) In addition to any meter which may be placed upon the premises of a consumer in pursuance of the provisions of sub-section (1), the licensee, may place upon such premises such meter, maximum demand indicator or other apparatus as he thinks fit for the purpose of ascertaining or regulating either the amount of energy supplied to the consumer, or the number of hours during which the supply is given, or the rate per unit of time at which energy is supplied to the consumer, or any other quantity or time connected with the supply:
Provided that the meter, indicator or apparatus shall not, in the absence of an agreement to the contrary be placed otherwise than between the distributing mains of the licensee and any meter referred to in subsection (1):
Provided also, that where the charges for the supply of energy depend wholly or partly upon the reading indicating of any such meter, indicator or apparatus as aforesaid the licensee shall, in the absence of an agreement to the contrary, keep the meter, indicator or apparatus correct; and the provisions of sub-sections (4), (5) and (6) shall in that case apply as though the meter, indicator or apparatus were a meter referred to in sub-section (1).
Explanation- A meter shall be deemed to be "correct" if it registers the amount of energy supplied, or the electrical quantity contained in the supply, within the prescribed limits of error and a maximum demand indicator or other apparatus referred to in sub-section (7) shall be deemed to be "correct" if it complies with such conditions as may be prescribed in the case of any such indicator or other apparatus."
Perusal of the provisions of sub-section (6) of section 26 shows that it is in mandatory form and it mandates that any dispute, relating to any meter is correct or not, has to be decided upon an application to be made by either party, by an Electrical Inspector. Thus, section 26(6) creates exclusive jurisdiction in the Electrical Inspector to decide any dispute regarding any defect in the meter. Perusal of second proviso to sub-section (7) of section 26 also shows that if the dispute relates to any indicator or apparatus, then also they are to be decided under section 26 of the Act. The learned Counsel appearing for the respondents submitted that under section 26 dispute relating to a period of 6 months before the detection of defect can only be decided under section 26, however, so far as the period anterior to 6 months is concerned, the dispute remains unresolved under section 26(6), therefore, that part of the dispute is clearly arbitrable. The submission made by the learned Counsel is clearly contrary to the law laid down by the Supreme Court in the case of Belwal Spinning Mills Ltd. Following observations of the Supreme Court in paragraph 49 of its judgment are material:-
"The scheme under the Electricity Act clearly reveals that a correct meter is to be installed and such correct meter is to be maintained by the licensee in the premises of the consumer so that consumption of electricity is computed on the basis of reading in the meter. The scheme also reveals that unilateral decision of either of the parties about the correct status of the meter is not to be accepted by the other party if the other party raises objection as to the status of the meter. Whenever both parties do not accept a meter to be correct and the dispute is raised, such dispute is got to be resolved by referring to a statutory authority under section 26(6), namely, the Electrical Inspector. Within the integrated scheme under section 26 of the Electricity Act, if is not possible that even though dispute is raised about the mal- functioning of the meter such dispute will be treated as statutorily resolved for a limited period in accordance with the amended sub-section (6) of section 26 but for other period anterior to the same, the dispute will remain unresolved and claim of the licensee be open to be challenged. Therefore, simply on the finding that meter had ceased to be correct by the Electrical Inspector on entering the reference a licensee may not be justified in contending that a particular meter had ceased to be correct from a particular point of time even though the licensee, despite its statutory duty to maintain the correct meter by repairing or rectifying the defective meter and by replacing it if necessary has failed to take appropriate step. Both Mr. Sen and the learned Solicitor General in their fairness, have submitted that beyond the statutory period for which no estimation for the consumption of electricity is to be made by the Electrical Inspector attaching statutory finality to such estimation, although the licensee is not precluded from raising revised claim for other period anterior to the statutory period of estimation but such claim will be open to be challenged by the consumer. In our view by the amendment of sub-section (6) of section 26, the Legislature has intended to put an end of such contest between the licensee and the consumer and has set at rest of any dispute relating to any period anterior to the statutory period of estimation by providing that in a case of dispute as to functioning of meter, the reading in the meter for the period beyond the period of statutory estimation, will be final."
Perusal of the above observations of the Supreme Court leave one in no manner of doubt that as a result of the amendment in sub-section (6) of section 26 of the Act, now the entire dispute can be resolved under the provisions of sub-section (6) of section 26 of the Act.
6. In so far as the question whether this point was raised before the arbitrator is concerned, I find that this question about applicability of section 26 was specifically raised on behalf of the petitioner before the arbitrator. It is further to seen that in any case, the question whether the arbitrator had jurisdiction to enter upon the dispute in view of the provisions of section 26 of the Electricity Act is a question of law, which can even be permitted to be raised for the first time before this Court.
7. In so far as the submission of the learned Counsel for the respondents that the question of applicability of the provisions of section 26 was referred to the arbitrator and therefore any decision of the arbitrator on that question would be a decision on question of law which is referred to the arbitrator, therefore, cannot be interfered with by the Court is concerned, in my opinion, law in this regard has been clearly laid down by the Supreme Court in its judgment in the case of Tarapore and Company v. Cochin Shipyard Ltd., 1984(2) S.C.C. 6808. The Supreme Court has in clear terms laid down that unless it can be shown that a question of law was specifically referred to the arbitrator, the jurisdiction of the Court to go into the correctness or otherwise of the determination of that question of law by the arbitrator is not ousted. In the present case there was no specific question referred to the arbitrator. What was referred to the arbitrator was the dispute arising between the parties. The question of applicability of provisions of section 26 incidentally arose, which was decided by the arbitrator and therefore this Court can examine the correctness or otherwise of this question. In short, I find that in view of the judgment of the Supreme Court in the case of U.P.S.E.B. v. Atma Steels, it is clear that the arbitrator had no jurisdiction to enter upon the reference, because the subject was fully covered by the provisions of section 26 of the Indian Electricity Act.
8. In the result, therefore, the present petition succeeds and is allowed. It is granted in terms of prayer clause (a) of the petition.
Parties may act on simple copy of the order duly authenticated by the Associate of this Court.
9. Petition allowed.