Telangana High Court
The Southern Power Distribution ... vs M/S.Sarwottam Ispat Limited And 3 ... on 25 January, 2022
Author: Satish Chandra Sharma
Bench: Satish Chandra Sharma, N.Tukaramji
THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
WRIT APPEAL Nos.120, 121, 122, 123, 136, 173, 174, 175, 177,
179, 180, 181, 183, 184, 185, 186, 187, 188, 190, 191, 192,
193, 194, 195, 196, 197, 198, 200, 203, 206, 207, 208, 209,
210, 211, 212, 213, 214, 215, 217, 218, 219, 221, 222, 223,
224, 225, 226, 227, 228, 229, 230, 231, 232, 234, 235, 236,
237, 239, 240, 241, 242, 243, 247, 257 AND 262 OF 2021
COMMON JUDGMENT: (Per the Hon'ble the Chief Justice Satish Chandra Sharma)
Regard being had to the similitude in the controversy
involved in the present cases, the writ appeals were
analogously heard and by this Common Judgment, they
are being disposed of by this Court.
2. The present writ appeals have been filed by the
Southern Power Distribution Company of Telangana
Limited and others being aggrieved by the Judgment dated
18.01.2021 passed in W.P.No.7130 of 2020 and other
connected matters, by which the learned Single Judge has
allowed the writ petitions filed by the respondent and
others and held that the action of the appellants herein in
levying and demanding the minimum charges, both on
maximum demand and energy during the closure period
on account of Covid-19 pandemic restrictions from the
respondents (petitioners in the writ petition) who are high
tension consumers as illegal. The learned Single Judge also
directed the appellant company to adjust the amounts
2
collected from the HT consumers (writ petitioners).
Meaning thereby, the appellant company has been
restrained from levying and demanding minimum charges,
both on maximum demand and energy in respect of
lockdown period.
3. The facts of the cases reveal that the respondent No.1
company (W.A.No.120 of 2021) before this Court is having
a manufacturing unit and entered into an Agreement with
the appellant company in respect of electricity supply (High
Tension Service Connection). The terms and conditions of
the agreement in respect of the all the writ petitioners are
the same and the clause relating to contracted maximum
demand and levy of minimum charges is the same in
respect of all consumers. The facts further reveal that the
Telangana State Electricity Regulatory Commission
(TSERC) has approved the General Terms and Conditions
of Supply (GTCS) with effect from 01.01.2006 and various
agreements have been executed between the appellant
herein as well as the respondents in the writ appeals from
time to time. The undisputed facts also reveal that on
account of Covid-19 pandemic, the Government of India as
well as the respective State Governments have issued
various orders in respect of closure of various activities,
i.e., declaring the lockdown keeping in view the provisions
3
of the Disaster Management Act, 2005 and the consumers
on account of the orders issued by the Government of India
as well as the respective State Governments were forced to
close down their commercial establishments with effect
from 23.03.2020. The restrictions were extended from time
to time and the dispute in all the cases relates to Twin Part
Tariff System (TPTS), i.e., levying of maximum demand
charges and energy charges during the lockdown period.
The writ petitioners before the learned Single Judge has
prayed for the following reliefs:-
"For the reasons stated in the accompanying
affidavit, the petitioner herein prays that this Hon'ble
Court may be pleased to issue a writ or order or direction
more particularly one in the nature of Writ of Mandamus
declaring the action of the respondents 2 to 4 in not
collecting the Maximum Demand charges for the month
of April, 2020 on pro-rata basis, i.e., working and non-
working periods (closure days) as highly illegal, arbitrary,
unjust, irrational, void and in violation of Articles 14,
19(1)(g), 21, 265 and 300-A of the Constitution of India
and pass such other order or orders as this Hon'ble
Court may deem fit and proper in the circumstances of
the case."
4. The writ petitioners in the light of the aforesaid relief
clause came up with an argument that they are entitled for
waiver of maximum demand charges and energy charges
under the TPTS as the lockdown was beyond their control
and the lockdown was imposed on account of the orders
issued by the Government of India as well as the State
4
Government. The writ petitioners have stated in the writ
petitions that the Government of India has announced the
package of Rs.20.00 lakh crores for relief to various
industries and Rs.6,900 crores have been allocated to
support various power distribution companies in the
country and therefore, as TSSPDCL will also get a sum
from the amount allocated to the power distribution
companies, the same should be given as relief to the writ
petitioners also. The writ petitioners also took shelter
under Section 18 of the Sale of Goods Act, 1930 and
prayed for waiver of the maximum/ minimum demand
charges. They also took shelter of force majeure situation
by placing reliance upon the Judgment delivered in the
case of Northern India Iron and Steel Company v. State of
Haryana1 and Orissa State Electricity Board v. IPI Steel
Limited2 and also placed heavy reliance upon the Judgment
delivered by the Madras High Court in the case of South
India Spinners Association v. The Chairman-cum-Managing
Director, Tamil Nadu Generation & Distribution Corporation
Limited3 on the same subject.
5. The prayer of the writ petitioners was opposed by the
appellant herein by placing reliance upon the Judgment
1
(1976) 2 SCC 877
2
AIR 1995 SC 1553
3
W.P.No.7678 of 2020 & batch, decided on 14.08.2020
5
delivered in the case of Vijay Syal v. State of Punjab4 and
Prestige Lights v. State Bank of India5 and heavy reliance has
been placed upon the agreement, which does not have any
such provision to waive maximum/minimum demand
charges. It was also argued that the TSSPDCL has supplied
the power during the lockdown period and in case the
petitioners have not been able to utilise, they will have to
pay maximum/minimum demand charges and energy
charges and the Distribution Company has paid their dues
to the generators for the contracted period. They have paid
the applicable fixed charges to generators and also
transmission charges.
6. The learned Single Judge has allowed the writ
petitions and paragraphs 67 to 85 are reproduced as
under:-
"67. The sum and substance of the contentions of the
petitioners in the entire batch of cases is that they are
H.T. Consumers and they were prevented from
consuming electricity due to circumstances beyond their
control. Therefore, they were forced to close their
Industrial / Commercial Units. There are penal
provisions in the lock down restrictions imposed by the
Central and State Governments. Thus, they have not
consumed the electricity.
68. On the other hand, the sum and substance of the
contentions of the TSSPDCL is that it has been
4
(2003) 9 SCC 401
5
(2007) 8 SCC 449
6
purchasing the power from Generators and it was ready
to supply the electricity as per the contracted power. It
has expressed its readiness and willingness to supply the
electricity. It has paid the cost to the generators. Thus,
the petitioners, consumers, have to pay the contracted
maximum demand and minimum demand as per the
agreements entered between the petitioners and the
TSSPDCL and also as per GTCS.
69. As stated above, the agreements entered into by the
petitioners, the consumers are silent on the aspect of
'force majeure', and the doctrine of frustration and the
force majeure are the cases which are to be determined
on the basis of factual examination. As stated above, the
COVID-19 pandemic is a force majeure as declared by
the Government of India. In view of the same, the
contention of the TSSPDCL that the agreements entered
into between the petitioners and the TSSPDCL are silent
on the aspect of force majeure and the doctrine of
frustration are to be invoked when the lis deals with
purely contractual matter cannot be accepted. It is also
relevant to note that the State of Telangana, on one hand,
issued proceedings asking all the Industrial /
Commercial activities to be closed and thus prevented the
consumers from consuming electricity, and on the other
hand, it cannot claim that it is ready to supply the power
etc. Thus, the contentions of the TSSPDCL are self-
contradictory.
70. As held by Madras High Court in South India
Spinners Association (supra) the HT consumers were
actually caught between the devil and deep sea. On the
one hand the Government asked them to shut down their
establishment and on the other hand TSSPDCL was
levying the Maximum Demand from the consumers. If
this is allowed to be continued, it will virtually lead to
permanent shutting down of the industries. The Madras
High Court further held that the financial crunch that is
7
being faced by almost all industries due to the lockdown
and the huge challenge they are going to face post the
pandemic is now made worse by TANGEDCO by levying
the Maximum Demand Charges. TANGEDCO must
understand that its attitude will kill the industries and
closing down of industries will ultimately have a financial
implication on TANGEDCO also. And TANGEDCO was
virtually killing the goose that was laying the golden eggs.
71. With the said discussion, the Madras High Court
held that the maximum demand charges and the
consumption charges levied by TANGEDCO against the
HT Consumers is illegal, unsustainable and in violation
of the statutory regulations, and accordingly, the
Maximum Demand Charges and the compensation
towards low PF that have been questioned in the
impugned bills raised by the TANGEDCO for each of the
consumers who are parties in the batch of writ petitions,
is by quashed with certain directions, which are as
under:
"a) TANGEDCO shall issue a revised bill to the petitioners
by applying Regulation 6 (b) of the Supply Code for the
entire period when the establishment was under shut
down;
b) If TANGEDCO has already recovered the entire dues
from any of the petitioners, the bill shall be reworked in
accordance with the direction given in Clause (a) and the
excess amount shall be adjusted towards the future bills;
c) If the demand made by TANGEDCO has been adjusted
from the security deposit and any of the petitioner has
been asked to pay any amount towards additional
security deposit on that count, the said claim shall be
withdrawn forthwith and the calculation of the additional
security deposit shall be independently done under
Regulation 5 of the Supply Code and demand/
adjustment shall be done in accordance with the said
Regulation;
8
d) The TANGEDCO shall not levy compensation charges
towards low PF from the petitioners during the period of
lockdown. Even if such levy is made in future, show
cause notice shall be issued to the consumer and
an opportunity shall be given to the consumer before
levying any compensation under Clause 6.1.1.6 of the
Tariff Regulation;
e) If any amount has already been recovered towards levy
of compensation charges for low PF from any of the
petitioners, the said amount shall be adjusted towards
future bills;
f) These directions will apply only for the period during
which the establishment was under total lockdown due to
the orders issued by the Government and it is made clear
that it pertains only to the Minimum Charges payable
under Regulation 6(b) of the Supply Code and there is no
exemption or concession insofar as the charges payable
for the actual consumption of electricity (Energy
Charges); and
g) If any of the establishments continue to be under
lockdown due to the Government Orders passed in this
regard, the minimum charges alone shall be collected till
the lifting of the lockdown."
72. Therefore, the contention of the TSSPDCL that the
petitioners herein have agreed to pay all the charges
levied by the Company and the Company's right to vary
terms and conditions of the agreement and the
Consumers have to pay monthly minimum charges etc.
in accordance with the GTCS is not acceptable.
73. The TSSPDCL shall appreciate the fact that running
an Industry / Business by any consumer is not that
easy. It has to make investment, face labour, pollution
and other problems. It has to pay taxes to the
departments concerned and also loans to the financial
institutions apart from making statutory payments. In
the said process, Industries/Commercial establishments
9
are being suffered in many ways including Government
Policies, Labour issues, Pollution issues and some times
with man-made force majeure, such as dharnas, riots,
agitations, strikes etc. The TSSPDCL without
appreciating the said aspects, levying maximum demand
charges and without considering the requests of the
consumers that they have to collect maximum demand
charges on pro-rata basis i.e., working and non-working
days (closure days). The said approach of the TSSPDCL
is unsustainable.
74. The contention of the TSSPDCL is that it would
follow the instructions / orders issued by the State and
the TSERC. The TSERC has considered the requests of
the consumers and also the reduction or deration as
specifically mentioned in Clause - 5.9.4.2 of the GTCS
and passed certain orders dated 23.04.2020 and
29.04.2020. The consumers without applying for
deration of power in compliance of the said orders passed
by the TSERC in O.P. Nos.16 and 17 of 2020, dated
23.04.2020 and 29.04.2020 respectively, approached this
Court straightaway.
75. As stated above, COVID-19 pandemic is a force
majeure. Nobody knows when normalcy is going to be
restored. Both the Central and the State Governments
have issued lock down restrictions by invoking the
powers under Epidemic Diseases Act, 1897. Therefore,
the petitioners, HT consumers, are not in a position to
apply for deration of power. In Clause 5.9.4.2 of the
GTCS, specific procedure is laid down with regard to
reduction or deration of power. It is an uncertain
situation. Therefore, the petitioners, HT Consumers,
cannot be expected to apply for reduction or deration of
power, and once normalcy is restored, it can again
approach the TSSPDCL with a request to restore the
normal power. The said exercise is not within the
purview of the petitioners, HT Consumers. The TSSPDCL
10
without appreciating the said fact, insisting the
petitioners to comply with the orders of the TSERC
mentioned above. Thus, the said approach of the
TSSPDCL is not appreciable. The TSSPDCL being
instrumentality of the State is expected to be reasonable
towards its consumers. In the present case, the
TSSPDCL is unreasonable and it is not expected to.
76. It is also relevant to note that when the matters were
listed for admission, the learned Standing Counsel for
TSSPDCL has submitted that the petitioners have to
make a similar representation to the State Government
and the TSERC and it is for them to consider and pass
appropriate orders. In view of the said submission, this
Court has passed interim order granting liberty to the
petitioners to make similar representations to the State
Government and the TSERC. The State Government and
the TSERC were also directed to consider the
representations and dispose of the same within a period
of ten days. Accordingly, they have passed orders
rejecting the request of the petitioners and requested the
petitioners to pay the balance amount.
77. In view of the aforesaid contention, the reasons
given by the State Government, TSSPDCL and the TSERC
in the orders passed by it are not satisfactory and the
same are unsustainable in law, more particularly, in view
of the law laid down by the Apex Court in Satyabrata
Ghose v. Mugneeram Bangur and Company6, Energy
Watchdog v. Central Electricity Regulatory
Commission7 and National Agricultural Co-Operative
Marketing Federation of India v. Alimenta S.A.8.
78. In view of the above discussion, the action of the
respondents in not collecting the maximum demand
which is on pro-rata basis i.e., working and non-working
6
. AIR 1954 SC 44
7
. (2017) 14 SCC 80
8
. AIR 2020 SC 2681
11
period (closure days) is illegal and contrary to the law laid
down by the Apex Court.
MINIMUM DEMAND CHARGES:
79. In view of the above discussion, it is apt to refer to
Section - 72 of the Act, 2005, which is as under:
"72. Act to have overriding effect.--The provisions of
this Act, shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the
time being in force or in any instrument having effect by
virtue of any law other than this Act. The provisions of
this Act, shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the
time being in force or in any instrument having effect by
virtue of any law other than this Act."
Thus, the provisions of the Act, 2005, are having over-
riding effect. In view of the same, the contention of the
TSSPDCL that the petitioners cannot claim that the
agreements entered into by the petitioners, HT
Consumers, do not become impossibility on account of
the lock down, as long as the relation between the
petitioners and respondent No.2 subsists, respondent
No.2 is bound to supply power to the petitioners and the
petitioners are liable to bound to pay the same etc. is
unsustainable. The provisions of the Act, 2005 is having
over-riding effect to the provisions of the Electricity Act,
2003 and GTCS and the terms and conditions of the
agreement for supply of power entered into between the
petitioners, HT Consumers, and the TSSPDCL. As
discussed supra, the lockdown restrictions were imposed
by the State of Telangana by invoking the powers vested
upon it under Section - 2 of the Act, 2005, which is
having over-riding effect.
12
80. Thus, the contention of the TSSPDCL that the
petitioners' claim that maximum demand charges for the
month of April, 2020 should be collected on pro-rata
basis i.e., working and non-working charges (closure
days) is not tenable and goes beyond the GTCS and the
regulations framed under the Act, 2003 is also
unsustainable. Union of India vide its Notification, dated
19.02.2020, has declared COVID-19 pandemic as a 'force
majeure'. Due to COVID-19 pandemic, the Central
Government and the State Governments have issued
various orders from time to time declaring the lockdown
of various activities including industrial activity under
the provisions of the Act, 2005. On account of the said
mandatory orders, according to the petitioners, they have
closed down their industrial operations w.e.f. 23.03.2020.
The said lockdown restrictions were extended from time
to time by both the Central and State Governments.
81. It is also relevant to note that considering various
aspects, more particularly, the situation of COVID-19
pandemic and the mitigating impact thereof, and also the
problems being faced by the electricity consumers, the
Government of Punjab vide proceedings dated
07.04.2020, granted certain reliefs to the electricity
consumers including the relief that fixed charges for
Medium Supply (MS) and Large Supply (LS) Industrial
Consumers be exempted for next two months from
23.03.2020 and energy charges may be fixed to
commensurate with reduction in fixed charges (single
rate), and revised energy charges would be paid by
consumers and not to be considered for subsidy.
82. It is also relevant to note that the State of Gujarat
has struck a balance by granting concessions to
consumers during the pandemic crisis and the electricity
charges have been directed to be collected as per the
consumption till normalcy is restored. By referring to the
same and also various other aspects, the Madras High
13
Court in South India Spinners Association (supra) held
that similar formula can be adopted by the State of Tamil
Nadu also and the TANGEDCO can be directed to collect
the recorded demand till normalcy is restored.
83. In view of the above discussion, it is also declared
that the action of the TSSPDCL in levying and demanding
the minimum charges, both on the maximum demand
and energy during the closure period on account of
COVID-19 restrictions from the petitioners - HT
Consumers as illegal.
84. To sum up, the Writ Petitions are allowed with the
following findings /directions:
(a) COVID-19 pandemic is a force majeure;
(b) since there is no force majeure clause in the
agreements, Section - 32 of the Act, 1872 does
not apply. However, Section - 56 of the Act, 1872
operates and the doctrine of 'frustration' is
applicable.
(c) the action of the TSSPDCL in not collecting the
maximum demand charges on pro-rata basis i.e.,
working and non-working days (closure days) as
illegal;
(d) the action of the TSSPDCL in levying and
demanding the minimum charges, both on the
maximum demand and energy during the closure
period on account of COVID-19, pandemic
restrictions from the petitioners - HT Consumers,
as illegal;
(e) the TSSPDCL is directed to adjust the amount
collected by it towards minimum charges, both
on maximum demand of energy for the closure
period by making appropriate calculation;
(f) liberty is given to the respective petitioners to
make a representation along with calculation
statement to the respondents' authorities
14
including TSSPDCL to enable them to adjust the
same;
85. Accordingly, all the Writ Petitions are allowed to the
extent indicated in the above. However, in the
circumstances of the case, there shall be no order as to
costs."
7. The learned counsel for the appellants has
vehemently argued before this Court that the learned
Single Judge has erred in law and on facts in allowing the
writ petition by placing heavy reliance upon the Judgment
delivered by the Madras High Court in South India Spinners
Association (supra). It has been argued that in the aforesaid
case, the challenge was on the ground that the TANGEDCO
was levying charges in violation of the orders passed by
TNERC and also in violation of Regulation 6 of the Tamil
Nadu Electricity Supply Code, 2004. It is further contended
that a Single Judge of Madras High Court has held that
TANGEDCO is bound by the Regulations and Tariff orders
and since the TANGEDCO was not acting in conformity
with the statutory provisions, the writ petitions were
entertained and whereas no such discrepancy was arising
in the facts and circumstances of the present case.
8. It has been further contended that the relief claimed
by the petitioners cannot be granted as there is a
corresponding financial liability upon the appellants. The
15
power is supplied to the writ petitioners pursuant to the
agreements executed with the appellants and the appellant
is bound to pay the cost of power to the generating units
irrespective of the fact that whether the power is consumed
or not. The power purchased has necessarily to be used
and there is no concept of storage of power and the learned
Single Judge has not taken into account the aforesaid
crucial aspect while granting relief to the writ petitioners. It
has been vehemently argued that the supply agreement
being a contract as defined under Section 2(e) and 2(h) of
the Contract Act, 1872, Section 56 of the Contract Act and
the doctrine of frustration cannot be made applicable in
the peculiar facts and circumstances of the case keeping in
view the settled proposition of law laid down by the Hon'ble
Supreme Court in the case of Naihati Jute Mills Limited v.
Khyaliram Jagannath9, wherein it has been held that the
Courts have no general power to absolve a party from the
performance of his part of the contract merely because its
performance has become onerous on account of an
unforeseen turn of events. It has also been argued that
clauses 8 and 10 of the Supply agreement makes it very
clear that the writ petitioners have undertaken to pay the
maximum demand charges, energy charges in accordance
with the tariff orders issued by TSERC and to pay monthly
9
AIR 1968 SC 522
16
charges even if no electricity is consumed for reasons
whatsoever and they are under obligation to comply with
the GTCS. It has been further contended that the concept
of pro-rata basis is not envisaged in the agreement nor in
the GTCS or in the Electricity Act, 2003 and therefore, the
finding of the learned Single Judge that the action of the
TSSPDCL in not collecting the maximum demand charges
on pro-rata basis i.e., working and non-working days
(closure days) as illegal is bad in law.
9. It has also been argued that the lis between the
parties pertains to financial liability of the writ petitioners
and could not have been decided in exercising jurisdiction
under Article 226 of the Constitution of India. The writ
jurisdiction of the High Court cannot be invoked whereas
there is a financial implication de hors the provisions of the
statute and the contractual issues in dispute could have
been dealt with by the Civil Court and not by the High
Court in the manner and method it has been done. It has
also been argued that in cases of dispute of private
character or purely contractual field or commercial in
nature and where no public duty element is involved, a
mandamus does not lie and therefore in the light of the
fact that the demand raised by the appellants is supported
by law, i.e., the tariff issued by the TSERC and the GTCS,
17
the order passed by the learned Single Judge deserves to
be set aside. It has also been argued that the competent
regulatory authority, i.e., TSERC has rejected the claim for
waiver of the maximum demand charges and in the light of
the orders passed by the TSERC, the High Court could not
have been interfered in the matter especially in the light of
the agreements executed between the parties. A prayer has
been made for dismissal of the writ petition.
10. The respondents before this Court, who are the
consumers, have vehemently argued that the lockdown
restrictions were imposed under the provisions of the
Disaster Management Act, 2005 and the Epidemic
Diseases Act, 1897 by the Central Government and by the
State Governments, Section 72 of the Disaster
Management is having overriding effect and therefore, the
agreements between the appellants and the respondents
and the Electricity Act, 2003 will not come in the way of
waiving the minimum charges/energy charges. It has also
been argued keeping in view the lock down restrictions,
consumers were not able to operate industrial
establishments/commercial establishments and the
distribution companies were also not supposed to supply
power during the lockdown period and therefore, the
learned Single Judgment was justified in allowing the writ
18
petitions. It has also been vehemently argued that the
appellants having failed to place any material before this
Court to show that the electrical energy procured by the
appellants/distribution companies during the lockdown
period got wasted due to non-consumption of power by the
industries/commercial establishments during the
lockdown period and especially in the light of the fact that
the Central Government has sanctioned Rs.6,900 crores to
the distribution companies to make good the loss suffered
by the distribution companies, the benefit should flow
down to the consumers.
11. It has been further argued by learned counsel for the
respondents/writ petitioners that the circumstances were
beyond the control of the consumers and therefore, they
are entitled for proportionate reduction of maximum
demand charges and energy charges as held by the Hon'ble
Supreme Court in the case of Northern India Iron and Steel
Company (supra) even though there is no force majeure
clause in the agreement for providing proportionate
reduction of maximum demand charges and energy
charges. Reliance has also been placed on the Judgment
delivered in the case of Orissa State Electricity Board (supra)
and it has been argued that in case the consumers are not
able to consume the power due to the circumstances
19
beyond their control on account of power restrictions, they
are entitled for reduction of maximum demand charges. It
has been vehemently argued that keeping in view the
impossibility to perform the obligation on the part of the
consumer, the contract gets frustrated and in view of
Section 56 of the Contract Act, the learned Single Judge
was justified in granting relief to the writ petitioners. It has
been further argued that the appellants cannot compel the
consumers to pay the maximum demand charges and
energy charges in full by placing reliance upon the clauses
8 and 10 of the agreements since the said clauses get
eclipsed during the lockdown period and the action of the
appellants/distribution companies becomes arbitrary and
irrational when tested on the touchstone of the Article 14
of the Constitution of India. It has also been argued that
during the lockdown period, the consumers suffered
heavily as they could not carry out their business
activities, they have incurred heavy expenditure in the
matter of payment of labour and other ancillary
expenditure and therefore, the learned Single Judge was
justified in granting relief to the writ petitioners.
12. Lastly, it has been argued that in case the
distribution companies have suffered losses on account of
the lockdown, the loss can be made good by adjusting the
20
tariff under Section 62 of the Electricity Act, 2003 or by
alternatively approaching the State Government for grant
of concession. It has been vehemently argued that the
order passed by the learned Single Judge does not suffer
from illegality, irregularity and the writ appeals deserve to
be dismissed.
13. Heard the learned counsel for parties and perused the
records. These matters are being disposed of with the
consent of the parties at admission stage itself.
14. The facts of the case reveal that large numbers of writ
petitions have been filed by companies, partnership firms,
proprietary concerns who have obtained High Tension (HT)
service connections from the distribution companies with a
contracted maximum demand. The undisputed facts of the
case make it very clear that on account of Covid-19
pandemic, various orders were passed by the Central
Government or by the State Government keeping in view
the statutory provisions as contained in Disaster
Management Act, 2005 and lockdown was imposed with
effect from 23.03.2020. The Central Government has
issued various orders from time to time in exercise of
powers conferred under the Epidemic Diseases Act, 1897
and the Disaster Management Act, 2005 keeping in view
21
the Covid-19 pandemic and the Government of Telangana
has issued G.O.Ms.No.45, General Administration
Department, dated 23.03.2020 notifying the lockdown in
the entire State of Telangana with immediate effect and
also incorporated Regulations in the said Government
Order. Regulation 7 of the G.O.Ms.No.45 is reproduced as
under:-
"7. All shops, commercial establishments, offices,
factories, workshops, godowns etc, shall close their
operations. However, production and manufacturing
units which require continuous process such as
pharmaceuticals, API etc may function. Further,
manufacturing units engaged in production of essential
commodities like dal and rice mills, food and related
units, dairy units, feed and fodder units etc will also be
permitted to operate."
15. The aforesaid regulation makes it very clear that there
were relaxations in respect of certain operations and
certain industries, which were functional, subject to the
terms and conditions mentioned in the Regulations. The
writ petitioners, being HT consumers are subjected to TPTS
which empowers the appellants/Distributions Companies
to collect two types of charges from the consumers viz.,
maximum demand charges for billing demand (i.e., 80% of
CMD or RMD, whichever is higher) and energy charges for
actual energy consumed or 50 units per KVA per month for
the billing demand, whichever is higher.
22
16. Section 62 of the Electricity Act, 2003 reads as
under:-
"62. Determination of tariff:- (1) The Appropriate
Commission shall determine the tariff in accordance with
the provisions of this Act for-
(a) supply of electricity by a generating company to a
distribution licensee"
Provided that the Appropriate Commission may, in
case of shortage of supply of electricity, fix the minimum
and maximum ceiling of tariff for sale or purchase of
electricity in pursuance of an agreement, entered into
between a generating company and a licensee or between
licensees, for a period not exceeding one year to ensure
reasonable prices of electricity;
(b) transmission of electricity;
(c) wheeling of electricity;
(d) retail sale of electricity;
Provided that in case of distribution of electricity in
the same area by two or more distribution licensees, the
Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling of
tariff for retail sale of electricity.
(2) The Appropriate Commission may require a
licensee or a generating company to furnish separate
details, as may be specified in respect of generation,
transmission and distribution for determination of tariff.
(3) The Appropriate Commission shall not, while
determining the tariff under this Act, show undue
preference to any consumer of electricity but may
differentiate according to the consumer's load factor,
power factor, voltage, total consumption of electricity
during any specified period or the time at which the
supply is required or the geographical position of any
23
area, the nature of supply and the purpose for which the
supply is required.
(4) No tariff or part of any tariff may ordinarily be
amended, more frequently than once in any financial
year, except in respect of any changes expressly
permitted under the terms of any fuel surcharge formula
as may be specified.
(5) Notwithstanding anything contained in Part X, the
tariff for any inter-State supply, transmission or wheeling
of electricity, as the case may be, involving the territories
of two States may, upon application made to it by the
parties intending to undertake such supply, transmission
or wheeling, be determined under this section by the
State Commission having jurisdiction in respect of the
licensee who intends to distribute electricity and make
payment therefor.
(6) A tariff order shall, unless amended or revoked,
continue to be in force for such period as may be
specified in the tariff order."
17. The aforesaid statutory provision of law reveals that
the electricity tariff is determined by the State Electricity
Regulatory Commission and the same has to be adhered to
by the Distribution Companies. The Distribution
Companies are not entitled to deviate from the tariff order
issued by the Telangana State Electricity Regulatory
Commission. Section 64(6) of the Electricity Act reads as
under:-
"64(6) A tariff order shall, unless amended or revoked,
continue to be in force for such period as may be
specified in the tariff order."
24
18. The aforesaid provision of law makes it very clear that
the tariff order unless amended or revoked continues to be
in force for such period as specified in the tariff order.
19. Regulation 2(c) of the Andhra Pradesh Electricity
Regulatory Commission (Electricity Supply Code)
Regulation, 2004 (hereinafter referred to as 'Supply Code,
2004') defines 'consumption charges', which reads as
under"-
"2(c) ' Consumption Charges' means energy charges for
consumption of electrical energy (calculated on the basis
of kWh or kVAh rate as applicable) and includes
Demand/Fixed charges, Fuel Surcharge Adjustment
(FSA) charges, customer charges, wherever applicable."
20. Regulation 3.4 of the Supply Code, 2004 reads as
under:-
"3.4 The consumer shall pay, in additional to the charges
fixed in the Tariff determined by the Commission, all
surcharges, additional charges if any and any other
charges payable relating to the supply of energy to the
consumer as per the tariff conditions in force from time
to time. The consumer shall also pay all the amounts
chargeable by the Government by way of tax/duty etc, to
the appropriate authority as specified by the
Government."
21. The aforesaid regulation makes it very clear that the
consumer is liable to pay all charges as stipulated in the
Supply Code, 2004. It is again an undisputed fact that the
A.P. Electricity Regulatory Commission has approved the
25
GTCS vide proceedings dated 06.01.2006 and the same is
having a statutory force. The Distribution Companies are
under obligation to follow GTCS in respect of supply of
electricity and the Contracted Maximum Demand (CMD) is
defined under clause 2.2.11 of the GTCS and the same
reads as under:-
"2.2.11 - Contracted Demand or the Contracted
Maximum Demand means the Maximum demand the
consumer intends to put on the system, as described in
clause 2.2.35 and is so specified in the supply agreement
between the parties."
22. The writ petitioners have entered into agreement with
the appellants/Distribution Companies and clauses 7, 8, 9
and 10 of the aforesaid agreement reads as under:-
"7. Determination of Agreement:- I/We shall be at liberty
to determine the Agreement by giving in writing three
months notice expressing such intention at any time
after the period of two years. If for any reasons, I/We
choose the Three months to derate/terminate the
Agreement before the expiry of the minimum two years
period of the Agreement, the duration/termination will be
done with effect from the date of expiry of the three
months notice period or expiry of the initial two years
period whichever is later. I/We agree that the Company
may terminate this Agreement at any time giving three
months notice. If I/We violate the terms of this
Agreement or the General Terms and Conditions of
Supply notified by the company with the approval of the
Commission from time to time or the provision of any law
touching this Agreement including the Electricity Act,
2003, the Rules and Regulations framed thereunder. This
Agreement shall remain in force until it is terminated as
26
above indicated. In computing the period of 2 years
referred to the above periods or periods for which the
annual minimum guarantee has or have been waived or
reduced shall be excluded.
8. Obligation of Consumers to pay all charges levied by
Company:- From the date this agreement comes into
force, I/We shall be bound by and shall pay the company
maximum demand charges, energy charges, surcharges,
meter rents and other charges if any, in accordance with
the tariffs applicable and this general terms and
conditions of supply prescribed by the Company from
time to time for the particular class of consumers to
which I/We belong.
9. Company's Right to vary terms and agreement:- I/We
agree that the company shall have the unilateral right to
vary, from time to time tariffs scale of general and
miscellaneous charges and the general terms and
conditions of supply under this Agreement by special or
general proceedings. In particular, the Company shall
have the right to enhance the rates chargeable for supply
of electricity according to exigencies.
10. Monthly Minimum Charges:- I/We shall pay
minimum charges every month as prescribed in tariff and
the general terms and conditions of supply even if no
electricity is consumed for any reasons whatsoever and
also if the charges for electricity actually consumed are
less than the minimum charges. The minimum charges
shall also be payable by me even if electricity is not
consumed because supply has been disconnected by the
Company because of non-payment of electricity charges.
Theft of Electricity or unauthorised use of Electricity or
for any other valid reasons."
27
23. The aforesaid agreement, which has been executed
between the parties, makes it very clear that the writ
petitioners have undertaken to pay maximum demand
charges, energy charges in accordance with the tariffs
applicable and the GTCS prescribed by the company from
time to time. Clause 10 makes it very clear that the
minimum monthly charges are payable even if electricity is
not consumed and the same is in existence.
24. It is true that on account of Covid-19 pandemic
lockdown was imposed in the State of Telangana keeping
in view the Disaster Management Act, 2005 and it was
extended from time to time and the State Government has
issued G.O.Ms.No.4, dated 22.04.2020, which reads as
under:-
GOVERNMENT OF TELANGNA
ABSTRACT
Industries and Commerce Department - COVID-19 -
Lockdown - Relief to Industries - Orders - Issues.
INDUSTRIES AND COMMERCE (IP&INF) DEPARTMENT
G.O.Ms.No.4 Dated 22.04.2020
Read the following:-
1. The Epidemic Diseases Act, 1897.
2. G.O.Ms.No.45, General Administration Department,
dated 22.03.2020.
3. G.O.Ms.No.46, General Administration Department,
dated 22.03.2020.
4. G.O.Ms.No.54, General Administration Department,
dated 28.03.2020.
5. G.O.Ms.No.57, General Administration Department,
dated 12.04.2020.
6. G.O.Ms.No.60, General Administration Department,
dated 19.04.2020.
7. Representations from various Industry Associations.
28
ORDER:
In the references 2nd and 3rd read above, Government of Telangana in exercise of the powers conferred under Section 2 of the Epidemic Diseases Act, 1897, read with all other enabling provisions of the Disaster Management Act, 2005, has notified lockdown In the entire State of Telangana till 31st March, 2020. Subsequently, vide references 4th to 6th read above, the lockdown period has been extended upto 07-05-2020 for containment of COViD-19epidemic in the State.
2. Government of Telangana has issued orders for closure of all shops, commercial establishments, offices, factories, workshops, godowns pertaining to non- essential commodities in view of social distancing for containment of the pandemic C0VID-19.
3. Industrial Associations, in this regard, have represented to the Government that the industrial units work on a precarious state of finances and any minor disruptions in their regular flow of works will upset their production and cash flows and their overall health is affected, While the loss and difficulties of workers and employees is predictable, it is equally difficult for units and businesses to pay the salaries and wages by taking additional loans while foregoing the production and revenues. The Industrial associations have informed that the Micro, Small, Medium Enterprises (MSME) units with zero/minimum financial reserves may be worst hit by the current prevailing situation and requested for relief measures to save the MSME sector in the state.
4. The requests of the Industry Associations were discussed in the cabinet meeting held on 19-04-2020. After detailed discussions, Government hereby decides to extend the following relief measures to the Industries in Telangana:
"Electricity Bills during the lockdown period will be collected as per actual consumption only and the fixed 29 charges for the same period shall be deferred till 31.05.2020 without any penalty and Interest. Further, those industries which pay the bills within due date shall get 1 percent rebate of billed amount".
5. The Energy Department is requested to take necessary action accordingly.
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA) JAYESH RANJAN PRINCIPAL SECRETARY TO GOVERNMENT AND COMMISSIONER FOR INDUSTRIAL PROMOTION (FAC) To The Special Chief Secretary to Government, Energy Department.
Copy to:
The Special Chief Secretary to Government, Revenue (CT & Excise) Department.
The Principal Secretary to Government, Finance Department. The Commissioner of Industries, Hyderabad. The VC&MD; TSIIC, Hyderabad for necessary action. The Principal Secretary to Hor'ble Chief Minister. The P.S.to the Hor'ble Minister for Industries & Commerce. The P.S.to Chief Secretary.
//FORWARDED :: BY ORDER//
25. The aforesaid executive instructions makes it very clear that after discussions with the industry associations, it was resolved to collect electricity bills for the lockdown period as per the actual consumption only and the payment of fixed charges for the same period, have been deferred till 31.05.2020 without any penalty and interest.
It was also resolved to grant 1% rebate in respect of the bill amount to those industries which pay the bills within due date. Meaning thereby, keeping in view the genuine 30 hardship, concession has already been granted to the writ petitioners by the State Government.
26. The learned Single Judge has taken into account the Judgment delivered in the case of Northern India Iron and Steel Company (supra). In the aforesaid case, the consumer was prevented from consuming electricity as per the contract and the consumer was not able to consume the electricity due to the inability of the Board to supply electricity energy due to power cut or any other circumstances. The Hon'ble Supreme Court in the aforesaid case has held as under:-
"9. We are, therefore, of the view that the inability of the Board to supply electric energy due to power cut or any other circumstance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with sub-clause (b) of clause 4 of the tariff and therefrom a proportionate reduction will have to be made as per sub-clause (f). We hope, in the light of the judgment, there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference or dispute as to the quantum of the demand charge or the proportionate reduction, parties will be at liberty to pursue their remedy as may be available to them in accordance with law."31
27. In the considered opinion of this Court, the Judgment is distinguishable on facts, as in the present case, the appellant/Distribution Company was constantly and regularly supplying electricity to the writ petitioners. It has discharged its liability by paying statutory dues to the transmission companies and generating companies, and therefore, the order passed by the learned Single Judge in declaring the action of the appellant/Distribution Company in levying and demanding minimum charges both on maximum demand charges and energy charges as illegal is certainly bad in law. The contract executed between the parties makes it very clear that the writ petitioners are required to pay minimum charges and energy charges and therefore, no such relief could have been granted in exercise of writ jurisdiction under Article 226 of the Constitution of India.
28. The learned Single Judge has placed heavy reliance upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association (supra) and the Madras High Court has allowed the writ petitions by referring to the principle laid down by the Hon'ble Supreme Court in the case of PTC India Limited v. CERC10 and Reliance 10 (2010) 4 SCC 603 32 Infrastructure Limited v. State of Maharashtra11. The Madras High Court held that the Covid-19 pandemic is a force majeure.
29. In nutshell, the writ petitioners before the learned Single Judge contended that on account of force majeure situation created by Covid-19 lockdown imposed by the Government of India in March, 2020, the maximum demand charges by TSSPDCL are arbitrary, unjust and the same should be recovered on equitable and pro-rata basis in respect of lockdown period. It was also contended that since the writ petitioners were compelled to close down the industries/commercial establishments, the TSSPDCL is not entitled to collect maximum charges under the GTCS and ought to have considered the working and non- working period of the writ petitioners and billed accordingly on pro-rata basis. The learned Single Judge has allowed the writ petitions. The learned Single Judge held that Covid-19 has been recognised by the Government of India as force majeure vide its Office Memorandum dated 19.02.2020 and accordingly Section 56 of the Contract Act would apply to the case on hand. As already stated earlier, the learned Single Judge has also placed heavy reliance upon the Judgment delivered by the Madras High Court in 11 (2019) 3 SCC 352 33 the case of South India Spinners Association (supra), wherein in similar circumstances, the Madras High Court held that the levy of maximum charges by the TANGEDCO was illegal.
30. In the considered opinion of this Court, the learned Single Judge has erred in law by granting relief to the writ petitioners. The learned Single Judge has observed that the contracts in question do not contain a force majeure clause. Having observed so in paragraph 43 of the impugned Order, the learned Single Judge held that Section 32 of the Contract Act will apply only when force majeure clause is there and in the absence of same, Section 56 of the Contract Act will apply. In fact, there is a categorical finding in paragraph 84 of the impugned order that Section 32 of the Contract Act does not apply to this case since there is no force majeure clause and the doctrine of frustration under Section 56 of the Contract Act will apply.
31. In the considered opinion of this Court, the doctrine of frustration cannot be invoked to direct the TSSPDCL to levy charges on pro-rata basis under the GTCS. In essence, Section 56 of the Contract Act contemplates that an agreement to do an act impossible is void or it becomes 34 impossible to perform an act after the contract is made. In paragraph 62 of the impugned order of the learned Single Judge, reliance has been placed upon the Judgment delivered in the case of Govindbhai Gordhanbhai Patel v. Gulam Abbas Mulla Allibhai12, wherein it has been held that the contract becomes void under Section 56 of the Contract Act if there are supervening circumstances, which makes the performance of the contract impossible. Therefore, Section 56 of the Contract Act contemplates that the entire contract will become void if performance becomes impossible due to change in circumstances. It is not the case of the writ petitioners that the contracts have become frustrated due to the lock down or that the same has to be declared void. Therefore, the learned Single Judge ought not to have relied upon Section 56 of the Contract Act in holding that the action of the TSSPDCL in not collecting the maximum demand charges on pro-rata basis i.e., working and non-working days (closure days) is illegal.
32. In the considered opinion of this Court, in any event, the payment of the impugned charges has not been pleaded to be impossibility. The writ petitioners contend that levy is unreasonable. Unreasonableness of actions are 12 (1977) 3 SCC 179 35 not contemplated under Section 56 of the Contract Act and therefore, the said provision has no application to the case on hand. In short, unless the contract provided for the occurrence of a force majeure event and the manner in which the charges will be levied if such an event occurs, the learned Single Judge ought not to have held that the action of the TSSPDCL is illegal as the action of the TSSPDCL is within its contractual right to levy the charges. Section 56 of the Contract Act would not come to the aid of the writ petitioners as the said provision contemplates to voiding of a contract in case performance becomes impossible due to unforeseen eventuality. The learned Single Judge has placed heavy reliance upon the Madras High Court Judgement in South India Spinners Association (supra). In the aforesaid case, the charges were governed by the statutory Regulations, namely Regulation 6(b) of the Tamil Nadu Electricity Supply Code. In paragraph 32 of the aforesaid Judgment, it has been noted that the petitioners' specific case is that the proviso to Regulation 6(b) of the TN Electricity Supply Code should be applied and the said proviso reads as under:-
"6(b) xxxxx Provided that where the Licensee is prevented from supplying electricity owing to cyclone, floods, storms, fire, strike or lockout in the Licensees' establishment or other occurrences beyond the control of the Licensee, or if the 36 consumer is prevented from consuming electricity is either in whole or in part for similar reasons, the Licensee may recover from the consumer a minimum charge at twenty percent of the contracted demand or recorded demand whichever is higher besides charges for the actual consumption of electricity."
33. In the case before the Madras High Court a statutory provision provided for the contingency of force majeure event and the charges that can be collected on happening of such an event. Admittedly there is no statutory regulation or a clause in the contract in the case on hand. Therefore, as the facts of the said case are distinguishable, the question of granting relief to the writ petitioners based upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association (supra) does not arise.
34. Much has been argued by the learned counsel for the writ petitioners/consumers by placing reliance upon the Judgment delivered in the case of Sri Kamadhenu Traders v. State of Telangana13. The aforesaid case was delivered in a different facts and circumstances. It was an issue relating to ban on tobacco products and the notifications/orders issued under Regulation 2.3.4 of the Food Safety Regulations, 2011, which relates to ban of sale of gutkha and pan masala (containing tobacco or nicotine). The 13 2022 (1) ALT 112 (DB) (TS) 37 Judgment does not help the writ petitioners in any manner as the demand is being raised by the appellant/ Distribution Company based upon the statutory tariff orders and the agreement executed between the parties.
35. In the considered opinion of this Court, the Order passed by the learned Single Judge deserves to be set aside and is accordingly set aside. Section 65 of the Electricity Act, 2003 empowers the State Government to grant subsidy to any consumer or class of consumers subject to the orders of the State Government and the writ petitioners shall certainly be free to take recourse to the statutory provisions as contained in Section 65 of the Electricity Act, 2003. Not only this, Section 108 of the Electricity Act empowers the State Electricity Regulatory Commission to issue directions in matters of policy involving public interest as the State Government may give it in writing and the Electricity Regulatory Commission shall be free to take a decision if they so desire or if the circumstances so warrants keeping in view Sections 65 and 108 of the Electricity Act.
36. This Court keeping in view the contractual dispute between the parties and as there is a specific clause for recovery of dues, is of the opinion that no relief can be 38 granted to the writ petitioners as has been done by the learned Single Judge and therefore, the impugned Order deserves to be set aside.
37. In the light of the aforesaid, the writ appeals are allowed and the Common Order, dated 18.01.2021, in W.P.Nos.7130 of 2020 and other connected matters passed by the learned Single Judge, is set aside.
Miscellaneous applications, if any pending, shall stand closed. There shall be no order as to costs.
_____________________________ SATISH CHANDRA SHARMA, CJ __________________ N.TUKARAMJI, J 25.01.2022 Pln