Andhra HC (Pre-Telangana)
Priyadarshini Cements Limited vs A.P. Gas Power Corporation Limited on 13 March, 2003
Equivalent citations: 2003(2)ALD690, 2003(3)ALT130, 2003(2)ARBLR436(AP), (2003)3COMPLJ201(AP), [2003]44SCL196(AP)
Author: J. Chelameswar
Bench: J. Chelameswar
JUDGMENT J. Chelameswar, J.
1. Aggrieved by the dismissal of I.A. No. 3948 of 2002 in O.P. No. 2883 of 2002 on the file of the Chief Judge, City Civil Court, Hyderabad dated 20.1.2003. The unsuccessful appellant therein preferred this appeal.
2. The O.P. itself was filed under Section 9 of the Arbitration and Conciliation Act, 1996.
3. Both the appellant as well as the sole respondent herein are public limited companies incorporated under the Companies Act, 1956. The registered office of each of the companies is at Hyderabad and within the territorial jurisdiction of this Court. The sole respondent was incorporated on 31.10.1998 with the main object of generating and supplying electricity by setting up power plants in India.
4. For the purpose of establishing the respondent Corporation initially a Memorandum of Understanding dated 17.10.1998 was entered into between the Andhra Pradesh State Electricity Board (as it was then) on the one hand and six public limited companies. The whole idea behind incorporating the respondent Corporation is as it appears from the material placed before us, that the Andhra Pradesh State Electricity Board was not in a position to supply electrical energy to all its customers as demanded by them and therefore there was a need to create more power generating stations. In the Memorandum of Understanding referred to above, it is specially mentioned "The electricity i.e., both power and energy to be generated by APGPCL shall be shared between the Participating Industries and A.P.Transco in proportion to their paid-up share capital......"
5. In fact the rights and obligations of the erstwhile Andhra Pradesh State Electricity Board, in this context, devolved upon a company called "A.P. TRANSCO" which came into existence pursuant to the Scheme of a subsequent State enactment called "Andhra Pradesh Electricity Reforms Act, 1998." When the respondent Corporation was brought into existence pursuant to the abovementioned Memorandum of Understanding, the appellant company also contributed to the equity of the respondent company. We are informed that initially the appellant company invested an amount of Rs. 1,45,79,200/- and subsequently the investment of the appellant company rose to Rs. 3,86,64,000/-. Admittedly, today the appellant company holds 5.44% of the share capital of the respondent company. It appears that A.P. TRANSCO holds 20% of the share capital of the respondent company and various other companies held the balance, the details of which may not be relevant for the present purpose.
6. In the Memorandum of Understanding dated 17.10.1988 (hereinafter referred to as MOU-I, for the sake of convenience), it is mentioned as follows:
"And whereas apart from A.P. TRANSCO and the parties of the second part, various other medium and large scale industries located in Andhra Pradesh have expressed a desire to join in the above venture and also to invest in the equity capital of APGPCL.
And whereas the parties of the second part and the various other medium and large scale industries are hereinafter collectively referred to as the 'Participating Industries."
In view of the above, the appellant is also a Participating Industry though it was not a subscriber to the above MOU.
7. The salient features of the MOU-I insofar as relevant for the present purpose are as follows :
8. The energy generated by the respondent-Corporation shall be shared prorata of actual energy generated. Anyone of the Participating Industries may transfer their share of energy and power to their sister-concerns subject to certain restrictions enumerated in the MOU. The A.P. TRANSCO is entitled to sell its share of the energy to its consumers who may include the members of the respondent company for the time being. The A.P. TRANSCO agreed to transmit the power generated by the respondent company to the participating industries on payment of certain charges by the respondent company. Such charges are termed as Wheeling Charges. However, the wheeling charges are required to be paid by the respondent company not in cash, but in kind i.e., the percentage of the energy generated by the respondent company. The respondent company was free to formulate its tariffs and we are informed that there is a substantial difference between the price of energy supplied by the respondent company and the A.P. TRANSCO at almost 100%. It was also contained in the above MOU-1 that if the power generated by the respondent company could not be utilised by the various participating industries either in full or in part, then the A.P. TRANSCO is given the 1st claim over such unutilised power on a price to be mutually settled between the A.P. TRANSCO and the respondent. Pursuant to the MOU-I, the respondent company was incorporated which had initially set up a 100 MW Natural Gas based Power Generating Station at Vijueswaram in West Godavari District and in fact been generating and distributing power. Subsequently, the respondent company further expanding its activity by setting up another plant with a capacity of 172 MW power plant at Vijjeswaram and for the said purpose another Memorandum of Understanding (hereinafter referred to as MOU-II, for the sake of convenience) was brought into existence on 19.4.1997 between the respondent company herein and the APSEB, now A.P. TRANSCO and 23 other public limited companies.
9. It may not be necessary to give the details of the MOU-II for the purpose of this case except noticing that under Clause 6 of the MOU-II, it is agreed that whenever one of the participating industries is unable to utilise its full share of energy from the respondent-company, the respondent-company is required to re-allocate such unutilised energy on prorata basis among those of the rest of the participants excluding the A.P. TRANSCO who require it. However, such a distribution is made only when the industry which is not able to utilise its full share gives an advance notice of 15 days of such fact. In the absence of such notice, the energy is required to be fully allocated to the A.P. TRANSCO. In fact, Clause 6 reads as follows:
"6. Non Utilisation of Energy by any of the Participating Industries to full extent :--When a Participating Industry, for any reason is unable to utilise its full share of energy from APGPCL, it shall give an advance notice of at least 15 days before the Billing Month to APGPCL. APGPCL shall then reallocate the surrendered energy of the Participant Industry on prorata basis, among those of the rest of the Participants who require additional power. However, when the advance notice is not received by APGPCL within the stipulated period mentioned above, the unutilised power shall be fully allocated to A.P. TRANSCO."
10. It is also necessary to notice that either under MOU-I or MOU-II, there was no stipulation specifying the periodicity of the payment of the bills by the "consumers".
11. As a consequence, it appears that number of consumers i.e., Participating Industries and also the A.P. TRANSCO, did not pay their bills regularly and at some point of time, it was noticed that there accumulated a huge amount of arrears due to the respondent company. In this background, the amendments were made to both MOU-I and MOU-II by a Resolution of the respondent company dated 16.3.2001 by which by the said resolution, a new Clause 19-A was incorporated in the MOU-I and an amendment to Clause 6 of the MOU-II was made. The relevant portion of the Resolution reads as follows:
"RESOLVED THAT pursuant to the provisions pf Section 31 and other applicable provisions, if any, of the Companies Act, 1956 the following Resolutions be passed: -
i. RESOLVED THAT the following words appearing in the first part of Clause 6 of Article 3 of the Memorandum of Understanding-II be deleted.
"The Participant shall pay an additional charge at the rate of 0.07 paise per Rupee per day on the amount of the bill for the period of delay if it does not pay the bill within the due date."
ii. "FURTHER RESOLVED THAT the following Clause be included in the first part of Clause 6 of Article 3 of the Memorandum of Understanding-II and a new Clause to be added as Clause 19-A in the Memorandum of Understanding-I. "The Participant shall pay an additional charge [surcharge] at the rate as may be fixed by the Board of Directors. The Board should review such rate every year before beginning of Financial Year taking into account the prevailing PLR of the Company's main bankers.
Two months period be allowed for payment of dues up to March, 2001 billing month and thereafter the two months will be reduced to one month i.e., power will not be allocated after one month of the due date of monthly bills, including surcharges and minimum charges, if remaining unpaid."
12. The appellant company was admittedly in arrears to the respondent company to the tune of Rs. 8.39 Crores as of 31.3.2001. It therefore sought of facility from the respondent company to permit the appellant to pay the outstanding amount in instalments of Rs. 75 lakhs per month. The respondent company did not make any commitment on such request by the appellant. Some correspondence ensued between the parties herein. By a letter dated 30.5.2001, the appellant was called upon to pay the outstanding as on 11.6.2001 with surcharges or otherwise to treat that letter as 15 days notice to discontinue the allocation of power in favour of the appellant from the ensuing billing month. The relevant paragraph of the letter reads as follows:
"According to the above you are requested to pay the outstanding as shown in the list enclosed, by 11.06.2001 with surcharges, otherwise this is to be treated as 15 days notice to discontinue the allocation of power from the ensuing billing month to you. It is also to be noted that on the unallocated power of quota, you are required to pay the minimum charges as per the rules."
Finally, by a letter dated 20.8.2001, the respondent informed the appellant as follows:
"With reference to the above subject, as you are aware that an amendment is incorporated to Clause 19A of MOU-I and Article-3(6) of MOU-II, it is allowed only two months period for payment of outstanding dues including surcharge up to March-2001 billing month and thereafter the two months will be reduced to one month. APGPCL has already informed you in our letter cited under reference, stating that a decision taken in the AGM as said above and requested to clear the dues on or before 11th June, 2001 otherwise the power will not be allocated to your industry from the July, 2001 billing month. A detailed statement showing amount payable by you as on today is enclosed for your information.
Keeping in view of the burden and as a goodwill gesture, even though you are not entitled to draw power from the July-2001 Billing Month onwards, you were allowed to draw the power from the Company in anticipation you will clear the dues. It seems that you have not put up any efforts to clear the dues, whereas other shareholders had cleared their dues by taking so much strain without fail after incorporating the disconnection provision in the MOU.
It may be recalled that the Company has extended full cooperation to your industry for clearing your dues such as Post-Date Cheques facility and instalments facility, which was taken by yourself; both were not committed sincerely by you.
It may be noted that the Directors also may not recommend any instalments to any industry, if they had failed to commit their honour as per the provisions of the MOU. In fact, the Board of Directors in their meeting held on 28th June- 2001 reiterated that to implement the GM decision without fail on those defaulted Participating Industries.
Please be noted that we are not supposed to allocate the power for this August-2001 Billing Month. However, we have decided to allocate the power for August-2001 Billing Month to avoid loss to your industry, despite much inconvenience to the management, because this will invite criticism from all quarters, However, we are giving a last chance to your industry, if you do not clear the dues on or before 23rd August-2001, the allocation of power will not be made for the September-2001 Billing Month and further Billing Months to your industry, i.e., 23rd August-2001 to 23rd September-2001. As agreed by the shareholders in the meeting held on 16.3.2001 and as per the MOU this action is initiated as the Company has no option but to disconnect the power since all the facilities extended to you by the Company were failed and the Company is no way responsible, for any loss caused to your industry for non-allocation of power by APGPCL. It may be noted that in the event of disconnection of power to your industry, you have to bear minimum charges for the disconnection period as per the terms and conditions of MOU.
Please be noted that the power will be restored only after clearing all your dues as mentioned in the enclosed statement.
In view of the above, it is requested to clear all the dues including surcharge without fail as said above."
The appellant did not make the payment in terms of the demand made in the said letter of the Corporation. It continued the correspondence seeking indulgence of the respondent Corporation. By a letter dated 27.9.2001, the appellant was informed as follows:
"With reference to the above subject, it is to inform you that we had agreed to give instalments to clear your outstanding amounts as on 31.3.2001. Please be noted that we are not supposed to give any instalments to the Participating Industries, as per EGM Resolution, however, your case was considered as a special case and agreed to sanction instalments. You have to pay Rs. 1 Crore for each instalment along with the Current Monthly C.C. Charges by every month i.e., on 11th. The due date for payment of the first instalment is on 11.11.2001 and accordingly the remaining instalments should be cleared by 11th day of next month till the outstanding amounts are cleared. It is relevant to note that the interest will be paid at 18% p.a. on the delay of sanctioned instalments as the rate of interest was decided in the EGM dated 16.3.2001. In other words interest should be payable for the period i.e., from the date of payment of instalment to the due date of C.C. Charges @ 18% p.a."
In fact, the appellant issued certain cheques which were dishonoured. Finally by a letter dated 13.9.2001, the respondent-informed the appellant as follows:
"With reference to the above subject, it is to inform you that as per the decision of the Shareholders, Finance Committee and Board of Directors you are not eligible for your share of power as well as surplus power from September 2002 billing month onwards as you not paid the CC bills from the billing month of April-2002 to July-2002 and the Instalments of Rs. 2.10 Crores before 11th September, 2002.
Please be noted that in case of Stage-I, if power not allocated, you should pay the Fixed Charges as per the conditions of MOU on your share of power and in case of Stage-II, your share will be allocated to other Participating Industries who requires additional power than their share, if other Participating Industries not required additional power, then you have to pay the Fixed charges on your share of power."
13. Finally, by a letter dated 23.9.2002, the respondent informed the appellant that the Board of the Respondent Company came to a conclusion that the grant of instalments to the appellant was inconsistent with the resolution dated 16.3.2001, referred to earlier and therefore decided that the facility of granting instalments should be withdrawn and called upon the appellant to pay the arrears immediately failing which the appellant would not be allocated it's share of power from October, 2002 billing month onwards. The relevant portion of the letter reads as follows:
"Later, some of the shareholders of APGPCL made representation that APGPCL should implement the Resolution passed in the EGM held on 16.3.2001, if dues were exceeded beyond two months, the allocation of power shall not be given. The Board has reviewed the position of Debtors and noted that instalments were sanctioned to M/s. Priyadarshini Cements Ltd., by the management, which is inconsistent with the EGM Resolution and MOU.
APGPCL has issued a circular dated 16.8.2002 based on the Resolution, stating that in case dues exceeds beyond two months, the allocation of power shall not be made to that Participating Industry from the September-2002 Billing Month. As per the Resolution, APGPCL has not made allocation to one of the Participating Industries, which has not cleared its dues. And to implement the Resolution uniformly to all the Shareholders, the Board of Directors have taken a decision in its Meeting held on 21.9.2002 that the instalments sanctioned earlier should be withdrawn and inform the Shareholders to whom instalments were sanctioned. They should pay their dues immediately without considering the instalments sanctioned earlier, to draw the power from October-2002 Billing Month.
It is to inform you that if you do not clear the old dues, the power will not be allocated from October-2002 Billing Month and onwards. Please note that in the event of non-allocation of power to your industry, for not clearing old dues, the minimum charges towards fixed cost and surcharge thereon should be borne by Priyadarshini Cements Ltd. The allocation of power shall be made only after clearing the entire dues."
14. The appellant still insisted on availing the facility of instalments by his letter dated 27.9.2002. The respondent once again by its letter dated 1.10.2002 declined the request of the appellant and called upon the appellant to pay arrears amounting to Rs. 5,66,17,834/-. The appellant was also informed that failing the payment the appellant's share of power would not be allocated from October, 2002 billing month onwards. The appellant did not pay the amount. The respondent therefore discontinued the allocation of power to the appellant as indicated by it from October, 2002 billing month onwards. Admittedly, the appellant is availing the supply of energy from A.P. TRANSCO from October, 2002 onwards on payment of a higher tariff. As a result according to the learned Counsel for the appellant, the appellant is incurring an additional expenditure of Rs. 65 lakhs approximately per month as the tariff of the A.P. TRANSCO is much higher than the tariff of the respondent company,
15. In the background of the above mentioned facts, the appellant herein filed O.P. No. 2883 of 2002 on the file of the Chief Judge, City Civil Court, under Section 9 of the Arbitration and Conciliation Act, 1996. Along with the said O.P, the appellant has filed the I.A. seeking an interim mandatory injunction against the respondent herein to restore the power supply to the appellant forthwith and also permit the appellant to pay the outstanding amount due to the respondent by way of monthly instalments of Rs. 25 lakhs with interest at the rate of 18% per annum. By the impugned order, the said I.A. was dismissed and hence the present appeal.
16. The learned Counsel - for the appellant submitted that the resolution dated 16.3.2001 is not intended to be acted upon. Apart from the appellant, A.P. TRANSCO and another Participating Industry [Cement Corporation of India Limited] are also in arrears of huge amounts towards the charges of the power supplied to them by the respondent Corporation. The respondent Corporation did not take action against the abovementioned two bodies in terms of the Resolution dated 16.3.2001, but chose to implement the said resolution only in the case of the appellant. The learned Counsel, therefore, argued that the action of the respondent Corporation in taking such action against the appellant is wholly unfair and discriminatory. The learned Counsel argued that the respondent is a "State" within the meaning of the expression under Article 12 of the Constitution of India and therefore bound by the prohibition contained under Article 14 of the Constitution of India. In the alternative the learned Counsel submitted that the appellant company is going through the financial crisis in view of the adverse market conditions in the cement industry. In view of the fact that the appellant is a share holder of the respondent, the basic purpose for which the respondent company was formed was to provide adequate supply of energy to all the participating industries and the non-supply of energy to the appellant would result not only in breach of the terms of the MOUs-I and II and also would be in contravention of the aims and objects of the respondent company. He further submitted that that the decision of the respondent company not to allocate power to the appellant who is a shareholder would have the effect of being an act of oppression by the majority shareholders and finally the learned Counsel submitted that the appellant company has two industrial units with a work force of about 3,000 people and if energy is not supplied to the appellant, all the work force would be deprived of their livelihood and therefore it is necessary that the respondent company should be directed to restore power supply to the appellant by permitting the appellant to pay the arrears of dues in instalments.
17. On the other hand, the learned Counsel for the respondent argued that the respondent can never be brought within the ambit of Article 12 of the Constitution of India and therefore the question of the application of Article 14, the concept of discrimination does not arise. The learned Counsel also argued that in fact the allegation of discrimination or unfair treatment is not factually true and lastly the learned Counsel argued that the relationship between the appellant and respondent is purely contractual and the interim mandatory injunction in such a case can only be granted when there is a breach of an obligation on the part of the respondent herein, but on the facts of the present case, the respondent herein did not make a breach of any obligations owed by it to the appellant. The learned Counsel also submitted that assuming for the sake of argument that interim mandatory injunction could be granted in a proper case, such an injunction normally be granted so as to restore the status quo ante.
18. The following questions emerge:--(i) whether the respondent-company is "State" as defined under Article 12 of the Constitution of India and therefore bound by the mandate contained in Article 14 of the Constitution of India; (ii) whether the Resolution dated 16.3.2001 of the respondent-company is intended to be acted upon and whether it was in fact acted upon uniformly with reference to all the Participating Industries; (iii) whether the decision of the respondent company to dis-allocate the share of the energy to the appellant herein with effect from October 2002 billing month would amount to an act of oppression on the part of the majority shareholders against the appellant herein; (iv) whether on the facts and circumstances of the case, an interim mandatory injunction such as the one prayed by the appellant can be granted.
19. The learned Counsel for the appellant argued that that the respondent is "State" as defined under Article 12 of the Constitution of India. According to the learned Counsel, the generation and distribution of electrical energy is a part of the essential activity of the State. Since the respondent company undertook to carry on the said act, the respondent company is required in law to be treated as "State" for the purposes of Article 12 of the Constitution of India. In support of his submission, the learned Counsel relied upon the judgment of the Supreme Court in Ajay Hasia v. Khalid Mujib, . We are of the opinion that reliance is wholly misplaced. No doubt, it is settled law that statutory corporations or even companies created under the Companies Act can be treated as instrumentalities of the State and therefore would constitute other authorities for the purpose of Article 12. The Supreme Court in R.D. Shetty v. International Airport Authority's case, , indicated certain tests to determine whether a statutory corporation or a company, is to be treated as an instrumentality of the State. In fact their Lordships in para (9) of Ajay Hasia's case (supra) after examining the above referred case summarised the various tests which would be relevant for deciding the question whether a particular body is a other authority for the purpose of Article 12 in the following words :
"We may summarise the relevant tests gathered from the decision in the International Airport Authority's case as follows:
(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.
(3) It may also be a relevant factor..... whether the corporation enjoys monopoly status which is the State conferred or State protected.
(4) Existence of "deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality."
(5) If the functions of the corporation are of public importance and closely related to Governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.
(6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government.
If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, it would, as pointed out in the International Airport Authority's case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12."
20. We are conscious of the facts that the above mentioned tests are not exhaustive, but are only illustrative; none of the above indicated tests individually is conclusive for reaching a conclusion, whether a particular body is a other authority or not. We shall now apply the tests to the facts of the case. Admittedly, the entire share capital of the respondent company is not held by any Government. Most of the share capital is held by various public limited companies. Only 20% of the share capital is held by A.P. Transco which no doubt is an instrumentality of the State. Admittedly no financial assistance is received by the respondent company from the State. The respondent company has no monopoly whatsoever nor is there any deep and pervasive State control on the affairs of the respondent company. The learned Counsel for the appellant tried to impress the Court by pointing out to Clause 16(a) of MOU-I which confers an absolute right on the A.P. Transco to disconnect power supply to a defaulting consumer and also Clause 17(a) which confers the 1st claim on the A.P. Transco to utilise the surplus power as factors indicating deep and pervasive control of the State. We regret our inability to agree with the said submission for two reasons. First of all, the above mentioned two factors do not by themselves indicate any deep and pervasive control over the affairs of the respondent company. They confer certain rights on the A.P. TRANSCO by an agreement of all the parties to the MOU-I, but not by any authority of law. The signatories to the MOU are not compelled to accept such terms as the acceptance was voluntary. Then remains the submission of the learned Counsel that the generation and distribution of electrical energy is an essential function of the State and therefore the respondent company which undertakes such an activity is required to be treated as 'other authority'. Though it is difficult to state with precision as to what exactly are the essential functions of a modern democratic State. The concept has undergone a great change with times. Till the medieval days, the essential functions of the State were considered to be only the defence of the realm and the maintenance of law and order. But with the advent of the concept of a Welfare State, the State undertook various other activities. Whether a particular activity which is undertaken by the State is an essential function of the State or not is required to be decided, in our view in the background of the Scheme of the Constitution and the current policy of the State. In our view, the broad contours of the essential functions of the State are contained under Part IV of our Constitution the Chapter dealing with the Directive Principles of State policy. This chapter only lays down the broad guidelines which are required to be kept in mind by the State in the matter of the governance. The choice of the process by which such objectives are achieved is left to the State and the State is given the freedom to formulate such policies as it thinks fit having regard to the complexity of the problems which it has to tackle at any given point of time by making appropriate legislation in that regard.
21. In the Scheme of the distribution of legislative power between the Parliament and the various State Legislatures, the subject matter of 'electricity' is enumerated under Entry 38 of the List III of the 7th Schedule thereby making the said subject matter amenable to the legislative competence of both the Parliament as well as the respective State Legislatures. The enacted law on this aspect is mainly contained in two Central enactments viz., Indian Electricity Act, 1910 and the Electricity Supply Act, 1948. Neither of the laws prohibits the activity of either generation or supply of electrical energy by persons other man the State, On the other hand, both the enactments recognise both the existence and the probability of coming into existence of generating companies in future. 'Generating Company' is a defined expression under Sub-section (2) of Section 4-A of the Electricity Supply Act, 1948 which reads as follows:
"Generating company means a company registered under the Companies Act, 1956 and which has among its objects the establishment, operation and maintenance of generating stations."
22. This Court can safely take the judicial note of the current policy of the State that generation of electrical energy in private sector is being encouraged. In fact, there always existed generating companies in private sector. Therefore, in our view that the activity of generating and supplying electrical energy was never considered by the State to be an essential governmental function nor anything else is brought to our notice to establish that such an activity is an essentially a governmental function.
23. Therefore, the submission that the respondent company is State for the purpose of Article 12 is required to be rejected and consequentially the respondent is not bound by the prohibition under Article 14 of the Constitution.
24. Apart from that, even on facts we are informed by the learned Counsel for the respondent that the Resolution dated 16.3.2001 was implemented wherever it is necessary. The learned Counsel for the respondent submitted that as alleged by the appellant, the Cement Corporation of India, one of the Participating Industries was in fact in arrears to the respondent company to a tune of approximately Rs. Fourteen (14) Crores. But, Cement Corporation of India was informed by the respondent Corporation by letter dated 4.1.2003 that if the arrears are not paid within 15 days, the allocation of the share of the power of the said company would be discontinued with effect from January, 2003 billing month. A copy of the said letter is placed before us. The relevant portion reads as follows:
"However, on a further consideration of the issue, the Board of Directors in its meeting dated 2.1.2003 resolved to withdraw the instalments facility earlier granted to you as it is in violation of the resolution passed by the General Body of the Company in its meeting held on 16th March, 2001 and incorporated as part of MOUs and it is accordingly withdrawn. As you know, your Company has to pay amount of Rs. 14,28,65,122/- (excluding surcharge). This amount is accumulated and due since long time.
In the light of the above, you are requested to pay the outstanding dues along with surcharge within 15 days failing which, APGPCL will be constrained to stop the power allocation thereafter with effect from January, 2003 billing month i.e., 23.12.2002 to 23.1.2003, without any farther notice."
We are also informed as the Cement Corporation of India did not make the payment, the allocation was in fact stopped.
25. The learned Counsel for the respondent, however, submitted though the A.P. TRANSCO is also in arrears as alleged by the appellant herein that there is a bona fide dispute about the liability of such arrears raised by the A.P. TRANSCO and the matter is pending consideration before a Committee constituted by the respondent company and therefore the resolution dated 16.3.2001 is not yet been implemented against the A.P. TRANSCO so far depending upon the decision of the above mentioned Committees, appropriate action would be taken in this regard. The learned Counsel submitted that apart from the non-application of Article 14 to the respondent company, factually A.P. TRANSCO and the appellant herein do not stand on the same footing as the liability of the appellant is undisputed whereas the liability of the A.P. TRANSCO is a subject matter of the bona fide dispute which is being enquired into. We accept the submission made by the learned Counsel for the respondent. We hold that there is no discriminatory application of the Resolution dated 16.3.2001.
26. Coming to the next submission that the decision of the respondent company to dis-allocate power to the appellant herein would amount to oppression of a minority shareholder by the majority shareholders, in our opinion, that the same is required to be rejected for the following reasons:
27. The right to obtain a share in the electrical energy generated by the respondent company, no doubt, flows from the two Memoranda of Understanding referred to earlier and also the Articles of Association and the Memorandum of Association of the respondent company, but such a right is not an unqualified right. It is subject to the condition as already noticed from the Scheme of two Memoranda of Understanding, that the participating industry pays for the energy allocated and consumed. Having regard to the qualified right referred to earlier, the appellant cannot complain that irrespective of the fact that whether it pays or not for the energy already consumed, it is entitled to receive its share of energy. Even otherwise if one of the participating industries such as the appellant herein continuously does not pay the cost of the energy supplied to it, the cost of the generation of such energy consumed would in fact become the burden on the remaining participating industries which regularly make the payment.
Obviously for the reason that the running cost of the generating units of the respondent company would have to come out of such payments made by the consumers, because the respondent company is required to make payment of all its dues towards the cost of its fuel, labour etc., from out of the funds received by it from the consumers. The assurance that the appellant would pay the arrears with interest at a future date does not go to the benefit of the participating industries who are regular in payment. Such interest if at all paid by the appellant as sought to be assured by the appellant it would go to the benefit of the respondent company. Therefore, we see no merit in the submission. In the light of the above mentioned discussion, we do not find any legal right of the appellant which is violated or any breach of legal obligation on the part of the respondent company which is an essential requisite for the grant of an injunction either interim or final by a Court of law.
28. In the light of the above conclusion reached by us, we do not wish to examine the question as to when a mandatory interim injunction can be granted.
29. In the result, the Civil Miscellaneous Appeal is dismissed. No costs.