Delhi High Court
Attar Singh vs Municipal Corporation Of Delhi And Anr. on 8 July, 1986
Equivalent citations: AIR1987DELHI304, ILR1986DELHI532, AIR 1987 DELHI 104
Author: D.P. Wadhwa
Bench: D.P. Wadhwa
JUDGMENT D.P. Wadhwa, J.
(1) By this judgment I propose to dispose of two suits filed under Section 20 of the Arbitration Act by the petitioner against the respondents. Parties are same in both the suits.
(2) Suit No. 1302-A/84 relates to the disputes arising out of six electric meters installed at the premises of the petitioner. He says he has been making payments of the electric charges as per bills given by the respondents. There are two respondents. Respondent No. I is the Corporation constituted under the Delhi Municipal Corporation Act, 1957. Respondent No. 2 is Delhi Electric Supply Undertaking, an Undertaking of respondent No. I Corporation for the purpose of generating or acquiring supplies of electricity and providing (including bulk supplies) of electricity for licensees and persons other than licensees. The petitioner says that the premises where these electric meters are installed are being used by him for running a hotel for residential purposes and one of the six meters installed is for bulk supply of electricity. The respondents called upon the petitioner to furnish a no objection certificate from the Delhi Development Authority/Municipal Corporation of Delhi for the land use. The petitioner says that the respondents have been charging misuse charges in the bills and he says the respondents could not object to the petitioner's running the hotel which, he says, is for residential purposes and he further says that whole of the area in which his premises are situated is commercial. The petitioner says that he received a bill for the period from 18th November, 1982 to 24th July, 1984 from the respondents which amounted to Rs. 2,94,493.61. This he received on 7th August, 1984. The petitioner says that he is not liable to pay this amount and he further says that he always made regular payments of all the bills right from November, 1982 till date and he says that instead of paying any further amounts he is entitled to claim refund of the so called misuse charges recovered from him by the respondents. He, therefore, says that the following disputes be referred to arbitration in terms of Clause Vl(3) of the Schedule to the Indian Electricity Act, 1910 (for short 'the Act') (1)Whether the recovery of misuse charges in the bills from 18th November, 1982 to 24th July, 1984 paid by the petitioner to the respondents are illegal and the respondents are liable to refund the said amount to the petitioner ? (2) Whether the respondents are entitled to recover the amount of Rs. 2,94,493.61 from the petitioner.
(3) In the other petition (S. No. 1738-A/84) the petitioner wants the following disputes to be referred to arbitration : (1)Whether the respondents can charge from the petitioner for the electric energy beyond the meter reading ? (2) Whether the petitioner is liable to pay a sum of Rs. 31,615.41 as per the bill dated 16-10-84 ? (3) Whether the petitioner is liable to pay 7-112 per cent L. T. charges and 25 per cent sur charge ? (4) Whether the petitioner is liable to pay electricity and excise duty as claimed in the said bill ?
(4) Both these petitions have been opposed by the respondents principally on the ground that provisions of Clause Vi (3) of the Schedule to the Act are inapplicable in the case of the petitioner in view of Section 277 of the Delhi Municipal Corporation Act and secondly the provisions of Clause Vl(3) of the Schedule to the Act do not constitute any arbitration agreement between the parties. I, therefore, framed the following issue :- WHETHER the present petition under Section 20 of the Arbitration Act is maintainable ?
(5) Respondent No. I is a licensee under the Act and Chapter Xiii of the Delhi Municipal Corporation Act, 1957 shall be deemed to be the license of respondent No. I for the purposes of the Act. This is Section 277 of the Delhi Municipal Corporation Act and it is as under :- "277.Subject to the provisions of this Act, the Corporation shall in respect of the whole of the Union Territory of Delhi, have all the powers and obligations of a licensee under the Indian Electricity Act, 1910 and this Chapter shall be deemed to be the license of the Corporation for the purposes of that Act: Provided that nothing in sections 3 to 11 of, or in clauses I to Ix of the Schedule to, that Act relating to the duties and obligations of a licensee shall apply to the Corporation."
(6) Under Section 3 of the Act (in so far as it is relevant to the controversy involved in the present suit) the State Government is to grant license under certain circumstances to a person to supply energy in any specified area and also to lay down or place electric supply-lines for the conveyance and transmission of energy. Under clause (f) of sub-section (2) of Section 3 of the Act the provisions contained in the Schedule to the Act are to be deemed to be incorporated with, and to form part of, every such license unless, of course, these are expressly added to, varied or excepted by the license. The Schedule to the Act is. headed as under : "PROVISIONS to be deemed to be incorporated with, and to form part of, every license granted under Part Ii, so far as not added to, varied or excepted by the license. (See section 3, sub-section (2) clause (f)."
Clause Vi (3) of this Schedule on which the petitioner relies as constituting the arbitration agreement between the parties is as under :- "(3)Where any difference or dispute arises as to the amount of energy to be taken or guaranteed as aforesaid, or as to the cost of any service-line or as to the sufficiency of the security offered by any owner or occupier (or as to the position of the meter board) or as to the improper use of energy, or to any alleged defect in any wires, fittings, works or apparatus or as to the amount of the expenses incurred under the third proviso to sub-clause (1), the matter shall be referred to an (Electrical Inspector) and decided by him."
(7) With reference to proviso to Section 277 of the Delhi Municipal Corporation Act Mr. V. P. Singh, learned counsel for the respondents, said that Clause Vl(3) of the Act was not applicable. I do not think he is quite correct. What is not made applicable by the proviso is the relevant provisions relating lo duties and obligations of a licensee. Clause Vl(3) of the Act, to my mind, does not relate the duties and obligations of the Corporation-respondent No. 1 as a licensee. I would, therefore, reject this argument.
(8) The main question that requires decision is if Clause Vi (3) of the Schedule to the Act and re-produced above constitutes an arbitration agreement between the parties. To get an answer reference will have to made to some of the provisions of the Act. There are certain provisions in the Act which specifically say that disputes arising therein would be determined by arbitration. In this connection reference may be made to some of the Sections like Sections 13(l)(c), 13(2), 14(2)(b) and (c), 14(3), 15(5), 16(3), 19, 21(4), 22, 22-A and 32(3). For example under Section 13 where the exercise of any of the powers of a licensee in relation to the execution of any works involves the placing of any works in, under, over, along or across any street, part of a street, railway etc. then certain provisions as contained in sub-section (3) are to have effect. Then, under Section 13(1)(d) if the owner disapproves of such works etc. he may within a certain period serve a requisition upon the licensee demanding that any question in relation to the works or to compensation, or to the obligations of the owner to others in respect thereof shall be determined by arbitration, and thereupon the matter shall unless settled by agreement, be determined by arbitration." Similarly under Section 13(2) of the Act "Where the licenses makes default in complying with any of these provisions, he shall make full compensation for any loss or damages incurred by reason thereof, and, where any difference or dispute arises as to the amount of such compensation, the matter shall be determined by arbitration." Let me now quote last section mentioned by me above which specifically refers to the settlement of disputes by arbitration. This is Section 32(3) of the Act and is as under :- "32(3)Where the operator makes default in complying with the requirements of this section, he shall make full compensation for any loss or damage incurred by reason thereof, and where any difference or dispute arises as to the amount of such compensation, the matter shall be determined by arbitration."
(9) Under Section 36 of the Act the appropriate Government, by notification in the official gazette is to appoint duly qualified persons to be Electrical Inspectors and every Electrical Inspector so appointed is to exercise the powers and perform the functions of an Electrical Inspector under the Act within such areas or in respect of such class of works and electric installations and subject to such restrictions as the appropriate Government might direct. Sub-section (2) of Section 36 of the Act is as under :- "36(2).In the absence of express provision to the contrary in this Act, or any rule made there under, an appeal shall lie from the decision of an Electrical Inspector to the appropriate Government or if the appropriate Government, by general or special order so directs, to an Advisory Board."
(10) Needless to say that Act prescribes various functions to be performed by an Electrical Inspector. In this connection I may, however, refer only to Sections 21(4), 24(l)(2) and 26(4) of the Act. Under Section 21(4) "Where any difference or dispute arises as to whether a licensee has prescribed any appliance or controlled or interfered with the use of energy in contravention of sub-section (1), the matter shall be either referred to an Electrical Inspector and decided by him or, if the licensee or consumer so desires, determined by arbitration." Under Section 24(1) of the Act the licensee is entitled to disconnect the electric supply and sub-section (2) of this section is as under :- "24(2).WHEREany difference or dispute (which by or under this Act is required to be determined by an Electrical Inspector, has been referred to the Inspector) before notice as aforesaid has been given by the licensee, the licensee shall not exercise the powers conferred by this section until the Inspector has given his decision."
(11) Then, the important section would be Section 52 of the Act which deals with the arbitration and is as under :- "52.Where any matter is, by or under this Act, directed to be determined by arbitration, the matter shall, unless it is otherwise expressly provided in the license or a licensee, be determined by such person or persons as the State Government may nominate in that behalf on the application of either party; but in all other respects the arbitration shall be subject to the provisions of the Arbitration Act, (1940) : (Provided that where the Government or a State Electricity Board is a party to a dispute, the dispute shall be referred to two arbitrators, one to be appointed by each party to the dispute.) To support his argument that Clause Vl(3) of the Schedule to the Act constituted an arbitration agreement, and a statutory arbitration at that Mr. R. K. Anand, learned counsel for the petitioner, referred to decisions of the Lahore, Madhya Pradesh and Allahabad High Courts. The decision of the Lahore High Court in Municipal Committee, Fazilka v. Fazilka Electric Supply Co. Ltd. (AIR 1947 Lahore 309) (1) has been the main plank of the argument of Mr. Anand.
(12) In this case there was a contract between the Fazilka Municipal Committee and the Fazilka Electric Supply Company Ltd. relating to the provision of street lighting. The contract included terms relating to payment by the Municipal Committee of the cost of the supply lines and equipment necessary for the purpose of street lighting. Clause-3 of the contract provided that the company was in the first instance to furnish all the necessary equipment for supplying energy to the street lamps as well as supply lines and was to intimate to the committee. within three months from the date of the agreement, the cost incurred in this behalf and if the committee did not approve this figure, the matter was to be decided by the Electrical Inspector whose decision as to the cost was to be binding on both the parties. Disputes having arisen the company wrote to the Electrical Inspector asking him to decide the cost of street lighting installations. The Electrical Inspector replied saying that since the committee had declined to join in referring the matter to him for arbitration on the ground that the company had not intimated the cost of the supply lines within three months from the date of the agreement. Thereafter, the company filed a suit claiming an amount over Rs. 37,500 which included, besides interest, the cost of the equipment other than the cost of the supply lines, which later formed a separate item of the claim. The committee raised the plea that there was an agreement to refer the disputes to arbitration under Clause-20 of the agreement and, therefore, moved an application under Section 34 of the Arbitration Act for stay of the proceedings. Clause-20 related to arbitration and was a general clause which provided that any dispute arising between the parties, other than those specified separately, would be referred to an arbitrator. However, the learned Sub-Judge rejected the application of the committee mainly on the ground that the committee had previously declined to refer the disputes to arbitration. Thereafter, issues were framed and some further proceedings taken in the suit. At this point the plaintiff company invoked the provisions of Clause Vl(3) of the Schedule to the Act saying that the cost of the supply lines (i.e. the service lines) was a matter which could only be determined by the Electrical Inspector. After hearing the arguments the learned Sub-Judge allowed the application of the company and directed that the dispute in so far as it related to the cost of supply lines be referred to the Electrical Inspector. The committee appealed against this order in the High Court and since no appeal lay it was treated as a revision petition. Various arguments were advanced before the High Court by the committee but it appears to me that it was understood that Clause Vl(3) of the Schedule to the Act constituted an arbitration agreement between the parties. It would also appear to me that the point before the High Court was quite simple. Clause-3 of the agreement between the parties provided that the cost of the supply lines, in case of dispute, would be decided by the Electrical Inspector. Clause-20 of the contract which contained the arbitration clause would not have applied to such a dispute as the dispute regarding the cost of supply lines was an excepted matter under this Clause-20. It is not clear to me from the report if the learned Sub-Judge when he referred the matter of the cost of supply lines to the Electrical Inspector it was a reference by way of arbitration or it was reference on the ground that he was having exclusive jurisdiction in the matter inasmuch as the Electrical Inspector was a special tribunal created by the statute to decide the dispute relating to cost of supply lines. The High Court held that the Clause Vl(3) of the Schedule to the Act not only required that such a dispute shall be referred to the Electrical Inspector but also compelled the Electrical Inspector to decide the matter when it was so referred. The High Court, therefore, rejected the argument of the committee that Clause Vl(3) of the Schedule to the Act did not bar the jurisdiction of the Civil Court to decide the matter. Similarly, the High Court also rejected the argument of the committee that the company having once filed the suit was stopped from saying that the dispute regarding the cost of supply lines be referred to the Electrical Inspector by virtue of Clause Vl(3) of the Schedule to the Act. Then, the argument of the committee was that the reference could not be made to the Electrical Inspector and that the only provision under the Arbitration Act was Section 34 under which a Court could only stay the proceedings to enable the parties to make a reference in terms of the arbitration agreement between the parties. The Court held that Section 34 did not apply as Clause Vl(3) of the Schedule to the Act contemplated statutory reference and that the Court had no jurisdiction to try the subject dispute. The Court also held that provisions of Section 20 of the Arbitration Act applied in the instant case and that the words "arbitration with intervention of a Court where there is no suit pending" preceding Section 20 were of no consequence. This is not a correct law. The Arbitration Act contemplates three kinds of arbitration; (1) arbitration without intervention of a Court dealt within Chapter-11 of the Act (Sections 3 to 19); (2) arbitration with intervention of a Court where there is no suit pending dealt within Chapter-111 of the Act (Section 20) and (3) arbitration in a suit which is covered by Chapter-IV of the Act. Therefore, to say that an application in a pending suit for referring certain disputes to arbitration could be treated as an application under Section 20 of the Arbitration Act would not, therefore, be correct. See Uoi vs. Om Parkash . I have also not been able to appreciate as to how it could be said that Section 34 of the Arbitration Act would not be applicable assuring Clause Vl(3) of the Schedule to the Act contained what is called a statutory arbitration. Section 46 of the Arbitration Act does not exclude the applicability of Section 34. Reference was also made to provisions of Section 36(3) of the Act which provides an appeal from the decisions of the Electrical Inspector to whom the dispute regarding cost of service lines had been referred by the learned Sub-Judge. The Court said "I do not see that this provision need cause any difficulty in the way of the Court assimilating the final decision upon the reference in its decree in the suit, which includes other reliefs besides the relief in relation to the cost of the service lines. "Frankly, and I say so with utmost respect, I have not been able to comprehend the reasonings in the judgment. One, however, does get a feeling that the Court was quite conscious of the fact that the dispute regarding the cost of service lines fell within the exclusive Jurisdiction of the Electrical Inspector and that jurisdiction of the Civil Court to decide such a dispute was barred. The order of the learned Sub-Judge could not be justified on any other ground except that the Act had conferred exclusive jurisdiction on the Electrical Inspector, an authority constituted under the Act, to decide certain disputes. However, to me it appears that the question if Clause Vi (3) of the Schedule to the Act constituted an arbitration agreement between the parties was not raised before the Court. I, therefore, do not feel myself bound to follow this judgment of the Lahore High Court.
(13) In Hamidullah Khan vs. The Chairman Madhya Pradesh Electricity Board he respondent had raised certain demands and started recovery proceedings. This led to the filing of a petition under Article 226 of the Constitution. The Court examined the provisions contained in Sections 26(4) proviso 26(6), 24(1) and Clause Vi (3) of the Schedule to the Act. It was contended that the respondent Board had illegally usurped the functions of the Electrical Inspector and one of the contentions was that the bill raising the demand was wholly unjustified when the meter was being referred to the Electrical Inspector and that in the absence of any decision by him under Section 26(6) of the Act it was not open to the respondent Board to make a revised demand. The Court held that if the consumer paid the bills in accordance with the meter reading and the Board issued revised bills on the plea that the meter was not correct which fact was disputed by the consumer, it would before the Board to refer the matter to the Electrical Inspector for getting a decision on the question whether the meter was correct and also for getting the quantity of enemy consumed during the period the meter was not found to be correct, estimated. The Court was, therefore, of the view that it was for the party who wanted to challenge the meter reading that had to make the reference to the Electrical Inspector. It also held that Clause Vl(3) of the Schedule to the Act, which was a general provision, would have no application to the case in question as specific provision was made hi the Act in the form Section 26(6) of the Act which provided that in the absence of fraud the meter reading subject to the decision of the Electrical Inspector was to be conclusive proof of the amount of quantity of the electric energy consumed. I fail to see how this judgment helps Mr. Anand in his argument that Clause Vi (3) of the Schedule to the Act constitutes an arbitration agreement between the parties. Reference of a dispute to the Electrical Inspector would not mean reference of a dispute to him as an arbitrator. Reference of a dispute can be to a statutory authority constituted under the statute as in the present case. In State Electricity Board Up vs. Prakash Talkies ( (DB) (4) the Court held that on plain reading of Section 24 of the Act it was clear there was no duty cast on the licensee (respondent in the present case) to refer a dispute covered by Clause Vl(3) of the Schedule to the Act for determination by the Electrical Inspector and that if a dispute of that character was raised by the consumer it was for him to make a reference to the Electrical Inspector for determination thereof. Again this judgment, in my opinion, is of no help to Mr. Anand in his argument.
(14) Mr. Anand also cited some judgments to show that lo constitute an arbitration agreement it was not necessary that the agreement should mention that the award given by the arbitrator was to be final. This was in answer to an argument of Mr. Singh, learned counsel for the respondents, that in order to constitute an arbitration agreement the decision of the arbitrator has to be said to be final. The judgments to which Mr. Anand referred are M/s. Ram Lal Jagan Nath vs. Punjab State through Collector, Hissar and another (FB) (5) and Smt. Rumanibai Gupta vs. The Collector, Jabalpur and others . But these judgments construed the relevant agreements between the parties to come to the conclusion that those provided for arbitration. Construction of something like Clause Vi (3) of the Schedule to the Act was not before the Courts. I don't find these judgments to be of any relevance. In the State of Up vs. Tipper Chand the Court held on interpretation of the relevant clause that it did not amount to an arbitration agreement and that the clause vested the Superintending Engineer only with the supervision and administrative control over the work.
(15) To me it appears that an Electrical Inspector appointed under Section 36 of the Act is a statutory authority required to perform certain functions and duties as prescribed under the Act. In the exercise of such powers he is to adjudicate upon certain disputes that might be referred to him either by the consumer or even by the licensee under the Act. This would be so under clause Vi (3) of the schedule to the Act, in so far as the relation between the licensee and the consumer as in the present case before me, is concerned. The decision of the Electrical Inspector is appealable under sub-section (2) of Section 36 unless there is an express provision to the contrary in. the Act. As an instance "that express provision to the contrary" would be Section 26(4) of the Act which makes the decision of the Electrical Inspector final. Whenever certain disputes are to be determined by arbitration specific provisions in the Act have. been made and to those arbitration provisions as contained in Section 46 of the Arbitration Act would be applicable. Section 52 of the Act provides the machinery for the appointment of an arbitrator where any matter is directed to be determined by arbitration and also uses the words "unless it is otherwise expressly provided in the license of a licensee." Mr. Anand said that this would mean Electrical Inspector as mentioned in Clause Vi (3) of the Schedule to the Act, I cannot agree. Clause Vi (3) of the Schedule to the Act does not constitute an arbitration agreement between the parties. It merely provides a statutory remedy where there is any difference or dispute as regards the items mentioned therein for decision by the Electrical Inspector. Since, the decision of the Electrical Inspector under this clause would not be final an appeal could be filed against that order. If Mr. Anand's argument is correct there would be then no difference whether the Act has specifically provided that certain disputes be determined by arbitration and whether the Act has provided that certain other disputes be determined by an Electrical Inspector and also whether the Act makes the decision of the Electrical Inspector final and where the Act provides for appeal against such a decision. In fact Section 21(4) of the Act gives the clue and shows that Mr. Anand is not correct in his submission. I have already referred to this Section above but let me set it out fully : "21(4)Where any difference or dispute arises as to whether a licensee has prescribed any appliance or controlled or interfered with the use of energy the contravention of sub-section (1), the matter shall be either referred to an Electrical Inspector and decided by him or, if the licensee or consumer so desires, determined by arbitration."
(16) Thus, it is obvious that the Act provides specific remedies for specific disputes, one to be decided by the Electrical Inspector and the other to be determined by arbitration. Clause Vi (3) of the Schedule to the Act is no arbitration agreement. Accordingly, both the suits are dismissed. There will, however, be no order as to costs. Interim orders would stand vacated.