Calcutta High Court
The West Bengal State Electricity Board ... vs Kalimata Cold Storage Pvt. Ltd. And Ors. on 18 April, 1991
Equivalent citations: (1992)1CALLT328(HC)
JUDGMENT Ajit Kumar Sengupta, J.
1. This appeal by West Bengal State Electricity Board (hereinafter referred to as the Board) is directed against the judgment dated, 5th April, 19901, passed by the learned trial Judge holding that the demand of additional security by the Board was illegal.
Shortly stated the facts are that by an agreement entered by and between the Board and the respondent in 1961, the respondent furnished a bank guarantee as and by way of security deposit in the sum of Rs. 9,650/-. Although from time to time the rate of tariff was increased, no fresh security was demanded by the Board from the respondent. By Memo dated, 30th June, 1987, the Senior Accounts Officer of the Board directed the respondent to resubmit the Bank guarantee in the sum of Rs. 80,000/- as against the existing security deposit of Rs. 9,650/- and if such bank guarantee was not furnished by July 15, 1987, the Board would disconnect the line without any reference. The respondent prayed for exemption from payment of the said security deposit at the enhanced rate. This was not acceded to by the Board. It was stated that such enhanced security deposit was sought from all bulk consumers, big or small. According to the Board, the security deposit which was initially directed to be paid was found insufficient on the basis of the consumption of electricity and that quantum of electric energy and the tariff for electrical energy supplied to the respondent had substantially gone up. On the basis of average consumption for 2 months, such security deposit in the sum of Rs. 80,000/- was demanded from the respondent.
2. The learned Judge was of the view that clause (vi) of the schedule of the Indian Electricity Act does not confer any power upon the Board or licensee to demand security deposit on the basis of the average monthly bill. Being aggrieved the Board has preferred this apeal. The stay application came up for hearing before the Division Bench presided over by the learned Chief Justice.
3. The Division Bench adjourned the hearing to enable the Board to consider a proposal regarding security deposit in respect of all types of consumers. The Board acordingly considered the matter at its meeting held on June 12, 1990. The resolution/decision taken at the said Board meeting is found annexed as Annexure "A" to the supplementary affidavit of Jyotirindra Nath Roy, Chief Engineer, Commercial, affirmed on July 28, 1990. Since this a subsequent development which has taken place during the pendency of the appeal and it is relevant for the purpose of considering the dispute arising for consideration the present case, the Appeal Bench permitted the said resolution/decision being placed on record. The parties agreed that the dispute arising out of the resolution/decision be also adjudicated upon in the present proceeding. Accordingly this appeal is being heard on the validity of the said resolution.
4. It has been contended that even if the said resolution of the Board dated 27th June, 1990 is otherwise legal and valid, it cannot have any retrospective effect. It is also contended that the resolution cannot override the agreement entered by and between the Board and the respondent. The contention of the Board is that the Board has the power to unanimously revise the conditions of supply and furnishing of security deposit is one of such condition.
5. We have considered that in the resolution dated 27th June, 1990 it has been, inter alia, provided as follows;
Mode of furnishing Security Deposit "The Security Deposit in case of L & MV consumers shall be received in cash/Bank Draft/Bank Pay Order. In case of H.V. & E.H.V. Consumers the Security Deposit shall be arranged in the shape of Bank guarantee of any Schedule Bank in the Board's prescribed proforma.
Rate of Security Deposit
(a) In case of Consumer covered under quarterly bill system, the Security Deposit shall be calculated on the basis of 4 (four) month's estimated energy bills considering connected load, Load Factor, Power Factor, Prevailing Tariff, Meter Rent, Electricity Duty, etc.
(b) In case of consumers not covered under quarterly Billing system, the security Deposit shall be calculated on the basis of 2 (two) months' estimated energy bills considering all the particulars mentioned in serial 3 (a) above".
6. It is not in dispute that even before the said Resolution was passed the Board continued to enhance the Security Deposit on the basis of the guidelines mentioned in the said resolution. The basis of fixing quantum of security deposit has not been changed. It is the average of 2 (two) months' consumption in the case of consumers like the respondent. There has been enhancement in the quantum of the Security Deposit by reason of the increase in the tariff since 1961. We do not find anything contrary to law of unreasonable or arbitrary in the mode and manner of fixation of the quantum of Security Deposit. The Supreme Court in Jagadamba Paper Industries (P) Ltd. and Ors, v. Haryana State Electricity Board and Ors., held that the State Electricity Board has been conferred with Statutory Power Under Section 49(1) of the Electricity Supply Act, 1948 to determine the conditions of supply of electrical energy. There the Supreme Court observed as follows :
"We are of the view that, the Board has been conferred with statutory Power Under Section 49(1) of the Act to determine the conditions on the basis of which Supply is to be made. This Court in Bisra Stone Lime Co. Ltd. v. Orissa State Electricity Board, , took the view that enhancement of rates by way of surcharge was well within the power of the Board to fix and revise the rates of tariff under the provisions of the Act. What applied to the tariff would equally apply to the security, that being a condition in the contract of supply. Each of the petitioning consumers had agreed to furnish security in cash for payment of energy bills at the time of entering into their respective supply agreements. There was no challenge in these writ petition that the demand of security at the time of entering into supply agreements has to be struck down as being without jurisdiction. Section 49(1) of the Act clearly indicates that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit. In exercise of this power the Board had initially introduced the condition regarding security and each of the petitioners had accepted the terms."
7. The Supreme Court then proceeded to hold :
"We agree, however, on the facts placed that the stand of the Board that a demand equally to the energy bill of two months or a little more is not unreasonable. Once we reach the conclusion that the Board has the power to unilaterally revise the conditions of supply, it must follow that the demand of higher additional security for payment of energy bill is unassaisable, provided that the power is not exercised arbiterarily or unreasonably."
8. The Supreme Court reiterated the same view in Hyderabad Engineering Industries Ltd. v. Andhra Pradesh, State Electricity Board, . The Supreme Court held that Section 49(1) of the Electricity Supply Act clearly provides that the Board could lay down conditions of supply and it had authority unilaterally to alter conditions of supply.
9. Having regard to the facts and circumstances and principles laid down by the Supreme Court, we are of view that the Board was within its power to revise the quantum of security deposit in the light of increase in consumption and tariff. The resolution of the Board cannot be assailed as being unreasonable or arbitrary.
10. There is no question of retrospective effect being given to the impugned resolution inasmuch as the basis of fixation of Security Deposit has not been changed, the quantum of such deposit is inextricably linked with the consumption and the rate of tariff.
11. For the foregoing reasons, we allow the appeal and set aside the order under appeal. We, however, make it clear that receipt for the sum of Rs. 80,000/- as and by way of Security Deposit. Such secuitry shall be initially for five years and shall be endorsed in favour of the West Bengal State Electricity Board who shall hold the same as and by way of security Deposit. The respondent will, however, be at liberty to direct the Bank to pay the interest to be accrued month by month or upon the maturity of the Fixed Deposit to the respondent. Such Fixed Deposit shall continue to be renewed upon maturity in accordance with the agreement for supply. Let the Fixed Deposit be made and deposited with the Board upon endorsement within four weeks from date.
12. In the event, because of the default of the respondent it becomes necessary for the Board to enhance the fixed deposit, the Board will be at liberty to do so after giving two weeks notice to the respondent. The Board in that event will be at liberty to appropriate the proceeds of the fixed deposit against the outstanding dues of the respondent in respect of the supply that may be made to the respondent by the Board.
13. In the event the Board is required to encash the Fixed Deposit before maturity, the bank will allow the encashment of such fixed deposit after adjustment of interest, if necessary in accordance with the rules.
There will be no order as to costs. All parties to act on a signed Xerox copy of the entire order on usual undertaking.
S.K. Sen, J.
14. I agree.