Jharkhand High Court
Ambika Wheat Private Ltd. vs Bihar State Electricity Board And Ors. on 11 December, 2000
Equivalent citations: AIR 2001 JHARKHAND 36, 2001 AIR - JHAR. H. C. R. 99
Author: M.Y. Eqbal
Bench: M.Y. Eqbal
JUDGMENT M.Y. Eqbal, J.
1. A very important question has been raised in this writ application, i.e. whether the action of the respondent-Bihar State Electricity Board in paying interest on the security money deposited by the consumers only @ 4% and 5% is justified.
2. I have heard Mr. M.S. Mittal, learned counsel for the petitioner and Mr. V.P. Singh, learned counsel for the Electricity Board.
3. Before answering the question, it would be useful to state in brief the facts of the instant case.
4. The petitioner's case is that the company entered into an agreement with the respondent-Board for, supply of electrical energy for running its factory which is situated at Bokaro Industrial Area for a contract demand of 260 KVA. Under the agreement the petitioner-company was required to deposit an amount of security money and the petitioner paid security money of Rs. 90,000/- under receipt No. 310943, dated 6.9.83. The security money was taken from the petitioner in accordance with clause 15.3 of the Tariff Notification. It is stated that the Board pays interest @ 4% only and the rate of interest was revised from 4% to 5% with effect from 1988. It is contended by the petitioner that when the Board is charging interest from the consumer @ 18% to 36% on their default in making deposit, then the Board is also liable to pay interest at the same rate on the security deposit made by the consumers.-
5. The amount of security deposit is taken from the consumer in accordance with clause 15.3 of the Tariff Notification issued in exercise of power conferred under Sections 46 and 49 of the Electricity (Supply) Act, 1948. Clause 15.3 of the Tariff Notification reads as under :--
"(a) This is deposit due from the consumer to the Board in respect of supply of energy on credit to be applied towards the payment of satisfaction of any money payable by him.
(b) The amount of initial security deposit to be paid before commencement of supply shall cover three months' estimated consumption subject to the following minimum :--
(i) for domestic, commercial and street light service Rs. 50/- per connection.
(ii) for irrigation and agriculfure services Rs. 50/- per H.P. per connection; and
(iii) for service for which minimum base charge has been specified in clause 15.2, the initial security deposit shall be equal to one-fourth of the annual minimum base charge.
(c) The amount of security deposit is liable to be enhanced on review from time to time. Such review shall take place twice every year namely, in October--November for the period April to September and in April--May for the period October to March. If half of the aggregate amount of all the bills relating to any of the aforesaid half yearly period exceeds by 20% of the existing security deposit, then the security deposit shall be enhanced to that amount refunded upto ten rupees. Fuel charge, if applicable, shall be taken into consideration in the aforesaid calculation butdelayed payment surcharged levied during the year, if any, shall be excluded.
(d) The entire amount of security deposit in case of L.T. consumers will be deposited in cash. In the case of H.T.S., E.H.T. consumers, the security deposit upto an amount of rupees one lakh will be deposited in cash and beyond deposited in cash and 50% in the shape of Bank guarantee. If the additional deposit, wherever payable, is not paid on demand, by a date to be fixed by the Board in the manner specified in clause 15.4 (A), the service may be disconnected on serving seven days' notice thereafter can only be restored if the deposit is made in full along with the prescribed disconnection and reconnection charges.
(e) In case the deposit having exhausted on adjustment of becoming insufficient on account of enhancement or adjustment, the full amount of the difference, as the case may be, shall be payable in the manner, and subject to the conditions mentioned in Sub-clause (d) above."
6. From the aforesaid provisions, it is clear that security money was to be paid by the consumer either in cash or in the form of bank guarantee. The respondent-Board used to pay interest @ 4% only. The rate of interest was however revised from 4% to 5% with effect from 1.4.88.
7. At this stage, it is worth to refer clause 16.2 of the Tariff Notification, which empowers the Electricity Board to charge interest from "the consumers on their default in making deposit. Clause 16.2 of the Tariff Notification reads as under :--
"16.2 (a) In case of H.T. Service under symbol H.T.S-I., E.H.T.S-II, Extra High Tension service under symbol HTS, if the consumer does not pay the bill in full by the due date indicated on the bill, he shall have to pay interest on the outstanding amount. The interest will be 1-1/2% per month or part thereof for delay upto 30 days from the due date, 2-1 /2 per cent per month or part thereof for delay upto 60 days and 3 per cent per month or part thereof for delay beyond 60 days. The interest will be leviable from the date immediately following the due date in all cases. No interest will be charged on the interest already acquired."
8. By another notification dated 17.5.84 some amendment was made whereby the interest/surcharge on account of delayed payment was revised @ 1.75% per month and besides this Electricity Board is also entitled to realise compensation @ 1.95% per month.
9. In 1993 the Electricity Board came with a new Tariff Notification which came into force from 1.7.93. The said notification was issued in supersession of the earlier notification. By reason of the said notification, various charges have been effected in Low Tension Industrial and Medium Power Services. High Tension Industrial Services, Irrigation and Agriculture Consumer's Services, Domestic Consumer's Services and also the Commercial Consumer's Services. Under the new tariff the provision for payment of interest to the consumer on security deposit was deleted and, therefore, according to the said new tariff, no interest was payable to the consumer on the security deposit. The validity of 1993 tariff was challenged by the consumer in this Court in relation to clauses 15 and 16 of the Tariff. A division Bench of this Court in the case of Bihar 440 Volt Vidyut Upbhokta Sangh v. Chairman, BSEB, (1994) 2 PLJR 103, formulated the following questions for consideration :--
"(a) Whether Sections 49 and 59 of the 1948 Act are ultra vires the Constitution of India ?
(b) Whether the 1993 tariff is ultra vires Article 14 of the Constitution of India, read with Sections 49 and 59 of 1948 Act ?
(c) .....
(d) .....
(e) .....
(f) .....
(g) Whether enhancement of the amount in security in terms of clause 15 of 1993 tariff and deletion of the provision about payment of interest on security deposit is valid in law ?
(h) .....
(i) .....
(j). ....
(k) .....
(1) .....
(m) .....
(n) ....."
10. While answering point No. (g) their Lordships held that deletion of the clause by the Board is illegal and arbitrary inasmuch as the Board is liable to grant interest on the security deposit to the consumer.
11. The deletion of the Division Bench of this Court has been affirmed by the Supreme Court in the case of Bihar State Electricity Board v. Bihar 440 Volt Vidyut Upbhokta Sangh, (1997) 11 SCC 380, so far clause (g) is concerned. In paragraph 5, the Supreme Court held as follows :--
"Mr. Reddy, learned Additional Solicitor General has challenged the findings of the High Court on second part of issues (g), (i) and (1). We see no force in the contention of the learned Additional Solicitor General so far as issues (g) and (i) are concerned. This Court in Ferro Alloys Corpn. Ltd. v. A.P. SEB, 1993 Supp (4) SCC 136 at p. 189 (para 158) has held that the Electricity Boards which have framed a provision for payment of interest by adjusting its finances, cannot be allowed to delete such provision. Since the Board in this case has provided for payment of interest it cannot be permitted to withdraw the same. So far as the provision relating to providing for levy of operational surcharge is concerned, we are of the view that it is arbitrary on the face of it. The surcharge has been levied on a wholly vague basis. The "operation of the Electricity Board" in general has no relation with the generation or electricity. It is no doubt correct that this Court has upheld the levy on fuel surcharge, but that has a direct relation to the generation of electricity. We, therefore, reject the contention of the learned Additional Solicitor General based on issue (i)."
12. It appears that in the light of the judgment of the Apex Court affirming the decision of this Court in Bihar 440 Volt case (supra), the respondent-Board came with another circular dated 14th August, 1996 making necessary amendment in the Tariff Notification dated 23.6.93. So far interest of security deposit is concerned, clause 15.3 (a) amended as under :--
"SECURITY DEPOSIT: Clause 15.3(a) The interest on security deposit is payable at the same rate and manner which was being followed prior to the tariff notification dated 23.6.1993."
13. It is, therefore, clear that after the aforesaid circular the respondent-Board agreed to pay interest to the consumer on security deposit @ 5% as existed prior to' 1993.
14. Now the question falls for consideration is whether the Board would be liable to pay interest on security deposit at the same rate of interest as has been charged from the consumer as per clause 16.2 of the Tariff Notification or at the minimum rate of 12% per annum. The contention of the petitioner is that when the Board is charging interest at such an exorbitant rate, on account of delayed payment, then why the Board would not equally be liable to pay interest on security deposit at least at the rate of 12% from the date of deposit.
15. It is not in dispute that for supply of electrical energy in the premises of the petitioner for running its factory the petitioner entered into an agreement for a contract demand of 260 KVA having three phase connection and for that the company was required to deposit an amount by way of security deposit. This deposit is in fact and in reality in the form of adjustable advance payment of consumption of charges. This security deposit is revisable from time to time on the basis of average consumption charges depending upon the actual consumption over a period.
16. Learned counsel appearing for the petitioner has also not disputed the fact that for supply of electricity the Board needs finance for production, supply and other charges necessary for supply of electricity. At the same time while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers used and consumed electricity on credit ranging from 2 to 3 months depending upon the category of consumption. The consumer under the agreement agrees to make payment of the bills in time. The Board in terms of the agreement becomes entitled to adjust the bill on default against such deposits. In other words, the object of security deposit is to ensure proper payment of bill. It is, therefore, clear that security deposit cannot be equated with the deposit of money as in the case of commercial transaction. Despite the factual position under the Tariff, the Board decided to pay interest in such security deposit at the rate of 5%.
17. In the case of Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board, AIR 1993 SC 2005, the Apex Court while considering a question as to whether interest is payable on security deposit or advance consumption deposit has gone in detail the provisions of the Electricity Act and relevant tariff and came to the conclusion that the relevant clause of the tariff not providing for interest is neither arbitrary nor unreasonable. Their Lordships observed :
"121. In the light of the above discussion, we hold that the clause not providing for interest is neither arbitrary nor palpably unreasonable, nor even unconscionable. In holding so we have regard to the following :
1. The consumer made the security deposit in consideration of the performance of his obligation for obtaining the service which is essential to him.
2. The electricity supply is made to the consumers on credit as has been noted above.
3. The billing time taken by the Board is to the advance of the consumer.
4. Pubic revenues are blocked in generation, transaction and distribution of electricity for the purpose of supply. The Board pays interest on the loans borrowed by the Board. This is in order to perform public service. On these payments made by the Board it gets no interest from the consumers.
5. The Board needs back its blocked money to carry out public service with reasonable recompense.
6. The Board is not essentially a commercial organisation to which the consumer has furnished the security to earn interest thereon."
18. In the aforesaid decision, the Apex Court further considered the applicability of the Interest Act, 1978 and overruling the judgment of Rajasthan High Court, held that the provisions of Interest Act has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted.
19. Having regard to the facts of the case and following the principles laid down by the Supreme Court, I am also of the view that the security deposit made by the consumer in accordance with the tariff cannot be equated to a fixed deposit. As a matter of fact, the security deposit is furnished to ensure timely payment of amount under the bills. Hence the consumer shall not be entitled to claim interest at the rate payable in a commercial transaction. At best the consumer would be entitled to interest in terms of the clauses contained in the tariff and not otherwise.
20. For the reason aforesaid, there is no merit in this writ application, which is accordingly dismissed.
21. Writ petition dismissed,