Orissa High Court
Arnadata Foods Private Limited vs Ombudsman-I on 11 February, 2025
ORISSA HIGH COURT: CUTTACK
W.P.(C) No.22089 of 2024
In the matter of an Application under Articles 226 and 227
of the Constitution of India, 1950
***
Arnadata Foods Private Limited At: Jagannathpur P.O.: Banpur District: Khordha Represented by its Managing Director Sri Bhagaban Pradhan Aged about 59 years Son of Late KapilaPradhan, At: Jagannathpur P.O.: Banpur District: Khordha. ... Petitioner.
-VERSUS-
1. Ombudsman-I,OERC At: Qtr. No.3R-2(S), GRIDCO Colony, P.O.: Bhoinagar Bhubaneswar, District: Khordha, PIN:751022.
2. Executive Engineer (Electrical) Tata Power Central Odisha Distribution Limited Balugaon Electrical Division W.P.(C) No.22089 of 2024 Page 1 of 58 At/P.O.: Balugaon, District: Khordha. ... Opposite parties.
Counsel appeared for the parties:
For the Petitioner : Mr. Falguni Rajguru Mohapatra, Advocate For the Opposite Party : M/s. Lalit Kumar Maharana No.2 and Ruparekha Jena, Advocates P R E S E N T:
HONOURABLE MR. JUSTICE BIBHU PRASAD ROUTRAY AND HONOURABLE MR. JUSTICE MURAHARI SRI RAMAN Date of Hearing : 28.01.2025 :: Date of Judgment : 11.02.2025 J UDGMENT MURAHARI SRI RAMAN,J.--
Challenge has been laid to Order dated 16.08.2024 of the learned Ombudsman-I, Odisha Electricity Regulatory Commission, Bhubaneswar-Opposite Party No.1 in C.R. Case No.OM(I)-120 of 2021 [Arising out of Order dated 07.04.2021 of the Grievance Redressal Forum, Khordha in C.C. Case No.124 of 2021 (BED)] in the afore-noted writ petition, wherein and whereby the prayer(s) of the petitioner for reduction of contract W.P.(C) No.22089 of 2024 Page 2 of 58 demand from 214 KVA to 90 KW and waiver of demand charges for the period of disconnection of power supply to its Unit has been rejected.
1.1. Having moved this Court by way of filing instant writ petition under Articles 226 and 227 of the Constitution of India, the petitioner has made the following prayer(s):
―The Petitioner therefore humbly prays that this Hon'ble Court may graciously be pleased to admit the writ petition issue a ‗Rule NISI' calling upon the opposite parties to show cause as to why the writ petition shall not be allowed;
And if the said opposite parties fail to show cause or show insufficient cause then after hearing the parties, your Lordship be pleased to allow the writ petition by quashing the impugned order dated 16.08.2024 passed by the opposite party No.1/Ombudsman-I in Case No.120 of 2024 as illegal;
And for which act of kindness, the above named Petitioner as in duty bound shall ever pray.‖ Facts:
2. The petitioner, Arnadata Foods Private Limited, a Rice Mill, in order to avail power supply of 214 KVA under ―Large Industry‖ category entered into Agreement with the Executive Engineer (Electrical), B.E.D., Balugaon, Central Electricity Supply Utility of Odisha (―the W.P.(C) No.22089 of 2024 Page 3 of 58 Licensee‖, for short). For said purpose, the petitioner (―the Consumer‖, for short) executed ―Standard Agreement Form for Supply of Electrical Energy by the Central Electricity Supply Utility of Odisha‖ on 07.05.2015 for five years, as provided under the Odisha Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2004 (―Code, 2004‖ for convenience)1.
2.1. During subsistence of period of agreement, the power supply to the petitioner-Rice Mill, as availed since October, 2015, has been disconnected since March, 2019 till December, 2020. Due to financial stringency, the petitioner could not run the business concern with full connected load, i.e. 214 KVA from March, 2019 to December, 2020. After getting the Unit inspected by the Electrical Inspector, the petitioner approached opposite party No.2- the Executive Engineer (Electrical), Tata Power Central Odisha Distribution Limited, Balugaon Electrical Division, Balugaon (be called, ―TPCODL‖) for consideration of reduction of connected load from 214 KVA to 90 KW, but the same was turned down. The prayer of the petitioner for 1 The Odisha Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2004 has been superseded by virtue of the Odisha Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2019 with effect from 11.10.2019.W.P.(C) No.22089 of 2024 Page 4 of 58
waiver of contract demand for the period during which power supply was disconnected was also not allowed.
2.2. The petitioner, therefore, approached learned Grievance Redressal Forum, Khordha (be called ―GRF‖). Refusing to grant relief(s) sought for by the petitioner, following Order was passed on 07.04.2021 in C.C. Case No.124 of 2021 (BED):
―1. Gist of Proceedings/Brief facts of the case:
Gone through the petition, the petitioner through his learned advocate stated in his petition that the Superintend Engineer-cum-Electrical Inspector, Bhubaneswar inspected his industry on 17.02.2019 and found that,―the MV load has been reduced from 214 KVA to 90 KW. In no case the consumer is allowed to exceed the load beyond 90KW and the report was communicated to:
(1) M/s Arnadata Foods Pvt. Ltd.;
(2) the EE (El.), BED, Balugaon, vide Memo No.545(2) dated 18.03.2019 by the Superintend Engineer-cum-Electrical Inspector, Bhubaneswar. So the Petitioner prays for reduction of load from 214 KVA to 90 KW with effect from 18.03.2019.‖ The Respondent in his counter reply stated that the Petitioner previously filed complaint before the Hon'ble GRF, Khordha vide C.C. No.785 of 2018 W.P.(C) No.22089 of 2024 Page 5 of 58 and C.C. No.355 of 2019 for reduction of contract demand.
In C.C. No.785 of 2018 this Forum directed that ―The opposite parties are directed to reduce the contract demand as per norms and formalities required on fulfilment of the conditions met by the petitioner.‖ In compliance to the said order the Respondent has reduced the contract demand from 214 KVA to 90 KVA in Medium Industry tariff on 15.02.2021. This Forum has already given direction vide C.C. No.785 of 2018 for reduction of contract demand.
Hence the case is dismissed.
The C.C. No.124/2021 (BED) is thus disposed of accordingly.
‗If the complaint is aggrieved with either by this order or due to non-implementation of the order of the Grievance Redressal Forum in time, he/she can make the representation to the Ombudsman-I, Qrs. No.3R-2(S), GRIDCO Colony, P.O.: Bhoinagar, Bhubaneswar-751022 (Tel/FAX No.0674- 2546264) within 30 days from the date of this order.' Served copies to both parties.‖ 2.3. Being dissatisfied with said Order dated 07.04.2021 of learned GRF, the petitioner approached the Ombudsman-I, Odisha Electricity Regulatory W.P.(C) No.22089 of 2024 Page 6 of 58 Commission, Bhubaneswar-Opposite Party No.1 to ventilate its grievance.
2.4. Opposite party No.1 has framed two points for adjudication, namely, (1) Whether the claimant is entitled for waiver of demand charge raised during the period of disconnection, and (2) Whether the claimant-petitioner is legally entitled for reduction of the contract demand from 214 KVA to 90 KW with effect from May, 2018?
2.5. On adjudication of said points, opposite party No.1 rejected the prayer of the petitioner vide Order dated 16.08.2024 passed in C.R. Case No.OM(I)-120 of 2021 (Annexure-3).
2.6. Further being dissatisfied thereby, the petitioner approached this Court by way of filing the instant writ petition to invoke power of judicial review under Articles 226 and 227 of the Constitution of India.
Counter affidavit of the opposite party No.2:
3. In reply to the contents of the writ petition, an affidavit dated 17.09.2024 has come to be filed before this Court on 18.09.2024 by the Executive Engineer (Electrical), TPCODL - opposite party No.2 in response W.P.(C) No.22089 of 2024 Page 7 of 58 to the averments and contentions of the petitioner, whereby it has been put forth that the petitioner-Unit was running in the name and style ―Annada Rice Mill‖, a proprietorship concern of one Sri Rajeeb Kumar Senapati bearing Consumer No.NMI-13 with a contract demand of 95.0KW in Medium Industry tariff. Certain defects being found as a result of inspection in the year 2009, the owner of the Unit requested by a Letter No.5366, dated 22.09.2009 to enhance contract demand of the Rice Mill from 95.0 KW to 214.0 KVA. Thus, the contract demand of the Unit was enhanced to 214.0 KW by changing the tariff category from ‗Medium Industry' to ‗Large Industry'. The opposite party No.2 has been serving bills with tariff as applicable to the Large Industry.
3.1. In May, 2015, the proprietorship concern changed the status of the Rice Mill and also the name and style from ―Annada Rice Mill‖ to ―Arnadata Foods Private Limited‖ with Sri Bhagaban Pradhan as the Managing Director. Accordingly, power supply agreement was executed on 07.05.2015 between the Central Electricity Supply Utility of Odisha (―CESU‖, be referred to hereinafter) and Arnadata Foods Private Limited with contract demand of 214 KVA.
W.P.(C) No.22089 of 2024 Page 8 of 583.2. On 02.05.2018, the petitioner applied for load reduction from 214 KVA. Since the application was not in conformity with the requirements as stipulated in Regulation 68 of the Code, 2004, the defects being communicated, the petitioner submitted Form-2 and billing statements of previous three months on 23.07.2018. As the petitioner failed to submit ―test report from the Licensed Contractor, letter of approval of Electrical Inspector and processing fee‖, on 27.07.2018 further communication was made by the opposite party No.2 for compliance.
3.3. Nonetheless, instead of furnishing necessary documents to comply with the requirements as sought for in Letter dated 27.07.2018 issued by opposite party No.2, the petitioner shot a legal notice to waive the contract demand and reduce the connected load on 24.08.2018.
3.4. In September, 2018, the petitioner instead of complying with deficiencies filed C.C. No.785 of 2018 before the learned GRF for reduction of load from 214 KVA to 90 KW, which was disposed of on 28.09.2018 with a direction to the opposite parties to reduce the contract demand subject to the petitioner fulfilling required norms and formalities.
W.P.(C) No.22089 of 2024 Page 9 of 583.5. Despite such relief being extended to the petitioner, on 20.05.2019 the learned GRF was again moved in C.C. No.355 of 2019, which came to be dismissed reaffirming that the prayer(s) of the petitioner can be considered only after compliance of the statutory requirements.
3.6. As the power supply got disconnected due to non-
payment of demand charges since March, 2019, on 12.10.2020, the petitioner sought for settlement of dues. On 29.10.2020, the following letter was issued to the petitioner for compliance contemplating restoration of power supply in connection with representation dated 14.10.2020 of the petitioner:
―TP Central Odisha Distribution Limited (A Tata Power and Odisha Government Joint Venture) Office of the Executive Engineer (Electrical) Balugaon Electrical Division, Balugaon Letter No.1235(4) Date: 29.10.2020 To The Managing Director, M/s. Arnadata Foods Pvt. Ltd.
At: Jagannathpur, P.O.: Banpur District: Khurda (Consumer No.06-LI) Sub.: Regarding restoration of power supply. Ref.: Your Representation dated 14.10.2020 Sir, With reference to above cited subject, it is to intimate you that, on verification of consumer ledger it is found W.P.(C) No.22089 of 2024 Page 10 of 58 that, an amount of Rs.18,27,419/- is outstanding against your large industry unit bearing Cons. No.06- LI as on 09/2020.
Further, it is to intimate you that, the initial agreement period of your above mentioned unit has been expired since 06.05.2020 (initial agreement date 07.05.2015).
Hence, as per your request, the undersigned is pleased to grant you the following suitable instalment facility to clear up the arrear outstanding dues.
1stInstallment : Rs.4,00,000/-along with Re-connection Fees of Rs.3,000/-
2ndInstallment : Rs.4,75,819/-along with current dues 3rdInstallment : Rs.4,75,800/- along with current dues 4thInstallment : Rs.4,75,800/- along with current dues Further, you are requested to comply the following formalities before restoration of power supply to your above mentioned unit.
1. You are required to submit the up to date inspection report in respect of your installations duly issued by Electrical Inspector, T & D, Govt.
of Orissa.
2. You have to execute fresh agreement with the undersigned for availing power supply.
This is for your information and necessary action.
Yours faithfully, Sd/-
Asst. General Manager (Electrical) B.E.D., Balugaon‖ 3.7. Having undertaken inspection of the business premise on 24.11.2020, the Electrical Inspector submitted a W.P.(C) No.22089 of 2024 Page 11 of 58 report pointing out the defects and deficiency with suggestion to comply within 30 days from the date of issue of said report. Though copy of the report was produced on 26.11.2020, the petitioner did not take steps to execute fresh Agreement2. As soon as steps for execution of fresh Agreement was undertaken by the petitioner by complying with statutory requirement, on 15.02.2021 an Agreement was executed with reduced load as prayed for by the petitioner and the petitioner deposited the processing fee only on 06.03.2021 in terms of Letter dated 11.05.2018.
3.8. The petitioner again approached the learned GRF in C.C. No.124 of 2021, which got disposed of on 07.04.2021 with the observation that the petitioner's prayer for reduction of connected load had already been acceded to since 15.02.2021.
3.9. Still dissatisfied, the said order of dismissal by the learned GRF was assailed by the petitioner before the learned Ombudsman-I in C.R. Case No.OM (I)-120 of 2021 praying for waiver of contract demand in respect of the disconnection period and reduction of connected load with effect from May, 2018.
2 The term ―Agreement‖ has been defined in Regulation 2(2) of the Code, 2019 as:
―Agreement with its grammatical variations and cognate expressions means an agreement entered into by the licensee/supplier and the consumer in accordance to Regulation 48 in the Format at Form Nos.1-3 of these Regulations.‖ W.P.(C) No.22089 of 2024 Page 12 of 58
3.10. The learned Ombudsman-I dismissed the C.R. Case No.OM(I) - 120 of 2021 on 16.08.2024 filed at the behest of the petitioner, which is the subject-matter of challenge in the instant writ petition.
Hearing:
4. As the pleadings are completed and exchanged between the counsels for respective parties, on their consent, this matter is taken up for final hearing at the stage of admission.
4.1. Heard Sri Falguni Rajguru Mohapatra, learned Advocate for the petitioner and Sri Lalit Kumar Maharana, learned Advocate for opposite party No.2.
4.2. After hearing learned counsels appearing for the parties, the matter is reserved for preparation of Judgment and pronouncement thereof.
4.3. After hearing is concluded, request of the counsel for both the sides for furnishing written note of submissions being allowed, while the counsel for the petitioner filed the same on 31.01.2025, the counsel for opposite party No.2 on 01.02.2025.
Rival contentions and submissions:
5. Sri Falguni Rajguru Mohapatra, learned Advocate alleged that neither learned GRF nor did learned W.P.(C) No.22089 of 2024 Page 13 of 58 Ombudsman-I addressed grievance of the petitioner in proper perspective. It is alleged that the Order dated 16.08.2024 passed by the learned Ombudsman-I is contrary to the Regulation 49(i) and 49(v) of the Odisha Electricity Regulatory Commission Distribution (Conditions of Supply) Code, 2019 (for convenience referred to as ―Code, 2019‖).
5.1. It is submitted that opposite party No.2 has committed gross error by raising demand charge with respect to the period from March, 2019 to December, 2020 during which the power supply to the petitioner-Unit remained disconnected. He suggested that such contract demand in terms of Regulation 143(ii) could not have been made contrary to Regulation 49(v) of the Code, 2019.
5.2. He went on to submit that when the contract demand has not been achieved at 214 KVA as per earlier orders of the GRF, raising the contract demand at the maximum is unethical as the petitioner could not run its Unit at the full strength.
5.3. It is explained that so far as demand charge is concerned, the petitioner is required to pay the electricity dues in two-parts as per tariff rate, which are described as under:
W.P.(C) No.22089 of 2024 Page 14 of 58i. One is on account of electricity consumption and the electricity dues are required to be paid taking into consideration the units consumed as reflected in the meter.
ii. Secondly, demand charge to be paid by the petitioner is based upon the contract demand.
5.4. The opposite party No.2 raised the demand charges for the period during which the Unit was disconnected with power supply, i.e., from March, 2019 to December, 2020 basing upon Regulation 143(ii) of the Code, 2019 without taking into consideration Regulation 49(v) of the said Code.
5.5. Relying on Executive Engineer Vrs. Seetaram Rice Mill, (2012) 2 SCC 108 Sri Falguni Rajguru Mohapatra, learned Advocate would submit that statute is required to be read as a whole and different provisions may have to be construed together to make consistent construction of the whole statute relating to the subject-matter.
5.6. With the said perspective, the object of demand charge being to recover the expenses incurred to create infrastructure for providing power supply to the consumers, construction which would improve the workability of the statute to be more effective and W.P.(C) No.22089 of 2024 Page 15 of 58 purposive should have been preferred by the GRF as also the Ombudsman-I instead of allowing their orders leading to absurdity and undesirable results. He, therefore, essentially strenuously argued that fixed charges based on contract demand in terms of Regulation 149 of the Code, 2019 as sought to be recovered from the petitioner during the period when the Unit was under disconnection with power supply is contrary to avowed purport for which the statute exists and operates.
5.7. The GRF and the Ombudsman-I have misread the provisions of the Code, 2019 and approached the issues mechanically, and thus, the impugned Order is not only contrary to Regulation 49(v) of the Code, 2019 but also would tantamount to frustrating the object of law.
5.8. Main thrust of his argument is that the petitioner is aggrieved by the charges sought to be recovered for the entire period of Agreement despite there was disruption in power supply. Sri Falguni Rajguru Mohapatra, learned Advocate would submit that where the infrastructure has been built up/created by the consumers, the Licensee should not have insisted for raising and collecting demand charges for the entire W.P.(C) No.22089 of 2024 Page 16 of 58 disconnection period, even if the agreement period did not get over.
5.9. Advancing his argument further, he made submission that the entire service lines belonged to the opposite party as per Regulation 63 of the Code, 2019, although the petitioner had borne the cost of expenditure from its own sources. Hence, raising further demand charge for the power supply disconnection period is arbitrary and not in consonance with provisions of Regulation 49(v) of the Code, 2019.
6. Sri Lalit Kumar Maharana, learned Advocate for the opposite party No.2 commenced his argument by referring to Vivek Narayan Sharma Vrs. Union of India, (2023) 3 SCC 1 and Maharashtra State Electricity Distribution Co. Limited Vrs. Adani Power Maharashtra Ltd., (2023) 5 SCR 668, wherein it has been pointed out that the Court should be loathe in interfering with the findings returned by an expert body. So, he contended that the finding and observations made with reasons by the learned Ombudsman of the Odisha Electricity Regulatory Commission needs no intervention. Referring to Association of Industrial Electricity Users Vrs. State of Andhra Pradesh, (2002) 2 SCR 273 = (2002) 3 SCC 711 he would lay emphasis W.P.(C) No.22089 of 2024 Page 17 of 58 that the Ombudman having followed the procedure established under law, and no arbitrariness could be imputed in the decision vide Order dated 16.08.2024 (Annexure-3), the writ petition warrants dismissal.
6.1. Refuting the contention of the petitioner that demand charges could not have been raised during the period from March, 2019 to December, 2020 (for around 22 months) as the power supply was disconnected, Sri Lalit Kumar Maharana, learned Advocate referred to Regulation 68 and Regulation 71 of the Odisha Electricity Regulatory Commission (Condition of Supply) Code, 2004 (―Code, 2004‖, for brevity) and Regulation 85 of the Code, 2019, to buttress his argument that the expert body, viz., learned GRF in CC No.785 of 2018 and CC No.355 of 2019 had directed for reduction of load factor subject to the petitioner depositing requisite amount and compliance of statutory requirement.
6.2. Conspicuously Sri Lalit Kumar Moharana, learned counsel would take exception to the submission of the petitioner seeking equity by urging that in view of unequivocal provisions contained in Regulation 85 of the Code, 2004 read with Clause 6 of the Agreement vide Annexure-1 do not authorise the authority to exempt ―Minimum Monthly Charges, Demand W.P.(C) No.22089 of 2024 Page 18 of 58 Charges, Energy Charges, etc. in accordance with Code, 2004‖. In furtherance of such submission, it is contended that in absence of any provisions conferring power on the Authority concerned under the provisions of the Code, 2019, there is no scope to exercise power to waive demand charges nor does any occasion arise for consideration of waiver of demand charges during the period when the power supply to the consumer remained disconnected as the petitioner has not discharged his liability in terms of the statutory mandate read with covenants of the Agreement. Having not taken effective steps by complying with the mandatory requirement during such period, i.e. March, 2019 to December, 2020, and the Agreement being executed on 07.05.2015 for five years from the date of supply3, he made valiant submission that the decision of the Ombudsman being in exceptionable. It is argued that the impugned Order is supported by well-founded reasons.
6.3. Sri Lalit Kumar Maharana, learned Advocate further submitted that the application for load reduction was not accompanied by processing fee, test report from 3 The expression ―date of commencement of supply‖ has been defined in Regulation 2(m) of the Code, 2004 as follows:
―DATE OF COMMENCEMENT OF SUPPLY means the day immediately following the date of expiry of a period of one month from the date of intimation to an intending consumer of the availability of power at the point of supply or the date of actual availing of supply by such consumer, whichever is earlier.‖ W.P.(C) No.22089 of 2024 Page 19 of 58 the Licensed Contractor, Meter Reading of previous three months and Letter of Approval of Electrical Inspector; but the petitioner furnished the Inspection Report at much later date, i.e. in the month of November, 2020, by which date the period of Agreement dated 07.05.2015 got expired. Hence, the load could be directed to be reduced from February, 2021 after undertaking all formalities as per law.
6.4. Therefore, Sri Lalit Kumar Maharana, learned Advocate urged to dismiss the writ petition inasmuch as on both the counts, i.e., reduction of connected load and waiver of demand charges, the petitioner could not be able to make out its case.
Analysis and Discussions:
7. The petitioner's application for load reduction was not complete as the same was not accompanied with:
(a) Processing Fee,
(b) Test Report from the Licensed Contractor,
(c) Meter Reading of Previous 03 months,
(d) Letter of Approval of Electrical Inspector.
As contended by Sri Lalit Kumar Maharana, learned Advocate for the opposite party No.2 that ―the W.P.(C) No.22089 of 2024 Page 20 of 58 petitioner themselves admitted that they had not submitted these documents‖, which remained uncontroverted. It is only in the month of November, 2020, the Inspection Report could be furnished. By such time the original Agreement had got expired. It is asserted by the opposite party No.2 that as soon as the fresh Agreement was made ready to be executed from the side of the petitioner, the load was reduced in the month of February, 2021.
7.1. The learned Ombudsman in the impugned Order dated 16.08.2024 has culled out the demand raised against the petitioner-Unit as follows:
―The monthly recorded demand4 of the petitioner's unit are as below:
Month Highest demand in KVA as per bill 05/2018 45.80 06/2018 to 09/2018 Not recorded due to disconnection 10/2018 10.80 11/2018 05.80 12/2018 09.00 01/2019 07.00 02/2019 06.60 03/2019 till month Line is under disconnection 4 The term ―DEMAND CHARGE‖ has been defined in Regulation 2(n) of the Code, 2004, to mean:
―DEMAND CHARGE refers to a charge on the consumer based on the capacity reserved for him by the licensee, whether the consumer utilises such reserved capacity in full or not;‖ W.P.(C) No.22089 of 2024 Page 21 of 58 7.2. At this juncture this Court proceeds to notice Regulations 66 to 71 of the Code, 2004, dealing with reduction of contract demand5,which stood thus:
―Reduction of Contract Demand.--
66. (1) Every application for reduction of contract demand shall be made to the designated authority of the licensee.
(2) Subject to Regulation 67 below no application for reduction in contract demand shall be entertained within three months from the date of commencement of initial or revised supply unless the agreement provides otherwise.
67. Contract demand above 20 KW shall not be allowed to be reduced more than once within a period of thirty-six months from the date of initial supply or from the date of last reduction. Contract demand of 20 KW and below shall not be allowed to be reduced more than once within a period of twelve months from the date of initial supply or from the date of last reduction. The designated authority of the licensee may for reasons to be recorded, allow such reduction more than once within the aforesaid period of thirty-six months or twelve months as applicable.
5 The term ―CONTRACT DEMAND‖ has been defined at Regulation 2(l) of the Code, 2004 as follows:
―CONTRACT DEMAND means maximum KW or KVA or HP as the case may be, agreed to be supplied by the licensee and reflected in the agreement executed between the parties. Where the agreement stipulates supply in KVA, the quantum in terms of KW may be determined by multiplying the KVA with 0.9;‖ W.P.(C) No.22089 of 2024 Page 22 of 58
68. Every application for reduction of contract demand shall be accompanied by:
(1) such processing fees as may be notified by the licensee for the particular category of consumer, (2) test report from the licensed contractor where alteration of installation is involved, (3) meter reading of the previous three months, and (4) letter of approval of Electrical Inspector wherever applicable.
69. No permission shall be granted to reduce the contract demand if on a consideration of the investment made by the licensee for effecting power supply to the consumer, the reduction is likely to result in the investment becoming non- remunerative according to the norms fixed by the licensee with the approval of the Commission, unless the consumer is agreeable to bear the financial burden of making the investment viable due to such reduction.
70. Decision on a consumer's application for reduction of contract demand shall be taken by the designated authority within ninety days of receipt of complete application. No application shall be rejected without recording reasons. The order on the application shall be communicated to the consumer by registered post.
71. When reduction of contract demand is permitted by the designated authority of the licensee, the effective date of such reduction shall be W.P.(C) No.22089 of 2024 Page 23 of 58 reckoned from the first day of the month following the month in which the application, complete in all respects, was received by the engineer.‖ 7.3. Glance at the above provisions unambiguously depict that unless the application is accompanied by specified documents in order to say that the application is ―complete in all respects‖, decision on a consumer's application for reduction of contract demand cannot be considered or permitted. The learned GRF in CC No.785 of 2018 and CC No.355 of 2019 had categorically observed that the load would be reduced upon deposit of payment as also submission of the documents as required under the Code. It is not in dispute that none of the aforesaid Orders were challenged by the petitioner.
7.4. There is considerable significance to take note of the fact of use of the word ‗shall' in the Code. Use of the word ―shall‖ being negatively worded in the aforesaid Regulations of the Code has much relevance.
7.5. The word ―shall‖ as used in the provisions of the Regulations referred to above can be understood in the light of the interpretation of the term propounded by the Hon'ble Supreme Court of India in the case of State of Haryana Vrs. Raghubir Dayal, (1994) Supp.5 SCR 448, which is to the following effect:
W.P.(C) No.22089 of 2024 Page 24 of 58―The use of the word ‗shall' is ordinarily mandatory but it is sometimes not so interpreted if the scope of the enactment, on consequences to flow from such construction would not so demand. Normally, the word „shall‟ prima facie ought to be considered mandatory but it is the function of the Court to ascertain the real intention of the legislature by a careful examination of the whole scope of the statute, the purpose it seeks to serve and the consequences that would flow from the construction to be placed thereon. The word „shall‟, therefore, ought to be construed not according to the language with which it is clothed but in the context in which it is used and the purpose it seeks to serve. The meaning has to be ascribed to the word „shall‟ as mandatory or as directory, accordingly. Equally, it is settled law that when a statute is passed for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the purpose, those prescribed formalities which are essential to the validity of such thing, would be mandatory. However, if by holding them to be mandatory, serious general inconvenience is caused to innocent persons or general public, without very much furthering the object of the Act, the same would be construed as directory.‖ 7.6. The Hon'ble Supreme Court of India in Debasish Paul Vrs. Amal Boral, (2023) 14 SCR 511 = 2023 INSC 925 observed as follows:
―15. It is relevant to note that the case of Bijay Kumar Singh Vrs. Amit Kumar Chamariya, (2019) 10 SCC 660, in turn, referred to the observations made in W.P.(C) No.22089 of 2024 Page 25 of 58 Nasiruddin Vrs. Sita Ram Agarwal, (2003) 2 SCC 577 = (2003) 1 SCR 634, in the following terms:
‗37. *** It is well settled that the real intention of the legislation must be gathered from the language used. It may be true that use of the expression ―shall or may‖ is not decisive for arriving at a finding as to whether the statute is directory or mandatory. But the intention of the legislature must be found out from the scheme of the Act. It is also equally well settled that when negative words are used the courts will presume that the intention of the legislature was that the provisions are mandatory in character.
38. *** if an act is required to be performed by a private person within a specified time, the same would ordinarily be mandatory but when a public functionary is required to perform a public function within a time-
frame, the same will be held to be directory unless the consequences therefor are specified.' ***‖ 7.7. The following observation with respect to ―shall‖ and ―may‖ appearing in C. Bright Vrs. The District Collector, (2020) 7 SCR 997 deserves to be quoted:
―7. A well settled rule of interpretation of the statutes is that the use of the word ―shall‖ in a statute, does not necessarily mean that in every case it is mandatory that unless the words of the statute W.P.(C) No.22089 of 2024 Page 26 of 58 are literally followed, the proceeding or the outcome of the proceeding, would be invalid. It is not always correct to say that if the word ―may‖ has been used, the statute is only permissive or directory in the sense that non-compliance with those provisions will not render the proceeding invalid [State of U.P. Vrs. Manbodhan Lal Srivastava, AIR 1957 SC 912] and that when a statute uses the word ―shall‖, prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute [State of U.P. Vrs. Babu Ram Upadhya, AIR 1961 SC 751].The principle of literal construction of the statute alone in all circumstances without examining the context and scheme of the statute may not serve the purpose of the statute [Reserve Bank of India Vrs. Peerless General Finance and Investment Co. Ltd., (1987) 1 SCC 424].‖ 7.8. It is the petitioner-Unit which has made application for availing benefit of reduced contract demand and, thus, the provisions of the Code, 2004 are considered to be mandatory in nature with the nature of requirements to be furnished by the consumer who claimed for reduction of contract demand. A person responsible for paying any sum is also liable to deposit the amount. All the aforesaid Regulations of the Code, 2004 make it clarified that the requirement in each of the provisions is employed with the word ‗shall'. The requirements of compliance specified under the W.P.(C) No.22089 of 2024 Page 27 of 58 provisions are, therefore, mandatory. There is nothing in any of the provisions that would warrant reading the word ‗shall' as ‗may'. The term ‗shall' used in all the provisions referred to above makes it clear that these are mandatory provisions and they do not give any leverage to the consumer to make the application considered without satisfying the preconditions stipulated in the aforementioned Regulations contained in the Code, 2004/the Code, 2019.
7.9. On the contrary, the intention of the Code, 2004, is evident from Regulations 68 and 71. The provisions and procedures laid in the Code, 2004 relating to reduction of contract demand are to be applied scrupulously. The object for such provisions being made mandatory also indicates the intent that the requirement of making application accompanied by processing fee, test report, meter reading and approval of the Electrical Inspector is mandatory.
7.10. The aforesaid interpretation of provisions of the Code, 2004 read conjointly with reference to reduction of contract demand is unblemished and without any iota of doubt.
7.11. In reply dated 29.08.2018 to the Advocate's Notice dated 24.08.2018 issued by the petitioner, the opposite party No.2 explained as follows:
W.P.(C) No.22089 of 2024 Page 28 of 58―That, being engaged in DISCOM and as far as Clause 67 and 68 of OERC Code, 2004 are concern, Clause 67 must be followed with Clause 68 of OERC Code, 2004.
As per Clause 67 of OERC Code, 2004 M/s. Arnadata Foods Pvt. Ltd. is eligible to apply for reduction of contract demand but, at the same time application must be submitted for such reduction of contract demand inappropriate manner that is what laid down in Clause 68 of OTC Code, 2004. However, the reason for requiring the documents is narrated below:
(a) Form-2: An application form that contains the profile of the consumer as well as the industrial unit with load particulars.
(b) Processing fees: Required for enrolment of application.
(c) Test report from Required for ascertaining the load details as well Electrical as ensuring the functioning of machineries and Contractor: safety standard of electrical installations.
(d) Billing statement Required to analyse the load drawls of previous of previous 3 period so as to rectify the load particulars in Form-
months: 2, if required.
(e) Inspection Approval of Electrical Inspector (T&D), Government
Report of of Orissa required to ensure that, the installations
Electrical are properly verified and abnormalities have been
Inspector: duly rectified by the competent authority as far as
transmission of supply and safety standards are concerned.
7.12. Scrutiny of documents enclosed to the writ petition and response thereto, it becomes crystal clear that unless required documents are submitted, the application for reduction of contract demand could not be processed for it would be concerning the safety standards of electrical installations and to ensure that installations are properly put in place and abnormalities and deficiencies, if any, have to be rectified by the competent authority.
W.P.(C) No.22089 of 2024 Page 29 of 587.13. This Court in addition to the above provisions contained in the Code, 2004, has the opportunity to take into consideration identical provisions contained in the Code, 2019. Such provisions for reduction of contract demand under the Code, 2019, stand as follows:
―Reduction of Contract Demand.--
119. (i) Every application for reduction of contract demand shall be made to the designated authority of the licensee/supplier.
(ii) Subject to Regulation 120 below no application for reduction in contract demand shall be entertained within twelve months from the date of commencement of initial or revised supply unless the agreement provides otherwise.
(iii) Notwithstanding anything contained above and in Regulation 117, the Commission may allow the change of contract demand of short term agro based seasonal industries or irrigation in its order from time to time for a particular season of the year.
120. Contract demand above 20 KW shall not be allowed to be reduced more than once within a period of thirty-six months from the date of initial supply or from the date of last reduction. Contract demand of 20 KW and below shall not be allowed to be reduced more than once within a period of twelve months from the date of last reduction.
W.P.(C) No.22089 of 2024 Page 30 of 58However, the designated authority of the licensee/supplier may for sufficient reasons to be recorded, allow such reduction more than once within the aforesaid period of thirty-six months or twelve months as applicable.
121. Every application for reduction of contract demand shall be accompanied by
(a) such processing fees as may be notified by the licensee/supplier for the particular category of consumer,
(b) test report from the licensed contractor where alteration of installation is involved,
(c) meter reading showing the maximum demands of the previous three months
(d) Inspection report of Electrical Inspector wherever applicable.
(e) Latest electricity bill duly paid and
(f) Any other reason(s) for reduction of contract demand.
122. No permission shall be granted to reduce the contract demand if on a consideration of the investment made by the licensee/supplier for effecting power supply to the consumer, the reduction is likely to result in the investment becoming non-remunerative according to the norms fixed by the licensee/supplier with the approval of the Commission, unless the consumer is agreeable to bear the financial burden of W.P.(C) No.22089 of 2024 Page 31 of 58 making the investment viable due to such reduction.
123. Decision on a consumer's application for reduction of contract demand shall be taken by the designated authority within fifteen days in case of domestic and sixty days in case of other categories of consumer of receipt of complete application. No application shall be rejected without recording reasons. The order on the application shall be communicated to the consumer by registered post/courier service/registered E-mail/personal service with proper acknowledgement of the consumer.
124. If the application is not decided by the licensee/supplier within the above-mentioned period of fifteen days in case of domestic and sixty days in case of other categories of consumer of receipt of complete application, the applicant may, by a written notice to the licensee/supplier, draw its attention to the matter. If no decision is communicated to the consumer within a further period of 15 days, permission for reduction of contract demand shall be deemed to have been granted.
125. When reduction of contract demand is permitted by the designated authority of the licensee/supplier or deemed to have been permitted, the effective date of such reduction shall be reckoned from the first day of the month following the month in which the application, complete in all respects, was received by the engineer.
W.P.(C) No.22089 of 2024 Page 32 of 58126. Any difference in security deposit arising out of load reduction shall be adjusted in the subsequent bills of the consumer within a maximum limit of six billing cycles.‖ 7.14. The events enumerated by the opposite party No.2 reveals that on 26.11.2020 though the petitioner produced copy of Inspection Report, he did not comply with formalities for execution of fresh Agreement as period stipulated in earlier Agreement dated 07.05.2015 (Annexure-1) had already expired. It is on 15.02.2021 that the petitioner took steps for execution of the fresh Agreement and complied with statutory requirements for load reduction. Scanning through the documents enclosed to the writ petition and affidavit in response thereto by the opposite party No.2,it transpires that on 06.03.2021 processing fee was deposited.
7.15. Under the above premises, there is no doubt in mind than to accede that the decision of the Ombudsman is supported by evidence on record. Such order of the Ombudsman cannot be branded capricious nor whimsical or on account of mechanical application of mind.
8. Now this Court is taken to consider the second aspect with respect to waiver of demand charge.
W.P.(C) No.22089 of 2024 Page 33 of 588.1. For ready reference relevant provisions of the Code, 2004 and the Code, 2019 are referred to hereunder:
The Code, 2004 The Code, 2019
Regulation 2(n): Regulation 2.2(26):
―DEMAND CHARGE refers to ―DEMAND CHARGE means to
a charge on the consumer a charge on the consumer
based on the capacity based on the capacity
reserved for him by the reserved for him by the
licensee, whether the licensee/supplier, mutually
consumer utilises such agreed in the agreement as
reserved capacity in full Contract Demand or
or not;‖ Maximum Demand (as the
case may be) whether the
consumer utilizes such
reserved capacity in full or
not;‖
Regulation 85: Regulation 143:
(1) Monthly demand (i) Monthly demand
charges shall be charges shall be payable
payable by the by the consumer on the
consumer on the basis basis of maximum
of maximum demand demand and contract
and contract demand demand as determined
as determined in the in the tariff notification.
tariff notification. In In case maximum
case maximum demand meter is not
demand meter is not provided or the meter
provided or the meter has become defective,
has become defective, the monthly demand
the monthly demand charges shall be payable
charges shall be on the basis of contract
payable on the basis of demand as determined
W.P.(C) No.22089 of 2024 Page 34 of 58
contract demand as in the tariff notification.
determined in the tariff (ii) Such monthly demand notification. charges shall be payable (2) Such monthly demand for the full period of the charges shall be agreement under payable during the Regulation 48 even if no continuance of the electricity is consumed agreement under for any reason Regulation 15 even if whatsoever or supply no electricity is has been disconnected consumed for any due to default of the reason whatsoever or consumer or agreement supply has been is fore-closed before its disconnected due to actual termination date default of the for any reason consumer. whatsoever.
(3) During statutory (iii) During statutory power-cuts and power power-cuts and power restrictions imposed by restrictions imposed by the licensee, if the the licensee/supplier, if restriction on demand the restriction on is imposed for a period demand is imposed for a exceeding sixty hours period exceeding sixty in a month, the hours in a month, the monthly demand monthly demand charges shall be charges shall be prorated in accordance prorated in accordance with the period and with the period and quantum of demand quantum of demand restrictions imposed. In restrictions imposed. In all other cases the all other cases the consumer shall be consumer shall be liable liable to pay the full to pay the full demand demand charges. charges.
W.P.(C) No.22089 of 2024 Page 35 of 588.2. Sri Falguni Rajguru Mohapatra, learned Advocate harping at Regulation 49 of the Code, 2019 read with corresponding Regulation 16 of the Code, 2004 would submit that the expenditure towards infrastructural development being incurred by the petitioner, during the period when it did not avail the supply of power, the monthly demand charges ought to have been waived. To this Sri Lalit Kumar Maharana, learned counsel submitted that there is no nexus in such contention of the petitioner. The contribution towards infrastructure by making expenditure has no relevance with respect to discharge of liability towards monthly demand charges.
8.3. To this, the relevant provisions can be taken note of which are as follows:
The Code, 2004 The Code, 2019
Regulation 16.-- Regulation 49.--
Termination of Termination of Agreement:
Agreement: ―(i) If power supply to any
―(1) If power supply to consumer remains
any consumer disconnected for a period
remains of two months or above for
disconnected for a non-payment of charges or
period of two dues or non-compliance of
months for non- any direction issued under
payment of this Code, and no effective
charges or dues or steps are taken by the
non-compliance of consumer for removing the
W.P.(C) No.22089 of 2024 Page 36 of 58
any direction cause of disconnection and
issued under this for restoration of power
Code, and no supply, the agreement of
effective steps are the licensee/supplier with
taken by the the consumer for power
consumer for supply shall be deemed to
removing the cause have been terminated on
of disconnection expiry of the said period of
and for restoration two months, without notice
of power supply, provided initial period
the agreement of of agreement is over.
the licensee with (ii) On termination of the the consumer for agreement, the power supply shall licensee/supplier shall be be deemed to have entitled to remove the been terminated on service line and other expiry of the said installation for supply of period of two power from the premises of months, without the consumer.
notice, provided the (iii) After permanent initial period of disconnection, if the agreement is over. consumer wishes to revive (2) On termination of the connection, then it the agreement, the would be treated as a licensee shall be fresh application for entitled to remove connection and would be the service line and entertained only after all other installation outstanding dues have for supply of power been cleared.
from the premises (iv) Any subsisting agreement of the consumer. can be terminated or fore-
After permanent closed by the consumer by
disconnection, if giving two month's notice
the consumer provided up-to-date
W.P.(C) No.22089 of 2024 Page 37 of 58
wishes to revive electricity bill and
the connection, fixed/demand charge for
then it would be uncovered initial period of
treated as a fresh agreement are paid.
application for (v) However, in case of power
connection and supply where the total
would be investment of additional
entertained only infrastructure required to
after all bring power to the
outstanding dues consumers premises has
have been cleared. been entirely borne by the
(3) Consumer may consumer himself, no fixed
terminate the or demand charges shall
agreement after be recovered for the
giving at least two uncovered period from the
months notice to consumer if he wishes to
the licensee only terminate the agreement
after completion of before the date of
initial period of agreement period. In case
agreement. of contract demand 1 MW
Provided that the and above the consumer is
notice shall be required to pay 20% of the
accompanied with demand charges for the
a copy of payment uncovered initial
of last bill.‖ agreement period. Provided
that the notice shall be
accompanied with a copy
of payment of last bill.
(vi) If the applicant execute an
agreement as per
Regulation 48 and not
availed the power supply
within the stipulated
period (Regulation 86), the
W.P.(C) No.22089 of 2024 Page 38 of 58
agreement of the
licensee/supplier for the
power supply shall be
deemed to have been
terminated and two
months demand
charges/fixed charges
shall be adjusted against
the available security
deposit. If he wants to
avail power supply, he
shall have to apply afresh
as per rules.‖
Regulation 27: Regulation 63:
―The entire service line, ―The entire service line, notwithstanding that notwithstanding that whole or whole or portion thereof portion thereof has been paid has been paid for by for by the consumer, shall be the consumer, shall be the property of the the property of the licensee/supplier and shall be licensee and shall be maintained by the maintained by the licensee/supplier who shall licensee who shall always have the right to use it always have the right for the supply of energy to to use it for the supply any other person unless the of energy to any other line has been provided for the person unless the line exclusive use of the consumer has been provided for through any arrangement the exclusive use of the agreed to in writing.‖ consumer through any arrangement agreed to in writing.‖ W.P.(C) No.22089 of 2024 Page 39 of 58 8.4. No provision could be cited by the petitioner to demonstrate that when the power supply remains disconnected for the default of the petitioner-Unit, on account of ―deemed‖ termination of agreement on expiry of the period of two months of non-payment of charges or dues or non-compliance of direction under the Code, there shall be waiver of demand charges. Since no request through application was made by the petitioner for termination of Agreement before its expiry, it was required to discharge its liability in terms of Agreement.
8.5. Regulation 141 of the Code, 2019 speaks as follows:
―Tariffs and charges for supply of electricity shall be determined by the licensee/supplier with the approval of the Commission under the Act. Such tariff, tariffs or charges shall take effect only after seven days from the date of publication in at least two daily newspapers having circulation in the area of supply. The charges may include:
(a) Minimum monthly fixed charges,
(b) Demand charges,
(c) Energy charges, and
(d) Other charges as specified by the Commission.‖ 8.6. Identical provisions is noticed in Regulation of the Code, 2004, which stood thus:W.P.(C) No.22089 of 2024 Page 40 of 58
―83. Tariffs and charges for supply of electricity shall be determined by the licensee with the approval of the Commission under the Act. Such tariff, tariffs or charges shall take effect only after seven days from the date of publication in at least two daily newspapers having circulation in the area of supply. The charges may include:
(a) Minimum monthly charges,
(b) Demand charges,
(c) Energy charges, and
(d) Other charges.‖ 8.7. Cumulative reading of aforesaid provisions makes the position unequivocally unambiguous that in the present case the initial period of agreement was not over (Regulation 16 of the Code, 2004 read with Regulation 49(i) of the Code, 2019). Furthermore, it is one of the conditions contained in the Agreement dated 07.05.2015 that, ―6. Charges to be paid by the consumer:
The consumer shall pay to the Executive Engineer, for power demanded and electrical energy supplied under this agreement ‗minimum monthly charges', ‗demand charges', ‗energy charges' and ‗other charges' in accordance with the provisions of O.E.R.C. Distribution (Conditions of Supply) Code, 2004 and as notified in the Tariff Notifications from time to time.W.P.(C) No.22089 of 2024 Page 41 of 58
Provided that, annual sum payable by any individual consumer under the provision to Section 45 of the Electricity Act, 2003, shall not be deemed to be part of the minimum monthly charges or demand charges, if any, payable by the consumer or the particular class of consumer under Regulation 84 and 85 of the O.E.R.C. Distribution (Conditions of Supply) Code, 2004.
Provided further, that the consumer shall pay electricity duty or such other levy, tax or duty as may be prescribed under any other law in addition to the charges, fuel surcharge and transformer loss payable under the O.E.R.C Distribution (Condition's of Supply) Code, 2004.
***
8. Clause 10:
This agreement supersedes the earlier Agreement No.617, dated 27.09.2010, between the parties hereto for power supply at the same premises for the same purposes provided that, all liabilities under the former agreement upto the date of supersession, if any, shall be deemed to be liabilities under this Agreement and shall be contained to be dealt in the manner herein provided.‖ 8.8. Nothing is placed on record by the petitioner that the Unit has discharged its liabilities in accordance with the provisions with reference to recital of Agreement.
Referring to Regulation 85 of the Code, 2004 and W.P.(C) No.22089 of 2024 Page 42 of 58 Regulation 143 of the Code, 2019 the learned Ombudsman has come to just decision that ―the claimant-petitioner is liable to pay demand charges for the whole Agreement period even though there was no electricity connection‖.
Conclusion:
9. A reference to the perception expressed by the Hon'ble Supreme Court of India in connection with the Electricity Act, 2003 in the case of Southern Electricity Supply Co. of Orissa Ltd. Vrs. Sri Seetaram Rice Mill, (2012) 2 SCC 108 may fruitfully be referred to:
―1(a) Interpretation
16. First and foremost, we have to examine how provisions like Section 126 of the 2003 Act should be construed. From the objects and reasons stated by us in the beginning of this judgment, it is clear that "revenue focus" was one of the principal considerations that weighed with the legislature while enacting this law. The regulatory regime under the 2003 Act empowers the Commission to frame the tariff, which shall be the very basis for raising a demand upon a consumer, depending upon the category to which such consumer belongs and the purpose for which the power is sanctioned to such consumer. We are not prepared to accept the contention on behalf of the respondent that the provisions of Section 126 of the 2003 Act have to be given a strict and textual W.P.(C) No.22089 of 2024 Page 43 of 58 construction to the extent that they have to be read exhaustively in absolute terms.
17. This is a legislation which establishes a regulatory regime for the generation and distribution of power, as well as deals with serious fiscal repercussions of this entire regime. In our considered view, the two maxims which should be applied for interpretation of such statutes are ex visceribusactus (construction of the Act as a whole) and ut res magisvaleat quam pereat (it is better to validate a thing than to invalidate it). It is a settled canon of interpretative jurisprudence that the statute should be read as a whole. In other words, its different provisions may have to be construed together to make consistent construction of the whole statute relating to the subject-matter. A construction which will improve the workability of the statute, to be more effective and purposive, should be preferred to any other interpretation which may lead to undesirable results.
18. It is true that fiscal and penal laws are normally construed strictly but this rule is not free of exceptions. In given situations, this Court may, even in relation to penal statutes, decide that any narrow and pedantic, literal and lexical construction may not be given effect to, as the law would have to be interpreted having regard to the subject-
matter of the offence and the object that the law seeks to achieve. The provisions of Section 126, read with Section 127 of the 2003 Act, in fact, become a code in themselves. Right from the W.P.(C) No.22089 of 2024 Page 44 of 58 initiation of the proceedings by conducting an inspection, to the right to file an appeal before the appellate authority, all matters are squarely covered under these provisions. It specifically provides the method of computation of the amount that a consumer would be liable to pay for excessive consumption of the electricity and for the manner of conducting assessment proceedings. In other words, Section 126 of the 2003 Act has a purpose to achieve, i.e., to put an implied restriction on such unauthorised consumption of electricity.
19. The provisions of the 2003 Act, applicable Regulations and the Agreement executed between the parties at the time of sanction of the load prohibit consumption of electricity in excess of maximum sanctioned/installed load. In the event of default, it also provides for the consequences that a consumer is likely to face. It embodies complete process for assessment, determination and passing of a demand order. This defined legislative purpose cannot be permitted to be frustrated by interpreting a provision in a manner not intended in law. This Court would have to apply the principle of purposive interpretation in preference to textual interpretation of the provisions of Section 126 of the 2003 Act. We shall shortly discuss the meaning and scope of the expressions used by the legislature under these provisions. At this stage, suffice it to note that this Court would prefer to adopt purposive interpretation so as to ensure attainment of the W.P.(C) No.22089 of 2024 Page 45 of 58 object and purpose of the 2003 Act, particularly, of the provisions of Section 126 in question.‖
10. Keeping the aforesaid approach in view, considering the context of the present case, it has already been discussed that the petitioner having not made application in complete form, there can be no infirmity attributable to the opposite party No.2 for having taken action in the year 2021, as soon as the deposit on account of processing fee was received.
11. Each point of objection has been dealt with reference to statutory mandate by the learned Ombudsman in his Order dated 16.08.2024 which does not warrant interference. The view expressed by the learned Ombudsman appears to be logical and conscientious application of mind by appreciating evidence on record.
12. The scheme of the Electricity Act, 2003 Act makes it evident that the regulatory powers of the State Commission under Section 181(2) are of wide import. The Commission has certain plenary powers to regulate on matters contained in Section 181(2), including Electric Supply Code under Section 50. Accordingly, the Commission notified the Supply Code governing all the matters pertaining to supply of electricity. Hence, the scope of the regulatory powers W.P.(C) No.22089 of 2024 Page 46 of 58 of the State Commission under Section 50 of the 2003 Act is wide enough to stipulate conditions by way of the Supply Code, which in the present case being the Code, 2004 and the Code, 2019. The said Code is self- contained.
13. Taking into consideration, the undisputed factual position with regards to afore-stated statutory provisions, it is observed that the Agreement being executed on 07.05.2015, it remained in force for five years from the supply of power. The contention of the petitioner that on non-payment of charges or dues or non-compliance of direction issued under the Code for more than two years would be deemed to be construed as termination of Agreement is without any foundation and such a submission is misconceived.
13.1. The purpose and object of creating a legal fiction in the statute is well known. When a legal fiction is created, it must be given its full effect. Reference be had to Bhavnagar University Vrs. Palitana Sugar Mill Pvt. Ltd., (2003) 2 SCC 111.
13.2. Heavy reliance was placed by Sri Falguni Rajguru Mohapatra, learned counsel to contend that the deeming fiction appearing in Regulation 49(i) of the Code, 2019 ought to have been given due consideration. It is his contention that if power supply W.P.(C) No.22089 of 2024 Page 47 of 58 to the petitioner-Unit remained disconnected for a period of twenty-two months for non-payment of charges or dues or non-compliance of direction issued under this Code, and no effective steps are taken by the petitioner for removing the cause of disconnection and for restoration of power supply, the Agreement of the licensee/supplier with the petitioner for power supply should deemed to have been terminated on expiry of the period of two months without notice in view of Regulation 49(i) of the Code, 2019.Careful reading of said Regulation apparently makes it clear that such deeming fiction does not attract automatically. What is conspicuously missed or ignored in the submission of the counsel for the petitioner is the proviso added to said Regulation 49(i), i.e., ―initial period of agreement is over‖. In the instant case, period of five years from the date of supply of power in terms of Agreement dated 07.05.2015 did not get lapsed.
13.3. The duty of the Court when faced with deemed fiction in a statute has been enunciated in State of Travancore-Cochin Vrs. Shanmugha Vilas Cashewnut Factory, AIR 1953 SC 333; State of Bombay Vrs. Pandurang Vinayak, AIR 1953 SC 244; Bengal Immunity Co. Ltd. Vrs. State of Bihar, AIR 1955 SC 661; CCT Vrs. Swarn Rekha Cokes & Coals Pvt. Ltd., (2004) W.P.(C) No.22089 of 2024 Page 48 of 58 136 STC 57 (SC); Z. Engineers Construction Pvt. Ltd. Vrs. BDA, 2006 (II) OLR 277 (Ori), conspectus of which seems to lay down that that a deemed provision is a legal fiction created by a statute and in interpreting a legal fiction the Court is to first ascertain the purpose for which the fiction is created. After ascertaining this purpose the Court is to assume all facts and consequences which are incidental or inevitable corollaries for giving effect to the fiction. In construing the fiction its effect is not to be extended beyond the purpose for which it is created. Therefore, a reasonable view of the facts situation has to be taken by the Court having regard to the purpose for which the legal fiction is created. When any person insists on the application of a deeming provision he must strictly comply with the conditions for invoking the deeming provision. In other words, if any person wants to enjoy the benefit granted under a deeming provision he must adhere to the conditions which are to be followed in order to bring him under the beneficial provision of the deeming clause. When the law requires that an imaginary state of affairs should be treated as real, then unless prohibited from doing so, one must also imagine as real the consequences and incidents which, W.P.(C) No.22089 of 2024 Page 49 of 58 if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.
13.4. As has already been discussed in foregoing paragraphs, there was no compliance of the requirement under the Regulations of the Code, 2004/the Code, 2019, the benefit under Regulation 49(i) of the Code, 2019 cannot be extended to the petitioner.
14. Apposite here to quote the following from Maharashtra State Electricity Distribution Company Limited (MSEDCL) Vrs. ADANI Power Maharashtra Limited (APML) and Others,(2023) 5 SCR 668:
―33. This Court, in the case of, after considering the relevant provisions under the Electricity Act, 2003 with regard to appointment, qualifications and Members of the CEA, CERC and the learned APTEL, held that these bodies are bodies consisting of experts in the field. After considering various judgments on the issue, this Court observed thus:
‗123. Recently, the Constitution Bench of this Court in the case of Vivek Narayan Sharma Vrs. Union of India, (2023) 3 SCC 1 has held that the Courts should be slow in interfering with the decisions taken by the experts in the field and unless it is found that the expert bodies have failed to take into consideration the mandatory statutory provisions or the W.P.(C) No.22089 of 2024 Page 50 of 58 decisions taken are based on extraneous considerations or they are ex facie arbitrary and illegal, it will not be appropriate for this Court to substitute its views with that of the expert bodies.' ***‖ 14.1. A Division Bench of this Court in the case of The Executive Engineer, (Electrical) NESCO Utility, Jajpur Vrs. OMBUDSMAN-II of Electricity, Bhubaneswar and another, WP(C) No.15006 of 2017, vide Judgment dated 05.05.2023 observed with respect to judicial review against decision of the Ombudsman as follows:
―21. It would be apt to refer to the decision rendered by the Hon'ble Supreme Court in GMR WARORA Energy Limited Vrs. Central Electricity Regulatory Commission (CERC), (2023) 8 SCR 183 = 2023 INSC 398, regarding ―concurrent finding of fact. In GMR (supra), the Hon'ble Supreme Court has observed as follows (paragraphs-127, 128, 129 and 130):
‗Concurrent Finding of Fact:
127. Apart from the aforesaid issues, there is one another common thread in all these appeals.
Many of these appeals arise out of concurrent findings recorded by the Central/State Electricity Regulatory Commissions and the learned APTEL.
128. This Court, in the case of Maharashtra State Electricity Distribution Company Limited Vrs. Adani Power Maharashtra Limited, 2023 W.P.(C) No.22089 of 2024 Page 51 of 58 SCC OnLine SC 233, after considering the statutory provisions in the Electricity Act, 2003, held that the CERC, SERCs and the learned APTEL are bodies consisting of experts in the field.
129. This Court, in the said case, observed thus:
‗120. It could thus be seen that two expert bodies i.e. the CERC and the learned APTEL have concurrently held, after examining the material on record, that the factors of SHR and GCV should be considered as per the Regulations or actuals, whichever is lower. The CERC as well as the State Regulatory bodies, after extensive consultation with the stakeholders, had specified the SHR norms in respective Tariff Regulations. In addition, insofar as GCV is concerned, the CEA has opined that the margin of 85-100 kcal/kg for a non-pit head station may be considered as a loss of GCV measured at wagon top till the point of firing of coal in boiler.
121. In this respect, we may refer to the following observations of this Court in the case of Reliance Infrastructure Limited Vrs. State of Maharashtra, (2019) 3 SCC 352.
‗38. MERC is an expert body which is entrusted with the duty and function to frame regulations, W.P.(C) No.22089 of 2024 Page 52 of 58 including the terms and conditions for the determination of tariff. The Court, while exercising its power of judicial review, can step in where a case of manifest unreasonableness or arbitrariness is made out. Similarly, where the delegate of the legislature has failed to follow statutory procedures or to take into account factors which it is mandated by the statute to consider or has founded its determination of tariffs on extraneous considerations, the Court in the exercise of its power of judicial review will ensure that the statute is not breached. However, it is no part of the function of the Court to substitute its own determination for determination which was made by an expert body after due consideration of material circumstances.
39. In Association of Industrial Electricity Users Vrs. State of A.P., (2002) 3 SCC 711 three-Judge Bench of this Court dealt with the fixation of tariffs and held thus:
(SCC p. 717, para 11) ‗11. We also agree with the High Court [S. Bharat Kumar v.
State of A.P., 2000 SCC W.P.(C) No.22089 of 2024 Page 53 of 58 OnLine AP 565 = (2000) 6 ALD 217] that the judicial review in a matter with regard to fixation of tariff has not to be as that of an appellate authority in exercise of its jurisdiction under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that its decision is on the face of it arbitrary or illegal or contrary to the Act, the court will not interfere. Fixing a tariff and providing for cross-subsidy is essentially a matter of policy and normally a court would refrain from interfering with a policy decision unless the power exercised is arbitrary or ex facie bad in law.' ***
123. Recently, the Constitution Bench of this Court in the case of Vivek Narayan Sharma Vrs. Union of India, 2023 SCC OnLine SC 1 has held that the Courts should be slow in interfering with the decisions taken by the experts in the W.P.(C) No.22089 of 2024 Page 54 of 58 field and unless it is found that the expert bodies have failed to take into consideration the mandatory statutory provisions or the decisions taken are based on extraneous considerations or they are ex facie arbitrary and illegal, it will not be appropriate for this Court to substitute its views with that of the expert bodies.'
130. As is indicated in the aforesaid judgments, this Court should be slow in interfering with the concurrent findings of fact unless they are found to be perverse, arbitrary and either in ignorance of or contrary to the statutory provisions.' ***‖ 14.2. See also Executive Engineer, Electrical (TPNODL), Balasore Electrical Division-II Vrs. Raj Complex, 2023 (II) ILR-CUT 455.
15. This Court, in view of the discussions made in the foregoing paragraphs vis-à-vis Regulations contained in the Code, 2004 as also the Code, 2019, finds no erroneous approach on the part of the Ombudsman-I, Odisha Electricity Regulatory Commission, vide Order dated 16.08.2024 passed in CR Case No.OM(I) 120 of 2021 [arising out of Order dated 07.04.2021 of GRF, Khordha in CC Case No.124 of 2021 (BED)].Keeping abreast of the principles so enunciated that this Court is required to be slow in interfering with the W.P.(C) No.22089 of 2024 Page 55 of 58 concurrent findings of fact given by an expert bodies like GRF and Ombudsman-II, Odisha Electricity Regulatory Commission. In view of Association of Industrial Electricity Users Vrs. State of A.P., (2002) 3 SCC 711, examining the impugned Order tested with the provisions contained in the Code, 2004 and the Code, 2019, this Court is of considered view that the Ombudsman has followed due procedure laid in the statute and perceives no demonstrable defect or deficiency in the decision making process so as to impute arbitrariness or illegality in the Order dated 16.08.2024.This Court does not warrant it expedient to show indulgence in the present matter.
16. Following are the circumstances enumerated to exercise of power of judicial review as have been succinctly laid down in the case of Sarvepalli Ramaiah Vrs. The District Collector, Chittoor District, (2019) 5 SCR 372:
―23. Administrative decisions are subject to judicial review under Article 226 of the Constitution, only on grounds of perversity, patent illegality, irrationality, want of power to take the decision and procedural irregularity. Except on these grounds administrative decisions are not interfered with, in exercise of the extra ordinary power of judicial review.W.P.(C) No.22089 of 2024 Page 56 of 58
24. In this case, the impugned decision, taken pursuant to orders of Court, was based on some materials. It cannot be said to be perverse, to warrant interference in exercise of the High Court's extra ordinary power of judicial review. A decision is vitiated by irrationality if the decision is so outrageous, that it is in defiance of all logic; when no person acting reasonably could possibly have taken the decision, having regard to the materials on record. The decision in this case is not irrational.
25. A decision may sometimes be set aside and quashed under Article 226 on the ground of illegality. This is when there is an apparent error of law on the face of the decision, which goes to the root of the decision and/or in other words an apparent error, but for which the decision would have been otherwise.
26. Judicial review under Article 226 is directed, not against the decision, but the decision making process. Of course, a patent illegality and/or error apparent on the face of the decision, which goes to the root of the decision, may vitiate the decision making process. In this case there is no such patent illegality or apparent error. In exercise of power under Article 226, the Court does not sit in appeal over the decision impugned, nor does it adjudicate hotly disputed questions of fact.‖ 16.1. In the present case the Ombudsman having analysed the provisions of the Code, 2004 and the Code, 2019 W.P.(C) No.22089 of 2024 Page 57 of 58 by taking into consideration germane factors with reference to evidence/material available on record, there is no flaw perceived in decision making process so as to exercise power of judicial review under Article 226 of the Constitution of India.
17. Having found no merit in the writ petition, this Court does not deem it proper to interfere with the decision of Ombudsman assailed by the petitioner. Hence, the writ petition stands dismissed, but in the circumstances, there shall be no order as to costs.
(MURAHARI SRI RAMAN) JUDGE BIBHU PRASAD ROUTRAY, J.-- I agree.
(B.P. ROUTRAY) JUDGE Signature Not Verified Digitally Signed Signed by: SUCHITRA BEHERA Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 11-Feb-2025 18:02:41 High Court of Orissa, Cuttack The 11th February, 2025//MRS/Laxmikant/Suchitra W.P.(C) No.22089 of 2024 Page 58 of 58