Delhi High Court
Lamba Steel & Alloys Pvt. Ltd. vs Municipal Corporation Of Delhi (Desu) on 18 February, 1994
Equivalent citations: ILR1994DELHI495, (1994)108PLR56
JUDGMENT Sat Pal, J.
1. This petition has been filed on behalf of M/s. Lamba Steel and Alloys P. Ltd., (hereinafter referred to as 'the petitioner') against the Municipal Corporation of Delhi through General Manager Delhi Electric Supply Undertaking (hereinafter referred to as 'DESU') under Section 20 of the Arbitration Act, 1940 and in this petition, the petitioner has prayed for referring the following disputes to the arbitration in terms of the arbitration clause 25 of the agreement between the parties.
"(a) Whether the provisional supplementary bill dated 20.12.1990 with retrospective effect from February 1987 to November 1990 for Rs. 2,06,03,363.70 is valid and in accordance with law.
(b) Whether the Respondent could raise the provisional supplementary bill dated 20.12.1990 without giving show cause notice and an opportunity to the Petitioner.
(c) Whether the provisional supplementary bill dated 20.12.1990 could be raised on the imaginary formula as worked out by the Respondent in the impugned bill.
(d) Whether the Respondent have any authority and power under the agreement or the Act to raise the impugned supplementary bill for a period for which regular monthly bills were raised by the Petitioner, after taking the meter readings of the meters installed by the Respondent and the said bills having been paid.
(e) Whether the Respondent could raise the impugned supplementary provisional bill merely on the basis of alleged inspection held on 4.12.1990 on the allegations of fraudulent abstraction detected.
(f) Whether the Respondent can resort to disconnection of power when the claim of the Respondent having been adjudicated by the Arbitrator in view of the fact that the Petitioner raised the bona fide disputes, as aforesaid.
(g) Whether the Respondent can levy the load violation charges and shunt capacity charges, as claimed.
(h) Whether the load violation charges and/or the shunt capacitor charges can at all be levied without giving a show cause notice and an opportunity to the Petitioner".
2. Along with the petition the petitioner had also filed an application bearing IA No. 11672/90 under Section 41 of the Arbitration Act read with Schedule-II and Section 151 of the Code of Civil Procedure and in this application the petitioner had prayed that the DESU be restrained from disconnecting the power supply of the factory of the petitioner situated at D-7/2-3, Okhla Industrial Area Phase-1, New Delhi till the disputes are duly adjudicated upon by the arbitrator or till such time as this court may deem fit and proper.
3. The petition and the application came up for hearing before the learned Vacation Judge who ordered that summons be issued to the respondent for 20th March, 1991 and notice of the application be issued for 27th February, 1991. The learned Judge also directed that the respondent DESU will not disconnect the electricity of the petitioner in premises No. D-7/23, Okhla Industrial Area Phase-1, New Delhi for non-payment of amount demanded in respect of meter bearing K. No. XI-1165 vide Annexure-E page 54. Reply on behalf of the DESU has been filed and allegations and averments made in the petition have been controverter. The petitioner has a rejoinder also.
4. Briefly stated, the facts of the case are that the petitioner is engaged in the manufacture and sale of Alloy steel castings and has a sanctioned load of 1718 KVA. As the petitioner has a sanctioned load of more than 100 KVA, the petitioner is treated bulk supply consumer of the industrial power. The petitioner had entered into an agreement with the respondent and in terms of clause 25 of the agreement any dispute or difference between the petitioner and the respondent shall be referred to arbitration and the provisions of Arbitration Act, 1940 shall apply to any such arbitration.
5. On 4th/5th December, 1990 a joint inspection of the premises of the petitioner mentioned hereinabove was conducted. The case of the DESU is that at the time when the officers reached the premises of the petitioner, the furnace of the petitioner was running at full capacity and immediately on reaching the premises, the electricity supply was made to stop by the petitioner and the supply was made available after half an hour. In the joint inspection report, inter alia, it was observed that there was an opening in the wall behind the DESU Ring Main Unit, which was found plugged by a fairly big slab through which unauthorised entry in the S/Stn. could be possible. It was also observed that "the consumer could gain access to the metering equipment by removing the brick masonry provided below the back side of the metering cubicle to seal the cable entry in the trench". It was further observed that the recorded consumption for the period 26th March to 23rd May was 167724 units, for the period 25th April to 26th June was 106704 units, for the period 26th June to 26th July was 143460 units, for the period 26th July to 29th August 203580 unit, 29th August to 27th September 216648 units and 27th September to 24th October was 190512 units, but on the average consumption computed on the connected load basis with 60% load factor, 20 hours working in a day for 25 days in a month works out to 4.8 lakhs units approximately per month and thus the recorded consumption was very much less. The joint team was, therefore, of the opinion that the consumer had been resorting to abstraction of energy fraudulently by tampering with the metering equipment. The joint team, therefore, recommended that further action for lodging FIR under Sections 39 and 40 of the Indian Electricity Act, 1910 read with Section 379 of the Indian Penal Code and for further disconnection of electricity supply as per rules be taken after taking approval from the competent authority. It was also recommended that further action for levy of misuse charges for non-installation of shunt capacitor for auxiliary load and load violation charges, if any, be also taken. Thereafter a 24 hours notice dated 8th December, 1980 was issued to the plaintiff to show cause as to why the electricity supply should not be disconnected on account of observations given by the joint inspection team.
6. Before the issue of show cause notice, the plaintiff on 6th December, 1990 filed a petition under Section 20 of the Arbitration Act, 1940 which was registered as a suit No. 3701/90. In this petition it was mentioned that the respondent DESU had inspected the premises on 4th/5th December, 1990 and the respondent wanted to fabricate a case against the plaintiff to resort to disconnection of power supply of the plaintiff. It was prayed in this petition, that the disputes mentioned in para 11 of the petition be referred to arbitration. Along with this petition, an application bearing IA No. 11062/90 under Section 41 of the Arbitration Act, 1940 read with Schedule II read with Section 151 of the Code of Civil Procedure was filed and in this application it was prayed that the DESU be restrained from disconnecting the power supply of the petitioner at its factory till the adjudication of the differences and disputes by the arbitrator.
7. The said petition and the application came up for hearing on 7th December, 1990 and on that date the petition was registered as a suit and notice on the main petition as well as in the application was issued for 13th December, 1990. Meanwhile, another application bearing IA No. 11117/90 was filed by the plaintiff under Section 151 of the Code of Civil Procedure and in this application it was prayed that the date of hearing from 13th December, 1990 be proponed and DESU be restrained from disconnecting the power supply of the petitioner at its factory. Arguments on both the applications i.e., IA No. 11062/90 and 11117/90 were heard on 12th December, 1990 and both the applications were disposed of by a learned Judge of this court vide order dated 17th December, 1990 by this court.
8. In the order dated 17th December, 1990 inter alia, it was observed that, "it could not be said, prima facie, that the petitioner has not been guilty of tampering with the meters resulting in recording lesser units of electricity which amounts to theft of electricity". It was further observed that, "in order to see that no factual disputes are raised with regard to the facts which are found on inspection made on 4th/5th December, 1990, I appoint Shri T. R. L. Narain, who has retired as a Joint Registrar of this court, as local commissioner to visit the spot and give a report of the actual position existing in the sub-station". The local commissioner was directed to visit the spot immediately and give the report and it was directed that thereafter the petitioner could plug the hole existing in the masonry work with the bricks and get it plastered from both the sides in the presence of the official of DESU. After this, the DESU was directed to restore the electricity within 24 hours.
9. Pursuant to the aforesaid order dated 17th December, 1990, Shri T. R. L. Narayan, the local commissioner submitted his report dated 21st December, 1990. The said report was filed in the Registry on 22nd December, 1990. In this report, inter alia, it was observed as follows :
"But on the sub-station side of the said wall I could find a portion in the wall at its bottom level, the wall touching the floor in a 2 feet trench surrounding the platform whereon the Metering Cubicle and other electrical appliances of the sub-station have been erected. Since the hole has been plastered from the other side, this block of bricks could not be removed from the wall. By breaking open the block, it was found that this block of bricks is made to slide through a metal frame fixed inside the wall and welded to the thick earthing wire running along the wall. With great difficulty and after about a couple of hours of effect the frame was detached from the wall and it measured about 19.5" x 18" x 3". This hole was on the floor level on the factory side. The whole wall on the factory side seems to have been plastered only very recently, perhaps to hide the existence of the hole, as the plaster was found damp when the portion covering this hole was broken open and also there was damp pungent lime smell emanating from the wall on the factory side only and this wall formed a small narrow passage like room of only about 3 feet wide inside the factory. It is possible to open the hole by pulling the block covering it with some force. The metal frame helped in pulling the block smoothly without much effort. One could easily enter the sub-station from the factory side through this hole"
It was also observed in the said report that access could be had to the P.T. Secondary Terminal Box through the back side also of the Metering Cubicle.
10. During the pendency of Suit No. 3701/99, DESU sent a supplementary bill for a sum of Rs. 2,06,03,373.70 for the period February 1987 to November 1990 along with a covering letter dated 20th December, 1990. In the said letter the petitioner was directed to make payment of the said bill by 31st December, 1990 and it was also stated in this letter that in case of failure to make the said payment, the electricity supply of the petitioner would be liable for disconnection. Though in the aforesaid letter dated 20th December, 1990 it was clearly mentioned that the supplementary bill was being sent due to fraudulent abstraction of energy detected by the joint inspection team on 4th December, 1990 and the report of the joint inspection team had been challenged by the petitioner in Suit No. 3701/90, the petitioner on 29th December, 1990 filed the present petition bearing Suit No. 3920-A/90 under Section 20 of the Indian Arbitration Act, 1940 and also prayed that the DESU should be restrained from disconnecting the power supply of the factory of the petitioner till the disputes were duly adjudicated upon by the arbitrator. It may be pointed out here that Suit No. 3701/90, thereafter was dismissed as infructuous on 15th May, 1991.
11. Mr. Bhasin, the learned counsel appearing of behalf of the petitioner submitted that the DESU has no power to raise bills retrospectively from February 1987 to November 1990 particularly when the petitioner has already made the payment of various bills sent by DESU for the aforesaid period. In this connection he referred to Section 24 of the Indian Electricity Act and Section 283 of the Delhi Municipal Act and submitted that there was no provision in either of these two statutes empowering DESU to recover any amount with retrospective effect. He, therefore, contended that in the absence of any provision in the statutes the petitioner was not liable to pay any amount with regard to the impugned bill till the matter is adjudicated upon by the arbitrator. The learned counsel also submitted that at the time of earlier joint inspection on 7th February, 1990 the meter was found in order and further the meter was replaced on 26th March, 1990. He, therefore, contended that no bill for the period prior to 26th March, 1990 could be raised. In support of his submissions the learned counsel for the petitioner has placed reliance on three judgments of the Supreme Court in Hukam Chand v. Union of India , Sri Vijaylakshmi Rice Mills, New Contractors Co. v. State of Andhra Pradesh and Govinddas v. The Income-tax Officer.
12. Learned counsel further submitted that there was violation o principles of natural justice in the present case as no show cause notice was issued to the petitioner before the issue of the impugned bill. He also submitted that the bill does not indicate any basis on which the bill was prepared. He further submitted that on receipt of the bill, the petitioner had submitted a letter dated 27th December, 1990 asking for the said basis but no reply has been received by the petitioner. In support of this contention the learned counsel has placed reliance on four judgments of the Supreme Court in Smt. Maneka Gandhi v. Union of India , S. L. Kapoor v. Jagmohan , Swadeshi Cotton Mills v. Union of India and Municipal Corporation of Delhi v. M/s. Ajanta Iron & Steel Company (Pvt.) Ltd. .
13. The learned counsel for the petitioner also submitted that disconnection of the electricity was impermissible till the disputes referred to arbitration are adjudicated upon. He contended that the recovery can be stayed during the pendency of the proceedings before the arbitrator by the court. In support of his contention he placed reliance on a judgment of the Supreme Court in Union of India v. Raman Iron Foundry , a judgment of Bombay High Court in Corporation of the City of Nagpur through Chief Executive Officer of the Corporation of Nagpur v. The Nagpur Electric Light and Power Company Ltd., Nagpur and a judgment of Orissa High Court in Orissa Vegetable Oil Complex Ltd. v. Union of India .
14. Lastly the learned counsel contended that the balance of convenience was in favor of the petitioner as the petitioner at his factory has employed a large number of workers and in case the recovery of the impugned bill is not stayed, the factory of the petitioner was likely to be closed down. He submitted that the last joint inspection was conducted in September 1990 and the theft of the electricity, if any, could have been committed after September 1990 but the supplementary bill raised by the DESU is for the period of three years nine months i.e. from February 1987 to November 1990. He, therefore, contended that the recovery of the bill should be stayed till the disputes are adjudicated upon by the arbitrator. In support of this submission the learned counsel referred to order dated 30th May, 1991 passed in M/s. Goenka Alloy Steel (P) Ltd. v. Municipal Corporation of Delhi (Suit No. 814/90), an order dated 16th April, 1992 passed in Suit No. 2424-A/91.
15. Learned counsel also contended that since the stay of the impugned bill was granted in the aforesaid cases, the stay should be granted in the present case also as the learned Judges are bound by the precedents. In support of this contention the learned counsel has placed reliance on a judgment of the Supreme Court in Sundarjas Kanyalal Bhatia and others v. The Collector, Thane, Maharashtra and others (AIR 1990 SC 216).
16. Dr. Singhvi, learned Senior Counsel appearing on behalf of the DESU submitted that in the present case there are allegations of theft of the electricity. In this connection he drew my attention to the observations made in the joint inspection report dated 4th December, 1990, the order passed by Mr. Justice P. K. Bahri on 17th December, 1990 in Suit No. 3701/90 and the report dated 21.12.1990 submitted by the local commissioner appointed by this court. He submitted that in the said order dated 17th December, 1990 it has been observed that, "it cannot be said, prima facie, that the petitioner has not been guilty of tampering with the meters resulting in recording lesser units of electricity which amounts to theft of the electricity". He further submitted that pursuant to the orders passed on 17th December, 1990, the local commissioner visited the premises and in his report he had clearly stated that, "the whole wall on the factory side seems to have been plastered very recently, perhaps to hide existence of hole, as the plaster was found damp when the portion covering this wall was broken open ................ one could easily enter the sub-station from the factory side through this hole". He, therefore, contended that the present case being a case of theft of electricity, the petitioner should be put to stringent terms while referring the disputes to arbitration.
17. The learned counsel also submitted that in the present case admittedly show cause notice dated 8th December, 1990 was served upon the petitioner and this notice was issued on the basis of the joint inspection report dated 4th December, 1990. He submitted that the impugned bill is also based on the same joint inspection report dated 4th December. 1990. He, therefore, contended that the principles of natural justice have not been violated in the present case. He also relied on the judgment of the Supreme Court in the case of Ajanta Iron & Steel Co. P. Ltd. (supra) it was held that a show cause notice should be served on the consumer before disconnection of supply of the electricity. Regarding the contention of the petitioner that the DESU could not raise the bill retrospectively from February 1987, the learned counsel submitted that even though the liability to pay may arise when the electricity was consumed by the petitioner, nevertheless it became due and payable only when the liability was quantified and a bill was raised. He submitted that the impugned bill had been raised on the basis of the observations made in the joint inspection report dated 4th December, 1990 when the joint team found that the petitioner had been resorting to abstraction of energy fraudulently and tampering with the metering equipment. He further submitted that in the report it had clearly been stated that the average consumption computed on connected load basis with 60 per cent load factor and 20 hours working in a day for 25 days in a month, works out to 4.8 lakhs units per month approximately whereas the recorded consumption per month had been shown from 653540 units to 203580 units from March 1990 to October 1990. Learned counsel, therefore contended that keeping these facts into consideration the impugned bill had been raised against the petitioner.
18. Lastly the learned counsel draw my attention to an order dated 7th September 1992 passed in Suit No. 959/92 by a learned Judge of this court in Nehru Place Hotels Ltd. (supra) and submitted that in this case of alleged theft of electricity, the petitioner was directed to deposit a sum of Rs. 20 lakhs in cash and security of the balance amount of the bill for Rs. 78,17,843.62. He further submitted that the aforesaid order dated 7th September, 1992 was confirmed by a Division Bench of this Court vide order dated 30th September, 1992 in FAO(OS) 196/92. He also drew my attention to order dated 6th February, 1991 passed by the Supreme Court in Municipal Corporation of Delhi v. Bansal Metal Industries (CA No. 644/91), and in this case the order passed by this court directing the consumer to deposit a sum of Rs. 20 lakhs against the provisional bill for Rs. 5,53,75,978.96 for the period January 1987 to October 1988 was set aside by the Supreme Court and all interim injunctions granted by this court and the courts below were vacated. The learned counsel, therefore, contended that while referring the disputes to arbitration, the interest of DESU should be fully protected and the petitioner should be directed to deposit substantial amount against the impugned bill and also to submit security for the balance amount.
19. I have given my anxious consideration to the submissions made by the learned counsel for the parties and have perused the record. From the report of the joint inspection team and from the report of the local commissioner, prima facie it appears that the petitioner had been tampering with the meters resulting in recording of lesser units of electricity and this amounts to theft of electricity. This observation was given by P. K. Bahri, J., in his order dated 17th December, 1990 while disposing of IA No. 11062 and 11117 of 1990 in Suit No. 3701/90. By the said order the learned Judge had also appointed the local commissioner who has also given the report to the same effect and the said report was filed in the Registry on 22nd December, 1990. In the present suit though the petitioner has mentioned that they had filed suit No. 3701/90 seeking restraint orders from this court against the disconnection of power supply by DESU and has also stated that power supply of the petitioner was restored on 20th December, 1990 after the orders were passed by this court but neither there is any mention of the order dated 17th December, 1990 passed in IAs 11062 and 11117/90 in Suit No. 3801/90 by P. K. Bahri, J., nor a copy of this order was annexed with this petition. There in the present petition even suppressed the fact that a local commissioner was appointed to visit their premises vide the aforesaid order dated 17th December, 1990 and also did not mention the observation given by local commissioner though the report was filed on 22nd December, 1990. The petitioner thus concealed material facts with regard to observations of P. K. Bahri, J., "that it cannot be said, prima facie, that the petitioner has not been guilty of tampering with the meters resulting in recording of lesser units of electricity which amounts to their of the electricity" and also the observations of the local commissioner that, "one could easily enter the sub-station from the factory side through a hole made by the petitioner." It appears that it was in these circumstances that on 31st December, 1990 the learned Vacation Judge granted interim stay to the petitioner without imposing any condition.
20. As regards the contention of the learned counsel for the petitioner that DESU has no power to raise the bill retrospectively from February 1987 to November 1990 a reference may be made to a Division Bench judgment of this court in the case of Municipal Corporation of Delhi v. H. D. Shourie (1994 (1) AD (Delhi) 105). In this case a Division Bench of this court upheld the findings of a learned Single Judge of this court that the liability to pay may arise when the electricity is consumed by the consumer nevertheless it becomes due and payable when the liability is quantified and a bill is raised. The question whether a revised bill for the earlier period can be raised by DESU, will be gone into by the arbitrator. Besides, this question with regard to a case of alleged theft will also have to be gone into by the arbitrator. All other questions including as to whether the principles of natural justice have been violated in the present case, will also have to be examined by the arbitrator.
21. The only question to be decided at this stage is as to whether the petitioner should be put to any terms regarding payment of the impugned bill till the disputes raised by the petitioner are adjudicated upon by the arbitrator. As stated hereinabove, prima facie, the petitioner appears to have been tampering with the meters resulting in recording lesser units of electricity which amounts to theft of electricity. The findings of the local commissioner are also to the same effect. In view of this, all the facts of the present case are almost similar to the facts of the case of Nehru Place Hotels and M/s. Bansal Metal Industries (supra) and as such the petitioner has to be put to some terms regarding payment of the impugned bill.
22. In view of the above discussion the disputes mentioned in para (1) of the judgment are referred to the arbitration. Since in the arbitration agreement no named arbitrator is mentioned, I appoint Mr. Justice D. R. Khanna, a retired Judge of this court as the sole arbitrator. He shall be paid Rs. 2,500/- per day plus out of pocket expenses. The fee in the first instance will be paid in equal shares by the parties which will be subject to orders which may eventually be passed by the learned arbitrator. Let the award be made within four months of entering into the reference by the arbitrator or within such time as the parties by mutual consent agree from time to time.
23. From the impugned bill I find that a sum of Rs. 30,57,205.30 has been included on account of arrears but no details of arrears have been given in the bill or in the reply filed on behalf of DESU. Further 10 per cent LPF charges amounting to Rs. 6,62,673.40 and 30 per cent load violation charges amounting to Rs. 21,86,822.22 have been included in the bill. Besides, as stated hereinabove, the impugned bill has been raised for the period more than three years. Keeping in view all these facts I direct that the DESU shall not disconnect the electricity supply of the petitioner at its factory situated at D-7/2-3, Okhla Industrial Area Phase-1, New Delhi, till the award is made a rule of the court provided that the petitioner deposits a sum of Rs. 25 lakhs in cash with the DESU and furnishes security for a sum of Rs. 50 lakhs to the satisfaction of the Registrar of this court within four weeks from today. The parties are, however, left to bear their own costs. With this order the petition stands disposed of.