Madras High Court
Harihar Alloys Pvt. Ltd vs The Superintending Engineer on 12 March, 2013
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 12/03/2013 CORAM THE HON'BLE MR. JUSTICE T.S.SIVAGNANAM W.P.(MD) No.14627 of 2010 Harihar Alloys Pvt. Ltd., Rep. By its Director, 1/43, Race Course Road, Kajamalai, Trichy - 620 023. ... Petitioner vs 1.The Superintending Engineer, Pudukottai Electricity Distribution Circle, Tamilnadu Electricity Road, Egmore Chennai. 2.Tamilnadu Electricity Regulatory Commission, Rukmani Lakshmipathy Road, Egmore, Chennai ... Respondents Prayer The Writ Petition filed under Article 226 of the Constitution of India for issue of Writ of Certiorarified Mandamus, to call for the records of the first respondent culminating in the CC Bill of the petitioner dated 28.11.2010, for the month of November, 2010, for HT SC No.121 in so far as it relates to charges for reliability/additional power and quash the same and further direct the first respondent not to charge the petitioner for additional reliability power without following the procedure set out in M.P.No.21 of 2010, dated 05.01.2010 of the second respondent. !For Petitioner ... Mr.N.L.Rajah ^For Respondents... Mr.S.M.S.Johnny Basha :ORDER
The prayer in the writ petition is for issuance of a writ of Certiorarified Mandamus, to quash the Bill dated 28.11.2010, issued by the first respondent in so far as it relates to charges for reliability/additional power and to forbear the respondents from charging additional reliability power without following the procedure set out in the order passed by the Tamil Nadu Electricity Regulatory Commission (TNERC), dated 05.01.2001 in M.P.No.21 of 2010.
2. The petitioner is a High Tension consumer running a foundry and they are carrying on business under the name and style of Harihar Alloys Private Limited and Harihar Forgings (P) Ltd., for the said two units two High Tension Service Connections bearing S.C.No.121 & S.C.No.123 has been granted. The grievance of the petitioner in this writ petition is relating to the demand raised by the first respondent, demanding reliability charges in the Bill dated 28.11.2010 to the tune of Rs.5,01,801.30/-. This demand is in respect of the service connection bearing S.C.No.121.
3. It has to be first examined as to under what circumstances such reliability charge was demanded by the first respondent. It is seen that on account of the policy decision taken by the Electricity Board imposing demand and energy cut of 90% between 6.00 p.m., and 10.00 p.m and demand and energy cut of 20% during rest of the day, caused serious prejudice to the High Tension Consumers and ultimately, the matter went before the TNERC by way of petition bearing M.P.No.21.2009. The TNERC by order dated 05.01.2010, after taking note of the suggestions and objections that emerged from various representations, from State Advisory Committee and from the public hearing, in exercise of powers conferred by Sections 62 and 64 of the Electricity Act, directed as follows:-
a) the enhanced tariff applies only to such of those HT consumers who opt for it, there is no legal impediment in prescribing differential charges.
(b) currently HT industrial consumers are subjected to demand and energy cut of 95% between 6.00 p.m. and 10.00 p.m., and demand and energy cut of 20% during the rest of the day.
(c) the TNEB shall address all HT industrial consumers, who are currently subjected to R&C measures to ascertain their willingness for supply of additional power at a total energy cost not exceeding Rs.7/- per unit; the consumers may indicate their requirement of additional power between 6.00 p.m., and 10.00 p.m., as well as the remaining hours.
(d) if he additional power procured by the TNEB is less than the total requirement as consented by the HT industrial consumers, the additional power shall be distributed amongst all the consenting consumers proportionate to the requisitioned additional power.
(e) the additional power supplied between 6.00 p.m., and 10.00 p.m, by the TNEB over and above the present 5% quota shall be reckoned as the additional power during this period.
(f) during the remaining hours any relief from 20% power cut will be treated as additional supply of power.
(g) the supply of additional power shall be limited to the base demand and base energy.
(h) the additional demand and additional energy supplied by TNEB during this arrangement shall not be treated as excess demand or excess energy for the purpose of penal charges; demand and energy consumption over and above the power supplied by the TNEB pursuant to this arrangement shall be reckoned for penal charges.
(i) for the additional quantum of demand supplied in this process, the TNEB is entitled to recover demand charges at the rates prescribed by the Commission in Tariff Order of 2003. An illustrative case is displayed at Annexure III.
(j) the Board shall ensure a monthly schedule for all the HT consumers both for the 6.00 p.m., to 10.00 p.m., slot as well as the remaining hours; any variation in the monthly schedule should be communicated to the consumers at least one week before the change.
(k) the TNEB should ascertain from each consumer the additional demand and energy requirement for every month limited to the base demand and base energy;
the TNEB should confirm to the indenting available demand and energy; both for the 6.00 p.m., to 10.00 p.m., slot as well as the remaining hours; having confirmed the additional demand and energy the TNEB is bound by the promise; the consumer is entitled to consume the additional demand at the normal rate and additional energy at the higher rate; penal charges should not be levied for that committed quantity; similarly, if the consumer does not off take the committed demand and energy, he is liable to pay the higher charge for the committed quantum of energy.
(l) the energy supplied to a consumer shall be separated into two parts; the first part would be the additional energy supplied on the basis of the requisition of the consumer; and the second part would be the balance; the first part will be billed at the higher rate and the second part will be billed at the normal rate.
(By order of the Commission)
4. According to the first respondent based on the direction/order of the TNERC, a communication dated 18.09.2010, was addressed to the petitioner stating that all the High Tension Consumers of the circle are requested to furnish their requirements of additional power on reliability charge on per day basis for peak hours and off peak hours from October 2010 to March 2011 in the format given in the letter on or before 22.09.2010, 2.00 p.m. In respect of service connection No.121, the petitioner by letter dated 21.09.2010, furnished the additional power requirement as called for. In respect of service connection No.123, based on a communication sent by the petitioner through e-mail on 01.11.2010, followed by a letter even dated, the first respondent accepted the same and they have not sanctioned the said additional power on reliability charges. The dispute now lies only in respect of S.C.No.121. The stand taken by the first respondent is that the petitioner on their own volition furnished the details of additional power requirement and the same was processed and by proceedings dated 01.11.2010, 2785 units were allotted to them during evening peak hour and even if the petitioner has not utilized the additional power, they are bound to pay reliability charges as the Board has purchased the power from other source at higher rate.
5. The learned counsel appearing for the petitioner would contest the demand raised by the Board by raising the following contentions. Firstly, the respondent Board did not comply with the direction issued by the TNERC in paragraph 4k of its order dated 05.01.2010, referred supra. It is stated that the Board should ascertain from the petitioner the additional demand and energy requirement for every month, the Board should confirm to the intending consumer one week prior to the commencement of the month the additional available demand and energy, slot as well as the remaining hours and only after confirmation of additional demand and energy, the Board is bound by the promise and the consumer is entitled to consume the additional demand. It is therefore submitted that such confirmation and identification was not done one week prior to the commencement of the month and hence illegal. Further, the learned counsel would submit that there was no agreement between the petitioner and the first respondent and in terms of the Tamil Nadu Electricity Distribution Code as well as the Tamil Nadu Electricity Supply Code without an agreement, they cannot enforce the contract and there is no contract in the eye of law. In support of such contention, the learned counsel placed reliance on the decision of this Court in State of Madras vs. Rohtas Industries Ltd., [Vol-81-L.W.-407], and the decision of the Hon'ble Supreme Court in Rickmers Verwaltung Gmbh vs. Indian Oil Corporation Ltd., [(1999) 1 SCC 1]. It is further submitted that the petitioner having not utilized the additional load, should not be charged with the amount, more so, when there was no agreement and that apart they had issued a letter by e-mail on 01.11.2010, that they do not require the same, but inadvertently, in the said letter, the service connection No.123, alone was mentioned without including S.C.No.121. Further, it is submitted unless until the Electricity Board confirms the demand, there is no question of fixing liability.
6. The learned counsel appearing for the respondent Board by relying upon the counter affidavit submitted that the petitioner is having two High Tension service connections in the name of M/s.Harihar Forgings (P) Ltd., bearing H.T.S.C.No.121 and M/s.Harihar Alloys and castings Ltd., bearing H.T.S.C.No.123, and in this writ petition, the demand of reliability charges relate to service connection No.121. It is submitted that due to increase and demand of power, the Government of Tamil Nadu implemented restriction and control measures of electricity by industrial and commercial consumers and the Board implemented demand and energy cut upto 90% between 6.00 pm and 10.00 pm and 20% for other hours. It is further submitted that the TNERC by order dated 05.01.2010, in M.P.No.21 of 2009 and by further order dated 18.10.2010 in M.P.No.16 of 2010, approved the reliability charges and issued directions stipulating the modalities for distribution of reliability power. The learned counsel referred to the order passed by the TNERC and in particular the directions contained in paragraph 6 of the order. It is further submitted that in terms of clause 6(d) of the order passed by the TNERC, dated 18.10.2010 in M.P.No.16 of 2010, all HT consumers were addressed to ascertain their willingness for supply of additional power including the petitioner's two service connection Nos.121 & 123. The petitioner by representation dated 21.09.2010, made their offer to take additional power during the peak hour. The said offer is made in response to the Board Proceedings, dated 18.09.2010, in which the petitioner was informed that additional power will be supplied by collecting reliability charges. The Board accepted the petitioner's offer and allotted 2785 units per day during peak hours by proceedings dated 01.11.2010. Therefore, it is submitted that there is an implied contract between the petitioner and the respondent to consume the electricity and they are bound to pay for the same. It is stated that the communication dated 1.11.2010, was received by the Project Manager of the petitioner company on 04.11.2010. In so far as service connection No.123, the petitioner requested to cancel the supply of additional power on reliability charges and the same was accordingly, cancelled.
7. It is further submitted that in furtherance to allotment of additional power by letter dated 01.11.2010, the Board's engineer visited the petitioner's premises and reset the High Tension meter on 01.11.2010 for availing reliability power. This is stated to have been acknowledged by an employee of the petitioner. Therefore, it is contended that the petitioner has not made any objections during the course of action in respect of service connection No.121. As far as the contention that there was no agreement entered into between the petitioner and the respondent Board, it is submitted that the order passed by the TNERC, does not specify any agreement for fixing reliability power, while allotting the same to the consumers. The offers were called for, the petitioner submitted their offer, which was accepted and this concludes the contract and there is no necessity to have a specific written contract. Therefore, it is submitted that the petitioner is estopped from avoiding the payment of reliability charges, though it is stated that they has not consumed the additional power. It is further submitted that even if the petitioner has not consumed in terms of the order passed by the TNERC, as per the directions contained therein, the petitioner is liable to pay charges for committed quantum of energy and demand. Further it is submitted that the charges have to be paid by the petitioner, since the reliability charges are the expenses incurred by the Board in purchasing the additional energy at higher rate. Further, it is stated that the petitioner acted diligently in respect of service connection No.123 and therefore, they cannot plead ignorance in respect of service connection No.121 and the demand raised by the respondent Board is proper.
8. I have considered the submissions on either side and perused the materials placed on record.
9. The impugned demand relates to a claim for reliability charges in respect of the petitioner's High Tension Service Connection No.121, granted in favour of M/s.Harihar Forgings (P) Ltd. The demand for reliability charges is pursuant to an order passed by the TNERC, dated 05.01.2010. The operative portion of the order has been quoted supra. It is an admitted case that there is no written contract entered into between the petitioner and the respondent Board for demanding the reliability charges or as to the rate payable by the petitioner and circumstances which would be construed as a default. The provision for providing additional power at higher cost during the period, where the restrictions and control measures are operative is in furtherance to a direction issued by the TNERC, referred supra. The petitioner was not a party before the Commission, but nevertheless, from the order it is seen that there was a public hearing conducted on 20.12.2009 and 41 persons are said to have participated in the hearing and the points that emerged in the public hearing particularly centered around the equitable distribution of additional power among all willing High Tension Consumers. From the order of the TNERC, it is further seen that the persons, who participated in the public hearing made a plea for distribution of additional power among all categories of consumers at the current level of tariff and large number of speakers dwelt on the need for clarity in the billing procedure for this additional power. The Commission after taking into account the suggestions and objections that emerged from various representations from the State Advisory Committee and from the public hearing in exercise of its power conferred by Sections 62 & 64 of the Electricity Act, 2003 issued certain directions.
10. From a perusal of the directions, the following points emerge:-
(i) High Tension Consumers have to exercise their options and enhanced tariff applies only to them.
(ii) The Board has to address all the High Tension Consumers, who are subjected to restriction and control measures to ascertain their willingness for supply of additional power at energy cost not exceeding Rs.7/- per unit and the consumer may indicate their requirement.
(III) For the additional quantum of demand supply the Board is entitled to recover demand charges at the rates prescribed by the Commission in tariff order of 2003.
(iv) The Board first should ascertain from each consumer the additional demand and requirement for every month limited to the base demand and base energy.
(v) The Board should confirm to the indenting consumer one week prior to the commencement of the month the additional demand and energy.
(vi) The Board should confirm the additional demand and energy and in doing so, the Board is bound by a promise,
(vii) The consumer is entitled to consume the additional demand at normal rate and additional energy at higher rate.
(ix) No penal charge is leviable for the committed quantity.
(x) If the consumer does not off take the committed demand and energy, he is liable to pay the higher charge for the committed quantum of energy.
11. The right of the consumer to seek for additional power flows from the direction issued by the TNERC. In terms of the order passed by the Commission, there is not only certain duties and responsibilities for the consumer, but for the Board as well. From a perusal of the directions issued by the Commission, it is evident that there is a time frame within which the Board has to act, more importantly the time frame operates at the very commencement of extending this benefit of additional power. The first aspect that has to be done by the respondent Board is to ascertain from the consumer as to the additional demand and energy requirement for every month. In the instant case, this direction had been complied with in the respondent issuing a notice dated 18.09.2010. The petitioner responded to this notice by reply dated 21.09.2010, indicating their additional power requirement for peak hours from October 2010. As per order passed by the Commission, on receipt of the requirement from the consumer, the Board should confirm to the consumer one week prior to the commencement of the month the additional available demand and energy.
12. It is not in dispute that this direction has not been complied with by the respondent in the case of the petitioner, as the confirmation was issued only on 01.11.2010, and not one week prior to the commencement of October 2010. At the first blush, it may appear that the delay is not a very significant factor, as within 12 days from the date of the petitioner furnishing the additional power requirement, the respondent sent their communication. In effect it is not so, since the time frame stipulated for the Board has wider ramification. Firstly, when the Board issues notice to the consumer to indicate the additional demand and energy requirement and the consumer respond to the same, it is not necessary that in all cases, the Board will be in a position to agree to the entire additional requirement of the consumer. The Commission being conscious of this fact imposed a specific condition on the Board to confirm the intending consumer as regards the quantum of additional demand, they would be committing to supply. This confirmation was also time bound so as to enable the consumer to assess his production capacity in the ensuing month.
13. Therefore, I am of the view that the order passed by the Commission has to be interpreted in the strict sense and time limits specified cannot given a go by and it is binding on both the consumer as well as the respondent Board. This conclusion of mine is further fortified by the next direction issued by the Commission is that after the confirmation (i.e) within one week prior to the commencement of the month, only after such confirmation, the respondent Board is bound by the promise. Therefore, between the stage of the consumer furnishing the additional power requirement and the stage of confirmation there are lot of factors, which would have a bearing on the ultimate promise to be kept by the respondent Board. There is no denying the fact that in the instant case after the petitioner furnished the additional power requirement confirmation was not made within a week, as I have already held that this period is mandatory, the fact that the officers of the respondent Board reset the meter in the factory on 01.11.2010 is of no consequences. The respondent in their typed set of papers have filed the copy of the High Tension Meter Card in respect of S.C.No.121 and from it, it is seen that every month after the meter reading is taken, the meter is reset to '0'. Therefore, merely on account of the resetting of the meter, it cannot be stated that the Board has given effect to their communication, dated 01.11.2010. In view of the above facts, it has to be held that the respondent Board have not complied with the direction issued by the Commission and consequently their demand for reliability charges would not be sustainable.
14. The learned counsel appearing for the petitioner submitted that they had sent a communication by e-mail followed by a written communication dated 01.11.2010 and though it has been stated that the communication is in respect of service connection No.123, it is meant for both the Service Connections i.e., 121 & 123. The submission made by the learned counsel appearing for the petitioner cannot be accepted for the simple reason that in the communication dated 01.11.2010, not only service connection number is given as 123, but it has been specifically stated in the letter that the respondent need not reset the meter as indicated by the Additional Division Engineer, Mattur, whereas the service connection No.121, is under the control of the Assistant Division Engineer, Viralimalai. However, since I am satisfied that the respondent Board having not complied with the directions issued by the Commission within the time frame stipulated, they would not be justified in demanding reliability charges.
15. The next aspect, which has to be seen is as to whether an agreement is required to be entered into between the consumer and the respondent Board and whether an implied contract could be inferred in the instant case. The learned counsel appearing for the petitioner referred to clause 33 of the Tamil Nadu Electricity Distribution Code 2004, which deals with an agreement and form 8 referred in clause 33(1), which is a statutory High Tension Agreement form. Therefore, It is submitted that unless an agreement has been entered into in the statutory form, question of inferring a contract or holding that there was an implied contract is not sustainable.
16. The Hon'ble Supreme Court in the case of Rickmers Verwaltung Gmbh., referred supra, considered an issue as to whether when no agreement was signed by the parties can an agreement be spelt out from the correspondence between the parties. While considering this question, the Hon'ble Supreme Court held as follows:-
13. In this connection the cardinal principle to remember is that it is the duty of the court to construe correspondence with a view to arrive at a conclusion whether there was any meeting of mind between the parties, which could create a binding contract between them but the court is not empowered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate implications of law to be drawn. Unless from the correspondence, it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence.
The court is required to review what the parties wrote and how they acted and from that material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of the parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there had been meeting of mind between the parties and they had actually reached an agreement upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence.
16. As noticed above, in the instant case a clear contract between the parties cannot be spelt out from the correspondence. When the provisions of the Tamil Nadu Distribution Code requires the parties to enter with an agreement and a statutory form has been prescribed, I see no reason to infer an agreement between the parties. The first respondent in the counter affidavit has stated that as per the order passed by the TNERC, there is no necessity for an agreement. Such contention is stated to be rejected. Firstly, the order passed by the Commission does not pertain to the petitioner or a particular consumer, rather the petitioner was never a party to the proceedings before the Commission. Secondly, the Commission considered the submissions of various stake holders as well as the suggestions and objections of the State Advisory Committee and issued directions. Therefore, the directions at best could be the parameters within which the Board as well as the consumer are required to act. The specific details and conditions between the Board and a particular consumer is required to be recorded in writing so as to not only ensure compliance of the promise made by the Board to the consumer, but also to ensure to make the consumer liable in the event of default.
17. The learned counsel for the petitioner produced a photostat copy of a short-term power supply agreement between the Superintending Engineer, TANGEDCO, represented by the first respondent herein vs. M/s.Cethar Vessels Ltd. Though the said agreement has not been signed by the first respondent, but the same pertains to allotment of additional power at reliability charges and in the sample/draft agreement the terms HT Consumer, additional power, reliability charges are defined, it gives the details of quantum of power allotted, the period, pricing, payment, energy, accounting and billing and obligations of the consumer and the respondent. The agreement also provides a force majeure clause and a redressal mechanism. In such circumstances, this is not a case, where any contract could be inferred from the correspondence between the parties.
18. In view of the above discussions, this Court has no hesitation to hold that the demand of reliability charges from the petitioner is wholly unsustainable.
19. In the result, the writ petition is allowed as prayed for. No costs. Consequently, connected miscellaneous petition is closed.
pbn Copy to:-
1.The Superintending Engineer, Pudukottai Electricity Distribution Circle, Tamilnadu Electricity Road, Egmore Chennai.
2.Tamilnadu Electricity Regulatory Commission, Rukmani Lakshmipathy Road, Egmore, Chennai