Bhusawal Borough Municipality Vs.
Amalgamated Electricity Co. Ltd. & ANR  INSC 246 (10 December 1963)
10/12/1963 MUDHOLKAR, J.R.
SINHA, BHUVNESHWAR P.(CJ) DAYAL, RAGHUBAR
AYYANGAR, N. RAJAGOPALA
CITATION: 1966 AIR 1652 1964 SCR (5) 905
F 1977 SC 27 (7)
Bombay Electricity Supply (Licensed
Undertakings was Cost.
Order, 944, cl. 5-Scope of-Construction of
document--If question of law.
The Municipality filed two suits to claim
refund of two sum of money paid by them to the respondent no. 1 under protest
a, electricity charges. The defence of the respondent no. 1 was that the
dispute between it and the municipality was decided by the Government of Bombay
and that under the second proviso to cl. 5 of the Surcharge Order, 1944 the
decision of the Government was final and binding both on the appellant and the
respondent no. 1. The decision of the Government was communicates to the
parties by the letter dated May 22, 1946. The appellant succeeded in both the
suits in the trial court as well as the District 906 Court. In second appeal,
the High Court dismissed the two units. Hence this appeal.
Held: (i) The Municipality was not entitled
to claim fund because the dispute between the parties had been decided by the
Government under the second proviso to cl. 5 of the Surcharge order, 1944. The
decision of the Government was final and binding on the parties.
(ii) The communication dated May 22,1946 sent
by the Government to both the parties was a final decision under the second
proviso to cl. 5 of the Surcharge Order, 1944. There is no reason to think that
the communication contains nothing but the opinion of the Government.
(iii) The second proviso to cl. 5 of the
Surcharge Order does not require that the dispute has to be referred by both
the parties. Such a dispute can be referred by one of the parties as clear from
the language of the proviso which says "in the event of dispute by any
party interested" the decision of the provincial Government shall be final.
(iv) The Trial Court and the District Court
had wholly misconstrued the document dated May 22, 1946 which is not merely of
evidentiary value but is one upon which the claim of the respondent no. 1 for
the surcharge is based.
Misconstruction of such document would thus
be an error of law and the High Court in second appeal would be entitled to
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 47 and 48 of 1961.
Appeals by special leave from the judgment
and decree dated August 5, 1957, of the Bombay High Court in Appeal No. 1085 of
1954 with second Appeal No. 1086 of 1954.
G.S. Pathak and Naunit Lal, for the
I. N. Shroff, for respondent no. 1 M.S.K.
Sastri and R.H. Dhebar, for respondent No. 2.
December 10, 1963. The Judgment of the Court
was delivered by MUDHOLKAR J.-This judgment will also govern C.A. no. 48 of
1961. Both the appeals are by special leave from the judgment of the Bombay
High Court in second appeal disposing of two appeals which arise out of two
separate suits instituted by the appelant, the Borough Municipality of
Bhusawal, against 907 the Bhusawal Electricity Co. Ltd., respondent No. 1
before us, to which suits the State of Bombay was later added as a defendant.
In each of the two suits the appellant had
claimed refund of two sums of money paid by them to the respondent No. 1 under
protest as electricity charges to which the respondent No. 1 claimed to be
entitled by virtue of an order made by the Government of Bombay under the
Bombay Electricity Supply (Licensed Undertakings War Costs) Order, 1944 (herein
referred as Surcharge Order ). The appellant succeeded in both the suits in the
trial court as well as the District Court. In second appeal, however, the High
Court set aside the decrees passed by the trial court and dismissed the two
suits. While doing so, the High Court admitted on record certain documents by
way of additional evidence and the only contentions raised before us by Mr.
G.S. Pathak for the appellant are firstly that the High Court is incompetent in
second appeal to admit additional evidence on record inasmuch as O. XLI, r. 27,
Code of Civil Procedure is inapplicable to a second appeal. Secondly, the
provisions of O. XLI, r. 27 cannot be used to fill up the lacuna in the
evidence left by a party. We may incidentally mention that when the High Court,
by its order dated April 30, 1958, decided to admit additional evidence on
record, no objection was raised on behalf of the appellant before us.
It seems to us to be wholly unnecessary to
decide in this case whether the High Court has the power to admit additional
evidence in second appeal and also whether even if it has that power it was
right in admitting the evidence in the circumstances of this case. Basing
itself on a particular interpretation of the agreements regarding payment of
electric charges with respondent no. 1, the appellant claimed refund on the
ground that it was not liable to pay the surcharge payable under the Surcharge
Order, 1944 in respect of electrical energy consumed by it.
The substantial defence of the respondent no.
1 was that the dispute between it and the municipality was 908 decided by the
Government of Bombay and that under the second proviso to cl. 5 of the
Surcharge Order, 1944 the decision of the Government was final and binding both
on the appellant and the respondent No. 1.The relevant provisions read thus:
Clause 5: "Upon the rate of the War
Costs Surcharge being fixed by the Provincial Government from time to time in
accordance with this order, it shall not be lawful for the licensee or
sanction-holder concerned to supply energy at other than charges surcharged at
the rate for the time being so fixed:" * * * * Second proviso:
"Provided further that no War Costs Surcharge shall be effective upon the
charges for the supply of energy under any contract entrered into after the 1st
May, 1942, unless such contract provides for the same charges for energy as
have been contained in similar previous contracts for similar supply by the
licensee or sanction holder concerned (as to which in the event of dispute by
any party interested, the decision of the Provincial Government shall be final)
or unless and to such extent as such application may be expressly ordered by
the Provincial Government." It is not disputed before us by Mr. Pathak
that the decision of the Government upon the dispute is final and binding on
the parties. But, according to him, it was not established by the evidence led
in the trial Court that the dispute between the parties had at all been
referred to the Government and that a certain communication sent by the
Government to the parties, Ex. 68 dated May 22, 1946 relied upon by the
respondent no. 1, contains nothing but the opinion of the Government. Mr.
Pathak further urged that the proviso referred to by us purports to constitute
the Government into an arbitrator and, therefore, there had to be a reference
to the arbitrator by both the parties to the dispute under the provisions of
the Arbitration Act, 1940.
This latter point, however, had not been
taken in the courts below nor is it found in the statement of the case. We
have, therefore, not permitted Mr. Pathak to rely upon it before us.
The communication of May 22, 1946 relied upon
by the first respondent runs thus:
"No. 6404/36-E1(1). Public Works
Department, Bombay Castel, 22nd May, 1946.
From The Secretary to the Government of
Bombay Public Works Department (Irrigation).
TO The President, The Borough Municipality,
Subject: War Costs Surcharge.
Dear sir, With reference to the
correspondence ending with Government letter no. 6404/36, dated the 10th May,
1946 on the subject mentioned above, I am to inform you that Government has
fully considered your case under the second proviso to clause 5 of the Bombay
Electricity Supply (Licensed Undertakings War Costs) Order, 1944, and has
decided that you should pay the surcharge to the Bhusawal Electricity Co. Ltd.,
at the rate of 15 % fixed in Government Order No. 6331/36 (IV) dated the 15th
August, 1944, unless the Company raised its rate of supply of energy for street
lighting to more than 4 annas per unit.
Yours faithfully, Sd/ D.N. Daruwala.
for Secretary to the Govt. of Bombay.
Copy forwarded for information to: Public works
Department, the Electrical Engineer to the 910 Government with reference to his
No. LRM.57/ 5260, dated the 8th March, 1946. The Accountant General, Bombay
with reference to his No. O.A. 2888, dated the 2nd February 1946.
Messrs The Bhusawat Electricity Co. Ltd., Bombay with reference to correspondence ending with Government letter No. 6404/36-El. (i)
dated the 17th May 1946. CC to E.E. Bhusawal for information sent on 25th May 1946." It is obvious from this communication that both the parties, that is,
the appellant as well as the respondent no. 1 had stated their respective cases
before the Government. There was no occasion for them to do so unless they were
both purporting to act under the second proviso to cl. 5 of the Order of 1944.
After consideration of the cases of both the parties the Government has stated
in the aforesaid communication that it had decided that the municipality should
pay to the Electricity Company surcharge at the rate of 15% fixed in a certain
Government Order unless the Company raised its rate for the supply of energy
for street lighting to more than four annas per unit. There is no reason to
think that what is on the face of it a decision is nothing but an opinion
because if there were anything in the correspondence to which a reference is
made in that letter as well as in the endorsement at the bottom which went to
show that the appellant did not purport to refer any dispute to the Government,
it was for the appellant to produce that correspondence. Its omission to do so
must be construed against it. Then Mr. Pathak said that under the Surcharge
Order itself the dispute had to be referred by both the parties and not by only
one of them. This contention is, however, untenable in view of the clear
language of the proviso which says: "In the event of dispute by any party
interested" the decision of the Provincial Government shall be final.
There is, therefore, no substance in the contention. In our opinion the trial
court and the District Court had wholly misconstrued this document which is not
merely of evidentiary value but is one upon which the claim of the respondent
no. 1 for the surcharge is based. Misconstruction of such a document would thus
be an error of law and the High Court in second appeal would be entitled to
correct it. This is what in fact has been done.
There is no substance in the appeals which
are dismissed with costs.