State of U.P. & Ors Vs. Hindustan
Aluminium Corpn. Ltd. & Ors [1979] INSC 87 (17 April 1979)
SHINGAL, P.N.
SHINGAL, P.N.
DESAI, D.A.
CITATION: 1979 AIR 1459 1979 SCR (3) 709 1979
SCC (3) 229
CITATOR INFO:
R 1981 SC 711 (10) RF 1988 SC1737 (30) R 1989
SC 788 (32)
ACT:
Electricity Act (9 of 1910), s. 2(h) &
Electricity (Supply) Act 1948 (64 of 1948) S. 2(b)-State Electricity Board if a
licensee.
Electricity Act 1910 (9 of 1910), S. 22-B (as
inserted in 1959)-Scope and object of-Order under section-Factors to be taken
into consideration & Electricity (Supply) Act 1948 (54 of 1948), S. 26
Proviso 2-Scope of.
U.P. Electricity (Regulation of Supply,
Distribution, Consumption and Use) Order 1977- Cl. 6(a) (i) Proviso- Validity
of.
Words & Phrases-'Regulation',
'restriction', 'prohibition'-Distinction between.
HEADNOTE:
At the time of granting licence to the
company for the establishment of a new Aluminium factory the Government of
India obtained the consent of the Government of U.P. To make available to the
company in bulk cheap electricity from the Rihand Hydro-Electric Scheme. An
agreement was entered into between the Company and the State Government for the
bulk supply of electricity on a firm, continuous and uninterrupted basis at
1.99 odd paise per unit for a period of 25 years.
The company set up and commissioned its
aluminium plant at Renukoot in April, 1962. It was granted a further licence
for the expansion of its installed capacity. As the State was unable to meet
the extra requirement of energy, sanction under s. 28 of the Electricity Act
1910 was granted to the Company, at its request, on November 12, 1964, to set
up a generating station at Renusagar, near Renukoot. It set up two generating
units of 67.5 mw each. The first unit started generating power in 1967 and the
other in 1968.
In the meantime, permission was granted to
increase the Company's installed capacity from 40,000 metric tonnes to 60,000
metric tonnes. The Company thought of setting up a plant for the production of
60,000 metric tonnes of aluminium in the State of Gujarat. But the Government
of U.P. entered into negotiations with the Company and in its letter dated
November 20, 1968, it stated that there could be no difficulty in meeting the
interim requirements of energy for 2 to 3 years from the U.P. State Electricity
Board and also for arranging for parallel running of their new power stations.
The Company was granted sanction to expand the Renu Sagar Generation by 250 mw,
and after negotiations with the State Government it was agreed that the
U.P.S.E.B. would meet the additional energy under a phased programme. The
U.P.S.E.B. stated in its letter dated September 2, 1972, that the supply would
be without prejudice to the power of the State Government to control the 710
distribution and consumption of energy under s. 22B of the Act. The additional
energy was not made available to the Company during 1972-75 although the rate
was substantially increased with retrospective effect.
An agreement was however entered into between
the Company and the U.P.S.E.B. on November 30, 1976, in supersession of the
earlier agreements, and it was stipulated that it would be read and construed
in all respects in conformity with the provisions of the Electricity (Supply)
Act, 1948 and its rules and the regulations and the amendments thereto.
The State Government took a decision in
December 1976 to reconnect some agricultural pumping sets which had been
disconnected and this placed an additional load on the grid system of the
State. On the note of the UPSEB that there was acute shortage of energy, and
its suggestion for the imposition of some restrictions, the U.P. Electricity
(Regulation of Distribution and Consumption) order 1977, was issued by the
Government on April 7, 1977. Under cl. 6(a)(i) of the Order, the Company could
draw energy only to the extent of 50 per cent of its monthly consumption.
As the shortage of energy became more acute
the Secretary of the Power Department sent a note to the Governor dated May 3,
1977 stating that there was a large gap between demand and availability of
energy and that overriding public interest, particularly the need to maintain
food supply, required that units which were heavy consumers of energy should be
subjected to further cut in the consumption of energy. It was particularly
pointed out that as the Company was itself generating energy at Renusagar, it
will have more than 50 per cent of energy even if the Board's supply was
completely withdrawn. The Governor approved that proposal on June 1, 1977. A
proviso was inserted in cl. 6(a) (i) of the U.P. Electricity (Regulation of
Distribution and Consumption) Order, 1977 in June 2, 1977 according to which an
industrial consumer having its own source of generation of energy from which it
obtained 50 per cent or more of its consumption would suffer a cut of 100 per
cent in the energy supplied by the UPSEB. The company was given time to bring
about the total cut.
Fresh elections were held to the State
Legislature Assembly, and the new Cabinet was sworn in on June 23, 1977.
It decided to reduce the supply of energy to
the company to zero, in pursuance of the amendment dated June 2, 1977 and
called for a fresh note on the position regarding the generation and
distribution of energy. The Chairman of the UPSEB prepared a note on August 26,
1977, in which he pointed out the shortage of energy, including substantial
fall in the generation of thermal energy, and in the "import" of
energy. The State Government made an order on September 19, 1977 called the
U.P. Electricity (Regulation of Supply Distribution, Consumption and Use)
Order, 1977.
That order was made for maintaining the
supply and securing equitable distribution of electrical energy, and to provide
for regulating the supply, distribution, consumption and use thereof. Clause 6
of the order which provided for compulsory cut in consumption of energy and
demand, affected the company.
711 The clause provided as follows:
"6(a)(i): In respect of electrical
energy consumed by all large and heavy power industrial consumers receiving
power at 33 kv. and above excepting fertilizers, from the U.P.S.E.B. a cut of
50 per cent in their monthly consumption of electricity both in respect of
energy and demand shall be exercised:
Provided that where any such industrial
consumer has his own source of generation of energy which alone enables him to
obtain 50 per cent or more of his total consumption, then a cut of 100 per cent
in the energy supplied by the UPSEB shall be exercised." Being aggrieved
by the compulsory cut imposed by the Government the company filed its third
writ petition against the order. The company's earlier writ petitions were
dismissed as withdrawn.
The High Court took the view:- (a) that it
was the statutory obligation of the UPSEB to supply electrical energy to a
consumer and held that the Pipri Bus Bar was a "distributing Main"
under s.2(o) and was an electricity supply line as defined in s.2(f) of the
Act;
(b) s. 22B of the Act did not confer power on
the State Governments to cut off supply of energy to existing consumers or to
issue an order that certain preferences will be followed in supplying energy,
(c) though the company deserved the writ, it could not be said that UPSEB had
deliberately under utilised its generation capacity, and held the first proviso
to Clause 6(a)(i) of the order ultra vires, quashed it and directed the UPSEB
to supply electrical energy to the company in accordance with law, without
taking into consideration, the provisions of the said proviso.
Appeals were filed in this Court by the State
and the Company, the State being aggrieved because the High Court had
interfered with the U.P. Electricity (Regulation of Supply, Distribution,
Consumption and Use) Order, 1977 dated September 19, 1977 made under s. 22B of
the Electricity Supply Act, 1910 and the Company felt aggrieved on the ground
that the High Court had not granted all the reliefs which it had claimed in its
petition under Art. 226 of the Constitution.
In the appeals it was contended:
(a) Only the energy which was generated by
the Board could be the subject-matter of an order under s. 22B of the Act and
it was not permissible for the State to take into account the energy generated
by the Company for its own use.
(b) Sub-s. (1) of s. 22B of the Act was
confined to a licensee and would not be applicable to the energy supplied by a
sanction-holder under s. 28.
(c) The only permissible preference was that
under s.22A in favour of an establishment mentioned in it and the preference
shown to individual consumers was illegal.
(d) The validity of the Order, which was by
way of subordinate legislation, was open to judicial scrutiny; the subjective
satisfaction of the State Government in making it was open to challenge in a court
of law, the order suffered from the vice of malice in law; it had been made in
the colourable exercise of 712 the power under s. 22B of the Act simply to
compel the company to agree to the payment of a higher rate for the supply of
energy to it. While making the order the State Government failed to take into
consideration the facts that the production of aluminium was of considerable
importance to the national economy and that the Board was capable of generating
more energy but was not doing so. The issue of the Order was really a
colourable exercise of the State Government's power under s. 22B of the Act as
power was supplied indiscriminately to new consumers after imposing a cut on
the Company's consumption of energy.
(e) The Board had deliberately reduced its
thermal generation.
HELD: 1. The High Court erred in taking the
view that the Pipri Bus Bar, which was composed of a set of conductors which
were made up of thick aluminium core steel reinforced cables, was a
'distributing main' under s. 2(e) of the Act and was an electric supply line as
defined in s. 2(f) and that cl. VI of the Schedule to the Act would be fully
applicable to the Board in so far as its obligation to the Company was
concerned. In view of the second proviso of s. 26 of the Act of 1948, the
provisions of cl. VI of the Schedule to the Act could apply to the U.P.S.E.B.
in respect of that area only where distribution mains had been laid by the
Board and the supply of energy through any of them had commenced. [724B-F] The
High Court, therefore, erred in taking the view that the Board was bound by the
term of cl. VI of the Schedule to the Act to supply energy to the Company
within one month of the making of a requisition or within such longer period as
the Electrical Inspector might allow. But even if the Board was under an
obligation to supply energy to every person, the fact nevertheless remained
that the State Government had the over-riding power to provide, by order made
under s. 22B of the Act, for regulating the supply, distribution, consumption
or use thereof. Sub-s. (2) of that section categorically states that, without
prejudice to the generality of the power under sub-s. (1), the order may direct
the Board not to comply with any contract, agreement or requisition for the supply
of energy. [725B-D]
2. Sub-s. (1) of s. 28 of the Act in terms
refers to and deals with, engaging by a non-licensee, in the business of
supplying energy to the "public". It was, therefore, futile to
contend that what was generated by the Renusagar Power Company was not meant
for supply to the public, but was the Company's own energy. It is true that
generation became, in the circumstances, the "captive" generation for
the use of the Company, but that was far from saying that, in the eye of law,
it was not energy meant for supply to the public or that it was not amenable to
control under s. 22B.
It was therefore also liable to equitable
distribution by an order under s. 22B of the Act. [725G-726A]
3. The expression "energy" had been
defined by cl. (g) of s. 2 of the Act to mean electrical energy, generated,
transmitted or supplied for any purpose or used for any purpose except the
transmission of a message. It was therefore a pervading definition and there
was no reason why energy generated and supplied under s. 28 of the Act should
not fall within its sweep. [726B-C]
4. Though the use of the article
"the" in sub-s. (2) was not quite appropriate, there was no
justification for the argument that section 22B was applicable only to
licensees and not to a sanction holder under s. 28. [727C] 713
5. What s. 22B of the Act authorised the
State Government to do, was to make an order providing for 'regulating"
the supply, distribution, consumption or use of energy. [727D]
6. A distinction between 'regulation' and
'restriction' or 'prohibition' had always been drawn. 'Regulation' promotes the
freedom or the facility which is required to be regulated in the interest of
all concerned, whereas 'prohibition' obstructs or shuts off, or denies it to
those to whom it is applied. The High Court went wrong in thinking that the
order had the effect of prohibiting the supply of energy to the Company, which
was an 'exciting consumer'.
[727G-728C] Municipal Corporation of the City
of Toronto v. Virgo, 1896 AC 88; Attorney General for Ontario v.
Attorney-General for the Dominion and the Distillers and Brewers' Association
of Ontario, 1896 AC 348; Birmingham and Midland Motor Omnibus Co. Ltd. v.
Worcestershire County Council, [1967] 1 WLR 409. Tarr v. Tarr. [1972] 2 WLR
1068; The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan &
Ors., [1963] 1 SCR 491; State of Mysore v. H. Sanjeeviah, [1967] 2 SCR 361;
Fatehchand Himmatlal & Ors. v. State of Maharashtra etc. [1977] 2 SCR 828
at p. 851.
7. What had been ordered was no more than a
cut of 50 per cent in the monthly consumption of electricity and not a total
prohibition of consumption of energy. That was a step in the direction of
regulating the consumption of energy, and not a total prohibition as envisaged
in the proviso to cl. 6(a) (i) of the Order. [728E]
8. The proviso operates in a special or
particular field and for a particular purpose where it was considered necessary
for regulating the supply etc., of the energy in the interest of the other
consumers, for s. 22B was mean to maintain the supply and secure the equitable
distribution of energy to all concerned. The High Court did not properly
appreciate that aspect of the matter. [728F]
9. Large and heavy industrial consumers of
the category in cl. 6(a)(i) are a class by themselves and it is hardly
permissible for them to complain that the small preference shown to
agriculturists in supplying energy for their water pumps or tube-wells, or in
energising State tube-wells, supplying water to them, or the supply of energy
to small scale industries had really created a privileged class of consumers or
brought into existence any such concept of priorities as to run counter to or
defeat the objective of bringing about the equitable distribution of energy by
an order under s. 22B. The High Court had no real justification for recording
an adverse finding against the State on the question of the so-called
preference or priorities. [729G-H, 730B]
10. There was no doubt that the State
Government formed its opinion about the necessity and expediency of making the
Order for the purpose of maintaining the supply and securing the equitable
distribution of energy at a time when that was called for and this Court cannot
sit as a Court of appeal to examine any and every argument in an attempt to
show that the opinion of the State Government was vitiated for one fanciful
reason or the other. [731 G-H]
11. Although the U.P. Electricity (Regulation
of Supply, Distribution, Consumption and Use) Order, 1977, had been made on the
ground that the State Government was of the opinion that it was necessary and
expedient for main- 714 taining the supply and securing the equitable
distribution of electrical energy, to provide for regulating the supply,
distribution, consumption and use thereof, it did not deal with all those
matters in detail. In fact it may well be said to be an order relating
essentially to compulsory cut in the consumption of energy. But that cannot
detract from the basic fact that the order had the sanction of s. 22B of the Act
and subserved the main purpose thereof. Therefore its validity was not open to
challenge as a piece of subordinate legislation. [732G-733B]
12. Malice in law is another aspect of the
doctrine of ultra vires. An offending Act can be condemned simply, for the
reason that it is unauthorised. Bad faith has often been treated as
interchangeable with unreasonableness and taking a decision on extraneous
considerations. In that sense, it is not really a distinct ground of
invalidity. It is well settled that if a discretionary power has been exercised
for an 'unauthorised purpose' that is enough to invite the Court's review.
[733-D] Roncarelli v. Duplessis, [1959] SCR 121 p. 141 (Canada Law Reports);
referred to.
In the instant case, the Company had not been
able to establish malice in law, merely because of what the Chief Secretary
said in his press statement dated July 8, 1977, or what the Minister informed
the Assemble. It may well be that the new State Government was dissatisfied
with the new agreement which had been entered into at the instance of the
political party which was then in power, but it could not be said that the new
Minister's desire to examining the validity or propriety of that agreement
arose out of any extraneous or improper consideration so as to amount to malice
in law. [734H-735A]
13. Although the High Court arrived at the
conclusion that the company deserved the writ which it granted, it did not find
it possible to hold that the UPSEB, had deliberately under utilised its
generation capacity. That was a finding of fact which did not call for
interference.
14. As long as the dominant motive was proper
and reasonable, and was not sullied by a mere pretext, the Order based on it
would be valid when it was well within the due scope and policy of the Act and
was an honest attempt to deal with the situation for which the power to make
the order had been granted by the Act. There was thus no justification for the
argument that there was malice in law on the part of the State Government in
making the order.
15. That distribution can be said to be
"equitable" which is "just and right under all the circumstances
of the particular case". The High Court had recorded a finding that there
was shortage in the generation of energy when the order was made. The fact
remains that the demand for energy was far in excess of the supply from all
sources available to the UPSEB. It had also been well established that a
situation had arisen when it became necessary to obtain an order from the State
Government about the course of action to be adopted by the Board.
Self-contained notes were therefore drawn up in March, 1977 and on May 24,
1977. June 28, 1977 and August 26, 1977, which were quite detailed and
objective and led to the making of the Order. The Order was a genuine attempt
to secure equitable distribution of energy. It was true that the Company was
the worst sufferer under cl. 6 (a)(i) of the Order, but then it was also the
greatest consumer. [737C-F] 715
16. From the Chief Secretary's letter dated
November 20, 1968 it appeared that the State Government had assured the Company
that it would meet the interim requirement of the Company for 2 or 3 years from
the UPSEB and facilitate the parallel running of the Company's new power
station in addition to the station which had been set up at Renusagar.
But the State was not a party to the
agreement dated November 30, 1976 for the supply of additional 30mw. because
the agreement was made between the Company and the UPSEB. It was expressly
stated in that agreement that it would be subject to the provisions of the
Electricity Acts of 1910 and 1948 and the rules and regulations thereunder,
including the amendments thereto. Care was also taken to provide that the UPSEB
shall not be responsible for damages or diminutions in the supply of energy
according to the orders issued by the State Government. A similar provision was
made in the earlier agreement of 1959. In the Board's letter to the Company
dated September 2, 1972 reference was specifically made to the State
Government's power to "control the distribution and consumption of energy
under s. 22B of the Indian Electricity Act, 1910." [739A-D]
17. Decisions in the matter of restrictions
to be imposed on the consumption of energy on account of acute shortage of
energy in the State, were taken by the different State Governments, including
the Governor's Advisors, and it cannot be said that the cuts were imposed
suddenly, or without due regard to the company's difficulties in reducing its
consumption of energy in the manner directed by the order. It cannot therefore,
be said that the State wantonly disregarded its contractual obligation to the
company.
18. Sub-section (2) of s. 22B of the Act
specifically provided that it was permissible for the State Government to
direct by the order that the UPSEB shall not comply with the provisions inter
alia of any contract made by it. A direction to that effect was expressly made
in cl. 11 of the Order, and so it is not permissible for the company to
complain on that account. [739G]
19. Craics on Statute Law (7th Edn.) pages
357-58 has mentioned six different classes of enactments which are considered
as having ceased to be in force. These six have been mentioned as the
enactments which are selected for inclusion in the Statute Law Revision Acts of
England as having ceased to be in force otherwise than by express repeal, or
having by lapse of time or otherwise become unnecessary. [740G, 741D] The
question is whether the order could be said to have "spent" itself or
become "obsolete". Whether a piece of legislation has spent itself or
exhausted in operation by the accomplishment of the purpose for which it was
passed, or whether the state of things contemplated by the enactment has ceased
to exist are essentially questions of fact for the legislature to examine, and
no vested right exists in a citizen to ask for a declaration that the law has
been impliedly repealed on any such ground. [741E-F]
20. The power to legislate is both positive
in the sense of making a law, and negative in the sense of repealing a law or
making it imperative. In either case it is the power of the legislature, and
should lie where it belongs. In an extreme and a clear case, no doubt, an
antiquated law may be said to have become obsolete-the more so if it is a penal
law and has become incapable of user by a drastic change in the circumstances.
But the judge of the change should be the legislature, and courts are not expected
to undertake 716 that duty unless that becomes unavoidable and the
circumstances are so apparent as to lead to one and only one conclusion. This
is equally so in regard to the delegated or subordinate legislation.
[741G-742A] Elwood Hamilton v. Kentucky Distilleries & Warehouse Co., 64
L.ed. 194; Chastleton Corporation v. A. Leftwich Sinclair, 68 L.ed. 841;
Nashville, Chattanooga & St. Louis Railway v. Herbert S. Walters, 79 L.ed.
949; The Union of India v. Ram Kanwar & Ors., [1962] 3 SCR 313; referred
to.
The Petition of the Earl of Antrim & 11
Other Irish Peers, [1967] AC 691; distinguished.
21. The High Court found three facts (i) the
shortage in the reservoirs for generation of hydel energy had ceased, (ii)
further supply of energy was available from newly commissioned units, and (iii)
fresh power connection had been given by the UPSEB, but lost sight of the
important fact that it was all along the case of the State that hydel energy
was only one-third of the total generation, and that generation of thermal
energy which met two third of the total requirement had declined for reasons
beyond the control of U.P.S.E.B. The High court did not therefore undertake a
careful examination of the facts, and took some new connections into
consideration without attempting to examine their magnitude and effect on the
overall generation and availability of energy from all the sources. The High
Court therefore erred in taking the view that the continuance of the Order was
no longer justified. Even so, the High Court abstained from striking down the
whole of the Order and merely declared that the provision of the first proviso
to cl. 6(a) (i) was ultra vires, and quashed it.
22. Even though the proviso is valid and has
wrongly been quashed by the High Court, it is not necessary to restore it in
view of the statement of the Solicitor General, so that it shall not be deemed
to form part of cl.
6(a)(i) of the Order. But it there is
deterioration in the generation of energy again, or there are other sufficient
reasons, within the purview of s. 22B of the Act to reinsert the proviso, in
the present or modified form, it would be permissible for the State Government
to do so accordingly to the law. [743G-H, 744C]
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 921/78 and 425/79 Appeals by Special Leave from the Judgment and Order
dated 27-4-1978 of the Allahabad High Court in Writ Petition No. 3732/77.
M. V. Goswami for the Appellant (In CA
921/78) S. S. Ray, D. Gupta, Shiv Dayal, N. R. Khaitan, U. K. Khaitan and G.
Mitra for the Respondent in CA 921/78 and Appellant in CA 425/79.
S. N. Kacker, Sol. Genl. of India, G. C.
Dwivedi, S. C. Bhudhwar, S. Markendaya and K. Madan Mohan Reddy for U. P. State
Electricity Board (Appellant No. 2 in CA 921/78).
717 The Judgment of the Court was delivered
by SHINGHAL J.-These appeals by special leave arise from the judgment of the
Allahabad High Court dated April 27, 1978. While Civil Appeal No. 921 of 1978
has been filed by the State of Uttar Pradesh, the U.P. State Electricity Board
and the Executive Engineer of the Rihand Power Station, hereinafter
collectively referred to as the State, Civil Appeal No. 425 of 1979 has been
filed by the Hindustan Aluminium Corporation Ltd., its Vice President and Chief
Accountant, hereinafter referred to as the Company. We have heard the two
appeals together and will dispose them of by a common judgment.
The controversy relates to the supply of
electrical energy (for short "energy") for the production of
aluminium, which is the most modern of the common metals. Unlike the other
common industrial metals like iron, copper, zinc and lead, pure aluminium is
not produced by the direct smelting of its ores. The metal is now produced by
the modern electrolytic method under the influence of direct current.
It takes about 10 kilo watt-hours of
electricity to produce a pound of aluminium, and the supply of cheap electric
power is therefore an essential requisite or raw material for its production.
The metal has many advantages and uses and has gained such importance that it
is an essential commodity under the Essential Commodities Act and its
production is one of the scheduled industries under the Industries (Development
and Regulation) Act. While the State feels aggrieved because the High Court has
interfered with the Uttar Pradesh Electricity (Regulation of Supply,
Distribution, Consumption and Use) Order, 1977, dated September 19, 1977,
hereinafter referred to as the Order, which it made under section 22B of the
Electricity Act, 1910, (for short the Act), the Company's grievance is that the
High Court has not granted all the reliefs which it had claimed in its petition
under article 226 of the Constitution. The Court's record is much too
voluminous, but it appears to us that the appeals can be adequately disposed of
on the basis of the important averments in the lists of dates drawn up by
counsel for the parties about which there is no dispute before us.
When the question of establishing a new
aluminium factory arose for consideration by the Government of India, it took
into consideration the consent of the Government of Uttar Pradesh to make
energy available for the factory from the Rihand Hydro-electric Scheme which
was expected to go into operation by the end of 1960, and granted an industrial
licence to the Company on September 26, 1959, for the manufacture of 20,000
metric tonnes of aluminium ingots per year at Rihand. An agreement was also
entered into between the State of 718 Uttar Pradesh and the Company on October
29, 1959 for the supply of 55 m w of power on a firm, continuous and
uninterrupted basis at a rate of 1.997717 paise per unit for a period of 25
years from the date of commencement of the supply.
The Company set up and commissioned its
aluminium plant at Renukoot (near Rihand Dam) with an installed capacity of
20,000 metric tonnes per annum in April 1962. It was granted a further licence
for the expansion of its installed capacity by 40,000 metric tonnes per annum.
As the State was unable to meet the extra requirement of energy, sanction under
section 28 of the Act was granted to the Company, at its request, on November
12, 1964, to set up a generating station at Renusagar, near Renukoot, through
its subsidiary the Renusagar Power Company Ltd. It had two generating units of
67.5 m w each. The first unit started generating power in 1967 and the other in
1968. The 40,000 metric tonnes expansion unit was commissioned in 1968. In the
meantime the Company was granted a licence in December 1966 for effecting a
further expansion of 60,000 metric tonnes per annum in its installed capacity
for the production of aluminium.
The Company thought of setting up the plant
for the production of 60,000 metric tonnes of aluminium in Gujarat State as it
was informed by the Gujarat State Electricity Board that it would be able to
meet the requirement of energy there at a rate of Rs. 320/- per kilowatt year,
which was much higher than the rate at which it was receiving energy from U.P.
State Electricity Board (U.P.S.E.B.). The Government of U.P. held negotiations
with the Company, and it was decided that the Company would produce the
additional 60,000 metric tonnes of aluminium also in Uttar Pradesh. The Chief
Secretary to the government of U.P. wrote a detailed letter to the Company on
November 20, 1968, in which the position regarding the supply of energy was
stated as follows,- "Regarding the power plant, I can see no difficulty in
meeting the interim requirements for 2 to 3 years from the U.P. State
Electricity Board, nor do I see any difficulty in arranging for parallel
running of your new power station, with the U.P. State Electricity Board."
The Company then addressed a letter to the State Government on September 26,
1969 stating the position regarding the supply and generation of increased energy
for the expansion of aluminum production as follows,- "5(a) The Scheme of
power supply for our expansion by UPSEB is interlinked with the question of
expansion of 719 Our Renusagar power plant and its parallel operation with your
system. The application for the expansion of our Renusagar Power Plant has
already been submitted to your office, a copy of which is enclosed herewith for
your ready reference. The necessary permission for the same is requested as
early as possible.
(b) The emergency assistance under parallel
operation would be required for about 100 m w and the terms and conditions for
the same would have to be decided simultaneously with the permission for
expansion of our Power Plant." It may be mentioned that the Company was
granted sanction to expand Renusagar generation by 250 m w.
In 1972 the Company expanded its installed
capacity for the production of aluminium by 35,000 metric tonnes per year. On
its part, the U.P.S.E.B. sanctioned 110 m w additional energy under a phased
programme to be compelled by June 1, 1975. It was clearly stated in the letter
of the U.P.S.E.B. dated September 2, 1972, that the supply would be without
prejudice to the power of the State Government to control the distribution and
consumption of energy under section 22B of the Act. Reference in the letter was
made to the acute shortage of power because of scanty rainfall in the catchment
area.
It so happened that additional energy was not
made available to the Company during 1972-75 although the rate was
substantially increased (to 11 paise instead of 1.997717 paise) with
retrospective effect from June 30, 1975, under the new aluminium policy of the
Government of India. An agreement was however entered into between the Company
and the U.P.S.E.B. on November 30, 1976 for the supply of 85 m w of energy on a
continuous basis, for a period of 5 years, in supersession of the earlier
agreements, and it was stipulated that it would be read and construed in all
respects in conformity with the provisions of the Act, the Electricity (Supply)
Act, 1948, and the rules and the regulations and the amendments thereto The
Company received that supply and was even promised an additional supply of 35 m
w over a phased period from July 1977, but did not get it.
The Company was all the same able to raise
its production of aluminium to 95,000 metric tonnes by April 7, 1977, because
of the supply of 85 m w of energy.
In the meantime, the State Government took a
decision by the end of December 1976 to reconnect some 70,000 pumping sets
which had 720 been disconnected for non-payment of the electricity dues.
That placed an additional load of about 400 m
w on the grid system of the State. The Chairman of U.P.S.E.B. submitted a note
on the power situation which was likely to obtain from April to July 1977. He
pointed out that there was acute shortage of energy and suggested the
imposition of some restrictions upto the end of July 1977 by when the demand
for agriculture was expected to decrease and the Rihand and Matatila reservoirs
would be filled up. That was proposed to meet the needs of agriculture and
related industries and to meet the industrial demand to the extent possible.
One of the proposals was for a 50 per cent cut in the demand of the Company and
some other industrial units including Kanoria Chemicals and Industries Ltd.
That note came up for consideration in the State Cabinet on April 1, 1977, and
was partially approved. The U.P. Electricity (Regulation of Distribution and
Consumption) Order, 1977, was therefore issued on April 7, 1977. Under clause
6(a) (i) of the Order, the Company could draw energy only to the extent of 42.5
m w i.e. 50 per cent of its monthly consumption; but it was allowed to draw 55
m w for the time being.
Uttar Pradesh came under the President's rule
on April 30, 1977, and the Company was allowed to draw 55 m w until further
orders. It is the case of the State that the shortage of energy became more
acute in the third week of May. The Company, in the meantime, filed its first
writ petition [No. 1790(c) of 1977] on receipt of a letter of the Executive
Engineer (O.&M.), Rihand, that the power supply to the Company should be
cut off completely with immediate effect. The writ petition was dismissed on May
20, 1977, because of a subsequent letter by the Government requiring the
U.P.S.E.B. to continue the supply of 42.5 m w energy instead of 55 m w in
accordance with the aforesaid Order of April 7, 1977.
The Secretary of the Power Department of the
State government sent a note to the Governor on May 24, 1977, proposing some
additional cuts in the supply of energy.
Decision thereon was deferred until
information was obtained from other States in regard to availability of energy
to aluminium plants. A fresh note was thereafter prepared for orders. In that
note dated May 31, 1977, it was stated that there was a large gap between
demand and availability of energy and that was creating a serious imbalance
requiring load shedding on a large scale, and that had given rise to discontent
in all sectors of the economy and, in particular, in the rural sector. It was
also pointed out that overriding public interest, particularly the need to
maintain 721 food supply and the industrial production, required that units which
were heavy consumers of energy should be subjected to further cut in the
consumption of energy. It was particularly pointed out that as the Company was
itself generating energy at Renusagar, it will have more than 50 per cent of
energy even if the Board's supply of 42.5 m w was completely withdrawn, and
that will service some 8500 pumping sets. It was, all the same, stated that the
Company would continue to have 60 m w from the U.P.S.E.B. as stand by supply as
in the past. The Governor approved that proposal on June 1, 1977. A proviso
was, inter alia, inserted in clause 6(a)(i) of the U.P. Electricity (Regulation
of Distribution and Consumption) Order, 1977, on June 2, 1977, according to
which the industrial consumer which had its own source of generation of energy
from which it obtained 50 per cent or more of its total consumption would
suffer a cut of 100 per cent in the energy supplied by the U.P.S.E.B. The
Company was accordingly given time to bring about the total cut.
In the meantime, the Company filed its second
writ petition [No. 2160(c) of 1977] along with an application for stay. The
High Court admitted the writ petition, but rejected the application for stay.
The Company then moved this Court for special leave. The Hon'ble Vacation Judge
made an observation that the matter may be discussed by the parties concerned,
and the State agreed to give 20 m w of energy to the Company for the time
being.
Fresh elections were held to the State
Legislative Assembly, and the new Cabinet was sworn in on June 23, 1977.
It decided to reduce the supply of energy to
the Company to zero, in pursuance of the amendment dated June 2, 1977, and
called for a fresh note on the position regarding the generation and
distribution of energy. The Executive Engineer, Rihand, accordingly asked the
Company to reduce the consumption to zero.
A detailed note was prepared by the Secretary
concerned on June 28, 1977, and it came up for consideration in the Cabinet on
June 30, 1977, but no decision was taken and the note was kept pending. It
appears that the Chairman of the U.P.S.E.B. prepared a note on August 26, 1977,
in which he pointed out the shortage of energy, including a substantial fall in
the generation of thermal energy and in the "import" of energy. It
appears that the Minister concerned made some statements in regard to the
generation of energy in the State and the position of the Company, but we shall
refer to them later when we deal with the allegation regarding malice in law.
It will be sufficient to say that the State Government made the Order 722 on
September 19, 1977, called the Uttar Pradesh Electricity (Regulation of Supply,
Distribution, Consumption and Use) Order, 1977. It has undergone some
amendments, but learned counsel are in agreement that they have no bearing on
the controversy before us.
The Company filed its third writ petition
(No. 3732 of 1977), against the Order, on September 26, 1977. It was admitted
the same day and the earlier writ petition (No.
2160 of 1977) was dismissed as withdrawn. The
High Court directed the Company to make an application under clause 10 of the
Order, for exemption, but it was rejected all December 9, 1977 when made. The
High Court ultimately heard and decided the writ petition by the impugned
judgment dated April 27, 1978 against which these appeals by special leave have
been directed as aforesaid. This Court made an order on May 4, 1978 for the
supply of 20 m w of energy to the Company as a purely interim arrangement. That
was raised to 35 m w by an order dated August 29, 1978, and the State is now
supplying 42.5 m w to the Company as an interim arrangement.
These basic facts are not in dispute before
us. We shall examine the arguments of the learned counsel for the parties with
reference to them, after taking into consideration the other well settled facts
on which reliance has been placed by learned counsel, and with due regard to
the relevant averments of the parties.
The High Court has recorded a number of
findings. We shall have occasion to refer to those of the findings which have
been challenged before us. It may be sufficient to say here that the High Court
has worded the operative part of its judgment as follows,- "In view of the
aforesaid discussion the provisions of the first proviso to clause VI (a)(i) of
the Uttar Pradesh Electricity (Regulation of Supply, Distribution, Consumption
and Use) Order, 1977 dated September 19, 1977 are declared ultra vires and are
quashed. The U. P. State Electricity Board is directed to supply electrical
energy to the petitioner in accordance with law without taking into
consideration the provisions of the said proviso".
In order to examine the findings of the High
Court about the invalidity of the proviso to clause 6(a) (i) of the order, it
will be convenient to examine the relevant findings of the High Court on the
various points of law.
The High Court has taken the view that it is
the statutory obligation of the U.P.S.E.B. because of the obligation of a
licensee under 723 sections 18 and 26 of the Electricity (Supply) Act, 1948 to
supply electrical energy to a consumer. Reference in this connection has also
been made to clause VI of the Schedule to the Act.
Clause (h) of section 2 of the Act defines a
"Licensee" to mean any person licensed under Part II to supply
energy.
Section 26 of the Act of 1948 provides, inter
alia, that, subject to the provisions of that Act, the Electricity Board shall
in respect of the whole State, have all the powers and obligations of a licensee
under the Indian Electricity Act, 1910, and the Act of 1948 "shall be
deemed to be the licence of the Board" for purposes of the Act (of 1910).
The first proviso to the section excludes the application of some sections,
including section 22, of the Act, and the second proviso states that the
provisions of clause VI of the Schedule to the Act shall apply to the Board in
respect of that area only where distribution mains have been laid by the Board
and the supply of the energy through any of them has commenced.
While, therefore, the U.P.S.E.B. is a
licensee under the Act, it will be sufficient, for purpose of the controversy
before us, to say that section 22 of the Act is not applicable to it, and
clause VI of the Schedule is applicable to it subject to the restriction
contained in the second proviso to section 26 of the Act of 1948. So even
though the Board is a licensee, the obligation under section 22 of the Act to
supply energy to every person within the area of its supply is not fastened on
it.
The provisions of the Schedule to the Act are
deemed to be incorporated in, and to form part of, every licence granted under
Part II. Clause VI of that Schedule states that where after distributing mains
have been laid down and the supply of energy through them has commenced, a
requisition is made by the owner or occupier of any premises situate within the
area of supply requiring the licensee to supply energy for such premises, the
licensee shall make the supply and shall continue to do so in accordance with
the requisition. But, as has been pointed out, the second proviso to section 26
of the Act of 1948 places a restriction on that obligation for it says that the
provisions of clause VI shall apply to the Board in respect of that area only
"where distribution mains have been laid by the Board and the supply of
energy through any of them has commenced".
Clause (i) of section 2 of the Act defines a
"main" to mean any electric supply-line through which energy is or is
intended to be, supplied to the public. A "distribution mail" has
been defined by clause (e) of the same section to mean the portion of any main
with which a service line is, or is intended to be, immediately connected. We
724 have also gone through the definitions of "electric supply- line"
and "service-line". They leave no doubt that a "distributing
main" is different from an electric supply- line, for to it a service-line
is immediately connected.
The High Court has stated that the Company
gets its supply from the Pipri Bus Bar, which is composed of a set of
conductors which are made up of thick aluminium core steel reinforced cables,
and has taken the view that the Pipri Bus Bar is a "distributing
main" under section 2(e) of the Act and is an electric supply-line as
defined in section 2(f) so that clause VI of the Schedule to the Act would be
fully applicable to the Board in so far as its obligation to the Company is
concerned.
But as has been stated in the second proviso
of section 26 of the Act of 1948, the provisions of clause VI of the Schedule
to the Act could apply to the U.P.S.E.B. in respect of that area where
distribution mains had been "laid by the Board". It was therefore a
question of fact whether that was so, and had to be examined on the basis of
the averments of the parties to that effect. It is however not disputed before
us that the Company did not plead that distributing mains had been laid by the
Board for supply of energy to the Company, or to anyone else, from the Pipri
Sub-station. The State had therefore no occasion to controvert any such
allegation. This has in fact been admitted to be so by Mr.
Ray in his arguments, and the High Court went
wrong in recording a finding of fact against the State without any basis for it
in the pleadings. We have also gone through section 18 of the Act of 1948 to
which reference has been made in the judgment of the High Court, but it is also
of no avail to the Company. The section makes a mention of the general duties
of the Board, but it does not make it obligatory for it to supply energy to
every person irrespective of its practical difficulties.
The High Court has in fact quoted extensively
from its earlier judgment in Civil Miscellaneous Writ Petition No.
618 of 1972 to which one of the two Judges
was a party. It is not disputed, however, that when an appeal was taken against
that judgment, the writ petition was itself withdrawn and was dismissed, so
that judgment of the High Court may not be said to have subsisted thereafter,
and need not have formed the basis of the finding of the High Court against the
Board in regard to its duty to supply the energy asked for by the Company-the
more so when the decision on the point should have turned on the facts pleaded
and established on the record.
725 Mr. Ray for the Company has however
invited our attention to a decision of the Rajasthan High Court in firm Sadul
Cotton Ginning and Pressing Factory v. Rajasthan State Electricity Board.(1)
But that was a different case where it was not pleased by the Electricity Board
that clause VI of the Schedule to the Act was not applicable to it as the
distributing mains had not been laid by it. The High Court therefore erred in
taking the view in the present case that the Board was bound by the terms of
clause VI of the Schedule to the Act to supply energy to the Company within one
month of the making of the requisition or within such longer period as the
Electrical Inspector may allow. But even if it were assumed that the Board was
under an obligation to supply energy to every person, the fact nonetheless
remains that the State Government had the overriding power to provide, by order
made under section 22B of the Act, for regulating the supply, distribution,
consumption or use thereof. In fact sub-section (2) of that section
categorically states that, without prejudice to the generality of the power
under sub-section (1), the order, may direct the Board not to comply with any
contract, agreement or requisition for the supply of energy etc. The High Court
erred in taking a contrary view.
It has next been argued that only the energy
which was generated by the Board could be the subject-matter of an order under
section 22B of the Act and it was not permissible for the State to take into
account the energy generated by the Company for its own use.
It may be recalled that the Company applied
for the grant of sanction under section 28(1) of the Act to generate 120 m w of
energy for the additional production of aluminium. That was allowed and a
notification was issued on November 12, 1964, granting sanction to the
Renusagar Power Company Limited (a wholly owned subsidiary of the Company) to
engage in the business of supplying energy to the Company. It has two
generating units and 135 m w power is being generated by the Renusagar Station
for the exclusive use of the Company, and it is this energy for which it has
been argued that it cannot be the subject-matter of an order under section 22B.
But sub-section (1) of section 28 of the Act
in terms refers to, and deals with, engaging by a non-licensee, in the business
of supplying energy to the "public". It is therefore futile to
contend that what was generated by the Renusagar Power Company was not meant
for supply to the public but was the Company's own energy. It is true that that
generation became, in the circumstances, the "captive" generation for
the use of the Company, but that is far from saying that, in 726 the eye of
law, it was not energy meant for supply to the public or that it was not
amenable to control under section 22B. It must therefore be held that it was
not amenable to control under section 22B. It must therefore be held that it
was also liable to equitable distribution by an order under section 22B of the
Act.
The expression "energy" has been
defined by clause (g) of section 2 of the Act as follows,- "(g)
"energy" means electrical energy- (i) generated, transmitted or
supplied for any purpose, or (ii) used for any purpose except the transmission
of a message".
It is therefore a pervading definition, and
there is no reason why energy generated and supplied under section 28 of the
Act should not fall within its sweep.
We are mindful of the fact that while section
22B of the Act occurs in Part II, the aforesaid section 28 is in Part III, but
that will not really take the supply of energy under section 28 out of the
control of section 22B. Part II deals with "supply of energy" by
licensee, while Part III deals with "supply, transmission and use of
energy by non- licensees". But when it was thought necessary to vest the
State Government with the power to give directions to licensees (under section
22A), and to control the distribution and consumption of energy (under section
22B), it became necessary to insert sections 22A and 22B by Act 32 of 1959. The
Legislature therefore inserted both the sections in Part II which occurred
earlier than Part III, and under the broad fabric "Supply of Energy".
As is obvious, insertion of sections 22A and 22B would not have been
appropriate in Part III, and the Legislature cannot be blamed if it preferred
the inclusion of the two sections together in Part II rather than in the
residuary Part IV.
Moreover it is by now well settled that the
true meaning of a provision of law should be determined on the basis of what it
provides by its clear language, and with due regard to the scheme of the law as
a whole, and not merely by the place it finds in the formation of its Parts or
Chapters.
An ancillary argument has been advanced that
if sub- section (1) of section 22B of the Act is read with due regard to
sub-section (2), it will appear that, like sub- section (2), sub-section (1) is
also confined to a licensee and will not be applicable to the energy supplied
by a sanction-holder under section 28. Our attention in this connection has
been invited to the use of the article "the" in sub-section (2) while
stating that the order made under sub-section (1) may direct 727 "the
licensee' not to comply with the matters stated in clauses (i) to (iii). The
argument is untenable for two reasons. Firstly, subsection(1) of section 22B
refers to the State Government's power to control the distribution of energy as
a whole and not merely the energy generated by a licensee, and there is no rule
of construction by which the restricted scope of sub-section (2), which deals
only with the licensees should govern the scope of sub-section (1) and confine
it to licensees. Secondly, the purpose of sub- section (2) is to provide
exceptions of the nature which are peculiar to licensees and are necessary to
save them from the statutory obligations mentioned in the three clauses of the
sub-section. It appears that the use of the article "the" in
sub-section (2) is not quite appropriate, but we have no doubt that there is no
justification for the argument that section 22B is applicable only to licensees
and not to a sanction holder under section 28.
What section 22B of the Act authorises the
State Government to do, is to make an order providing for
"regulating" the supply, distribution, consumption or use of energy,
and it has been held by the High Court that the section does not confer the
power to prohibit the supply of energy to any consumer. The High Court has gone
on to hold that Parliament did not confer on the State Governments the power to
cut off supply to existing consumers. Mr. Ray has supported the view of the
High Court and has invited our attention to the decisions in Municipal
Corporation of the City of Toronto v. Virgo,(1) Attorney General for Ontario v.
Attorney-General for the Dominion and the
Distillers and Brewers' Association of Ontario,(2) Birmingham and Midland Motor
Omnibus Co. Ltd. v. Worcestershire County Council(3), Tarr v. Tarr(4), The
Automobile Transport (Rajasthan) Ltd.
v. The State of Rajasthan and others(5) and
State of Mysore v. H. Sanjeeviah(6). As against that the learned Solicitor
General has placed reliance on the view taken in Fatechand Himmatlal and others
v. State of Maharashtra etc.(7) that 'regulation', if the situation is
necessitous, may reach the limit of prohibition.
It appears that a distinction between
'regulation' and 'restriction' or 'prohibition' has always been drawn, ever
since Municipal Corporation of the City of Toronto v. Virgo (supra).
'Regulation' promotes the freedom or the facility which is required to be
regulated in the interest of all concerned, whereas 'prohibition' obstructs or
shuts off, or denies it to those to whom it is applied. The Oxford English
Dictionary does not define "regulate" to include prohibition so that
if it had been the intention to prohibit the supply, distribution, consumption
or use of energy, the Legislature would not have contented itself with the use
of the word "regulating" without using the word
"prohibiting" or some such word, to bring out that effect.
But where the High Court went wrong was in
thinking that the Order had the effect of prohibiting the supply of energy to
the Company, which was an "existing consumer". The proviso to clause
6(a) (i) of the Order to which exception has been taken, states as follows,-
"Provided that where any such industrial consumer has his [own source of
generation of energy which alone enables him to obtain] 50 per cent or more of
his total consumption, then a cut of 100 per cent in the energy supplied by the
Uttar Pradesh State Electricity Board shall be exercised." What has
therefore been ordered is no more than a cut of 50 per cent in the monthly
consumption of electricity and not a total prohibition of consumption of
energy. That is a step in the direction of regulating the consumption of energy
as far as it goes, and it is overridden with the further regulation contained
in the proviso in the case of an industrial consumer having its own source of generation
of energy "which alone" enabled him to obtain 50 per cent or more of
his total consumption so as to ensure even to him a consumption of 50 per cent
of energy and not a total prohibition. The proviso therefore operates in a
special or particular field and for a particular purpose where it is considered
necessary for regulating the supply etc. of the energy in the interest of the
other consumers, for section 22B is meant to maintain the supply and secure the
equitable distribution of energy to all concerned. We are constrained to say
that the High Court did not properly appreciate this aspect of the matter.
The High Court has gone on to hold that no
power was vested in the State Government under section 22B of the Act to issue
an order that certain preferences will be followed in supplying energy. The
High Court has found it established that after power supply was totally
"disconnected" by the Board to the Company, "power supply
connections were given to the agricultural sector and agro-based industries."
This appears to be the High Court's finding in regard to the argument that the
Order was bad as it was not permissible to adjust the priorities 729 by an
order under section 22B. Learned counsel for the Company have argued that the
only permissible preference was that under section 22A in favour of an
establishment mentioned in it and that the preference shown to individual
consumers was illegal.
Now so far as clause 6(a) (i) of the Order is
concerned, it does not, by itself, provide for any preferences or priorities,
beyond excluding "fertilizers" from the cut of 50 per cent on all
large and heavy industrial power consumers receiving power at 33 k v and more.
Clause 7 of the Order deals with "exemptions", and "fertilizers
manufacturing establishments" have been included there amongst the
consumers to whom the cut referred to in clause 6 of the Order shall not be
applicable. It has not been argued before us that it was not permissible for
the State Government to provide for exemptions in an order under section 22B,
and we have not been referred to any such data or material on the basis of
which it may be possible to examine whether the exemptions in question were in
derogation of the concept of "maintaining and securing the equitable
distribution of energy" under section 22B.
It may be that the State Government was of
the opinion that supply of energy to the agricultural sector and agro- based
industries was more necessary and would benefit the state more substantially
than the supply made to heavy industrial consumers, but merely because any such
preference has been entertained by the State Government, it cannot be said that
it necessarily runs counter to the concept of equitable distribution of energy
stated in section 22B. In fact counsel for the Company have repeatedly urged
before us that the cut of 50 per cent referred to in clause 6(a) (i) was meant
to deprive only a few consumers of energy, and that the cut of 100 per cent
under the proviso operated exclusively against the Company. And it has to be appreciated
that clause 6(a) (i) deals only with large and heavy industrial power consumers
receiving power at 33 kv and above, and it is hardly permissible for such a
heavy consumer as the Company to complain of any preference that may have been
shown to small consumers in the field of agriculture, or agro-based or other
small industries. The fact remains that large and heavy industrial consumers of
the category mentioned in clause 6(a) (i) are a class by themselves and it is
hardly permissible for them to complain that the small preference shown to
agriculturists in supplying energy for their water pumps or tube-well, or in
energising State tube-wells supplying water to them, or the supply of energy to
small scale industries has really created a privileged class of consumers or
brought into existence any such concept of priorities as to run counter to or
defeat the objective of bringing about the equitable distribution of energy by
an order 730 under section 22B. No glaring instance of any preference has been
brought to our notice so as to raise in us a desire to examine the question
whether it was necessary or proper for the State Government to provide
guidelines for the small preferences shown by it to the aforesaid consumers. In
fact it has been admitted in the written arguments which have been filed and
received in Court that, in the present case, the company is "not sure as
to what exactly has happened".
In such a situation, we are not persuaded
that the High Court had any real justification for recording an adverse finding
against the State on the question of the so-called preferences or priorities.
Learned counsel for the Company were not able to refer us to any plea in the
writ petition about illegal priorities or preferences. Nor could they refer to a
plea that any preference or priority shown by the State was the very antithesis
of the concept of equitable distribution which, for the purpose of maintaining
the supply of energy, was the very object of the Order. If any such plea had
been taken, it would have been permissible for the State to take any defence
that may have been open to them. But merely because the word preference or
priority has been used by the State for the purpose of comparing the grantees
of energy in preference to the Company, or as a matter of priority over the
consumption of energy by a giant consumer like the Company, it will not be fair
and reasonable for us to hold that the State has established a class of
privileged consumers, and to set aside the grant of energy to them in their
absence and without examining the facts and circumstances of their respective
cases. The purpose of the Order is to maintain the supply of energy and to
secure its equitable distribution. One such method was to conserve energy by
virtue of the provisions of clause 6(a) (i). If that has been done according to
law; and if the resultant saving of energy is frittered away by showing
unlawful preferences or creating unlawful priorities by other orders of an
administrative nature, there is nothing to prevent the aggrieved party,
including the Company, from challenging it according to the law, in an
appropriate proceeding, if so advised. But any such grievance cannot be
examined in these proceedings for the Order has the avowed object of bringing
about equitable distribution of the conserved energy in an honest and
forthright manner and there is nothing on the record for us to hold otherwise.
It has next been argued that the validity of
the Order, which is by way of a piece of subordinate legislation, is open to
judicial scrutiny and that the subjective satisfaction of the State Government
in making it is open to challenge in a court of law.
It will be enough for us to say that
subordinate legislation is by now a well-recognised form of legislation for
practical reasons. The modern 731 administrative machinery is quite complex and
it is often found difficult to pass complicated legislative measures through
the full parliamentary procedure and on a permanent or durable basis. Even a
carefully drafted Act may not work well in actual practice. It may also be that
the exact means of achieving the object of an Act may not be adequately
comprehended all at once, and it may be useful to provide for some elasticity
in the actual working of a law. That can best be done by leaving some of the
details to subordinate legislation. That is why some legislative powers are
delegated to executive authorities, subject of course to the purpose and the
scheme of the parent Act, the constant vigil of the Parliament or the State
Legislature, and the Judicial control. These are reliable safeguards and with
their easy availability, it is no surprise that subordinate legislation is now
so voluminous that it may well be said to have dwarfed the parent.
The grounds of challenging the validity of
subordinate legislation are well known. The challenge may be on the ground that
the power to make the law could not have been exercised in the circumstances
which were prevailing at the time when it was made, or that a condition
precedent to the making of the legislation did not exist, or that the authority
which made the order was not competent to do so, or that the order was not made
according to the procedure prescribed by law, or that its provisions were
outside the scope of the enabling power in the parent Act or were otherwise
violative of its provisions or of any other existing statute. As it happens,
none of these grounds or circumstances has been shown to exist in the present
case.
The High Court has taken the view that the
Company was unable to establish as a fact that there was no shortage in the
generation of energy at the time when the order was made under section 22B. It
is no body's case that the State Government was not competent to make the
order, or that it did not comply with any procedural requirement of the Act in
making the order, or that its provisions (or any of them) are outside the scope
of the enabling power or are violative of the provisions of any other law. We
have examined some of the points of law on which the High Court has found some
provisions of the order to be invalid, and we have given our reasons for taking
a different view. We have no doubt that the State Government formed its opinion
about the necessity and expediency of making the order for the purposes of maintaining
the supply and securing the equitable distribution of energy at a time when
that was called for, and this Court cannot sit as a court of appeal to examine
any and every argument in an attempt to show that the opinion of the State
Government was vitiated for one fanciful reason or the other. It has to be
appreciated that the question whether the reasons which led to the 732 making
of the order were sufficient, was essentially for the State Government to
consider.
The validity of the order has been challenged
on the ground that it suffers from the vice of malice in law. But that is a
point by itself and we shall examine it separately.
It will thus appear that the above arguments
which have been advanced against the validity of clause 6(a) (i) of the order
are not justified. The whole of the clause reads as follows,- "6(a) (i) In
respect of electrical energy consumed by all large and heavy power industrial
consumers receiving power at 33 kv and above, excepting fertilizers, from the
U.P. State Electricity Board a cut of 50 per cent in their monthly consumption
of electricity both in respect of energy and demand shall be exercised:
Provided that where any such industrial
consumer has his own source of generation of energy which alone enables him to
obtain 50 per cent or more of his total consumption, then a cut of 100 per cent
in the energy supplied by the Uttar Pradesh State electricity Board shall be
exercised." It thus deals with the consumption of energy by all (excepting
fertilizers) large and heavy industrial power consumers receiving power from
the U.P.S.E.B. at 33 kv and above. It imposes a cut of 50 per cent in their
monthly consumption of energy. Then it adds the provision that where such an
industrial consumer has his own source for the generation of energy which by
itself gives him 50 per cent or more of his total consumption of energy
(provided for in the main clause), then it will not receive any energy from the
U.P.S.E.B. as the cut in its supply will then be 100 per cent. The clause
therefore subserves the purpose of section 22B for, in a period of scarcity or
insufficiency of the supply, it will have the effect of regulating the same and
thereby securing the equitable distribution thereof.
It is true that although the order has been
made on the ground that the State Government is of opinion that it is necessary
and expedient for maintaining the supply and securing the equitable
distribution of electrical energy, to provide for regulating the supply,
distribution, consumption and use thereof, and has been called the Uttar
Pradesh Electricity (Regulation of Supply, Distribution, Consumption and Use)
order 1977, it does not deal with all those matters in details. In fact it may
well be said to be an order relating essentially to compulsory cut in the
consumption of energy. But that cannot detract from the basic fact 733 that the
order has the sanction of section 22B of the Act and subserves the main purpose
thereof, even though there may be justification for the criticism that it does
not go far enough in its regulative enterprise in the expansive field set out
for it in the preamble. At any rate, it cannot be said to be beyond the scope
and the ambit of that section, and its validity is not really open to challenge
as a piece of subordinate legislation.
It has however been strenuously argued on
behalf of the Company that the order should be struck down on the ground of
malice in law on the part of the State Government. That no doubt is another
aspect of the doctrine of ultra vires, for an offending Act can be condemned
simply for the reason that it is unauthorised. Bad faith has often been treated
as interchangeable with unreasonableness and taking a decision on extraneous
considerations. In that sense, it is not really a distinct ground of invalidity.
It is well settled that if a discretionary power has been exercised for an
"unauthorised purpose", that is enough to invite the Court's review,
for as has been said quite widely but properly by Rand J. in Roncarelli v.
Duplessis,(1) malice is "acting for a reason and purpose knowingly foreign
to the administration." But the question is whether this has been Proved
to be so in the present case.
Mr. Ray has argued on behalf of the Company
that the order is malafide, and has been made in the colourable exercise of the
power under section 22B of the Act simply to compel the Company to agree to the
payment of a higher rate for the supply of energy to it. He has tried to
establish his argument on the basis of the statement of the Chief Secretary of
the State Government dated July 8, 1977 and some statements of the Minister
concerned. We shall examine them separately.
What the Chief Secretary said in his press
statement dated July 8, 1977, was that the State Government had reduced the
supply of power to the Company from 85 m w to 10 m w and that it had been
decided to almost double the rate for the supply of the power which was being
given to the Company. It will be remembered that by virtue of the amendment
which was made to the U.P. Electricity (Regulation of distribution and
consumption) order on June 2, 1977, the Company was required to reduce its
consumption of the Board's energy to zero, but it was, nonetheless, allowed to
draw 30 m w for some time. That led to further directions for the reduction of
consumption, and ultimately an order was made on June 29, 1977 for
disconnecting the supply. A representative of the Company met the Minister
concerned and explained the Com- 734 pany's difficulties. He asked for
permission to draw at least 10 m w to keep the pots warm. The Minister agreed
to that request, but only against the standby agreement for the demand of 60 m
w. A letter to that effect was sent to the Company on June 30, 1977. As under
the standby agreement, energy was to be supplied at the rate of 24 paise per
unit, instead of 11 paise, the Chief Secretary merely stated the factual
position on July 8, 1977. At any rate there is nothing to show that the plea of
scarcity of energy was merely a ruse to charge a higher rate from the Company.
Mr. Ray has invited our attention to the
statements of the Minister concerned dated July 18, 1977, July 28, 1977,
September 14, 1977, August 29, 1978 and his reply to the Company dated October
18, 1978, to show that the State Government was not satisfied with the contractual
rate for the supply of energy as it was below the cost of generation, and
wanted to review and rescind the agreement altogether.
We have gone through the record of the
proceedings of the Legislative Assembly and we find that what the Minister said
there was essentially correct that 10 m w energy was being supplied to the
Company under the standby agreement. It was in that content that the Minister
informed the Assembly that the charges for the said standby supply came to
26-28 paise per unit. The learned Solicitor General has taken us through the
relevant record to show that the Minister did not really want to harm the
Company unnecessarily, and if he stated further that he was never approached
personally by the Company, or in a proper manner, or that the relief to the
Company would be considered depending on how it contacted him for that purpose,
the Minister simply wanted to state the facts and to convey his resentment
against the attempt to influence him politically, or through any Minister of
the Central Government.
The State has in fact filed a chart with its
supplementary counter-affidavit about the supply of energy to the Company from
February 1973 to April 7, 1977. It shows that during the period February 1973
to August 7, 1975 the Company received energy from 27.50 m w to 1.25 m w. It
was only after the declaration of emergency on June 26, 1975 that the Company
received some 55 m w of energy, and then a fresh agreement was made soon after
on November 30, 1976 to supply 85 m w of energy. But even before that date, for
a sufficiently long period, the Company got far more energy than what it was
entitled to. We are therefore not satisfied that the Company has been able to
establish malice in law merely because of what the Chief Secretary or the Minister
stated here and there. It may well be that the new State Government was
dissatisfied with the new agreement which had been 735 entered into at the
instance of the political party which was then in power, but it cannot be said
that the new Minister's desire to examine the validity or propriety of that
agreement arose out of any extraneous or improper consideration so as to amount
to malice in law.
Our attention has also been invited in this
connection to certain statements on behalf of the State Government and the
Board that energy was available in abundance, and it has been urged that even
so the Company was denied its supply in spite of the agreements and the
assurances of the State Government to the contrary. That is a point relating to
the contractual rights of the Company and we shall come to it in a while.
Then it has been argued that even though the
State Government professed in its affidavit that the cut in the consumption of
energy by the Company could not be restored because of the desire to provide
more energy for agricultural purposes, that was not really so and that any such
attempt was in the nature of an extraneous consideration which vitiated the
implementation of the Order. Reference in this connection has been made to the
Company's averments in the supplementary affidavit that the load on account of
agriculture and irrigation had declined, and there was in fact no diversion of
energy to agriculture.
In order to examine the point, we directed
the State to prepare a statement for the entire period from January 1977 to
December 1978. The Order was made on September 19, 1977, and the statement
shows that consumption of energy for agricultural and irrigation purposes
increased appreciably thereafter, and there is no justification for the argument
to the contrary.
Another "extraneous" factor which
is said to have been taken into consideration by the State Government in making
the Order is said to be its view that the major portion of the aluminium
produced by the Company was being consumed outside the State. A similar
objection was raised before the High Court on the basis of an averment in the
counter- affidavit of the State. The High Court has, however, recorded the
finding that it would be "unsafe" to uphold that contention, and we
see no reason to take a different view.
The other factors to which reference has been
made as extraneous factors which vitiated the Order are said to be
consideration of the facts that the Company had failed to expand its generating
capacity, the financial loss suffered by the U.P.S.E.B. and the non-payment of
the coal surcharge by the Company. But there is nothing on the record to show
that these factors were taken into consideration at the time of making the
Order. It may be that those or somewhat similar facts were mentioned 736 at one
time or the other in answer to the complaint of the Company, or in
justification of what the State Government had done, by way of defence, but
that cannot justify the argument that they formed the basis for the making of
the Order.
It has also been argued that while making the
Order the State Government failed to take into consideration the facts that the
production of aluminium was of considerable importance to the national economy
and that the Board was capable of generating more energy but was not doing so.
Reference has also been made to the new
aluminium policy which the Central Government announced on July 15, 1975, and
to the benefits which the U.P.S.E.B. was deriving from the aluminium products
manufactured by the Company. But the argument is untenable because there is
nothing to show that these factors were not taken into consideration while
making the Order, and an inference that they were ignored cannot be drawn
against the State merely because the Company was not permitted to consume all
the energy it wanted and there was a fall in the production of aluminium
because of the restriction imposed by the Order. It may be that the U.P.S.E.B.
was capable of generating more energy, or that it was not running efficiently
and had not succeeded in reaching its target of ideal generation. But here
again it will be enough to say that although the High Court arrived at the
conclusion that the Company deserved the writ which it granted, it did not find
it possible to hold that the U.P.S.E.B. had deliberately under utilised its
generation capacity. That is a finding of fact which does not call for
interference by us.
There is thus no justification for the
argument that there was malice in law on the part of the State Government in
making the Order. It may be that the State gave an impression, after the Order
had been made, that it had some spectacular effect on the fortune of the
Company, or that it had brought about such efficiency as to ensure supply of
energy to new entrepreneurs. It may also be that in doing so the State
over-stated its resources of energy in order to open up a State which had not
been able to develop its industrial resources satisfactorily, but what has to
be examined in such cases is the true and the dominant purpose behind the
Order. And as long as the dominant motive is proper and reasonable, and is not
sullied by a mere pretext, the Order based on it will be valid when it is well
within the true scope and policy of the Act and is an honest attempt to deal
with the situation for which the power to make the Order had been granted by
the Act.
It has however been further argued by Mr. Ray
that the Order is invalid as it does not subserve the purpose of section 22B of
the Act inasmuch as it does not secure the "equitable distribution"
of energy.
737 Reference has been made to Jowitt's
Dictionary of English Law, where "equitable" has been stated to mean
"that which is fair", and to Corpus Juris Secundum to show that
equitable is that which is done "fairly, justly and impartially". Our
attention has been invited to the facts and circumstances which led to the
establishment of the Company in the State of Uttar Pradesh and the agreement
with and the assurances which were given to the Company. Our attention has also
been invited to the new connections which were given by the U.P.S.E.B. to the
other consumers while denying the contractual supply of energy to the Company.
It cannot be doubted that only that
distribution can be said to be "equitable" which is "just and
right under all the circumstances of the particular case" (The Century
Dictionary). It will be remembered that the High Court has recorded a finding
that there was shortage in the generation of energy when the Order was made. A
great deal of statistical data has been laid before us and Mr. Gupta has tried
to make full use of it on behalf of the Company. But the fact remains that the
demand for energy was far in excess of the supply from all the sources
available to the U.P.S.E.B. It has also been well established that a situation
had arisen when it became necessary to obtain an order from the State
Government about the course of action to be adopted by the Board.
Self-contained notes were therefore drawn up in March 1977, and on May 24,
1977, June 28, 1977 and August 26, 1977. We have gone through the notes and
they are quite detailed and objective. We have made a mention of the
developments which took place because of those notes, including the making of
the Order. We have no doubt that it was made because a situation had arisen
when regulation of the supply, distribution, consumption and use of energy had
become necessary, and the Order was a genuine attempt to secure equitable
distribution of energy. It is true that the Company was the worst sufferer
under clause 6(a)(i) of the Order, but then it was also the greatest consumer.
The basis for the making of the Order was the
necessity or expediency for maintaining the supply and securing the equitable
distribution of energy by means of an order providing for the regulation of the
supply, distribution, consumption and use of energy. It has been argued by Mr.
Ray that as power was supplied indiscriminately to new consumers after imposing
a cut on the Company's consumption of energy, the issue of the Order was really
a colourable exercise of the State Government's power under section 22B of the
Act.
Our attention in this connection has been
invited to the averments in the affidavits which have been filed on behalf of
the Company and to a 738 list of new connections filed as Annexure to the
supplementary rejoinder affidavit of Suresh Chandra, Special Officer of the
Company. Reference has also been made to a list of new connections filed in the
High Court on March 6, 1978. Learned Solicitor General has however pointed out
that even if all the new connections were to become effective within a period
of two years, their incidence would be no more than 4 per cent of the total
connected load as the real impact on the system would merely be an additional
load of only 18 m.w. It has also been pointed out that while there was an
increase of 9 per cent in the installed capacity of the U.P.S.E.B. for the
generation of energy, the increase in the connected load was not more than 2
per cent. We have been informed that the percentage increase in the connected
load had declined from 10 in 1974-75 to 2 in 1977-78, which showed that great
care was being taken in incurring extra liability. The State has also filed a
list of those applicants to whom new connections were sanctioned, but were not
actually released, making a total of some 23 mw.
It has been urged on behalf of the Company
that the Board had deliberately reduced its thermal generation. It has been
pointed out that while there was a substantial increase in hydro-electrical
generation, the performance in the thermal field was highly unsatisfactory. The
State has supplied the necessary information which shows that the fall in
thermal generation was due to the initial troubles of new plants, the poor
performance of the plants, and the breakdown at Harduaganj. We have been
informed that the performance of the U.P.S.E.B. was better than the Boards in
the other States. We have also been told that the proposition that there was
deliberate under-capacity operation of thermal machines is technically unsound
because of the operating constraints in running the large thermal machines at
loads lower than the rated capacity. We have made a reference to the finding of
the High Court against the Company in this respect.
Another aspect of the controversy before us
relates to the contractual liability of the State to supply the energy which it
had assured to the Company. It has been pointed out that under the agreement
dated October 29, 1959, the State was bound to supply 55 m w of energy upto
1987 and then an agreement was entered into on November 30, 1976, to supply
additional 30 m w, making a total of 85 m w for a period of 5 years. It has
therefore been argued that instead of fulfilling its obligation under the
agreements and the other assurances which were given by the State from time to
time, the State took resort to the provisions of section 22B to get out of its
obligation and the making of the impugned Order was really a colourable
exercise of that statutory power.
739 We find from the counter-affidavit of the
State (October, 1977) that, as would appear from the Chief Secretary's letter
dated November 20, 1968, what the State Government had assured the Company was
to meet the interim requirement of the Company for 2 or 3 years from the
U.P.S.E.B. and to facilitate the parallel running of the Company's new power
station, in addition to the station which had been set up at Renusagar. It is
also not without significance that the State was not a party to the agreement
dated November 30, 1976, for the supply of additional 30 m.w., because that
agreement was made between the Company and the U.P.S.E.B. It was in fact
expressly stated in that agreement that it would be subject to the provisions
of the Electricity Acts of 1910 and 1948 and the rules and regulations,
including the amendments thereto. Care was also taken to provide that the
U.P.S.E.B. shall not be responsible for damages or diminutions in the supply of
energy according to the orders issued by the State Government, A similar
provision was made in the earlier agreement of 1959. Reference was in fact
specifically made in the Board's letter to the Company dated September 2, 1972,
to the State Government's power to "control the distribution and
consumption of energy under section 22B of the Indian Electricity Act, 1910".
We have made a reference to the manner and
the stages in which the State Government took decisions for the restrictions to
be imposed on the consumption of energy with due regard to the detailed factual
notes which were submitted for its orders on account of the acute shortage of
energy in the State. Decisions in the matter were taken by the different State
Governments, including the Governors' Advisors, and it cannot be said that the
cuts were imposed suddenly, or without due regard to the Company's difficulties
in reducing its consumption of energy in the manner directed by the Order. We
are therefore unable to take the view that the State wantonly disregarded its
contractual obligations to the Company. But even if the Company had some cause
of grievance on that account, that may well be said to be unavoidable, in the
situation which had arisen when the Order was made on September 19, 1977. It
has to be appreciated that subsection (2) of section 22B of the Act
specifically provided that it was permissible for the State Government to
direct by the Order that the U.P.S.E.B. shall not comply with the provision,
inter alia, of any contract made by it. A direction to that effect was
expressly made in clause 11 of the Order, and it is not permissible for the
Company to complain on that account.
It is not disputed that the consumers which
were hit by the provisions of clause 6(a) (i) of the Order were the Company,
the Kanoria 740 Chemicals and Industries Ltd., the Indian Railways, the Indian
Explosives Ltd., and the Fertiliser Corporation of India. The last three of
these have been exempted from the rigour of the Order. As regards the Kanoria
Chemicals and Industries Ltd., the State has stated in its reply that it was
manufacturing Benzena Chloride and BHC which are used for agricultural purposes
and for purifying drinking water.
They were entitled to 50 per cent of their
consumption, and the State allowed them exemption to the extent of 3 m w making
it permissible for them to consume 12.5 m.w. It cannot therefore be said that
the continued supply of energy to Kanoria Chemicals was proof of any hostility
on the part of the State in so far as the Company was concerned. It may also be
that, as has been argued on behalf of the Company, some other restrictions
which were initially imposed on some other consumers under the Order were
withdrawn, so that it is the Company which is the main sufferer under the
Order.
Even so, it is not reasonable to take the
view that the Order was not justified when it was made, and it cannot be held
to be invalid merely because the Company is the main sufferer under it. It is
not its case that the Order was discriminatory and should be struck down under
article 14 of the Constitution. As has been stated the High Court has in fact
found that the Company was "unable to establish as a fact that there was
no shortage in the generation of electricity when the impugned Order was made
under section 22B of the Act of 1910." The Order was therefore justified
and was a valid Order when it was made on September 19, 1977. The question is
whether there is force in the argument that it has ceased to be in force and
stood impliedly repealed because of the change in the circumstances which
brought it into existence.
The High Court has recorded a finding in this
connection in favour of the Company.
Craies on Statute Law, seventh edition, has
mentioned six different classes of enactments at pages 357-8 which are considered
as having ceased to be in force,- "1. Expired-that is, enactments which
having been originally limited to endure only for a specified period by a
distinct provision, have not been either perpetuated or kept in force by
continuance, or which have merely had for their object the continuance of
previous temporary enactments for periods now gone by effluxion of time;
2. Spent-that is, enactments spent or
exhausted in operation by the accomplishment of the purposes for which they
were passed, either at the moment of their first 741 taking effect or on the
happening of some event or on the doing of some act authorised or required;
3. Repealed in general terms-that is,
repealed by the operation of an enactment expressed only in general terms as
distinguished from an enactment specifying the Acts on which it is to operate;
4. Virtually repealed-where an earlier
enactment is inconsistent with, or is rendered nugatory by, a later one;
5. Superseded-where a later enactment effects
the same purposes as an earlier one by repetition of its terms or otherwise;
6. Obsolete-where the state of things
contemplated by the enactment has ceased to exist, or the enactment is of such
a nature as to be no longer capable of being put in force, regard being had to
the alteration of political or social circumstances." These six have been
mentioned as the enactments which are selected for inclusion in the Statute Law
Revision Acts of England as having ceased to be in force otherwise than by
express repeal, or having by lapse of time or otherwise become unnecessary. It
is quite an exhaustive list and the question is whether the Order could be said
to have "spent" itself or become "obsolete", for the other
four categories are inapplicable to the present case. But whether a piece of
legislation has spent itself or exhausted in operation by the accomplishment of
the purpose for which it was passed, or whether the state of things
contemplated by the enactment has ceased to exist, are essentially questions of
fact for the Legislature to examine, and no vested right exists in a citizen to
ask for a declaration that the law has been impliedly repealed on any such
ground.
It has to be appreciated that the power to
legislate is both positive in the sense of making a law, and negative in the
sense of repealing a law or making it inoperative. In either case, it is a
power of the Legislature, and should lie where it belongs. Any other view will
be hazardous and may well be said to be an encroachment on the legislative
field. In an extreme and a clear case, no doubt, an antiquated law may be said
to have become obsolete-the more so if it is a penal law and has become
incapable of user by a drastic change in the circumstances. But the judge of
the change should be the Legislature, and courts are not expected to undertake
that duty unless that becomes unavoidable and the circumstances are so apparent
742 as to lead to one and only one conclusion. This is equally so in regard to
the delegated or subordinate legislation.
We have gone through the cases reported in
Elwood Hamilton v. Kentucky Distilleries & Warehouse Co.,(1) Chastleton
Corporation v. A. Leftwich Sinclair(2) and Nashville, Chattanooga & St.
Louis Railway v. Herbert S.
Walters(3) on which reliance has been placed
by Mr. Ray, but they are of no real help to the Company. Thus in Elwood
Hamilton(1) it has been held that it requires "a clear case" to
justify a court in declaring that a Federal Statute adopted to increase war
efficiency has ceased to be valid, on the theory that the war emergency has
passed and the power of Congress no longer exists. In Chastleton Corporation(2)
it has been held that courts would pronounce on the continued operation of law
upon facts which they "judicially know." We have also gone through
Nashville(3) case where the view has been taken that a statute valid when
enacted may become invalid by change in the conditions to which it is applied.
We have gone through The petition of the Earl of Antrim and Eleven other Irish
Peers(4) also where a declaration was asked for by some Irish Peers that the
peerage of Ireland had in accordance with the provisions of the Union with
Ireland Act, 1800, the right to be represented by 28 Lords temporal of Ireland
for life. Their petition was rejected because the provisions of the Act of 1800
had ceased to be effective on the passing of the Irish Free State (Agreement)
Act, 1922. That was therefore quite a different case. Mr. Ray has placed
reliance on Pannalal Lahoti v. State of Hyderabad,(5) but what has been held
there is that a temporary legislation cannot be allowed to outlast the war
emergency which "brought it forth". In The Union of India v. Ram
Kanwar and others(6) it was held that as the building in question was being
used for a purpose other than that for which it was originally requisitioned
under the law, it was liable to be de-requisitioned. The question is whether
any such situation has been found to be established in the present case ? Now
what the High Court has found in this respect is as follows,- "This Court
finds that circumstances have materially changed since the impugned order was
made.
The shortage in reservoir from which water is
drawn for the generation of 743 Hydro-electricity has ceased and further
supplies of electrical energy are available from newly commissioned units. The
respondents admit that fresh power connections have been given. In these
circumstances, the continuance of the impugned order is no longer justified and
consequently, the order must be held to have outlived the purpose for which it
was made and, as such, it must be held to be no longer valid.' It has thus
found three facts: (i) the shortage in the reservoir(s) for generation of hydel
energy had ceased, (ii) further supply of energy was available from newly
commissioned units, and (iii) fresh power connections had been given by the
U.P.S.E.B. But what was lost sight of was the important fact that it was all
along the case of the State that hydel energy was only one-third of the total
generation, and that generation of thermal energy which met two-third of the
total requirement had declined for reasons beyond the control of U.P.S.E.B. The
High Court did not therefore undertake a careful examination of the facts, and
took some new connections into consideration without attempting to examine their
magnitude and effect on the overall generation and availability of energy from
all the sources. The State has filed a detailed affidavit dated October 12,
1978, where it has been stated that the U.P.S.E.B. was at best capable of
generating electrical energy to the "tune of 10,185 m u," whereas the
total requirement of the State for 1978-79 was 13,866 m u so that there was a
gap of 393 m u. The High Court therefore erred in taking the view that the
continuance of the order was no longer justified.
Even so, the High Court abstained from
striking down the whole of the Order and merely declared that the provisions of
the first proviso to clause 6(a) (i) was ultra vires, and quashed it.
We have given our reasons for taking the view
that the whole of clause 6(a) (i) of the order, including the proviso, is
valid, and the question remains whether we should restore the quashed proviso.
The answer to the question is simple. The learned Solicitor General has made a
statement at the Bar that at present, or in the near future, there is no
difficulty in supplying 42.5 m w energy to the Company, and that the Company is
getting that much energy already. He has been frank enough to say that this
will be so even if the proviso is restored by this Court. He has stated that
the State Government has been reviewing the position from time to time, and has
given the 744 assurance that it will continue to do so in future. He has also
stated that although the application of the Company for grant of exemption
under clause 10 of the Order had been rejected on December 9, 1977, there is nothing to prevent the Company from making a fresh application if it thinks that
there is a real and substantial improvement in the generation of energy in the
State. The fact therefore remains that, as things stand at present, the
proviso, which admittedly applies only to the Company, is of no practical use
for the time being. So even though it is valid and has wrongly been quashed by
the High Court, we do not think it necessary to restore it, so that it shall
not be deemed to form part of clause 6(a) (i) of the Order. But if there is
deterioration in the generation of energy again, or there are other sufficient
reasons within the purview of section 22B of the Act to reinsert the proviso,
in the present or modified form, it will be permissible for the State
Government to do so according to the law.
In the result, while C.A. No. 921 of 1978 is
allowed to the extent mentioned above, C.A. No. 425 of 1979 fails and is
dismissed. In the circumstances of the case, the parties shall pay and bear
their own costs in both the appeals.
N.V.K. C.A. 921/78 allowed.
C.A. 425/79 dismissed.
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