Corpn. of India Vs. Asian Art Printers (P) Ltd.
 INSC 495 (23
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Sen, S.C. (J)
1995 AIR 196 1994 SCC (6) 87 JT 1994 (5) 607 1994 SCALE (3)919
Pursuant to the direction of the Constitution Bench contained in its judgment1
dated 9-9-1994, the bail petition was posted
before us on 21-9-1994. We heard Shri Kapil Sibal, learned
counsel for the petitioner and Shri Natarajan, learned counsel for the respondent
are not inclined to enlarge the petitioner on bail at this juncture. It is not
necessary or advisable to say more than this at this stage. The petition is
shall, however, be open to the petitioner to renew his request for bail before
the Designated Court after his defence evidence is
adduced at the trial.
MUNICIPAL CORPN. OF DELHI v. ASIAN ART PRINTERS (P) LTD.
Reddy, J.) The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.-
Leave granted. Heard the learned Attorney General and Shri Ashwini Kumar for
the appellant and Shri Harish Salve for the respondents.
Common questions arise in these appeals. For the sake of convenience, we would
refer to the facts in civil appeal arising out of SLP (C) Nos. 14140-47 of
1991. The appeal Is directed against the judgment and order of a Division Bench
of the Delhi High Court dismissing the appeal preferred by the appellant,
Municipal Corporation of Delhi (DESU) as well as the cross-objections preferred
by the respondent.
appeal and cross-objections were preferred against the judgment of a learned
Single Judge of the Delhi High Court dated 21-11-1990 allowing the petition and a large
number of similar petitions filed by the respondent and other consumers under
Section 20 of the Arbitration Act and referring the dispute between the parties
learned Single Judge directed further that pending the arbitration proceedings
before the Arbitrator, the consumer shall not be made to deposit the disputed
amount. It was, however, observed that in case it is ultimately held that the
consumer is liable to pay the said disputed amount, he shall pay the same with
interest @ 12% p.a.
respondent is a consumer of electricity. He had applied for Mixed Load (HT)
Connection for 'non-industrial' purposes. The dispute between the parties is
with respect to the calculation of the tariff amount/consumption charges
payable by the respondent each month. In short, the dispute pertains to interpretation
of the relevant tariff condition in the tariffs notified under Section 283 of
the Delhi Municipal Corporation Act by the Municipal Corporation of Delhi
(DESU) for the year 1990-9 1. The same are supplied to us, as a printed
booklet, by the learned Attorney General, appearing for the appellant. We shall
briefly refer to the relevant provisions therein.
Under the sub-heading 'premises', three expressions, viz., 'premises',
'industrial premises' and 'non-industrial premises' are defined. The respondent's
premises are admittedly 'non-industrial premises'. Under the sub-heading
"General Conditions of Applications", besides providing certain
general conditions, a few more expressions are defined. Clause (i) of the
General Conditions says that supply of electricity in all cases is subject to
the execution of agreements including compliance of commercial formalities.
Clause (ii) says that "these tariffs are subject to the provisions of the
'Conditions of supply' and 'Scale of miscellaneous charges' relating to the
supply of electricity issued by the Undertaking or any modification thereof as
are enforced from time to time and the Rules and Regulations made or any order
issued thereunder or any subsequent amendments or modifications thereof so far
as the same are applicable". Clause (iii) says that all loads above 100 KW
under any category of supply shall be given on HT Clause (iv) clarifies that
"the minimum charges/demand charges exclude meter rent, electricity taxes
and other charges which shall be charged separately as in force from time to
time depending upon the character of service".
(v) 89 to (viii) define the expressions 'connected load', 'sanctioned load',
'contract demand' and 'maximum demand' respectively. Clause (ix) provides that
wherever the contract demand has been given in KW, the contract demand in KVA
for tariff purposes shall be determined by adopting the power factor as 0.85.
For the purpose of tariff rates, the consumers are divided into domestic,
non-domestic, mixed load HT, small industrial power (SIP) and large industrial
power (LIP) categories. Besides the above, separate tariff rates are notified
for agriculturists and certain other consumers with whom we are not concerned.
So far as domestic supply is concerned, the character of service is single
phase 230 V or three phase 400 V. The tariff prescribed is what may be called
'single part tariff'. It is @ 27 per cent per unit on first 100 units per
month, 32 paise per unit on next 100 units per month and 75 paise per unit on
all consumption above 200 units per month. This is, of course, subject to
minimum charges prescribed therein.
case of non-domestic LT supply, different rates are fixed which we need not
coming to the Mixed Load HT with which we are concerned, this is
"available to consumers having connected load (other than Industrial
Loads) above 100 KW, for lighting, fan, heating and power appliances in all
Non- Domestic establishments as categorised in Non-Domestic (Mixed Load HT)
tariff', The character of service is AC 50 cycles, 3 phase, II KV The tariff
mentioned under clause (c) and the 'minimum bill' mentioned in clause (d) may
now be set out in full from page 13 of the booklet*:
40.00 per month per KVA or part thereof of the committed load (as per load in
the test report) Plus Energy Charges:
above shall be without prejudice to the minimum demand as laid down in (d)
below and adjustment clause at (xviii) under General Conditions of Application.
amount of the demand charges based upon the KVA of billing demand."
is the interpretation of above two clauses (c) and (d) which falls for
consideration in these appeals. Though it is not strictly relevant for the purpose
of these appeals, it has become necessary to notice the tariff rate prescribed
for large industrial power category inasmuch as a decision rendered by this
Court with reference to a note appended to the LIP tariff * We are referring to
the pages of the booklet because of the confusing manner in which the several
tariff conditions are enumerated. This is being done to avoid any confusion or
mix-up between tariffs applicable to 'Mixed Load HT' and the tariffs
application to 'Large Industrial Power'(LIP).
rates (affirming the decision of the Delhi High Court) is made the sheetanchor
of the respondents'case which has been upheld by the learned Single Judge and
affirmed by the Division Bench of the Delhi High Court in the orders under
appeal herein. In the case of Large Industrial Power (LIP) also, the character
of service is AC 50 cycles, 3 phase, 11 KV. The tariff for LIP category is
mentioned in clauses (c) and (d) occurring at page 16 of the booklet. They read
per month per KVA or part thereof of the committed load (as per load in the
test report) plus Energy Charges:
First 5,00,000 units per month at 85 paise per unit.
All above 5,00,000 units per month at 84 paise per unit.
maximum overall rate of Rs 1.10 per KWH only for bona fide use of supply
without prejudice to minimum payment as laid down in item (d) below and
adjustment clause at (xviii) above under General Conditions of Application.
amount of demand charges will be based upon the KVA of the committed load (as
per load in the test report)." A Note is appended to the above provisions.
applicable to furnaces only.
the case of furnaces, the above tariff and stipulations of LIP will also be
applicable with further provision of clause of Minimum Consumption Guarantee @ Rs
340 per KVA or part thereof per month." (Printed at page 18 of the
coming back to the tariff rate for the Mixed Load HT (other than industrial
load) with which we are concerned herein clauses (c) and (d) set out
hereinbefore (at page 13 of the booklet) provide for a two-part tariff. The
first part comprises of demand charges and the second part of energy charges.
The demand charges are calculated @ Rs 40 per month for KVA or part thereof of
the committed load (as per load in the test report) while the energy charges
are calculated @ 67 paise per unit. In other words, the tariff amount shall be
determined as an amount which is the total of demand charges plus- energy
charges. This is evident from the word 'plus' occurring between the two items,
i.e., between demand charges and energy charges. Having so set out the above
formula, clause (c) further says that "the above shall be without prejudice
to the minimum demand as laid down in (d) below and adjustment clause at
(xviii) under General Conditions of Application". It is agreed between the
parties that the adjustment clause at (xviii) under General Conditions of
Application is not relevant for our purposes. Now 91 what do the words
"the above shall be without prejudice to the minimum demand as laid down
in (d) below" signify? The words "without prejudice" indicate
that the formula indicated in clause (c) is unaffected by what is stated in clause
(d). Clause (d) reads: "Minimum Bill: The amount of the demand charges
based upon the KVA of billing demand."
main dispute between the parties revolves around the meaning and purport of
clause (c). According to the respondent-consumers, it says "first
ascertain the demand charges @ Rs 40 per month per KVA; then ascertain the
energy charges @ 67 paise per unit actually consumed; if the energy charges are
less than the demand charges, demand charges in full are payable; if the energy
charges and demand charges are equal, only the demand charges are payable; if,
however, the energy charges exceed the demand charges, then only the energy
charges are payable inasmuch as demand charges get merged with energy
the other hand, the appellant-supplier says that clause (c) provides for a
two-part tariff; both the demand charges and energy charges have to be
calculated according to the formula prescribed in clause (c) and then both have
to be added together; the total so arrived at is the tariff charges payable by
the consumer; this is the plain meaning of the clause as disclosed by the use
of the word 'plus' between demand charges and energy charges.
would be seen immediately that the interpretation placed by the
respondent-consumers on clause (c) has the effect of completely overlooking and
nullifying the expression 'plus' in clause (c). According to the respondents'
interpretation, it ceases to be a two-part tariff. It indeed amounts to
rewriting the clause. If the respondents' interpretation is to be accepted, the
clause should read like this:
Charges: Rs 40.00 per month per KVA or part thereof of the committed load (as
per load in the test report) or Energy Charges: 67 paise per unit, whichever is
do not think that such a course is permissible to us. When clause (c) says that
the charges payable are demand charges plus energy charges, it means just that;
it cannot mean demand charges or energy charges whichever is higher. The words
in clause (c) to the effect "the above shall be without prejudice to the
minimum demand as laid down in (d) below..." make no difference to the
above understanding. Clause (d) carries the heading "Minimum bill".
It reads: "The amount of the demand charges based upon the KVA of billing
demand." This only means that even in case there is no consumption, the
minimum bill shall be the demand charges based upon the KVA of the billing
demand. It may be reiterated that according to clause (c), the formula
prescribed therein (demand charges plus energy charges) is "without
prejudice to the minimum demand as laid down in (d) below". In 92 the face
of these words, it is not possible to read clause (d) as modifying or cutting
down the meaning or purport of the formula contained in clause (c). Clause (d)
does not purport to do any such thing. All that it says is that the demand
charges based upon the KVA of the billing demand shall at any rate represent
the minimum bill. We are, therefore, of the opinion that clause (c) of the
Mixed Load HT is not capable of any other interpretation than the one placed by
us and that it admits of no ambiguity whatsoever.
language is clear and not susceptible of any reasonable doubt.
The case of the respondent-consumers is based not upon the language of clauses
(c) and (d) but entirely upon certain observations made by the Division Bench
of the Delhi High Court in Gulab Rai v. Municipal Corpn. of Delhi1 and the
decision of this Court in Ashok Soap Factory v.
Corpn. of Delhi2 affirming the same on appeal. It has, therefore, become
necessary to examine the said decisions in particular the decision of this
Court closely to ascertain their ratio and the principles enunciated therein.
For the sake of convenience, we shall refer to the decision of this Court in Ashok
The challenge in the writ petitions (filed in the Delhi High Court) was to the
resolution of the Municipal Corporation of Delhi whereby it approved the proposal of the Delhi Electricity Supply
Committee (DESC) to enhance "minimum consumption guarantee charges"
from Rs 40 per KVA to Rs 340 per KVA in respect of arc/induction furnaces.
furnaces are necessarily units having Large Industrial Power connections. Arc
furnaces consume electricity in bulk, i.e., in very large quantities. Many of
these furnaces were indulging in several fraudulent practices and were showing
very low consumption than their capacity and working warranted. It had become
necessary to check these malpractices which were causing substantial financial
loss to the Corporation. With a view to remedy the situation, the demand
charges in the case of furnaces alone was raised from Rs 40 per KVA to Rs 340
per KVA by virtue of the note referred to above. In the case of all other LIP
service-holders, the said enhancement was not applicable. It is the said
enhancement which was questioned by the furnace holders in writ petitions filed
in Delhi High Court. The contentions raised by them, as may be culled out from
the judgment of this Court in Ashok Soap Factory2, are the following:
The decision to increase minimum charges, i.e., demand charges is contrary to
Section 21(2) of the Indian Electricity Act, 1910. Without the approval of the
State Government, no such enhancement could have been effected (vide paras 16
and 17). The contention was rejected by this Court in paragraphs 22 and 23
holding that where the licensee is the local authority, the said requirement is
The minimum guarantee charges can only be levied under the proviso to Section
22 of the Indian Electricity Act, 1910. In other words, the licensee 1 AIR 1990
Del 249: 42 (1990) DLT 121 2 (1993) 2 SCC 37 93 can only charge that amount
which will give him a reasonable return on the capital expenditure and covers
standing charges incurred by it in order to meet the possible maximum demand.
The Corporation has failed to satisfy that the said enhancement from Rs 40 to Rs
340 was required for the above purposes (vide para 18). This contention was
rejected in paragraphs 24 and 25 by pointing out that none of the writ
petitions can invoke Section 22 inasmuch as the proviso to said section
"talks about a separate supply unless he has agreed with the licensee to
pay him such minimum annual sum". This Court pointed out that in the case
before them "there is no question of any separate supply or any agreement
in relation to minimum annual sum" and hence, Section 22 is wholly
The third contention was based on Article 14 of the Constitution of India. It
was argued that singling out furnaces from out of the class of LIP consumers
amounts to invidious discrimination and is, therefore, bad (para 32).
contention was also rejected.
What is significant to notice is that the interpretation of the tariff
condition relating to LIP category prescribed in clauses (c) and (d) at page 16
of the booklet was not in issue in the said writ petitions or in the appeals
before this Court. Neither party raised any contention as to the method of
calculating the tariff charges in the case of LIP consumers. The only question
was as to the validity of the said Note which enhanced the minimum consumption
guarantee in the case of furnaces from Rs 40 per KVA to Rs 340 per KVA. This
Court, however, while dealing with the second contention aforementioned and
after rejecting the said contention made the following further observations,
with respect to the meaning and purport of the two-part tariff provided in the
case of LIP category, in paragraph 26: (SCC pp. 46-47) "In the present
case, on facts, the challenge is to the tariff. As stated above, the tariff is
the two-part tariff system. The two-part tariff system is comprised of two
charges (i) minimum consumption guarantee charges called demand charges and
(ii) energy charges for the actual amount of energy consumed. Under this system
an LIP consumer pays minimum guarantee consumption charges at the rate fixed by
the DMC. If the LIP consumer does not consume the specified minimum quantity of
electricity or no energy at all even then he has to pay minimum consumption
guarantee charges. But in case the consumer consumes more electricity than the
minimum, then the consumer pays the electricity charges for the actual
consumption of electricity beyond the minimum consumption guarantee charges, in
such a manner that minimum consumption guarantee charges are merged in the
total bill for electricity consumed. In other words, if a consumer consumes
more than the specified minimum quantity of electricity then, in effect, he
will pay for electricity which is actually consumed by him. As stated earlier,
the appellants have obtained licences for the supply of electricity to a
sanctioned load of more than 94 100 KW and they fall in the category of LIP and
the two-part tariff is applicable to them.
the period 1985-86 to 1988-89 the respondents had fixed rates of minimum
consumption guarantee charges at the rate of Rs4O per KVA for 1000 KVA and Rs38
per KVA for consumption above 1000 KVA."
is the above observations which were made with reference to the tariff
condition relating to LIP category (occurring at page 16 of the booklet that
are relied upon by the respondent-consumers as concluding the issue relating to
interpretation of clauses (c) and (d) applicable to "Mixed Load HT",
non-industrial connections (occurring at page 13 of the booklet) as well. We do
not find it possible to agree for more than one reason. Firstly, the relevant
tariff condition (tariff condition applicable to LIP category, printed at page
16 of the booklet) is not correctly quoted (in para 7 of the judgment). The
all- important word 'plus' in between the Demand Charges and Energy Charges is
omitted in the tariff condition as extracted in para 7. This may be because the
interpretation of the tariff condition was not in issue in the appeals.
the said clauses (c) and (d) were taken from the High Court judgment in Gulab
Rail where too the said clauses are extracted with the same significant
omission. The tariff conditions clauses (c) and (d) as extracted in paragraph
(7) of the judgment of this Court read thus: (SCC p. 41) " ' (d) Tariff
Demand Charges First 1000 KVA of billing Rs 40.00 per KVA or part demand for
the month thereof All above 1000 KVA of billing Rs 39.00 per KVA or part demand
for the month thereof First 5,00,000 units per month at 85 paise per unit.
above 5,00,000 units per month at 84 paise per unit.
maximum overall rate of Rs 1. IO per KVA without prejudice to the minimum
payment as laid down in item (g) below and adjustment clause at (xvii) above
under General Conditions of Applications.' Item (g) of the said tariff
prescribes that the minimum bill would be the amount of the demand charges
based upon the KVA of billing demand Item (g) reads as under:
Minimum Bill The amount of the demand charges based upon the KVA of bill
Not only is the all-important word 'plus' is missing but the small sub-heading
'Energy charges' is also missing before the words "First 5,00,000 units
the observations in para 26 are coloured by and based upon the said accidental
incorrect rendering of the 96 LIP consumers for the year 1991-92. In the
tariffs notified for the said year, the words "subject to a maximum
overall rate of Rs 1.10 p per KVA ..." occurring in clause (c) applicable
to LIP category were deleted. In view of the said deletion, it was held by the
Division Bench in Texmaco3 that unlike during the previous year, for the year
1991-92 demand charges are payable in addition to energy charges.
following two paragraphs from the judgment are apposite:
the immediately preceding year, for the large industrial power users like the
petitioners tariff was, inter alia, being charged on the basis of demand
charges plus energy charges. For the year 1990-91, it was further prescribed
that the maximum overall rate would be Rs 1. IO per KWH. The effect of the
tariff for the year 199091 was that the consumers had to pay at least minimum
demand charges. In case the consumption was below the sanctioned load but was
in excess of the connected load, then it is in effect, the actual consumption
of which payment was being made.
position in the year viz. 1991-92 is same to the extent that there is a levy of
demand charges plus energy charges. In this year also, the minimum payable is
the demand charges if the energy is not consumed up to the connected load. The
only difference in this year is that whereas for the year 1990- 91, there was
maximum overall rate of Rs 1. IO per KWH, this year that maximum has been done away
with. The effect may be that in addition to the demand charges, the energy
charges have also to be paid." (emphasis added)
is thus clear from the decisions of the Delhi High Court that its earlier
decision in Gulab Rail was mainly because of the said words of I ceiling'; when
the ceiling was removed, it was held that in addition to demand charges energy
charges are also payable. We may reiterate in the case of tariff condition
applicable to 'Mixed Load HT', with which we are concerned in these appeals,
there are no words of ceiling. We must, however, hasten to add that we must not
be understood as holding or affirming that the said words of 'ceiling' to mean
that only the highest of the two charges (demand charges and energy charges)
alone is payable. We need express no opinion on the said question in these
appeals for the simple reason that that question does not fall for our
For all the above reasons, it must be held that the observations in paragraph
26 in Ashok Soap Factory2 have no application to the tariff condition with
which we are concerned because of the substantial difference in the language
employed in the relevant tariff conditions considered in that decision and the
tariff conditions concerned in these appeals. No relief can be granted to the. respondent-consumers
herein on the basis of the said observations. The same comment holds good for
the decision of the Delhi High Court in Gulab Rail.
Now the very reference to arbitration by the Delhi High Court in these and
other connected matters pertains precisely to the interpretation of 97 the
tariff condition occurring in clauses (c) and (d) applicable under 'Mixed Load
HT' category. Since we have answered the question on merits, the reference to
arbitration must be deemed to have become unnecessary and infructuous. The
restraint order/stay order passed by the High Court pending disposal of the
arbitration proceedings also falls to ground and is vacated herewith.
The appeals are accordingly allowed and the judgment of both the teamed Single
Judge and the Division Bench of the Delhi High Court affirming it which are the
subject-matter of these appeals are set aside. The appellant shall be entitled
to their costs. Appellant's costs assessed at Rs 20,000 consolidated.