Bihar State Electricity Vs. Parmeshwar Kumar Agarwala [1996] INSC 750 (27 May 1996)
B.L.
Hansaria Hansaria,J.
ACT:
HEAD NOTE:
[With
C.A. Nos.1934, 1938, 1940-43 of 1989, C.A.Nos of 1996 (arising out of SLP (C)
Nos.11085, 10377, 11907, 9282, 9184, 8644, 7164, 9646, 9534, 9430, 11605,
10408, 10246, 10255, 10257, 10285, 10329, 15187, 14467, 11949, 11948, 10085,
11951, 9538, 9419, 9142, 9288 and 9259 of 1989, 17538, 17522, 17521, 17520,
17519, 17529, 17528, 17543, 17525, 17524, 17523, 17542, 17541, 17540-40A, 17539,
17536, 17535, 17534, 17533, 17532, 17531, 17530, 17527, 17526 of 1993, CC
Nos.1269, 1084 and 1055 of 1989] Bihar State Electricity Board and others V. Parmeshwar
Kumar Agarwala etc.etc.
Theft
of electricity has become so chronic a disease that there can be no doubt that
all efforts must be made to curb the same; not only to make the State
Electricity Boards viable, but also to ensure regular supply of electricity to
the lawful consumers at reasonable tariff.
2. The
facet of theft of electricity with which these appeals are concerned relates to
the mischief of consumers to tamper with the meters, first to slow it down and
then to make the same defective. The basic idea behind this is that the general
terms and conditions governing the agreement between Electricity Boards and the
consumers require that in such a case reading of the meter shall be based on
the average reading cf previous three months, in which the meter ran correctly
and reading was duly recorded. Section 26 of the Indian Electricity Act, 1910,
hereinafter the 1910 Act, is on the subject of "Meters" and
sub-section (1) of this section requires that the amount of energy applied to
the consumer shall be ascertained by means of a correct meter.
Sub-section
(6) has provided that where any difference or dispute arises as to whether any
meter is or is not correct, the matter shall be decided, upon the application
of either party, by an Electrical Inspector. Further steps are required to be
taken as per the opinion cd such Inspector.
3.
Confronted with the aforesaid position, the Bihar State Electricity Board (for
short, the Board) found itself suffering heavy financial loss to the tune of
several crores. It, therefore, arranged a meeting of the General Managers - cum
- Chief Engineers on 12.6.1982 and decided, inter alia, that the assessment of
the aforesaid type of consumers, should be made, in the case of low tension
industrial consumers at 30% load factor and in case of high tension industrial
consumers at 45% load factor, during the period their meters remained
defective.
4. On
the aforesaid decision put to implementation, some consumers approached the
High Court of Judicature at Patna by filing a writ petition (CWJC No.2250 of
1984) in which it was held that the decision dated 12.6.1982 having far
reaching consequences and having not been taken by the Board itself, could not
be sustained. It was also pointed out that the power to amend tariff lay with
the Board in exercise of powers under sections 46 and 49 of the Electricity
(Supply) Act, 1948 to be referred hereinafter as the 1948 Act. The High Court,
therefore, quashed the decision dated 12.6.1982.
5. The
Board thereafter issued a Notification on 16.2.1987 invoking its power under
sections 46 and 49 of 1948 Act and decided to bill industrial consumers in the
line of the decision taken earlier. The Notification reads as below :
"In
view of the observations of the Hon'ble High Court in its order dated 25.8.86
passed in C.W.J.C.No.2250/84 filed by Sri Vishnu Re-Rolling Mills against the
Bihar State Electricity Board and others, the B.S.E.Board, in its resolution
No.5873 taken in the 388th meeting of the Board held on 23.1.1987, after taking
into consideration all the aspects of the matter, has decided and resolved to
bill L.T.I.S. (meaning, Law Tension Industrial Sector?) consumers at 30% load
factor, H.T. (meaning, High Tension) consumers at 45% load factor, for the
period the meter remained defective or non-working, with effect from 12.6.92.
Accordingly,
it is hereby notified that by virtue of the power conferred under sec.46 and 49
of the Electric Supply Act, 1948, the Bihar State Electricity Board, has
decided to bill LTIS consumers at 30% load factors, H.T. consumers at 45% load
factors and commercial consumers at 30% load factors for the period meter
remained defective or non-working with effect from 12.6.82."
6.
This notification came to be challenged by a number of consumers and the
judgments impugned in these appeals relate to the view taken by the High Court
qua this notification.
The
High Court has quashed the notification, not only the retrospective part of it,
but the whole of it, being of the view that the Board had no power to issue the
same. In these appeals by special leave, the Board has challenged the legality
of the view taken by the High Court.
7. Shri
Sibal, appearing for the appellant-Board, made a submission, when the appeals
were taken for hearing, that he was not in a position to find fault with that
part of the judgment of the High Court by which retrospective operation of the
notification has been set aside. He, however, strenuously contended that the
notification could not have been quashed in its entirety by regarding the same
as ultra vires. We would, therefore, address ourselves to this stand only of Shri
Sibal.
8. The
notification having been issued in exercise of powers under sections 46 and 49
of the 1948 Act the learned counsel first referred us to section 49 of this
Act, which is on the subject of "Effect of other lass". Tn
sub-section (1) of this section, it has been stated that no provision of the
Indian Electricity Act, 1910 or of any rules made thereunder, shall have any
effect, so far as it is inconsistent with any of the provisions of 1948 Act. It
was, therefore, urged that in case of conflict between the two statutes,
namely, 1910 and 1948 Acts, the provision contained in the latter shall
prevail. This legal position cannot assist the Board, as what has been provided
in section 70 cannot protect the notification, because the same is not a part
of the provision of the 1948 Act, but has been issued with the and of the
provision of this Act.
9. It
is because of this that the learned counsel referred us to section 49 of the
1948 Act and we were addressed on the width of the power given to the Board by
various sub- sections of this section. The one which was specifically mentioned
is sub-section (3), which has laid down that nothing in the foregoing
provisions of the section shall derogate from the power of the Board to fix
different tariffs for the supply of electricity to any person not being a
licensee, having regard to some objects mentioned in the sub-section and
"any other relevant factors".
10. Shri
Sibal referred us to certain decisions of this Court in which the width of the
power of the Board conferred by section 49 had come to be examined. These
decisions are:
(1)
New Central Jute Mills Co. Ltd. v. U.P. State Electricity Board, 1993 (Supp)
SCC 581; and (2) Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board,
1993(Supp) 4 SCC 136. In the first of these decision the view taken by a
two-Judge Bench of this Court was that the expression "any other relevant
factors" appearing in section 49(3) was not to be construed ejusdem generis;
and that the combined effect of section 49 and the terms and conditions of supply
was that having regard to the nature of supply and other relevant factors, the
Board had the power to enhance the tariff rates. What had happened in New
Central Jute Mills's case was that the U.P. Electricity Board had levied a
surcharge of 5.5 paise per unit of electricity drawn in excess of the
permissible 70% authorised by the State Government. As the State Government had
imposed a ban on drawing electricity in excess of 70% in exercise of powers
under section 22-B of the 1910 Act, it was contended that the Board had no
legal authority to levy the surcharge. This contention was not accepted by
pointing out the agreement with the Board being silent on this aspect, the
Board was justified in invoking its power under section 49(3).
11. In
the second of the aforesaid decision, this Court, while upholding the validity
of section 49, approved the condition imposed by the regulations framed by the
Board, which required a consumer to make security deposit, as under clause VI
of the Schedule to the 1948 Act, supply of energy by the Board is to be made
after a written contract is executed with sufficient security. Another
provision of the Act noted by the Court also permitted Board to require any
consumer to deposit security for payment of the monthly energy bills. The
non-payment of interest by the Board on the deposit made was approved as none
of the concerned statutes created such an obligation.
12.
Thus, these two decisions do not advance the case of the Board qua the validity
of the notification (except that different tariffs could have been charged from
different industrial concerns, which, as per the High Court, however, could not
have been done) because in those cases the Board had done nothing against the
terms and conditions on which it had agreed to supply energy, which the Board
is said to be doing hereby force of the notification.
13.
This takes us to the main objection of the High Court to the notification which
is that it is inconsistent with the terms and conditions of the agreement
entered into between the Board and the consumers. The submission of Shri Sibal
on this facet of the case was that clause 11 of the agreement, read with clause
14, permits the Board to vary the conditions which find place in clauses 3(c)
and 6, which are the two clauses said to have been violated by the
notification.
14. To
appreciate this submission, let the aforesaid four cclauses be noted. These
read as below:
"3.(a)
*** *** *** (b) *** *** *** (c) Subject to clause 6 appearing hereinafter in
the agreement, in the event of any meter ceasing to register or found to be
defective or the Board's employee having been unable to read meter. the reading
during the period of each cessation or defective registration or non- reading
shall be based on the average reading of the previous three months, in which
the meter ran correctly and reading was duly recorded. In taking such average
due regard shall be given to the conditions of working month under dispute and
during the previous three months. In case of failure to take reading by the
Board's employee, proper adjustment shall be made when actual reading is taken
next.
6.
Should the consumer dispute the accuracy of any meter not being his own
property, the consumer may upon giving notice and paying the prescribed fee
have the meter officially tested by the Electric Inspector, Government of
Bihar, in accordance with sub-section (6) of Section 26 of the Indian
Electricity Act, 1910. In the event of the meter being tested by the Electric
Inspector, Government of Bihar, and found to be beyond the limits of accuracy
as prescribed in the Indian Electricity Rules, 1956, or any other statutory
modification thereof as may be in force from time to time the testing fee will
be refunded and the amount in respect of the meter readings of three months
prior to the month in which the dispute has arisen or of three months as
provided in clause 3(c) above, as the case may be, will be adjusted in
accordance with the result of the test taken, due regard being paid to the
conditions of working during the month under dispute and during the previous
three months.
11.
This agreement shall be read and construed as subject in all respects to the
provisions of the Indian Electricity Act, 1910, rules framed thereunder and the
Electricity (Supply) Act, 1948 together with rules, regulations (if any)
tariffs and terms and conditions for supply cf electricity framed and issued thereunder
and for the time being in force as far as the same may respectively be
applicable and all such provisions shall prevail in case of any conflict or
inconsistency between them and the terms and conditions of this agreement.
14.
The Board shall be at liberty at any time to alter the demand charges, energy
charges including fuel-surcharge and minimum guarantee charges as set out in
the Schedule appended hereto and this Schedule shall be deemed as having been
automatically revised with effect from the date the Board enforces new tariff
for the consumer."
15. Shri
Ganguli, who addressed us on behalf some of the respondents, urged orally, as
well as in A submissions, that the aforesaid clauses have to be read and
construed harmoniously. To this, it was added by Shri Sanyal, appearing for
other respondents, that clause 11 has not mentioned about any
"notification".
16.
Before we advert to the effect produced by a combined reading of the four
clauses, it deserves to be pointed out that the terms and conditions have sacrosanctity,
in that Rule 27 of the Indian Electricity Rules, 1956, framed by the Central
Electricity Board in exercise of power under section 37 of 1910 Act has, read
with Annexure VI thereof, provided the model conditions of supply which are
required to be adopted by the State Boards. It is on the basis of this
statutorily prescribed model, with suitable variations, that energy had been
supplied by the Board to the consumers. The model conditions can be said to be
akin to the model Standing Orders prescribed by Industrial Employment (Standing
Orders) Act, 1946, which, when certified, become part of the statutory terms
and conditions of service between the employer and employees and they govern
the relationship between the parties, as held in Workmen v. Firestone Tyle
& Rubber Co.Ltd., 1973 (1) SCC 813(832). We are inclined to think that
similar is the effect of terms and conditions, on which a State Board supplies
energy to the consumers.
17. We
may now see what clause 11 has provided. It has stated that the provisions 1910
and 1948 Acts together with the rules and regulations, if any, shall prevail,
in case of any conflict or inconsistency between them and the terms and
condition of the agreement. Nothing has been mentioned in this clause about any
notification issued by the Board; and the agreements at hand being earlier in
point of time to the impugned notification, we are of the view that the
stipulation made in the notification cannot override the terms and conditions
mentioned in clauses 3(c) and 6.
18.
Clause 14 deals with alteration of various energy charges and states that on
the charges being altered, the tariff shall become realisable accordingly. This
clause has dealt with : (1) demand charges: (2) energy charges; and (3) minimum
guarantee charges. The expression 'demand charges' means minimum consumption
guarantee charges. (See para 5 of Ashok Soap Factory v. Municipal Corporation
of Delhi, 1993 (2) SCC 37). A perusal of this para also shows that for big
consumers of electricity, there is two-part tariff system, i.e. it is comprised
of two charges : (1) minimum consumption guarantee charges (called demand
charges); and (2) energy charges for actual amount of energy consumed. In the
Schedule to this present agreement a so, para 5(a) deals with demand charge and
5(b) with energy charge. Rates of each has also been mentioned. Clause 14 has
empowered the Board to alter rates of these charges.
19. In
Ashok Soap Factory case, this Court dealt with the power of the Board to alter
the rate of demand charges (which had been enhanced from Rs.40/- per KVA to
Rs.340/-) and the same was sustained, because valid reasons existed for the
enhancement (theft of electricity and defective meters recording extremely low
consumption causing loss of huge revenue) and the particular clause in the
agreement (quoted in para 15) permitted increase in the rates.
20.
Though in the case at hand, the motivating factor for the issuance of the
notification is similar to the one as was in the aforementioned case, we don't
think if clause 14 can be pressed into service to sustain the notification, as
present is not a case of alteration of charges mentioned in the clause; it
really seeks to introduce an unknown mode of charging for energy, which is not visualised
by the agreement entered into between the parties. This apart, a harmonious
reading of clauses 3(c), 6 and 14 would not permit us to say that clause 14 has
overridden what has been provided in clauses 3(c) and 6.
21.
This is not all, as it has been held by this Court in M.P. Electricity Board
vs. Bassantibai, 1988 (1) SCC 23, that section 26(6) of the 1910 Act does not authorise
the Electricity Boards to issue any supplementary bill in respect of the energy
consumed during the pendency of the dispute with an Electrical Inspector. We
have mentioned about this decision because pursuant to the notification, the
Board did submit supplementary bills to the respondent- consumers. It seems to
us that this action was really in conflict with the statutory provision
contained in section 26(6) of 1910 Act, as interpreted by this Court in Basantibai's
case.
22.
The only other point urged by Shri Sibal, which needs to be dealt with, is
relatable to the power of the Board under section 26 of the 1948 Act. We do not
think the provisions of this section can assist the appellant Board in any way
to sustain the notification, as that section has only provided that the Board
shall have, in respect of the whole of any State, all the powers and
obligations of a licensee under the 1910 Act. This section thus provides no
shield to the Board insofar as its present dispute with the respondents is
concerned.
23.
For the reasons aforesaid, we are constrained to dismiss the appeals, much
though we would have liked to lend our support to the Board in its effort in
effectively deal with theft of electricity caused by manipulation of meters,
which is a known evil. Despite the laudable object which the Board sought to
achieve by issuing the notification, we are of the view that the same has not
been done in accordance with law.
24.
The appeals are, therefore, dismissed, leaving the parties to bear their own
costs throughout.
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