State Electricity Board Ltd. Vs. Zora Singh & Ors  Insc 408 (11 August 2005)
Bhan & S.B. Sinha
S.L.P. (C) No. 22352-22423 of 2003] W I T H CIVIL APPEAL NOS. 4983-4984 OF 2005
[@ SLP (C) Nos. 14960 and 16202 of 2004] S.B. SINHA, J:
granted in S.L.Ps.
State Electricity Board (for short 'the Board') is a statutory authority
created in terms of Section 5 of the Electricity (Supply) Act, 1948 inter alia
for the purpose of rationalization of the production and supply of electricity
to the consumers. Supply and distribution of electricity indisputably are
public utility services. The Respondents herein are agriculturists.
22 of the Indian Electricity Act, 1910 imposes a statutory obligation on the
licensee to supply the electrical energy in the following term :
energy is supplied by a licensee, every person within the area of supply shall,
except in so far as is otherwise provided by the terms and conditions of the licence
be entitled, on application, to a supply on the same terms as those on which
any other person in the same area is entitled in similar circumstances to a
corresponding supply." Electrical undertakings acquire the character of
public utilities by reason of their virtually monopolistic position and their
profession to serve the public. The State in exercise of its legislative power
had a right to compel the licensees to render service efficiently, promptly and
impartially to the members of the public, as has been done by enacting Section
22 of the said Act. Even in common law such public utilities having obtained a licence
under a statute are under an automatic obligation by reason of the fact that
the property of a public utility is dedicated to public service and impressed
with public interest to serve the public and any such statutory obligation is
in effect and substance a declaration of the common law.
the dedication of public utility to public use and in return for the grant to
it of a public franchise, the public utility is under a legal obligation to
render adequate and reasonably efficient service, without unjust discrimination
and at reasonably rates to all the members of the public to whom its use and
scope of operation extend and who apply for such service and comply with
reasonable rules and regulations of the public utility.
Section 22 of the Indian Electricity Act, 1910 per se does not apply to Board
in view of the provisions of the Electricity (Supply) Act, 1948, the provisions
contained therein indicate that the Board has also a duty to render such
right of a prospective consumer is meticulously and minutely regulated under
the Electricity (Supply) Act, 1948 and/ or the Indian Electricity Act, 1910 and
Indian Electricity Rules. The grounds upon which a licensee can refuse to
supply electrical energy is also governed by the statute.
licensee, thus, has a statutory liability to supply electrical energy to any
prospective consumer on the same terms as those on which any other person in
the same area is entitled in similar circumstances to a corresponding supply.
Such a statutory obligation on the part of the licensee is also reinforced in
terms of Clause VI of the Schedule appended to the Act.
Respondents herein with a view to obtain supply of electricity energy filed
applications and the Board asked them to deposit the security amount. As
despite deposit of such security amount and compliance of other formalities
electrical energy was not supplied to the Respondents, complaints were filed
before various District Forums alleging deficiency in service on the part of
Respondents had also spent a huge amount on construction of Kotha and making
other arrangements for obtaining supply of electrical energy. The District
Forums found the Board guilty of deficiency in service and directed the Board
to give the connections to the complainants within the period(s) specified
therein and also awarded compensation. The Board preferred appeals thereagainst
inter alia on the ground that it was obligated to supply electrical energy to
the applicants maintaining the order of seniority, in view of Regulation 24 of
the Sales Manual. The said appeals were dismissed. Aggrieved by and
dissatisfied therewith Revision Petitions were filed by the Board and by reason
of the impugned judgment dated 4.8.2003, the National Commission while
upholding the claim of the Board that the order of seniority should be
maintained in the matter of supply of electrical energy, directed it to release
connections to all applicants by 31.3.2004. It also directed payment of
interest at the rate of 12% per annum on the amounts deposited by the
complainants and awarded compensation of Rs. 10,000/- each to them. Cost of Rs.
2000/- was also directed to be paid.
the Board is before us.
these appeals, an additional affidavit has been filed annexing therewith the
regulations purported to have been framed under Section 79(j) of the
Electricity (Supply) Act, 1948.
Kumar, learned senior counsel appearing on behalf of the Board would contend
that the National Commission acted illegally and without jurisdiction in
passing the impugned judgments and orders without taking into consideration
that the Board at the relevant time did not act only in terms of the circulars
issued by the State but also acted under the regulations framed under Section
79(j) of the said Act in terms whereof no interest was payable.
learned counsel submitted that this Court should take judicial notice of the
fact that the Government of Punjab at one point of time directed supply of free
electrical energy to the agriculturists resulting in drainage of huge fund and
on that account the Board was not in a position to purchase materials required
for supply of electrical energy.
learned counsel would contend that if the order of the Commission is to be
given effect to, the Board would have to bear a huge financial liability as
during the relevant period 15000 applications for supply of electrical energy
not in dispute that prior to framing of the regulations, the Board by way of
executive instructions issued circulars known as Sales Manual and Abridged
Conditions of Supply. The said executive instructions were restricted for
internal circulation only. However, allegedly with a view to provide
transparency in the functioning of the Board, Sales Regulations were issued in
1999 incorporating and amending certain provisions contained in Commercial
Circular No. 2/97 dated 3.1.1997, including Instruction No. 26.
said Regulations were also placed before the State Legislature on 28.3.2000 as
is required in terms of Section 79-A of the Electricity (Supply) Act.
relevant provisions of Commercial Circular No. 2/97 which allegedly formed a
part of Regulation framed under Section 49 and Sub- section (j) of Section 79
of the Electricity (Supply) Act read, thus:
Time limit for grant of connections SMI26 The matter regarding time limit for
release of connections to various categories of consumers has been reconsidered
and it has been decided as under:
the compliance of demand notice, the connection to various categories of
prospective consumers should be given within the time schedule specified
Large Industrial Power Supply and Bulk Supply above 100 KW :3 months
Medium Industrial Power Supply and Bulk Supply upto 100 KW :2 months
Small Industrial Power Supply category:
Where no augmentation is involved :2 weeks
Where augmentation is involved :6 weeks
Domestic and Non-residential Supply category :2 weeks
Agricultural Pumping Supply category :2 months Note:
above specified period shall be subject to availability of requisite material
like poles, conductors, transformers, insulators and other allied material. It
will further be subject to any court case/ dispute or other bottlenecks such as
damage of power transformer etc.
where connections cannot be released within the above time schedule, reasons
for delay shall be displayed on the Notice Board but individual intimation
would also be given, in case of small power, medium supply and large supply
applicants, indicating the probable date. Where the connection cannot be
released within 2 months of compliance of requisite formalities/ compliance of
demand notice then the same with the detailed reasons would be brought to the
notice of C.E./ Operation concerned.
view of the time limits specified above, it should be ensured that the demand
notices are issued carefully taking all the circumstances viz. availability of
the funds, materials and also power position into consideration. The release of
connections will also be subject to restrictions imposed due to power shortage
and loading conditions of the system etc.
provisions of SMI-26 may be considered as amended above." Clause 24 of the
Sales Regulations also specifies the period during which electrical connections
are to be granted. Clauses 24.6 and 24.8 read as under:
Above time frame shall be subject to availability of requisite material particularly
poles, conductors, transformers and insulators. It will further be subject to
any court case/ dispute or other bottlenecks such as damage to power
In view of the time limits specified above, it should be ensured that the
demand notices are issued carefully taking all the circumstances viz.
of funds, materials and also power position into consideration. Release of
connections will also be subject to restrictions imposed due to power shortage
and loading conditions of the System etc." On or about 11.7.2001, a
Commercial Circular No. 57/2001 was also issued wherein it was stated:
Before commencing supply to a prospective consumer or resuming supply /
allowing additional load to an existing consumer or any time during the
existence of an agreement executed by the consmer with Board, the Board may
require the consumer to lodge with it an Advance Consumption Deposit (ACD) and
/ or Additional Advance Consumption Deposit (AACD), against advance energy
charges on which no interest shall be payable. This advance consumption deposit
shall not be transferable. Normally, the Advance Consumption deposit will be
equivalent to three months electricity bill on the prevalent tariff.
The ACD/ AACD/ security shall be deposited in cash. No interest is payable on
ACD/ AACD deposit against energy consumption. However, interest @ 6% per annum
shall be payable on security deposit of Rs. 100/- and above against meters/
metering equipment. However, no interest will be payable, if a connection is
disconnected within a year of giving supply." Before adverting to the
rival contentions raised before us, we may notice that keeping in view the fact
that the Board had failed and/ or neglected to supply electrical energy to a large
number of agriculturists, the National Commission secured the presence of the
Chief Engineer (Commercial) of the Board who gave an assurance and undertaking
that while maintaining the seniority list electrical connections would be given
to all the complainants/ Respondents by 31.3.2004.
a contention was raised that the Board is bound to supply electrical energy in
terms of the seniority of the applications, no factual dispute was raised that
electrical connections were required to be granted within two months of issue
of demand notice, the same had not been done for years.
79(j) of the Electricity (Supply) Act, 1948 confers power upon the Board to
make regulations laying down principles governing the supply of electricity by
the Board. Although it is doubtful as to whether the Board in exercise of its
regulation making power under Section 79(j) can direct that no interest shall
be payable at all or limit the rate of interest, it may not be necessary for us
to go into the said question in this case as the said regulations are not
applicable in the instant case having been brought into force only in 1999 in
view of the fact that all the applications had been filed prior to 1999 and
demands were raised in 1999.
administrative circulars as thence existed as also the regulations indisputably
require supply of electrical energy to the agriculturists within a period of
two months from the date of receipt of the amount asked for in terms of the
demand notice. It may be true that the note appended thereto provides that the
period specified therein shall be subject to availability of requisite material
but the same does not absolve the Appellant from performing its statutory
Andhra Pradesh State Road Transport Corporation v. The State Transport
Appellate Tribunal & Ors., [ILR (2001) AP 1], a Full Bench of the Andhra
Pradesh High Court has noticed thus:
The meaning of "note" as per P. Ramanatha Aiyar's Law Lexicon, 1997
Edition is 'a brief statement of particulars of some fact', a passage or
explanation" The note, therefore, was merely an explanatory in nature and
thereby the rigor of the main provision was not diluted.
Board in terms of the Regulations was obligated to display the reasons for
delay on the Notice Board. They were also required to indicate the probable
date of supply therefor. Furthermore, such cases were also required to be
brought to the notice of Chief Engineer (Operation).
of the said statutory requirements had not been brought on record. Clause 2 of
the said Circular reads as under:
It may, however, be pointed out that the period specified above is the maximum
to give connections in much shorter period." Clause 3 of the said Circular
mandates the authorities to ensure that prior to issuance of demand notice,
care is taken to take into consideration all circumstances, viz., availability
of funds, materials and also power position.
Circular No. 57/2001 provides for advance consumption deposit or meter security
deposit. Clause 8.4 thereof which puts a restriction in the matter of payment
of interest relates to only ACD/AACD. 6%, however, is payable on security
deposit of Rs. 100/- and above against meters/ metering equipment.
Protection Act was enacted to provide for better protection of the interests of
consumers and for that purpose to make provision for the establishment of
consumer councils and other authorities for the settlement of consumers'
dispute and for matters connected therewith. No dispute has been raised before
us that the provisions of the said Act are not applicable.
has been defined in Section 2(g) to mean "any fault, imperfection or
shortcoming in the quality, quantity, potency, purity or standard which is
required to be maintained by or under any law for the time being in force or
under any contract, express or implied or as is claimed by the trader in any
manner whatsoever in relation to any goods". "Service" is
defined in Section 2(o) to mean "service of any description which is made
available to potential users and includes provision of facilities in connection
with banking, financing, insurance, transport, processing, supply of electrical
or other energy, board or lodging or both, housing construction, entertainment,
amusement or the pureveying of news or other information, but does not include
the rendering of any service free of charge or under a contract of personal
Board is a statutory authority. It is a 'State' within the meaning of Article
12 of the Constitution of India. As a State, the Board is expected to discharge
its statutory functions within a reasonable time having regard to the fact that
it undertakes an important public utility service. Its actions besides being
governed by the Electricity (Supply) Act and the regulations framed thereunder,
it must also fulfill the test of reasonableness as envisioned under Article 14
of the Constitution of India.
would be a reasonable period for supply of electrical energy to different
categories of consumers has been specified in the administrative circulars
issued as well as the regulations made by the Board itself. We find from the
records that the persons had applied for grant of electrical connection as far
back in 1986 and the Board had asked then to deposit the security amount only
sometimes in the year 1999. The complaints were filed as despite expiry of the
prescribed period, no electrical connection was given. If the Board was serious
to implement its own circular, it was obligatory on its part to draw a
blue-print so as to enable it to make supply of electrical energy to the
consumers in order of seniority of application upon procuring the requisite
materials therefor. It failed and/ or neglected to do so. It was also under an
obligation to notify the persons concerned stating the reasons why such supply
could not be made during the period specified in the administrative circular
and/ or regulations. The Board does not say that the said requirements were
also idle to contend that the Board was cash-starved owing to any faulty
decision on the part of the State. If it suffered losses owing to any direction
issued by the State pursuant to any policy decision adopted by it, the same
being an internal matter between the State and the Board, the prospective
consumers cannot suffer therefor.
it is evident from the orders passed by the District Forums, State Commission
and the National Commission that no reason was assigned by the Board as to why
it could not comply with its administrative circulars/ regulations.
24 of the Indian Electricity Act, 1910 mandates a licensee to grant electrical
connection to an applicant. Although the said provision is not applicable so
far as the Board is concerned, as has been noticed hereinbefore, it is bound to
supply electrical energy. The provisions contained therein also envisage supply
of electrical energy within a reasonable time. The Board being a deemed
licensee under the Indian Electricity Act having been constituted in terms of
Section 5 of the Act ordinarily cannot be heard to say that it was not in a
position to supply electricity to a class of consumers, having invited
applications therefor from them.
this case, apparently, the Board was not in a position to supply electrical
energy to the consumers within a reasonable time from the date of issuance of
the demand notice. It not only failed to supply electrical energy to the 71
complainants who were before the National Commission but even failed to supply
electrical energy to those who had applied much prior thereto. Before the State
Commission and the National Commission, the primal contention of the Board was
that the claimants-Respondents could not have been given a march over others
who had filed applications prior to them. The National Commission rightly did
not find fault with such contention but secured the presence of the Chief
Engineer of the Board only for the purpose of ascertaining as to how soon
supply of electrical energy could be ensured to all concerned including the
with the orders passed by the District Forums and State Commission and having
regard to its own stand taken before the National Commission, the Chief
Engineer gave an undertaking that all such connections would be given by 31st
March, 2004. From the aforementioned conduct of the authorities of the Board,
we have no doubt in our mind had the claimants Respondents not knocked the
doors of the forum under the Consumer Protection Act, they might not have even
obtained electrical connection for years to come.
premises aforementioned, the Commission, in our opinion, has rightly found that
the Board having not made itself ready to supply electrical energy to the
agriculturists unjustly enriched itself with the money deposited by the complainants
without rendering any service in return. It is evident that the Board wanted to
fill its coffer with the amount of the security deposits and other deposits
made by the prospective buyers of electricity. It has also not been denied that
relying on or on the basis of the representations made by the Board in terms of
its circular letters and / or regulations, the prospective consumers also spent
a huge amount on construction of kotha and making themselves ready for getting
the electrical connection.
not oblivious of the fact that when public functionary is asked to perform a
statutory duty within a specified time, the provisions of the T.P.M. Sahir and
Others, (2003) 8 SCC 498] But the said principle would not apply in cases when
injustice or inconvenience to others would be caused who have no control over
those exercising the duty if such requirements are not essential or imperative.
[See Karnal Improvement 159] SCC 331], this Court held:
The question as to whether a statute is directory or mandatory would not depend
upon the phraseology used therein. The principle as regards the nature of the
statute must be determined having regard to the purpose and object the statute
seeks to achieve." Another, (2004) 8 SCC 402] Furthermore, there cannot be
any doubt whatsoever that even if an order is found to be not vitiated by
reason of malice on fact but still can be held to be invalid if the same has
been passed for unauthorized purposes, as it would amount to malice in law.
2 SCC 491] this Court observed:
is not therefore the case of the appellant that there was actual malicious
intention on the part of the Government in making the alleged wrongful order of
her premature retirement so as to amount to malice in fact. Malice in law is
however, quite different. Viscount Haldane described it as follows in Shearer
person who inflicts an injury upon another person in contravention of the law
is not allowed to say that he did so with an innocent mind; he is taken to know
the law, and he must act within the law. He may, therefore, be guilty of malice
in law, although, so far the state of his mind is concerned, he acts
ignorantly, and in that sense innocently." Thus malice in its legal sense
means malice such as may be assumed from the doing of a wrongful act
intentionally but without just cause or excuse, or for want of reasonable or
probable cause." 739], this Court observed:
The legal meaning of malice is "ill-will or spite towards a party and any
indirect or improper motive in taking an action". This is sometimes
described as "malice in fact". "Legal malice" or
"malice in law" means "something done without lawful
excuse". In other words, "it is an act done wrongfully and wilfully
without reasonable or probable cause, and not necessarily an act done from ill
feeling and spite. It is a deliberate act in disregard of the rights of
Words and Phrases Legally Defined, 3rd Edn., London Butterworths, 1989.)
Where malice is attributed to the State, it can never be a case of personal
ill-will or spite on the part of the State. If at all it is malice in legal
sense, it can be described as an act which is taken with an oblique or indirect
object. Prof. Wade in his authoritative work on Administrative Law (8th Edn.,
at p. 414) based on English decisions and in the context of alleged illegal
acquisition proceedings, explains that an action by the State can be described mala
fide if it seeks to "acquire land" "for a purpose not authorised
by the Act" (2003) 8 SCC 567 and P. Anjaneyulu vs. Chief Manager, A.P.
Circle, Bharat Sanchar Nigam Ltd., Govt. of India, Hyderabad and Another - 2001
(3) ALD 313].
'State' within Article 12 of the Constitution of India must act fairly and bona
fide. It cannot act for a purpose which is wholly unauthorized and not germane
for achieving the object it professes whether under a statute or otherwise.
not, therefore, find any fault in the judgments of the National Commission.
However, before us a statement has been made that all connections have been
given to the claimants Respondents within the period of aforementioned
in view the said fact as also the peculiar facts and circumstances of this
case, we are of the opinion that the interest of justice shall be sub-served if
the directions issued by the National Commission is modified to the extent that
in stead and place of interest at the rate of 12% per annum, the Appellants are
directed to pay interest at the rate of 9% per annum and in stead of
compensation at the rate of Rs. 10,000/- in each, compensation of Rs. 5000/- in
each is directed to be awarded. These appeals are dismissed subject to the
aforementioned modifications. No costs.