U.P.S.E.B.
& Anr Vs. Sant Kabir Sahakari Katai Mills Ltd [2005] Insc 490 (19 September 2005)
Arijit
Pasayat & H.K. Sema
WITH CIVIL
APPEAL NOS. 7966 to 7973 of 2001 and 7990 to 7991 of 2001 ARIJIT PASAYAT,J.
These
appeals are directed against the judgments rendered by a Division Bench of the Allahabad
High Court.
The
main judgment was rendered in Civil Misc. Writ Petition no. 5859 of 1999 which
is the subject-matter of challenge in Civil Appeal No. 7965 of 2001. Following
the judgment rendered in the said case other writ petitions were disposed of.
In each of the writ petitions filed before the High Court correctness of the
electricity bills raised by the appellant no.1-Uttar Pradesh State Electricity
Board (hereinafter referred to as the 'Board') was questioned.
The
High Court by the impugned judgment held that the Board was as authority under
Article 12 of the Constitution of India, 1950 (in short 'the Constitution') and
similar was the position so far as the writ petitioners are concerned who
according to the High Court were Public Sector Undertakings. The High Court
held that in cases where the dispute involves the State Government and a Public
Sector Undertaking, Committee in the line indicated by this Court in Oil and
Natural Gas Commission and Another v. Collector of Central Excise [1992 Supp(2)
SCC 432] (for convenience referred to as ONGC-I) should be set up. Accordingly
it was observed that the writ petitioners would move the State through the
Chief Secretary to constitute a Committee to resolve the dispute. Further
direction was given to the effect that the power supply to the writ petitioners
was not to be discontinued.
According
to the appellant-Board factual position is as follows:- State Government issued
a notification under Section 22-B of the Indian Electricity Act, 1910 (in short
'Electricity Act') titled as Uttar Pradesh Electricity (Regulation of
Distribution, Consumption) Order 1972 (in short the '1972 Order') which imposed
certain restrictions on various categories of consumers for using electricity
during certain periods. The 1972 Order was repealed and in the year 1977
another Notification under Section 22-B, known as Uttar Pradesh Electricity
(Regulation of Supply, Distribution, Consumption and Use) Order 1977 (in short
'1977 Order') was issued. In this order consumers were divided into several
categories and so far as the Industrial Consumers are concerned two categories
were indicated. They are "Continuous Process Industries Power
Consumers" and "Non-continuous Process Industries Power
Consumers". List of consumers belonging to the aforesaid category was
annexed as Annexure 2 of the said Order. It was provided in the 1977 Order that
Non-continuous Process Industries Power Consumers would not use electricity
from 18.00 to 22.00 hours every day. It meant that the distinction between the
Continuous Process Industries Power Consumers and the Non- Continuous Process
Industries Power Consumers was that peak hours restrictions, not to use
electricity were not applicable in case of Continuous Process Industries Power
Consumers. The spinning mills and textiles Mills were exempted from observing
power cutting during peak hours as per clause 8 of the Order and thus these
industries also were covered by category "Continuous Process Industries".
The
Writ Petitioners were co-operative societies registered under Uttar Pradesh
Co-operative Societies Act, 1965. Undisputedly they had entered into agreements
with the Board and one of the clauses in the agreement provided that supply
shall be available to the consumers continuously during 24 hours of each day
and throughout whole period of agreement. This Clause was however, subject to
the following restrictions:
"Supplier
shall not be responsible for the damages or otherwise on account of accidental
interruption of supply or stoppage or deficiency of energy caused by any order
or direction issued by the Government of U.P. or resulting from fire, flood, temptest
or any accident or from any strike or lock out of workers or from any other
cause beyond the control of the supplier but the supplier shall make every
effort to restore the supply as soon as possible." Clause 20 of the
Agreement provided that in case of any dispute between the consumer and the
Board the matter was to be decided by a person nominated by the Chairman of the
Board and the dispute can only be referred when the consumer pays outstanding
dues. The said clause reads as follows:
"If
any question or dispute or difference arises between the parties to this
agreement as to the interpretation or effect of any provisions or clause herein
contained or the construction thereof or as to any other matter thereof or the
rights, duties or liabilities of either party in connection therewith, such
question, dispute or difference shall be referred to the arbitration of the
Chairman, U.P. State Electricity Board or the person nominated by him and the
award/decision of the said arbitrator shall be final and binding upon the
parties.
Provided
that if the question, dispute or difference relates to or concerns any dues
chargeable to the Consumer in terms of this agreement, no reference to
arbitration shall at the instance of such consumer be made till the consumer
has either deposited with the supplier the amount of dues in dispute or
difference or given a Bank Guarantee of such amount in favour of the Supplier
valid upto the period of one year from the date in which the award becomes
final or the amount or dues is cleared, whichever is earlier." In the year
1984 in exercise of powers conferred under Section 49 read with Section 79 of
the Electricity Supply Act, 1948 (in short the 'Supply Act') the Uttar Pradesh
Electricity Supply (Consumers Regulation) 1984 (in short the 'Regulations') was
framed. The regulations have statutory force and Regulation 14 has considerable
significance so far as the present cases are concerned. It reads as follows:
"Regulation
14 : Failure of supply The supplier shall not be liable for any claim for any
loss, damage or compensation, whatsoever arising out of any accidental failure
of supply or stoppage or curtailment of diminution or variation in supply or
for failure restoring as a result of any direct or indirect strike or order of
the Government or other competent Authority in regard to distribution of power
or due to war, mutiny, commotion, Riot, strike, lockout, fire flood, lighting
earthquake or other causes beyond the control of the supplier." In 1986 a
Notification dated 28.1.1986 was issued categorizing the industrial consumers
into two categories i.e. Continuous Process Industries and Non-Continuous
Process Industries. Challenging the different rates fixed by the Board, writ
petitions were filed which were dismissed by the High Court upholding the
validity. It was held that it was a valid classification. Board felt that the language
of the Notification dated 28.1.1986 was not very clear and therefore a
corrigendum was issued clarifying the position that Continuous Process
Industries which are not observing peak hours restrictions have to pay higher
charges. Writ Petitions were filed challenging the levy of higher charges.
The
High Court allowed the levy from the date the corrigendum was issued. The Board
has filed appeals questioning the High Court's view. During pendency of the
appeals, writ petitions were filed alleging that uninterrupted power supply was
not given though higher rates were being charged. Therefore, it was claimed
that amounts paid, which were in excess of the amounts payable, should be
adjusted against the future bills along with interest. The High Court by its
impugned order held that the writ petitioners and the Board were 'State' within
Article 12 of the Constitution, and directed a resolution of the dispute by a
person to be nominated by the Chief Secretary of State of U.P. It held that
writ petitioners were "Public Sector Undertakings".
According
to the learned counsel for the appellant Board and its functionaries, the
approach of the High Court is clearly erroneous. Huge amounts have not been
paid by the respondents-writ petitioners. What was challenged before the High
Court was the levy of higher charges on the allegation that uninterrupted power
supply was not given.
The
decision in ONGC-I case (supra) has no application to the facts of the present
case. In any event, the High Court should not have passed a blanket order of
stay.
Learned
counsel for the respondents on the other hand submitted that the respondents
are entitled to receive some amount from the appellants. According to him, the
payment raised is absolutely unreasonable and without any basis. It was also
submitted that disputes between public sector undertakings and the State should
be resolved in the line suggested by this Court in ONGC-I case (supra). There
is nothing wrong in the High Court's order granting interim protection.
In
ONGC-I case (supra) it was felt desirable that to avoid unnecessary litigation,
disputes between the Governments and the Public Sector Undertakings should be
sorted out by a Committee to be constituted. It was pointed out that most of
the disputes between the Public Sector undertakings and the Government get
resolved by meeting of minds.
It is
certainly desirable that inter-departmental disputes and disputes between
Governments and Public Sector Undertakings should be sorted out in the manner
suggested by this Court in ONGC-I case (supra).
The
stand of the learned counsel for the Board is that the operation of the High
Court's order was stayed and, therefore, the Committee as directed by this
Court has not been set up. The quantum of arrears in different cases has been
set out in the affidavit filed by the appellant-Board.
They
are as follows:
1.
CIVIL APPEAL NO. 7965 Rs. 1,65,49,000/-
2.
CIVIL APPEAL NO. 7968 Rs. 6,26,73,485/-
3.
CIVIL APPEAL NO. 7970 Rs. 16,62,497/-
4.
CIVIL APPEAL NO. 7971 Rs. 1,04,11,681.02/-
5.
CIVIL APPEAL NO. 7972 Rs. 1,88,85,823/-
6.
CIVIL APPEAL NO. 7990 Rs. 4,98,42,000/-
High
Court equated the Board with the State Government and held that the writ
petitioners who were co-operative societies were public sector undertakings.
The High
Court's view is clearly untenable. Board cannot be equated with State
Government. Section 80 of the Code of Civil Procedure, 1908 (in short 'CPC') is
a pointer in that regard. Co-operative Societies and Pubic Sector Undertakings
are conceptually different. The Board is a Public Sector Undertaking and not a
State Government department. It may be "State" for the purpose of
Article 12 of the Constitution. There the similarity ends. Co- operative
Societies (writ petitioners) cannot be, without examination of relevant factual
aspects, equated with Public Sector Undertaking. The High Court has come to
abrupt conclusion that they are Public Sector Undertakings without indicating
any reason for such conclusion. The High Court, therefore, was wrong in
applying ratio of ONGC-I case (supra) to the facts of the present cases.
The
view in ONGC-I case (supra) was further elaborated in Oil and Natural Gas
Commission v. C.C.E. 1995 (Supp.) 4 SCC 541) (For sake of convenience described
as ONGC-II). It was noted in Oil and Natural Gas Commission v. C.C.E. (2004(6)
SCC 437) (for convenience described as ONGC-III) that some doubts and problems
arose in the working out of the arrangements in terms of the order of this
Court dated 11.10.1991 (ONGC-II case (supra). It was noted in ONGC-III case
(supra) as follows:
"There
are some doubts and problems that have arisen in the working out of these
arrangements which require to be clarified and some creases ironed out. Some
doubts persist as to the precise import and implications of the words "and
recourse to litigation should be avoided". It is clear that the order of
this Court is not to the effect that nor can that be done so far as the Union
of India and its statutory corporations are concerned, their statutory remedies
are effaced. Indeed, the purpose of the constitution of the High-powered
Committee was not to take away those remedies. The relevant portion of the
order reads: (SCC pp. 541-42 para 3)
"3.
We direct that the Government of India shall set up a committee consisting of
representatives from the Ministry of Industry, the Bureau of Public Enterprises
and the Ministry of Law, to monitor disputes between Ministry and Ministry of
the Government of India, Ministry and public sector undertakings of the
Government of India and public sector undertakings in between themselves to
ensure that no litigation comes to court or to a tribunal without the matter
having been first examined by the Committee and its clearance for litigation.
The Government may include a representative of the Ministry concerned in a
specific case and one from the Ministry of Finance in the Committee. Senior
officers only should be nominated so that the Committee would function with
status, control and discipline." It is abundantly clear that the machinery
contemplated is only to ensure that no litigation comes to court without the
parties having had an opportunity of conciliation before an in-house
committee." The matter was again examined in the case of Chief Conservator
of Forest v. Collector (2003(3) SCC 472). In Paras 14 and 15 it was noted as
follows:
"Under
the scheme of the Constitution, Article 131 confers original jurisdiction on
the Supreme Court in regard to a dispute between two States of the Union of
India or between one or more States and the Union of India. It was not
contemplated by the framers of the Constitution or the C.P.C. that two
departments of a State or the Union of India will fight a litigation in a court
of law. It is neither appropriate nor permissible for two departments of a State
or the Union of India to fight litigation in a court of law.
Indeed,
such a course cannot but be detrimental to the public interest as it also
entails avoidable wastage of public money and time. Various departments of the
Government are its limbs and, therefore, they must act in co-ordination and not
in confrontation.
Filing
of a writ petition by one department against the other by invoking the
extraordinary jurisdiction of the High Court is not only against the propriety
and polity as it smacks of indiscipline but is also contrary to the basic
concept of law which requires that for suing or being sued, there must be
either a natural or a juristic person. The States/Union of India must evolve a
mechanism to set at rest all inter- departmental controversies at the level of
the Government and such matters should not be carried to a court of law for
resolution of the controversy. In the case of disputes between public sector
undertakings and Union of India, this Court in Oil and Natural Gas Commission v.
Collector of Central Excise (1992 Suppl. (2) SCC 432) called upon the Cabinet
Secretary to handle such matters. In Oil and Natural Gas Commission & Anr.
v. Collector of Central Excise (1995 Suppl. (4) SCC 541), this Court directed
the Central Government to set up a Committee consisting of representatives from
the Ministry of Industry, the Bureau of Public Enterprises and the Ministry of
Law, to monitor dispute between Ministry and Ministry of the Government of
India, Ministry and public sector undertakings of the Government of India and
public sector undertakings in between themselves, to ensure that no litigation
comes to court or to a Tribunal without the matter having been first examined
by the Committee and its clearance for litigation. The Government may include a
representative of the Ministry concerned in a specific case and one from the
Ministry of Finance in the Committee. Senior officers only should be nominated
so that the Committee would function with status, control and discipline.
The
facts of this appeal, noticed above, make out a strong case that there is a
felt need of setting up of similar committees by the State Government also to
resolve the controversy arising between various departments of the State or the
State and any of its undertakings. It would be appropriate for the State
Governments to set up a Committee consisting of the Chief Secretary of the
State, the Secretaries of the concerned departments, the Secretary of Law and
where financial commitments are involved, the Secretary of Finance. The
decision taken by such a committee shall be binding on all the departments
concerned and shall be the stand of the Government. " The directions as
noted above were quoted in Mahanagar Telephone Nigam Ltd. v. Chairman, Central
Board, Direct Taxes and another (2004(6) SCC 431) and were adopted in paragraph
8. It was noted as follows :
"Undoubtedly,
the right to enforce a right in a court of law cannot be effaced.
However,
it must be remembered that courts are overburdened with a large number of cases.
The majority of such cases pertain to Government Departments and/or public
sector undertakings. As is stated in Chief Conservator of Forests' case [2003]
3 SCC 472 it was not contemplated by the framers of the Constitution or the
Civil Procedure Code that two departments of a State or Union of India and/or a
department of the Government and a public sector undertaking fight a litigation
in a court of law. Such a course is detrimental to public interest as it
entails avoidable wastage of public money and time.
These
are all limbs of the Government and must act in co-ordination and not
confrontation. The mechanism set up by this court is not, as suggested by Mr. Andhyarujina,
only to conciliate between Government Departments. It is also set up for purposes
of ensuring that frivolous disputes do not come before courts without clearance
from the High Powered Committee. If it can, the High Powered Committee will
resolve the dispute. If the dispute is not resolved the Committee would
undoubtedly give clearance.
However,
there could also be frivolous litigation proposed by a department of the
Government or a public sector undertaking.
This
could be prevented by the High Powered Committee. In such cases there is no
question of resolving the dispute. The Committee only has to refuse permission
to litigate. No right of the Department/public sector undertaking is affected
in such a case. The litigation being of a frivolous nature must not be brought
to court. To be remembered that in almost all cases one or the other party will
not be happy with the decision of the High Powered Committee. The dissatisfied
party will always claim that its rights are affected, when in fact, no right is
affected.
The
Committee is constituted of highly placed officers of the Government, who do
not have an interest in the dispute, it is thus expected that their decision
will be fair and honest. Even if the Department/public sector undertaking finds
the decision unpalatable, discipline requires that they abide by it.
Otherwise
the whole purpose of this exercise will be lost and every party against whom
the decision is given will claim that they have been wronged and that their
rights are affected. This should not be allowed to be done." The ONGC I to
III cases (supra), Chief Conservator's case (supra) and Mahanagar Telephone's
case (supra) deal with disputes relating to Central Government, State
Government and Public Sector Undertakings. They have no application to the
facts of these cases as the High Court has not indicated any reason for its
abrupt conclusion that the writ petitioners are Public Sector Undertakings. In
the absence of a factual determination in that regard, the decisions can have
no application.
Accordingly,
we set aside the impugned judgments of the High Court and remit the matter for
fresh consideration of the cases. As the matter is pending consideration for a
long time, it would be appropriate if the writ petitions are disposed of early.
It is made clear that if parties place material to show that writ petitioners are
Public Sector Undertakings then the High Court can direct action in line with
Chief Conservator of Forest's case (supra) and not otherwise.
The
appeals are accordingly disposed of. No costs.
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