Woolen Mills Ltd. Vs. Punjab State Electricity Board & Anr  Insc 247 (28 April 2006)
Sinha & P.K. Balasubramanyan
out of SLP (Civil) Nos.1398-1442 of 2005] WITH
CIVIL APPEAL NOS. 2334 OF 2006 [Arising out of SLP (Civil) Nos,15357-15358 of
2005] S.B. SINHA, J :
appellant is a mill represented by its authorized representative.
the purpose of its working, it at all material times was and still is a
consumer of electrical energy. It had for the said purpose taken electrical
connection from the respondent-Board. The connected load is 6664 KW. In terms
of the tariff framed by the Board, the Appellant herein (Company) comes under
the category of 'general industry'. The Board on or about 21.01.1991 issued a
circular whereby it proposed to levy surcharge @ 17 = % on the actual
consumption of electricity in respect of those industrial consumers who had
been sanctioned load exceeding 5000 KW or sanctioned contract demand exceeding
5000 KVA and had supply from a 11 KV line. The said circular stipulated that
surcharge would continue to be levied till conversion of supply to 33 KV or
higher voltage by the consumers. It is, however, not in dispute that a letter
was issued to the company intimating that for installation of 66 KV Sub
Station, a site plan was required to be supplied.
again by circular dated 30.05.1991, it was stipulated :
to CC No.5/91 dt. 21.1.91 vide which it was decided to levy surcharge @ 17% on
general industrial consumers having sanctioned load/demand exceeding 5000
KW/KVA and running at 11 KV till conversion of supply to 33 KV or higher
voltage. The matter has been reconsidered by the Board and it has been decided
that the surcharge @ 17 =% shall be levied on such consumers who do not switch
over their supply system to 33 KV and higher voltage in line with the following
A lead time of
12 months may be given to all the existing consumers having load/demand above
5000 KW/KVA and running at 11 KV to convert supply to higher voltage within
period includes the time spent on getting estimated cost of works, deposit of
charges with the PSEB and erection of 33 KV or higher voltage works by the
consumer as well as by the PSEB .
time schedule for different activities involved for erection/completion of
higher voltage works shall be fixed by the load sanctioning authority, and any
slippage/evasion in adhering to the laid down targets on the part of the
consumer shall attract levy of surcharge @ 17 =%. In case after the stipulated
period, the higher voltage works of the consumers are ready but the works of
the PSEB are not ready, surcharge shall not be levied and also likewise if the
Board's works of higher voltage are ready but the consumers are not ready this
surcharge shall be leviable The validity of the said circular dated 21.01.1991
came to be questioned by the company in a writ petition, filed before the High
Court, which was marked as CWP No.7069 of 1991. In the meanwhile, the said
circular letter was modified by the Board, in terms whereof it was stipulated
that a time of 12 months extendable upto the maximum of 18 months was to be
granted to all the existing consumers having load above 5000 KW/KVA and running
at 11 KV to convert supply system to higher voltage.
letter dated 19.09.1991 was issued by the Board intimating it that electric
supply had to be converted to 66 KV and hence the company was required to show
the place of installation of 66 KV sub-station, failing which a penalty @ 17 =%
would be levied. A further letter was issued by the Board demanding a sum of
Rs.34 lacs towards the tentative cost of conversion. The writ petition filed by
the company, however, was disposed of stating :
the short reply filed on behalf of the Electricity Board, it is stated that
from the petitioners 17 =% surcharge collected will be adjusted in the
subsequent bills. It is further mentioned that there would be conversion from
11 KV to 33 KV or 66 KV. Certain formalities are to be observed by both the
parties in that connection and one year's time has been given to the
petitioners to comply with the directions. However, it is made clear that the
period of one year would start from the pointing out of feasible point for
installation of sub station at the factory premises by the Board."
[Underlining is ours for emphasis] Yet again, without complying with the said
directions, a demand was made by the Board from the company for depositing the
said amount of Rs.34 lacs. On or about 14.02.1992, the company replied to the
said letter stating that the matter was pending adjudication before the civil
court and furthermore no other feasible point had been pointed out by the
officers of the Board so far. A site plan was again sought for from the company
by the Board by a letter dated 13.05.1992, wherein it was stated :
kind attention is drawn to above references and it is requested that the site
plan and site for the construction of 33/66 KV Sub grid must be shown to the
undersigned within 7 days and according to the instructions of the Board
required amount may be deposited so that further action may be taken otherwise
17 =% surcharge will be levied." In exercise of its powers under Sections
46 and 49 of the Electricity (Supply) Act, 1948, (for short, 'the Act') the
Board made a tariff which came into force with effect from 01.02.1994. Section
(B) of the said tariff refers to the schedule thereof the relevant portion of
which reads as under :
of Tariff Schedule LS.-Large Industrial Power Supply
shall apply to consumers having industrial connected load above 100 KW. Their
contract demand shall not be less than 100 KVA (85 KW).
availing supply of energy at high tension 11000 volts and above (33 KV and
above for Arc furnace) shall increase his connected load without approval of
the Board. The consumer availing supply at high tension shall indicate the
rating capacity of all the step-down transformer(s) installed in his premises
and shall not increase the capacity of such step-down transformer(s) without
prior approval of the Board." Clause 3 of the Schedule of Tariff reads as
connected load less than 1000 KW 153 Paise/Unit
connected load 1000 KW and above :
Charges Rs.90/KVA PLUS Energy Charges 128 Paise/Unit Maximum overall rate 163 Paise/Unit
(B) Power Intensive Units a) Consumers with connected load less than 1000 KW
158 Paise/Unit b) Consumers with connected load 1000 KW and above Demand
Charges Rs.90/KVA PLUS Energy charges 133 Paise/Unit Maximum overall rate 168 Paise/Unit
The energy charges under category (A) and (B) above shall be without prejudice
to the Monthly Minimum Charges leviable under item 7 of this Schedule L.S.
(i) (ii) Surcharge
of 17 =% on the above tariff shall be leviable for all the Arc furnace load
consumers which are being given supply at 11 KV." From note (ii) of the
aforesaid tariff, it is, therefore, evident that surcharge @ 17=% thereupon was
leviable only for all the Arc Furnace load consumers which were being given
supply at 11 KV. Moreover, these other mills which were liable to bear the
specified surcharge were specifically mentioned in the tariff notification. It
is also not in dispute that prior to issuance of the said notification,
executive orders had been issued levying such surcharge. The said executive
order, however, was later on made part of the tariff.
on 26.07.1991, a notification was issued under Sections 46 and 49 of the Act
inter alia stating :
For consumers with connected load of 1 MW and above Demand Charges Rs.60/- per
KVA Plus Plus Energy charges Rs.83 paise/unit Subject to max. rate of 107
P/Unit without prejudice to the MMC under item 7 of this Schedule LS
Surcharge of 17
=% on the above tariff shall be leviable for all the Arc furnace load consumers
which are being given supply at 11 KV.
Questioning the said demand, admittedly, a suit was filed by the company. The
trial court as also the appellate court on the basis of the materials brought
on record came to the conclusion that the Board could levy such surcharge only
with effect from 13.05.1992.
reason of the impugned judgment the High Court opined :
counsel for the appellant could not point out any clause in the circular which
stipulates the modification or suppression of the earlier circular dated
21.01.1991 and 03.05.1991. In the absence of any supersession of notifications,
I am unable to hold that such notification stood superceded by virtue of a fresh
notification dealing with revision of tariff for general category consumers as
well as contemplate levy of surcharge for the ARC furnace load consumers. There
is no clause in the said circular that surcharge will be leviable only on the
ARC furnace. Still further, such argument was not raised before the courts
it is apparent that levy of surcharge by notification dated 21.01.1991 and
03.05.1991 was never superceded." A limited notice was issued by this
Court on the special leave petition filed by the company as to whether revision
of tariff issued as per the memo. No.10061/10761/CC/T/2/Rev./Vol.XIII dated
01.02.1994 was applicable to the company or not. The Board has also approached
this Court in regard to the question as to whether the one year period should
be calculated from 13.05.1992 or from the date of issuance of the notification.
questions, thus, arise for our consideration in these appeals :
Whether the High
Court is correct in holding that in view of the fact the matter relating to
payment of surcharge was governed by circulars, which having not been
superseded by the notification dated 21.01.1991 and 03.05.1991 the impugned
demand was valid in law; and
what would be
the proper interpretation of the judgment of the Division Bench of the Punjab and Haryana High Court dated
29.01.1992 The Board is a creature of the statute. It is constituted in terms
of Section 5 of the Act. It is incorporated and can sue and be sued in its own
name in terms of Section 12 thereof. Section 46 of the Act provides for the
Grid Tariff and Section 49 thereof empowers the Board to make provision for the
sale of electricity by it to persons other than the licensees. While exercising
the said power the Board would be governed by the general terms which may be
issued by the State in terms of Section 79 of the Act.
by way of additional rate or penalty can be levied only in terms of a tariff
notification. Such a power, therefore, can be exercised by the Board only in
exercise of its statutory power and not by reason of an executive power. In
terms of a circular letter issued by the Board, therefore, neither any
surcharge nor any penalty could be levied.
year 1991, indisputably, the said circular letter dated 21.01.1991 was followed
by the tariff notification issued in terms of Sections 46 and 49 of the Act.
The subsequent circular letter dated 03.05.1991 was, however, not followed by
any notification making the tariff applicable with retrospective effect.
have noticed hereinbefore that the tariff notification dated 26.07.1991 speaks
of levy of such surcharge inter alia on Arc furnaces.
is the position in regard to the notification dated 01.02.1994. The Board,
therefore, could levy surcharge only in terms of the notification and not by
reason of any circular letter. As in the notification, it has clearly been
stated that 17 =% surcharge on the above tariff should be leviable for all the
Arc furnace load consumers which were being given the supply at 11 KV, the High
Court clearly fell in error in arriving at the finding that by reason of the
said notification, the circular letters dated 21.01.1991 and 03.05.1991 were
not superseded. The Board being a statutory authority, its power to issue bills
for consumption of the electricity would be governed solely by the tariff
notification. It being a statutory authority must act within the four- corners
of the statute.
High Court, therefore, in our opinion was clearly wrong in arriving at the
finding that the earlier notifications dated 21.01.1991 and 03.05.1991 were not
superseded. The High Court failed to pose unto itself the correct question,
namely, as to whether after issuance of the tariff notification, the Board
could levy any surcharge @ 17 =% on the tariff on those consumers who did not
have Arc furnace. The High Court, therefore, misdirected itself in law in
passing the impugned order.
question which falls for consideration is from which date the period of one
year could have started. Although on the basis of the aforementioned finding,
the Company could have contended that from 13.05.1991, no surcharge could have
been levied, but it did not raise such a contention before the High Court.
have seen that herein also a limited notice was issued.
not in dispute that for the purpose of giving effect to the offer made by the
Board in terms of its letter dated 30.05.1991, no surcharge could have been
levied immediately. A Division Bench of the High Court, as noticed
hereinbefore, by an order dated 29.01.1992 clearly stated that the period of
one year would start from the date when the feasible point is pointed out.
observation of the High Court in the earlier writ petition was in the nature of
submission of Mr. Ranjit Kumar, the learned Senior Counsel appearing on behalf
of the Board, in this behalf, cannot be accepted.
the period should be counted from the date of issuance of the notification and
not from the date of the High Court's judgment. The High Court, however, made
observations, whereupon both the parties acted. The said observations were made
in terms of the affidavit affirmed on behalf of the Board itself.
High Court's direction leads only to one conclusion that the cut- off date
would be considered to be one in futuro, i.e., a date after 29.01.1992 alone
was required to be fixed.
the final notice by the Board had been issued, the negligence on the part of
the consumer to point out the actual site had not been condoned by the courts.
High Court's observations might be incorrect; but then the same was accepted.
As indicated hereinbefore, the parties acted thereupon. The period of one year
in terms of the judgment of the High Court, therefore, was to start from the
date when the feasible point for installation of Sub Station at the factory
premises by the Board was pointed out. Selection of a site for the purpose of
drawing 33 KV line was not an empty formality.
factors including the convenience of the Board were required to be taken into
consideration. In some cases probably compensation for acquisition of land was
required to be paid.
the courts had arrived at a finding of fact, having regard to the Board's
letter dated 03.12.1992 that the final notice in terms of the said circular had
been given only on 13.05.1992. The company had contended that actual
feasibility was found out on 28.05.1994, but as noticed hereinbefore, the court
did not accept its plea that even the date of the said notice could not have
been considered to be the date for the purpose of the starting point of the
period of one year.
the reasons aforementioned, although Mr. R.K. Jain, the learned Senior Counsel
appearing for the company, may be right in his submission that the Board has no
jurisdiction to levy surcharge after 29.01.1992, but as the said contention had
not been raised and furthermore as notice was issued by the court on a limited
question, we are of the opinion that the company is liable to pay the surcharge
with effect from 13.05.1992. We may furthermore notice that the actual amount
of surcharge payable from that date has already been paid by the company to the
Board. However, in view of our findings aforementioned, there cannot be any
doubt that the surcharge @ 17 =% was not required to be paid in terms of the tariff
notification dated 01.02.1994.
the reasons aforementioned, the Civil Appeals arising out of S.L.P. (Civil)
Nos. 1398-1442 of 2005 preferred by the Company are allowed to the
aforementioned extent and the Civil Appeals arising out S.L.P. (Civil) Nos.
15357-58 of 2005 preferred by the Board are dismissed.
facts and circumstances of the case, the parties shall pay and bear their own