Andhra Pradesh State Electricity Board, Hyderabad And Another v. A.P Carbides Limited .

K. Ramaswamy, J.:— The three appeals can be disposed of by a common judgment since they are founded on the same set of fact. The respondent sued the appellants in O.S No. 805/84 for declaration that the demands by the appellants in their letters dt. June 13, 14, 1984 for a sum of Rs. 1,78,89,986-90 ps. and Rs. 94,36,000/- towards charges for consumption of electricity and additional deposit for consumption respectively, as illegal, void and arbitrary and to restrain the appellants or their subordinates to enforce the said demands. O.S No. 919/84 was laid for a declaration that the appellants are not entitled to issue bills for monthly consumption charges on the basis of normal tariff and to issue future bills at concessional rates and to restrain the appellants from collecting Rs. 26,94,745-42 ps. towards the bills for the month of June 1984. Pending the suits, they filed I.A No. 1529/84 in O.S 805/84 which gave rise to C.M.A No. 638/85 to issue an injunction restraining the appellants or their subordinates from disconnecting the electrical power supplied to the respondent-company by enforcing the bills dt. June 13 and 14, 1984 respectively, which was granted subject to the respondent furnishing bank guarantee for the interest on the amounts in difference in the said bills, at 12% per annum from the date as and when they become due for payment and also furnishing security for the interest on the amount due in difference in the bills, and to continue the attachment on the plant, machinery and properties of the respondent subject to further condition that the injunction will be in force for a period of six months from the date of the order i.e, March 4, 1985 or till the date of disposal of the suit whichever is earlier.

2. C.M.A No. 662 of 1985 arises against the order in I.A No. 1803 of 1984 in O.S No. 919 of 1984 issuing an order of injunction to supply power for a period of six months subject to furnishing bank guarantee for the interest on the amount claimed in the suit from June 30, 1984 to June 4, 1985 or till the date of disposal of the suit whichever is earlier, subject to the attachment of plant, etc.

3. C.M.A No. 674 of 1985 arises against an order in I.A No. 1804 of 1984 in O.S 919 of 1984 directing the appellants to issue bills—the difference amount for each month separately from June, 1984 to Feb. 28, 1985 and the respondent to furnish bank guarantee for the interest on the amounts calculated at 12% per annum from the date on which the bills became due for payment till June 4, 1985 or till disposal of the suit, whichever is earlier, subject to the continuance of attachment of plant etc.

4. The gamut of controversy hinges upon the date on which the respondent-company commissioned its unit viz. whether Sept. 19, 1980 as contended by the appellants or June 5, 1982 as pleaded by the respondent, and whether the contract still subsists? Findings in this regard would afford prima facie case to further find whether the balance of convenience lies in issuing orders of injunction referred to earlier. To appreciate the points, it is necessary to adumbrate few material facts relevant to the issue and are mostly non-controversial.

5. The respondent is a Registered Public Limited Company established to manufacture calcium carbide for which electrical power is an essential raw material. The first appellant, for short, “the Board” is a statutory authority, constituted under the Electricity (Supply) Act of 1948, for short, the “the Act”. It generates electricity in the State of Andhra Pradesh for transmission and distribution thereof in the most efficient and economical manner, etc. and has been supplying the same to various consumers. With a view to reduce manufacturing cost of the finished product so as to become a viable unit, the respondent approached the Government of Andhra Pradesh to grant concessional tariff in their consumption of electricity in manufacturing calcium carbide. The Government, in exercise of the power under S. 78-A of the Act, has been issuing concessional tariff and directing the Board to abide thereby, and the Board has been complying with the same. When bills were not paid, supply was disconnected on April 16, 1981. When again approached, the Government passed the material G.O in issue, viz., G.O Rt. No. 1798 dt. Dec. 29, 1981. Thereunder, it is stated that “the power supply would be made at 0-18 paise, 0-19 paise and 0-20 paise per unit for the first, second and third year respectively from the date of commissioning the unit (normal tariff shall be charged from the fourth year onwards;) (2) the extension of the period of commission for five years from the date of re-connection of power. “(Other clauses are not relevsuit. Hence omitted). In para 3 of the order it directs thus: “The Government of Andhra Pradesh, under S. 78-A of the Electricity (Supply) Act 1948 hereby direct that the Andhra Pradesh State Electricity Board shall extend the following benefits to Andhra Pradesh Carbides Limited, Kurnool and incorporate in the agreement”. Despite the facility the respondent could not continue to pay the electrical bills and when again approached, the Government by letter dt. May 31, 1982 intimated to the Board that losses if any incurred by it in extending the concessional rates will be reimbursed by the Government to the Board in an year or two. (It is not necessary to extract all the other clauses in the letter for the reason that the terms thereof are not in dispute nor relevant). Pursuant thereto, the respondent executed an agreement dt. June 4, 1982, agreeing for the terms and conditions covenanted therein. On June 5, 1982, re-connection was given and the Board went on issuing the bills from time to time in terms of G.O Rt. No. 1798 dt. Dec. 29, 1981. In G.O Rt. No. 62 dt. June 19, 1983, the Government had reconsidered and had withdrawn the concessions stated supra, stating that the Government will not, on account of electricity dues subsidize any industry and the Board is free to exercise its power to effect recoveries and dues from any consumer including the respondent-company. Assailing its legality, the respondent filed W.P No. 5155 of 1983 and requested to quash the above G.O (G.O Rt. 62). Pursuant to the said G.O, the Board issued a revised bill dt. June 20, 1983 demanding payment of Rs. 4,24,08,637-40 as due and also to deposit additional consumption charges for three months in a sum of Rs. 92,90,400/- and for the non-payment thereof, the supply of electricity was again disconnected Assailing this demand, W.P No. 5222 of 1983 was filed to quash the same. W.P No. 5156 of 1983 was filed for a Mandamus to direct the Board to restore the connection of electricity supply to the respondent forthwith. Similarly, W.P 5157 of 1983 was filed to direct the Board to continuously supply to the respondent the electrical energy and to collect charges for the supply thereof in terms of G.O Rt. No. 1798 dt. Dec. 29, 1981 and the letter dated May 31, 1982. W.P No. 5158 of 1983 was filed for refund of Rs. 1,28,21,000/- being the excess amount collected from the respondent. Pending the writ petitions, interim orders including deposit of one month's additional consumption charges of Rs. 30,00,000/- and attachment of the plant, etc. were ordered and complied with. We are informed that on appeal to the Division Bench and further appeal to the Supreme Court, Rs. 0-48 ps. per unit was directed to be paid and is being paid.

6. At final hearing, Madhava Rao, J. by judgment dt. Jan. 19, 1984 held in W.P No. 5155 of 1983 that the order in G.O Rt. No. 62 dt. June 10, 1983 is prospective from the date of its issue viz., from June 10, 1983; in W.P No. 5156 of 1980, mandamus was issued to restore connection and to continue supply of electric power. In W.P No. 5252 of 1983 it was held that the bills referred to in the writ petition and the amount mentioned therein cannot be collected from the petitioner in view of the decision in W.P Nos. 5155 and 5157 of 1983. Fresh demand notices may be issued to the respondent, if found necessary. In W.P No. 5157 of 1983 it was held that the energy has to be supplied in terms of the contract entered into between the parties and if any terms and conditions are to be worked out, it is for the parties to approach a Court of law, but not in writ proceedings. It was also held that energy is to be supplied in terms of G.O Rt. No. 1798 dt. Dec., 28, 1981 read with letter dt. May 31, 1982 which is part of the contract entered into between the parties on June 4, 1982. In W.P No. 5158 of 1983 it was held that the respondent is entitled to the refund of Rs. 51.21 lakhs. It is also further held that matters required investigation and therefore relief could not be granted in the writ petition. Writ Appeals Nos. 872, 858, 837 and 904 of 1984 were filed by the appellant-Board and the State Government. The Division Bench, speaking through Ramachandra Raju, J. confirmed the finding of the learned single Judge that G.O Rt. No. 62 is prospective from the date of its issue. The Division Bench concluded thus:

“Taking comprehensive view of the circumstances which resulted in the agreement dated 4-6-1982, we are clearly of the view that there was mutual agreement regarding the tariff rates as between the Board and the Company though subsequently there were slight disputes as to the periods during which such rates should be operative. Those rates are the result of directions given by the State Government under S. 78-A of the Supply Act. Having given such directions and keeping in view that the Board and the Company acted in accordance with such directions, it is not open to the Government to withdraw such concession retrospectively and enable the Board to realise the amounts due to it from the Company in accordance with the tariff normally charged by the Board from power intensive industries.”

Then it held that it is not open to the State Govt. to withdraw such concessions with retrospective effect. It can do so at best only from June 10, 1983 i.e, the date of G.O Rt. No. 62. After considering the loss incurred by the Board and the rights and liabilities of the parties, it was further held that the Board cannot seek to recover any amount as minimum current consumption charges for the period from Sept. 1980 to June, 1982 and the liability of the Company payable to the Board was determined at Rs. 1.07 crores, leaving the Board and the Government to adjust their disputes between themselves regarding the balance of the amounts which the Government had obliged itself to pay the Board on account of making the electric supply available to the Company at concessional rates. Regarding consumption deposit, it was directed that 2/3rd of Rs. 92,90,400/- be deposited within two months from the date of judgment and to furnish bank guarantee in favour of the Board within the same period for the balance of 1/3rd amount. A sum of Rs. 30 lakhs deposited pursuant to the interim direction may be given credit to while depositing the 2/3rd amount. The other reliefs are not necessary for the purpose of controversy. Therefore they are not being extracted. With regard to the date of commissioning of the unit-whether it was on Sept. 19, 1980 or June 5, 1982, the Bench has left open that point in view of the representation made before the Bench that the present suits have already been filed and pending. We are informed that both parties filed appeals in the Supreme Court against the decision of the Division Bench and with regard to the direction for deposit of 2/3rd amount as minimum consumption charges as security, it was stayed by the Supreme Court unconditionally.

7. In the plaint, eschewing the immaterial contentions for the present purpose, the thrust of the respondent's plea and reiterated by Sri K. Srinivasa Murthy, its learned counsel is that the direction issued by the State Government under S. 78-A of the Act is a statutory direction; the Board is bound thereby; it forms an integral part of the contract dt. June, 4, 1982 power supply was restored on June 5, 1982 the consumption of electricity preceding thereto was on trial runs for commercial production; the unit was commissioned from June 5, 1982; therefore the concessional tariffs for three years begins to run from June 5, 1982 and thereby they are entitled to the benefit thereto till June 4, 1985. The withdrawal of concessions in G.O Rt. No. 62 dt. June 10, 1983 have no effect on the contract and therefore the demands the subject-matter of the suit are illegal, void etc. This plea is resisted by the Board in their written statement and it is vehemently contended by Sri Chandrasekhara Rao, their learned standing counsel that the directions in G.O Rt. No. 1798 dt. Dec., 29, 1981 and the letter of the Government dt. May 31, 1982 from an integral part; there is no tripartite agreement between the Board, the respondent and the Government; therefore the directions in G.O Rt. No. 1798 and the letter dt. May 31, 1982 do not form part of the contract dt. June 4, 1982 which empowers to unilaterally increase the tariff and since the concessions were withdrawn by the Government in G.O Rt. No. 62 dt. June 10, 1983; the Board is free to collect the normal tariff from the respondent from June 10, 1983.

8. The Court below on consideration of the relevant material placed before it, held that the respondent established a prima facie case and the balance of convenience lies in issuing the injunction and accordingly, the orders referred to earlier have been issued providing appropriate safeguards to the rights of the parties.

9. Sri Chandrasekhara Rao, learned standing counsel for the Board contended that the learned single Judge and the Division Bench held as a fact that G.O Rt. No. 62 is prospective from June 10, 1983 and the claims are for the energy consumed from June, 1983 to May, 1984 and therefore the suits themselves are incompetent. Admittedly the unit was commissioned on Sept. 19, 1980 and the three years period of concession accorded in G.O Rt. No. 1798 dt. Dec. 29, 1981 is to be worked out from Sept. 19, 1980 and it expired by Sept. 19, 1983. Therefore, the grant of injunction by the Court below is unwarranted. It is further contended that the Government have no power to issue concessional tariff to an individual consumer. S. 78-A pertains to direction regarding policy. Concessional tariff to an individual is not a policy under S. 78-A. Therefore the Board is not bound by the concession given under G.O Rt. No. 1798. Even otherwise, it expired by efflux of time, by September, 1983. In terms of Clauses (9) and (10) of the contract dt. June 4, 1982, the Board has got unilateral right to revise the tariff directing the respondent to pay the normal rates of tariff. He placed the main plank in support of his contention on the decision of a Division Bench of this Court reported in Poddar Projects Ltd. (Multi Steels) v. A.P.S.E Board, AIR 1982 Andh Pra 189. He also relied on other decisions which we frill refer at the appropriate place.

10. Sri Srinivasa Murthy, learned counsel for the respondent contended that by operation of the finding of the Division Bench in the writ appeals referred to earlier, the concessional tariff given in G.O Rt. 1798 dt. Dec. 29, 1981 became integral part of the contract dt. June 4, 1982 must be one entered under S. 49(3) of the Act. Unless the contract is avoided under any of the provisions of the Contract Act, it is binding on the Board. It has no power to unilaterally revise the tariff unless it is a contingent contract coming within Section 32 of the Contract Act. In support thereof he relied on Girija Proshad Pal…Plaintiff; v. The National Coal Co. Ltd.…Defendant., AIR 1949 Cal 472; Pragdas v. Jeewanlal, AIR 1948 PC 217 and Ganga Saran v. Firm Ram Charan, AIR 1952 SC 9. In support of his contention that the Board has no unilateral power to revise ti\e tariff, he relied on Indian Aluminium Co. v. Kerala State Electricity Board, AIR 1975 SC 1967 and A.P.S.E.B v. K.K Sugar Industry, AIR 1984 Andh Pra 360. The Board is estopped from going back from their conduct in billing the respondent on concessional tariffs accorded in G.O Rt. No. 1798.

11. The first question that arises for consideration is whether the State Government has power to issue directions to the Board to accord concessional tariff under S. 78-A of the Act.

Section 78-A of the Act reads thus:

“78A. Directions by the State Government — (1) In the discharge of its functions, the Board shall be guided by such directions on questions of policy as may be given to it by the State Government.

(2) If any dispute arises between the Board and the State Government as to whether a question is not a question of policy, it shall be referred to an authority whose decision thereon shall be final.”

12. In Aluminium Industries' case (AIR 1975 SC 1967), Bhagwati, J. (as he then was) speaking for the Court held at page 1977, thus:

“Some times the Board might have to give special tariffs to consumers in undeveloped or sparsely developed areas and sometimes special tariffs might, have to be given to industrial consumers with a view to accelerating the rate of industrial growth and development in the State, even though such special tariffs might not be sufficient to meet the cost of generation, supply and distribution of electricity.”

In Writ Appeal No. 359/74 etc., on difference of opinion between Obul Reddy, C.J and Lakshmaiah, J., Sambasiva Rao, J. (As he then was) as a referring Judge, has held thus:

“Had there been no settlement we do not know whether the Government would have issued a direction directing the Board on the same lines as the agreement because an important matter of policy relating to a very heavy industry providing employment to quite a large number of workers and providing substantial amount to the revenue of the State Government was involved, in this sense, it can be said that the agreement may be deemed to be in pursuance of the directions, though strictly speaking no direction under S. 78-A was in terms issued by the Board.”

In W.A No. 872/84 and batch dt. April 5, 1985, Ramachandra Raju, J. held thus:

“The State has got manifold functions including the giving of encouragement to entrepreneurs to set up industries either in the private sector, public sector or joint sector. In the initial periods, the industries would be requiring supply of power at concessional rates. If the matter was to be left to the Board, the Board may not be in a position to offer any concessions to such entrepreneurs. It is clear that the Government steps in and gives directions to the Board as may be necessary to supply power for those new industries at concessional tariffs during the formative years. Setting up of heavy industries would generate not only more employment but also more returns to the State by way of commercial taxes, excise duties, etc. The State would also be genuinely interested in locating some industries in backward areas with a view to develop that part of the State and add to the economic development of such backward regions. To encourage the setting up of such industries in such backward areas, the State Government has to give some inducements, which would persuade entrepreneurs to set up their industries in such backward areas. In our view, the fixation of tariffs is also a larger policy decision which the Board can take concerning which the Government can effectively intervene by acting under Section 78-A of the Supply Act and in giving necessary directions to the Board.”

In G.O.Ms No. 375, Industries and Commerce (IA) department, dt. Aug. 23, 1985 revising the policy in G.O.Ms No. 224 dt. Mar. 9, 1978 and G.O.Ms No. 736 dt. Dec. 28, 1981, the Government issued orders to introduce new schemes of incentives for new industries to be set up in Andhra Pradesh, taking into consideration classification of backward areas, the revised package of state incentives is meant to achieve the policy objectives in the sphere of industrialisation of the State:

(a) Optimum utilisation of natural resources of the State with emphasis on conversion within the State of available raw materials into value added products;

(b) widen the entrepreneurial base in the State and promote industrial consciousness and foster on industrial culture among the people of the State;

(c) dispersal of industrial activity with a view to bringing about a balanced regional development with special emphasis on industrially backward areas;

(d) to encourage the establishment and; growth of industries needed to provide; necessary input, support to the agrarian sector and to bring about a harmonious development of the industrial and agriculture sector so as to make them mutually supportive and growth oriented;

(e) to encourage employment oriented industries.

In paragraph 3AI(iii) it is stated that:

“Power — At present the Andhra Pradesh; State Electricity Board offers 25% tariffs concessions for the first three years for certain industries. This concession would be extended to two more years, i.e, a total of 5 years. 25% concession tariff would be met for the additional 2 years from out of the industries budget.”

(The other clauses are not necessary. Hence omitted).

13. Considered from the above perspective, we have no hesitation to conclude that the State Government, in its endeavour to accelerate industrialisation in the State, intended to encourage entrepreneurs to set up industries in a particular region or regions, depending upon the availability of the raw material or the backwardness of the region in either public or private or joint sectors as part of its package schemes; could offer concessional tariffs for the consumption of electricity, an essential raw material in the said industry or industries and as a part thereof, grant of concessional tariff to an individual industry is a policy under S. 78-A, and the Board shall be bound by such directions. On acceptance and in furtherance thereof, if an entrepreneur acts to his detriment a valuable right is created in his favour and could be enforced in an appropriate proceedings and the State is estopped to go behind the promise made to the entrepreneur. It was so held in Solanki Chimanbhai Ukabhai v. State Of Gujarat, AIR 1983 SC 484. No doubt, the Division Bench in Poddar Projects Ltd.'s case, AIR 1982 Andh Pra 189 (supra), has held that the power under S. 78-A cannot be invoked even in classes of pases to accord concessional tariffs. But unfortunately the earlier Division Bench judgment in W.A No. 354/74 was not drawn to its attention and though Indian Aluminium Company's case, (AIR 1975 SC 1967) (supra), was referred to, the relevant passage in para 17 referred to earlier was not drawn attention to the Division Bench. We are informed that the decision in Poddar Projects Ltd. case (supra) is subject of appeal in the Supreme Court. The latter Division Bench, the same parties here, followed the earlier Division Bench decision. We agree with the ratio laid down in the decisions referred to earlier. The necessary conclusion is that the Board is bound by the directions issued by the State Government in G.O Rt. No. 1798 dt. Dec. 29, 1981, the further question is whether it is an integral part of the contract dt. June 4, 1982. It is true, as contended by Sri Chandrasekhara Rao that unlike Clause (A) of the proceeding agreements the contract dt. June 4, 1982 did not expressly incorporate the concessions accorded by the State Government in G.O Rt. No. 1798 dt. Dec. 29, 1981. In para 3 thereof, we have already noted hereinbefore, that the State Government gave express directions to the Board to make the concession as part of the agreement. It is a statutory discretion and therefore the Board is bound by the said direction. Under S. 78-A(2) it is open to it to dispute its binding nature by making a reference to the Central Electricity Authority constituted under S. 3 of the Act Admittedly no such recourse was taken. On the contrary it is accepted the direction and went on issuing the bills at the concessional 1 rates till it was withdrawn in G.O Rt. No. 62. The finding of the Division Bench in W.A No. 874 of 1984 etc. is also to the same effect. The necessary conclusion, therefore, is that the concessional tariff given in G.O Rt. No. 1798 dt. Dec. 29, 1981 forms an integral part of the contract dt. June 4, 1982.

14. The next question is whether the Board is bound by the contract. It is not its case that the contract is vitiated either by coercion, undue influence, fraud or misrepresentation under Ss. 15 to 18 or voidable under Sections 19, 21, 22 or void under S. 20 or 23 of the Indian Contract Act, 1872. Under S. 32, a contingent contract to do or not to do anything if an uncertain future event happens to be enforced by law unless and until that event has happened. An agreement is frustrated and becomes void when its performance becomes impossible.

15. In Maritime National Fish Ltd. v. Ocean Trawler Ltd., AIR 1935 PC 128 Lord Wright speaking for the Board held that:

“In a case such as the present it may be questioned whether the Court should imply a condition resolutive of the contract when the parties might have inserted an express condition to that effect but did not do so, though the possibility that the things might happen as they did was present in their minds when they made the contract.”

Lord Morton in Pragdas v. Jeewanlal Ltd., AIR 1948 PC 217 (supra) speaking for the Board construing the contingent contract under S. 32, held thus:

“There is thus no ground for concluding that the buyers must have intended the terms in question to be a term of the contract. On the contrary it seems unlikely that the buyers, who had Government orders to carry out, would have agreed that the sellers should only be bound to deliver the tin and when a consignment already ordered by them should arrive in Calcutta.”

In that case, in a forward contract, they agreed to sell a specified quantity of Penang Tins. But there is no covenant in the contract that it would be supplied on the arrival of that tin to Calcutta Port. The contention in that regard was negatived. The suit for damages for breach of contract was decreed.

16. In Ganga Saran v. Firm Ram Charan, AIR 1952 SC 9 (supra), the contention regarding contingent contract of Section 32 and frustration thereof under S. 56 of the Contract Act was considered. It was held therein, that the Courts in India must look primarily to the law as embodied in Sections 32 and 56 of the Indian Contract Act 1872 and also held that the enforcement of the agreement was not contingent on the happening of an uncertain future event (supply of cloth as and when it is received). Same is the view in Girija Proshad Pal…Plaintiff; v. The National Coal Co. Ltd.…Defendant., AIR 1949 Cal 472 (supra).

17. It is well settled that the Courts have no power to absolve a party to the contract from his obligations. On the other hand, the Courts are anxious to preserve intact the sanctity of contract. The true construction of a contract must depend upon the import of the language couched therein and not upon what the parties choose to say afterwards. It is not the case of the Board that the contract dt. June 4, 1982 is contingent upon the exercise of power by the Government under S. 78-A from time to time. Therefore, the doctrine of contingent contract engrafted under S. 32 of the Contract Act becomes inapplicable to the facts in this case.

18. The power to grant concessional tariffs under S. 78-A carries with it the power to withdraw such a concession. Under what given circumstances such a power could be exercised and is binding on the parties, is not a matter to lie probed into because the exercise of such power by the State Government was not assailed by the respondent in the previous litigation but was agitated only as to the date on which the order in G.O Rt. No. 62 came into effect, i.e whether it would be retrospective or prospective. It was held therein that it is only prospective from the date of the issue viz. June 10, 1983, the core Contention of Sri. Chandrasekhara Rao, learned counsel for the Board, is that as a result of rescinding the previous order, the contractual obligation to accord concessional tariffs came to a terminus with effect from June 10, 1983 and thereafter the Board is free to charge the normal tariff for the consumption of electrical power by the respondent. Thereby by implication, though expressly it is not contended that the contract stood frustrated and the foundation for concessional tariffs accorded under G.O Rt. No. 1798 dt. Dec. 29, 1981 stood destroyed, thereby the contract for concessional tariff becomes unenforceable. Sri Srinivasa Murthy countered it as extracted earlier. The question is whether the contract dated June 4, 1982 is frustrated? In Tsakiroglou & Co. Ltd. v. Noblee & Thorl G.M.B.H, 1962 AC 93 (HL) the question whether contract is frustrated was held to be a question of law. In National Carriers Ltd. v. Panalpina Ltd., (1981) 1 All ER 161 (HL) Lord Hailsham of ST Marylebone, LC held that it involves question of law or at best a question of muted taw and fact. In this case, leave to appeal to House of Lords was in fact granted directly from master's order in Chamber in Summary procedure. Same view was taken in Pioneer Shipping Ltd. v. B.T.P Toxide Ltd., 1982 AC 724 at 736 (per Lord Diplock). In Davis Contractors Ltd. v. Fareham Urban District Council, 1956 AC 696 at 727 (HL) Lord Radcliffe held that the description of the circumstances that justify the application of the rule (frustration) and, consequently, the decision whether in a particular case the circumstances exist are necessary questions of law.

19. It is well settled that a promise under the contract may be express or implied. The dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of Section 56. In some cases the Court may gather as a matter of construction that the contract itself contains impliedly or explicitly a term according to which the contract would stand discharged on the happening of certain circumstances. The doctrine of implied term in the contract was not found to be quite satisfactory as it contained an element of contradiction for, if the parties foresaw the circumstances which existed at the date of performance they would provide for them in contract; if they did not, they meant that they deliberately took the risk and therefore no question of implied term could really arise. But that circumstance itself does not absolve the Court from looking into the nature of the contract and the attendant circumstances surrounding the contract. The English Courts of high authority have evolved different theories to absolve a party from the absolute contractual liability when the foundation of the contract has been destroyed and the, performance thereof becomes impossible. This premise was evolved on the ground that the contract on the date of its performance is found to be unreasonable and unjust to exact its performance in the changed circumstances. In that context in F.A Tamplin S.S Co. v. Anglo Mexican Petroleum Products Co. Ltd., (1916) 2 AC 397 (HL), Earl Lorebum, held thus:

“……… a Court can and ought to examine the contract and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. And if they must have done so, then a term to that effect will be implied, though it be not expressed in the contract… no Court has an absolving power, but it can infer from the nature of the contract and the surrounding circumstances that a condition which is not expressed was a foundation on which the parties contracted.”

Lord Wright in Joseph Constantine Steamship Line Ltd. v. Imperial Smelting Corpn. Ltd., 1942 AC 154 at 185 (HL) during the course of his speech observed thus:

“In ascertaining the meaning of the contract and its application to the actual occurrences, the Court has to decide, not what the parties actually intended but what as reasonable men they should have intended. The Court personifies for this purpose the reasonable man.”

20. In Denny, Mott & Dickson Ltd. v. James B. Fraser & Co. Ltd., 1944. AC 265 (HL), Lord Macmillan during the course of his speach, said that in judging whether a contract has been frustrated, the contract must be looked at as a whole. The question is whether its purpose as gathered from its terms has been defeated. It is also further held that it is a principle so inherently just as inevitably to find a place in any civilized system of law. Lord Wright at page 274 has said that where it (doctrine of frustration) applies, there is no breach of contract. What happens is that the contract is held on its true construction not to apply at all from the time when the frustrating circumstances supervene. From that moment it is no longer any obligation as to future performance, though up to that moment obligations which have accrued remain in force. The application of the general principle must depend on the circumstances of the particular case. No detailed absolute rules can be stated. A certain elasticity is essential. Where there is frustration a dissolution of a contract occurs automatically. It does not depend, as does rescission of a contract on the ground of repudiation or breach, on the choice or election of either party. It depends on what Actually has happened on its effect on the possibility of performing the contract. At page 276 it was further held that when frustration occurs, it is automatic, and that its legal effect depends not on the intention of the parties or even on their knowledge as to the event, but on its occurrence in such circumstances as to show it to be inconsistent with the further prosecution of the adventure. In that case, the trade agreement between the timber merchants for letting one party's timber yard to another with an option to the lessee to purchase on termination of an agreement but as a result of the promulgation of contract of Timber Order 1939, the performance of the contract was frustrated and it was held that the contractual liabilities stood discharged.

21. In Davis Contractors Ltd. v. Fareham Urban District Council, 1956 AC 696 at 720 (supra), Lord Reid did not accept the doctrine propounded by Earl Lorebum, in F.A Tamplin S.S Co. Ltd. case (1916 (2) AC 397) (supra) as the correct approach. He approved of Viscount Simon's speech in British Movietonews Ltd. v. London and District Cinemas Ltd., 1952 AC 166 at 185 (HL) that:

“If on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamental different situation which has now unexpectedly emerged, the contract ceases to bind at that point — not because the Court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation”. As correct test

It was further held thus:

“In my view the proper approach to this case is to take from the arbitrator's award all facts which throw light on the nature of the contract, or which can properly be held to be extrinsic evidence relevant to assist in its construction and then, as a matter of law, to construe the contract and to determine whether the ultimate situation, as disclosed by the award, is or is not within the scope of the contract so construed.”

22. At page 727, Lord Radcliffs held that the theory of frustration belongs to the law of contract and it is represented by a rule which the Courts will apply in certain limited circumstances for the purpose of deciding that contractual obligations, ex facie binding, are no longer enforceable against the parties. It was further held that frustration is not to be lightly invoked as the dissolvent of a contract. At page 729 it was further held that “frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do.” It was further held that the data for decision are, on the one hand, the terms and construction of the contract, read in the light of the then existing circumstances and on the other hand the events which have occurred. In the nature of things there is often no room for any elaborate inquiry. The Court must act upon a general impression of what its rule requires. It is for that reason that special importances is necessarily attached to the occurrence of any unexpected event that as it were, changes the face of things. But, even so, it is not hardship or inconvenience or material loss itself which calls the principle of frustration into play. There must be as well such a change in the significance of the obligation that the things undertaken would if performed, be a different thing from that contracted for. In National Carriers Ltd. v. Panalpina Ltd., (1981) 1 All ER 161 (HL) (supra) Lord Hailsham, L.C while surveying five doctrines of frustration adumbrated in various decisions, expressed his agreement with the speech of Lord Radcliffs in Davis Contractors Ltd. case that “frustration occurs whenever law recognises……promised to do”. 1956 AC 696 (supra).

23. In Satyabrata v. Mugneeran, AIR 1954 SC 44 at p. 48 Mukherjea, J. (as he then was) while considering the doctrine of frustration held that the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract. The relief is given by the Court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement. Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have intention regarding it. When such an event or change of circumstance occurs which in so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the Court which can pronounce the contract to be frustrated and at an end. The Court undoubtedly has to examine the contract and the circumstances under which it was made. The belief, knowledge, and intention of the parties are evidence, but evidence only on which the Court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object. This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction. This really a positive rule of positive law and as such comes within the purview of Section 56 of the Indian Contract Act. In that case the contract to deliver the plots with built in houses was held to have been frustrated as a result of the requisition of the land for military purpose and the contract stood terminated. In Ganga Saran's case AIR 1952 SC 9 (supra). It was held that the doctrine of frustration would be dealt with under Section 32 of the Contract Act.

24. The result of the above discussion leads to the following conclusions. The contract may be express or implied. The doctrine of frustration is a positive law under Section 56 and an integral scheme to be dealt with under Section 32 of the Contract Act itself. The Court is to examine the contract as a whole, the circumstances under which it was made and the altered circumstances, not with a view to vary the terms of the contract but to explain whether or not as a reasonable man, the parties would have intended to make their bargain on the footing that a particular thing or state of things would continue to subsist and if found positive, a term to that effect may be implied. This is a principle so inherently just and fair, but no absolute rule can be laid down. Certain amount of elasticity is essential. The contact comes to an end automatically from the time the frustrating circumstances supervene. The party is relieved of the contract not because there is an implied term, but because of the subsequent impossibility of the performance of the contractual obligation due to occurrence of unexpected event that brought about fundamentally different situation without the fault of either party. The doctrine of frustration is not lightly to be invoked as the dissolvent of a contract. It is not the hardship or inconvenience or material loss that impel the doctrine of frustration to come into play but radically altered situation that had emerged from what was initially undertaken striking at the root of the contract. Thereby it rendered the performance of the contract impossible defeating the underlying object of the contract.

25. Thus we reach the scenerio to consider the crucial questions on the facts in this case. Sri Chandrasekhara Rao vehemently pressed forth, placing strong reliance on the decision of the Division Bench in W.A No. 854/84 (W.P 5222/83) whereunder the demand for Rs. 4 crores and odd for the difference amount on the normal tariff was quashed and a mandamus was issued directing the Board to issue fresh bill for the consumption of electrical power for the month of May, 1983 computing the tariff at Re. 0.20 paise per unit obviously on the premise that the concessional tariff started from Sept. 19, 1980. Therefore, the question whether the contract dt. June 4, 1988 became frustrated or as to when the unit of the respondent commenced consumption of electric power at concessional tariff, are mere matters of construction of the relevant G.Os Therefore, the question, should be decided now and here itself. Sri Srinivasa Murthy when we have drawn his attention of the result of the decision in W.A No. 854/84 his answer is one of non-committal while reiterating his contentions referred to hereinbefore and placed reliance on the decisions referred to earlier. It is undoubted that if the contract is one made under Section 49(3) of the Act, the Board has no unilateral power to revise the tariff as held in Aluminium Industries' case, AIR 1975 SC 1967 (supra), and in the absence of an express provision under the covenant, the Board has no power to impose a liability as held in K.K Sugar Industries' case, AIR 1984 Andh Pra 360 (supra). By a catena of decisions of this Court, starting from Kanguda Industrial Works v. A.P.S.E Board (1969) 1 Andh LT 328, by a Division Bench consistently held that the Board has power, even during the currency of the contract, to enhance tariff unilaterally. Therefore, it is needless to consider all the decisions cited by Sri Chandrasekhara Rao in this regard. This view is now affirmed by the Supreme Court in Bisra Stone Lime Co. v. O.S.E Board, AIR 1976 SC 127. It is equally true that in these days of rocket explosion, Courts have to evolve suitable procedure to shorten the litigation. Normally in a case where the decision is based on adduction of evidence and consideration thereof, it is inexpedient to adjudicate the issue at an interlocutory stage by the appellate Court, but when the decision could be rendered merely on the construction of the documentary evidence on record unrelated to adduction of oral evidence, even at the interlocutory stage, the Court could decide the issue and relegate the matter to the trial Court to perform the final ceremony. The non-committal stand of the respondent has given us to conclude that the questions are “still born” for trial by the Court below. Though we find that the matter might be decided as a matter of construction of the documents and the circumstantial evidence, we find it difficult to decide the same in these proceedings except to relegate it for decision by the trial Court. Though the Court below found prima facie case in favour of the respondent and issued injunction on the basis thereof, in the view we have taken, we refrain to express any opinion in this regard, but suffice it to state that it is a matter for decision at trial. Though the issue regarding deposit of additional consumption charges was argued at great vehemence by either counsel, in view of the fact that the same issue is pending decision by the Supreme Court, we decline to go into and give a finding in that regard. We confirm that, for the time being, the deposit of Rs. 30/- lakhs made by the respondent pursuant to the interim direction given by this Court pending writ petitions in the previous proceedings, would continue to be operative as ordered by the Supreme Court in the stay petition. We are informed that the respondent filed applications for extension of the injunction pending suits. Since they could not be disposed within the time stipulated by the Court below. To avoid further prolongation, we are of the view that the orders of injunction subject of these appeals, shall continue to be operative till the disposal of the suits. Both the counsel agreed that the suits could be disposed of expeditiously. The trial Court is directed to dispose of the suits on or before Oct. 31, 1985. The Chief Judge, City Civil Court is directed to transfer the suits to any Additional Judge or Additional Chief Judge who has less work, for disposal of these suits within the prescribed time. The appeals are accordingly disposed of, but in the circumstances, the parties are directed to bear their own costs.

Order accordingly.