Citation Codes

Equivalent Citations

citation codes

Case Number

O.J.C No. 1699 of 1993

Advocates

D.Mishra
B.R.Sarangi

Judges

L. Rath
D.M Patnaik, JJ.

Acts

provisions of the Electricity Act and the Electricity (Supply) Act

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Smart Summary

Court Opinion Summary

Factual and Procedural Background

The petitioner is a small scale industrial unit which originally had an agreement with the Orissa State Electricity Board (the Board) for supply of electricity at a contract demand of 94 H.P. As the petitioner's power requirement increased, a revised agreement was executed on 10-2-1983 for supply at 194 H.P and a 250 KVA transformer was installed.

The petitioner alleges that despite installation of the 250 KVA transformer and the revised agreement, the Board was never in a position to supply electricity up to the enhanced contract demand and continued to supply only on the basis of 94 H.P. Nonetheless, a bill was raised on 29-6-1989 charging the petitioner on the basis of the enhanced contract demand for the period November 1983 to October 1988 (the dispute as recited in the petition focuses on November 1983 to August 1988 in the eventual relief).

The petitioner protested and the Executive Engineer (Electrical), Kalahandi East Electrical Division (KEED) conducted an inquiry and, by letter dated 9-1-1990, accepted the petitioner's claim, opining that billing on the basis of 194 H.P was not justified. The Superintending Engineer, Bolangir Circle, on 25-6-1990, also sought a review and requested instructions to revise the bill on the basis of 94 H.P from November 1983.

Despite this, a letter of the Chief Engineer (Commerce) dated 10-12-1992 determined liability on the basis of 194 H.P for the period November 1983 to August 1988 and on the basis of 94 H.P from September 1988 onwards. A subsequent demand dated 20-2-1993 called upon the petitioner to pay dues of Rs. 5,60,253.45 outstanding until January 1993, failing which disconnection proceedings would follow.

The petitioner filed the present writ petition challenging the demand. The opposite parties filed a so-called preliminary counter-affidavit (filed 15-4-1993) and no further counter-affidavit was filed despite adjournments. The matter proceeded for final disposal before the Court.

Legal Issues Presented

Whether, in circumstances where the consumer (petitioner) entered into an agreement for enhanced contract demand (194 H.P) but the Board was not in a position to supply that enhanced quantity of electrical energy, the consumer can be called upon to pay charges on the basis of the enhanced contract demand for the period when supply was not actually available.
Whether Regulation 8 of the Orissa State Electricity Board (General Condition of Supply) Regulations, 1981 — relied upon by the Board — authorises charging the consumer the contractual minimum/dues where the Board itself was unable to supply the agreed quantity of power.

Arguments of the Parties

Petitioner's Arguments

Counsel for the petitioner (Mr. Misra) submitted the sole question that though an agreement was executed raising the contract demand to 194 H.P, the Board was never in a position to supply that quantity of electrical energy and therefore the petitioner cannot be made to pay for that enhanced demand.
The petitioner relied on the Executive Engineer's inquiry report which concluded that additional load of 100 H.P was never released and that billing on 194 H.P was not justified.

Board's Arguments

The Board's stand in the counter-affidavit was that the Sub-Divisional Officer had informed the petitioner on 19-10-1983 of the Board's readiness to supply the enhanced quantity and that by virtue of the subsequent agreement and audit, bills were properly raised on the basis of 194 H.P for November 1983 to August 1988.
The Board asserted that once a contract is executed under Regulation 8 of the 1981 Regulations, the consumer is obliged to pay dues on the basis of the contract demand and is not entitled to reduction of demand.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ispat Alloys Limited v. The Orissa State Electricity Board, OJC No. 2816 of 1992 (decided 10-5-1993)	Illustration of the principle that Regulation-based liability to pay minimum/contract charges arises where the Board is in a position to supply but the consumer does not consume; conversely, if the Board is not ready to supply, it is unreasonable to charge the consumer the minimum/contract rate.	The Court relied on the reasoning in that decision to support its view that Regulation 8's liability arises only where power is actually available to be supplied; hence if the Board itself could not supply the enhanced quantity, it could not justifiably charge the consumer on that basis.

Court's Reasoning and Analysis

The Court examined and accepted the factual findings of the Executive Engineer, KEED, which were set out in detail in the inquiry report. Key factual findings relied upon by the Court included:

A 250 KVA transformer was installed on 19-10-1983 after the revised agreement, but the metering arrangement necessary to record consumption at 194 H.P had not been made.
The installed 250 KVA transformer fed multiple consumers and institutional loads (a detailed list and a tabulation of connected loads are recorded in the inquiry report), resulting in very high utilisation — the report notes about 90% loading during day time and daytime loads that made release of an additional 100 H.P infeasible.
The transformer failed on 23-2-1989 and supply to the petitioner was disrupted until substitute transformers were installed on 17-3-1989; after that date supply was from a 100 KVA transformer.
Inspections by the Board's vigilance wing on 8-9-1988 and the Executive Engineer's inspection on 25-7-1989 found the connected load to be 94 H.P.

On legal interpretation, the Court analyzed Regulation 8 of the Orissa State Electricity Board (General Condition of Supply) Regulations, 1981. The Court observed that the spirit of Regulation 8 was premised on the precondition that power according to the agreement is actually available to be supplied. Thus, the Court held that the liability under Regulation 8 arises only when that precondition — availability/readiness to supply — is satisfied.

The Court contrasted two situations: (a) the Board is ready and willing to supply but the consumer does not consume (in which event liability may arise since the Board must keep energy available), and (b) the consumer is ready to consume but the Board is not prepared to supply (in which event it would be unreasonable to permit the Board to charge for supply it could not make). The Court found the present case to fall under the latter situation.

The Court also referred to the earlier decision in Ispat Alloys Limited (OJC No. 2816 of 1992) to reinforce the principle that a Board cannot charge contractual minimums where it has not been in a position to supply the contracted power. Applying the factual findings of the Executive Engineer and this legal principle, the Court concluded that billing on the basis of 194 H.P for the period in question was unjustified.

Holding and Implications

HOLDING: The Court quashed the decision of the Chief Engineer (Commerce) contained in Annexure-10 and the consequent demand raised against the petitioner on that basis. It directed that the petitioner's liability for the period November 1983 to August 1988 shall be only on the basis of 94 H.P, and that the Board may serve a revised bill accordingly. The petition was disposed of. No costs were awarded.

Implications:

The direct effect is that the specific demand based on charging the petitioner at 194 H.P for November 1983 to August 1988 was set aside and a revised bill on the basis of 94 H.P was ordered to be issued; the petitioner is liable to pay that revised bill.
The Court relied on existing statutory/regulatory interpretation and a prior decision (Ispat Alloys) to apply the principle that a consumer cannot be charged for enhanced contract demand if the supplier was not in a position to supply that demand. The opinion did not purport to lay down a new legal precedent beyond applying these principles to the facts of the case.

Disposition: Petition allowed in part — Chief Engineer's decision quashed; revised billing on 94 H.P for November 1983 to August 1988; petition disposed of; no costs.

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Messrs J.M Graphite Mining & Manufacturing Company v. Orissa State Electricity Board And Others Opposite Parties.

L. Rath, J.:— The dispute raised in the present petition is the bills raised against the petitioner, a small scale industrial unit, for the electrical energy supplied during the period November, 1983 to October, 1988. The brief facts to introduce the case are that originally the petitioner had an agreement with the Board for supply of electricity for contract demand of 94 H.P but later on as its power-requirement increased, an agreement was executed by it with the Board on 10-2-1983 for supply of 194 H.P and the petitioner also installed necessary equipment for consumption of such energy. It is the petitioner's case that even though a 250 KVA Transformer was installed, yet in fact the Board was never in a position to supply current up to the extent of the contract demand and that it continued to supply the petitioner current only on the basis of the contract demand of 94 H.P and the surplus power was being utilised for other purposes. Even so bill as in Annexure 2 was raised on the petitioner on 29-6-1989 charging it to pay on the basis of the increased contract demand from November, 1983 to October, 1988. The petitioner having raised protest against such demand, the matter was enquired into by the Executive Engineer (Electrical), Kalahandi East Electrical Division (KEED) and on the basis of the enquiry he addressed a letter to the Superintending Engineer, Bolangir Circle on 9-1-1990 accepting the claim of the petitioner and opining that billing it on the contract demand of 194 H.P was not justified. Subsequently the Superintending Engineer, Bolangir Circle also wrote on 25-6-1990 to the Superintending Engineer (Commercial), Orissa State Electricity Board, Bhubaneswar, for review of the facts and issue of instruction to the Executive Engineer to revise the bill on contract demand of 94 H.P from November, 1983. The petitioner was however served with a revised bill on the basis of the letter of the Chief Engineer of 10-12-1992 which was annexed to that letter. In the letter the Chief Engineer communicated the Executive Engineer, KEED that decision had been taken to determine the liability of the petitioner on the basis of 194 H.P for the period November, 1983 to August, 1988 and on the basis of 94 H.P from September, 1988 onwards. A further letter dated 20-2-1993 was received by the petitioner calling upon it to pay the dues of Rs. 5,60,253.45 as outstanding against it till January, 1993 failing which steps for disconnection of supply of power was to be taken.

2. On notice being issued for admission and final disposal directing that counter-affidavit shall be filed along with appearance, the opposite parties have appeared and filed a counter-affidavit styling it as a preliminary counter-affidavit. In it the opposite parties have made the averments that on 19-10-1983 the Sub-Divisional Officer informed the petitioner about the Board's readiness to supply the enhanced quantity of power and on the basis of the audit report and in view of the subsequent agreement, the bills were to be raised against the petitioner on the basis of 194 H.P Consequently the bill on the basis of the enhanced load of 194 H.P has been raised for the period November, 1983 to August, 1988. Since the OSEB Vigilance Squad visited the premises of the petitioner on 8-9-1988 and found the connected load to be only 94 H.P, the demand has been reduced to 94 H.P from September, 1988 onwards.

3. Before the respective stands of the parties are considered, it is necessary to be stated that under the Rules of the High Court a counter to a writ petition is necessary to be filed along with appearance. Grant of further time for filing counter-affidavit is at the discretion of the Court. There is no provision for filing a preliminary counter-affidavit. At any rate such counter-affidavit was filed on 15-4-1993 and since then no return has been made before this Court. Even so the matter being put up on 3-1-1994, was adjourned to the next day and again on 4-1-1994 was adjourned for today, but no other return has been filed.

4. Mr. Misra, the learned counsel for the petitioner has urged the sole question that even though an agreement was executed with the Board raising the contract demand to 194 H.P yet the Board was never in a position to supply that quantity of electrical energy and consequently the petitioner cannot be called upon to pay for such a demand. On the contrary submission is made on behalf of the Board that once the contract is executed under Regulation 8 of the Orissa State Electricity Board (General Condition of Supply) Regulations, 1981, (for short, “Regulations, 1981”) the consumer is under a compulsion to pay the dues on the basis of the contract demand and is not entitled to any benefit of reduction of the demand. In deciding the case the facts found by the Executive Engineer, KEED are of great relevance and it will be of benefit to extract some portion of the same:

“Regarding their complaint at para (1) above, I am to report you as follows:

(1) After the consumer entered into the revised agreement on 10-2-83, an estimate was prepared for installation of a 250 KVA transformer and after due provision in the Budget of 82-83, the 250 KVA transformer was installed on 19-10-83. The Consumer has arranged an initial inspection of additional installation of 98 HP on 20-10-83 by the Assistant Electrical Inspector, Rayagada which shows that the party was ready for availing power supply for an additional load of 98 HP (though the contract was for 100 HP). But as far as Board is concerned supply was not given to his additional installation of 98 H.P as can be established from the following points.

(a) Metering arrangement to record the consumption of 194 HP has not been done.

(b) In the 250 KVA transformer installed for their purpose, the following are connected with load.

Sl. No. Name of the Consumer HP. K.W 1. J.M Graphite 94 75.00 2. Sri Purand Chandra Jain 10 7.50 3. Chiranjabi Talkies — 13.15 4. Street Light, Kesinga — 10.00 5 Domestic/Commercial (250 nos.) — 200.00 6. L.I consumer 5 3.75 Total 309.40

Even during day time the loading in the 250 KVA transformer is as follows.

HP KVA 1. Industrial & L.I 109 95 2. Cinecan — 15 3. Commercial Loads other than domestic loads — 110 Total:— 220

The area fed by this transformer is having schools, police out post, offices such as Block Office, HAG Office, Vetenary Office, Co-operative Society, OSEB, Officers, Sales Tax Office, Treasury Office, M.I Office and P.H.O Offices etc. Hence it can be seen that the transfer was about 90% loaded over during day time. Thus it can be seen that even during day time an additional load of 100 HP cannot be released from this transformer.

Then this 250 KVA transformer failed on 23-2-89. Because 250 KVA transformer was not available for replacement of the burnt transformer 2 Nos. of 100 KVA transformers were installed on 17-3-89. During this period from 23-2-89 to 16-3-89 supply was totally not given to this consumer and also to other consumers except essential consumers.

Since 17-3-89 J.M Graphite is being given power supply from one of the 100 KVA transformers installed on 17-3-89.

In the meantime the vigilance wing of OSEB have inspected his installetion on 8-9-88 and their report also shows that the connected load as on that date was 94 H.P

On 25-7-89, I had inspected the permises and found the connected load to be 94 H.P

From the above it can be concluded that though the consumer has entered into an agreement for 194 HP and even though a 250 KVA transformer was installed, no supply for their additional load of 100 H.P was released. Hence, billing then on a contract demand of 194 H.P is not justified.

The Head Office may kindly be moved to take a decision on this issue taking into consideration of the above report.”

On the basis of this report, the Superintending Engineer, Bolangir Circle wrote to the Superintending Engineer (Commerce), Bhubaneswar requesting him to issue necessary instructions to the Executive Engineer, KEED to revise the bill on contract demand of 94 H.P from November 1983. Even though the records reveal such facts, it is not known on what basis the decision as was contained in the letter of the Chief Engineer (Commerce) on 10-12-1992 vide Annexure 10 was taken to charge the petitioner on the contract demand of 194 H.P from November 1983 to August 1988. No reply has been made on that count in the counter-affidavit filed. Neither the position has been met in the counter-affidavit of the assertion that the Board was not in a position to supply the enhanced quantity of energy. The letter of the Executive Engineer, as Extracted above, amply shows that the electrical energy out of 250 KVA Transformer installed was being utilised by different consumers and that at day time the transformer was loaded 90% by different institutions and an additional load of 100 H.P could not be released from that transformer in favour of the petitioner.

5. Regulation 8 of the Regulations 1981 which has been relied upon by the Board, so far as relevant, is as follows:

“8. Commencement of supply: The consumer shall start taking electrical energy from the supplier within ninety days from the date on which intimation in writing to the consumer by the supplier is given to the effect that the arrangements for the supply of energy are ready and power is available. In case the consumer does not take the supply within the aforesaid period, the supplier shall charge the monthly minimum payment as specified in the tariff rate schedule applicable in the case from the date of expiry of the nineteenth day from the date of intimation. The consumer shall be liable to pay the charges within fifteen days from the date of written demand for the same, failing which the supplier shall without prejudice to any other remedy available be free to adjust the charges against the security deposit or/and enforce the charges against the pledged National Saving Certificate or Bank Fidelity Guarantee as the case may be.”

Even though the above provision has been strenuously pressed into service to justify the demand, yet we do not see anything in it as supporting the Board. The vary spirit behind the Regulation is that power according to the agreement is available to be supplied. The liability under Regulation 8 will arise only when that precondition is satisfied and not otherwise. In a similar case, OJC No. 2816 of 1992 (Ispat Alloys Limited v. The Orissa State Electricity Board) decided on 10-5-1993, though arising under a different context, we had observed, while considering the scope of Regulation 31(e) refuting the submission made on behalf of the Board, that the spirit behind it appears to be that where the Board is in a position to make the supply but the consumer does not consume the quantity asked for and agreed upon, his liability to pay the minimum charges does not cease and that it would consequently follow that if the Board itself is not ready to supply even if the consumer is in a position to consume, it would be hardly reasonable to hold that the Board would still be authorised to charge at the minimum rate.

6. The relationship between the Board and petitioner is that of supplier and consumer. The relationship between them is as between two contracting parties supervened by the provisions of the Electricity Act and the Electricity (Supply) Act as also the Regulations framed thereunder. The relationship between the parties is therefore to be interpreted in the light of the statutory provisions but however wherever possible, the statutory provisions would not be stretched to be interpreted in a manner so as to deny the basic relationship of contracting parties. It would hence stand to reason that the Board while has the unlimited authority to realise the dues as per the agreement executed yet should not be found to be so authorised if it itself was not in a position to supply the electrical energy for which the charges are to be paid. The reason is that in the first event, i.e where the Board is ready and willing to supply but the consumer does not consume, the liability arises because of the fact that the Board remain in readiness to supply energy and non-utilisation of energy by the consumer does not affect its liability to keep the energy apart for consumption. But so far as the reverse situation is concerned, where the consumer is ready to consume but the Board is not prepared to supply, to yet allow the Board to realise the higher duty merely because of the existence of agreement would be travesty of justice.

7. In that view of the matter, we do not find any justification for the stand taken by the opposite parties and hence quash the decision of the Chief Engineer (Commerce) as in Annexure-10 and the consequent demand raised against the petitioner on the basis of it and direct that the petitioner's liability for the period November 1983 to August 1988 shall be only on the basis of 94 H.P The Board may serve a revised bill on the petitioner which shall be liable to pay the same. The petition is disposed of. No costs.

D.M Patnaik, J.:— 8. I agree.

Order accordingly.

Messrs J.M Graphite ... v. Orissa State Electri...