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  • Section 22-B of the Indian Electricity Act of 1910
  • Section 49 of the 1948 Act
  • Section 49(3) of the Electricity Supply Act, 1948
  • Article 226 of the Constitution of India
  • Section 22-B of the Indian Electricity Act, 1910
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Cites
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Citation Codes
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citation codes
Case Number
Disposition
Attorney(S)
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Acts
  • Section 22-B of the Indian Electricity Act of 1910
  • Section 49 of the 1948 Act
  • Section 49(3) of the Electricity Supply Act, 1948
  • Article 226 of the Constitution of India
  • Section 22-B of the Indian Electricity Act, 1910
Smart Summary

Factual and Procedural Background

The appellant, an industrial consumer of electricity, filed a writ petition under Article 226 of the Constitution of India to challenge an order of the Uttar Pradesh Electricity Board (“the Board”) that levied a surcharge of 5.5 paise per unit on electricity drawn in excess of 70 per cent of the allotted quota. The quota restriction had been imposed by the State Government under Section 22-B of the Indian Electricity Act, 1910 owing to a severe shortage of electricity generation caused by insufficient rainfall.

A learned Single Judge of the High Court dismissed the writ petition, emphasising that the Board had purchased additional power from the Damodar Valley Corporation (DVC) at a higher price (4.57 paise per unit) specifically to meet requests from the appellant and similar industries, and was therefore equitably entitled to recover those costs through the surcharge. A Division Bench of the High Court affirmed that decision. The present appeal was brought before the Supreme Court.

Legal Issues Presented

  1. Whether the Electricity Board lacked authority to levy a surcharge of 5.5 paise per unit without giving the one-month prior notice stipulated in the supply agreement.
  2. Whether imposition of the surcharge on electricity already supplied (from November 1966 to 20 February 1967) amounted to an impermissible retrospective levy.

Arguments of the Parties

Appellant's Arguments

  • The Board could not unilaterally enhance the tariff by 5.5 paise per unit without giving one-month notice as required by the contract.
  • The surcharge, applied to electricity consumed before the notification dated 20 February 1967, was retrospective and therefore unlawful.

Respondent (U.P. Electricity Board) Arguments

  • The agreement did not contemplate supply in violation of a statutory ban; hence the contractual notice clause was inapplicable.
  • Section 49(3) of the Electricity (Supply) Act, 1948 empowered the Board to fix a different tariff when electricity was supplied under exceptional circumstances, including excess drawal during a Section 22-B restriction.
  • Additional power had been procured from DVC at a higher cost solely to meet industrial consumers’ demands, justifying recovery of the extra expense through the surcharge.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Adoni Cotton Mills v. A.P. State Electricity Board, (1976) 4 SCC 68; AIR 1976 SC 2414; (1977) 1 SCR 133 Section 49 of the Electricity (Supply) Act, 1948 includes power to enhance tariff; Section 49(3) permits different tariffs based on “any other relevant factors,” including shortage situations. The Court relied on Adoni Cotton Mills to affirm that Section 49(3) empowered the Board to impose higher rates when consumers exceeded their quota during an electricity shortage.

Court's Reasoning and Analysis

1. Statutory Authority under Section 49(3): The agreement between the parties was silent on charges for electricity drawn in violation of a Section 22-B ban. Consequently, the Board could invoke its statutory power under Section 49(3) of the Electricity (Supply) Act, 1948 to prescribe a different tariff, factoring in the shortage, the special nature of supply, and “any other relevant factors.” The Court held that excess drawal during a statutory restriction plainly constituted such a factor.

2. Support from Precedent: Adoni Cotton Mills confirmed that Section 49(3) is broad and the phrase “any other relevant factors” is not to be read ejusdem generis. The Board may impose higher rates to deter consumption beyond the authorised quota and to recover additional costs incurred in procuring emergency power.

3. Contractual Notice Clause Inapplicable: Because the surcharge stemmed from statutory power rather than a contractual revision of tariff, the one-month notice requirement in the agreement did not apply.

4. Retrospectivity Argument Rejected: The notification dated 20 February 1967 merely quantified the surcharge for electricity already supplied in excess of the quota. The Court saw this not as a retrospective alteration of tariff, but as the lawful recovery of charges for supply that had always been unauthorised under the quota restriction and made available only through costlier external purchase.

5. Equitable Considerations: The Court noted, echoing the High Court, that industrial consumers had themselves requested continued supply and had offered to bear additional costs, further reinforcing the equity of the surcharge.

Holding and Implications

Appeal Dismissed. The Supreme Court upheld the levy of a 5.5 paise per unit surcharge on electricity drawn in excess of the 70 per cent quota and found no illegality in applying the surcharge to consumption from November 1966 to 20 February 1967. No order was made as to costs.

Implications: The decision reaffirms the breadth of Section 49(3) of the Electricity (Supply) Act, 1948, allowing State Electricity Boards to impose differential tariffs—including surcharges—when consumers exceed statutorily imposed quotas during power shortages. It signals that contractual notice clauses cannot override the Boards’ statutory powers in such circumstances, but the ruling sets no new doctrine beyond existing precedent.

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    New Central Jute Mills Co. Ltd. v. Uttar Pradesh State Electricity Board, Lucknow And Others

    M.P Thakkar, J.— The appellant invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution of India in order to challenge the order passed by the respondent — U.P Electricity Board levying a surcharge of 5.5 paise per unit of electricity drawn by the appellant in excess of the permissible 70 per cent authorised by the State Government. State Government had imposed a ban on drawing electricity in excess of 70 per cent of the consumption in exercise of powers under Section 22-B of the Indian Electricity Act of 1910 having regard to the fact that on account of shortfall of rain the generation of electricity had been adversely affected and it was not possible to supply electricity to the consumers as per the demand. The learned single judge of the High Court dismissed the writ petition inter alia on the ground that the equities were against the appellant (writ petitioner) in view of the fact that the respondent-Board had purchased electricity from the Damodar Valley Corporation (DVC) at the rate of 4.57 per unit in order to make available the electricity as per the demand of the appellant and other industrial units at their request. Says the learned single judge:

    “It appears to me that there are no equities in favour of the petitioner, and on this ground also, the petitioner is not entitled to any relief. The petitioner factory and other industries had requested the State Government and the Board to augment supply of electrical energy by obtaining it from the Damodar Valley Corporation and other sources and has offered to pay additional expenses which the State Government or the Board might have to incur for it. In order to accommodate the petitioner factory and other industries the State Government and the Board did not exercise the power to disconnect their connections and obtained electrical energy from the Damodar Valley Corporation and had to pay certain sums of money therefor. They were certainly entitled to recover those amounts from the petitioner factory and other industries. It does not lie in the mouth of the petitioner now to say that the Board is not entitled to levy a surcharge for recovery of the amount which they have spent in obtaining extra electrical energy from the Damodar Valley Corporation.”

    2. The Division Bench has confirmed the decision of the learned Single Judge.

    3. Two contentions have been urged in support of this appeal. The first contention is that the Electricity Board had no authority to charge 5.5 paise per unit in excess of the agreed rate without giving one month's notice as contemplated by the agreement. The second contention is that the levy of the surcharge resulted in a retrospective levy and therefore, it was not in accordance with law.

    4. So far as the principal contention is concerned we are unable to accede to the submission that the Board had no legal authority to levy 5.5 paise surcharge in respect of the supply in excess of the 70 per cent authorised by the State Government. The agreement itself does not envision the supply of electricity in violation of the ban imposed by the State Government in exercise of the power under Section 22-B of the Indian Electricity Act, 1910. Nor does the agreement stipulate the rate at which such supply should be charged if notwithstanding the ban against the supply, a consumer draws electricity in excess of the permissible quantity. Thus the agreement is silent on this aspect. Therefore, the Board was justified in invoking its power under Section 49(3) of the Electricity Supply Act, 1948 which authorises a Board to supply electricity by charging a different tariff having regard to the geographical position of the area, the nature of the supply, purpose for which the supply is required and “any other relevant factors”. Section 49(3) of the Act is wide enough to cover a situation where electricity in excess of the authorised quantum is drawn in disregard of the ban imposed in view of the shortage of the supply position in the face of the ban imposed under Section 22-B of the Indian Electricity Act, 1910 as also to cover a situation where at the express request of the appellant (as per the averment contained in the affidavit filed on behalf of the respondent) electricity is purchased from some other authority (in the present case from DVC) and is supplied to the consumers. We are, therefore, of the view that the Electricity Board had the legal authority to levy and collect surcharge of 5.5 paise per unit from the appellant in regard to the supply in excess of the 70 per cent authorised in the context of Section 22-B of the Indian Electricity Act, 1910. We are buttressed in this view by a decision of this Court in Adoni Cotton Mills v. A.P.S.E.B (1976) 4 SCC 68, AIR 1976 SC 2414, (1977) 1 SCR 133 In Adoni Cotton Mills' case (1976) 4 SCC 68, AIR 1976 SC 2414, (1977) 1 SCR 133 the view has been taken “that the power to enhance the tariff is included in Section 49 of the 1948 Act” and that Section 49(3) authorises a Board to fix different tariffs for the supply of electricity having regard to the geographical position etc. and any other relevant factors. The expression “any other relevant factors” is not to be construed ejusdem generis and that the combined effect of Section 49 and the terms and conditions of supply is that having regard to the nature of supply and other relevant factors particularly when there is shortage of electricity the Board has the power to enhance the rates. If there is shortage of electricity there is to be restriction on supply and the Board can disconnect supply if the quota is exceeded. The Board can also impose higher rates if the quota is exceeded. The imposition of higher rates is only to “sanction the rigour of ration by making persons who exceed the quota liable to pay higher rates”. We are, therefore, of the opinion that so far as the first point is concerned the view taken by the High Court cannot be taken exception to. With regard to the retrospective effect argument, the electricity was supplied from November 1966 till February 20, 1967 on which date the notification imposing the levy was issued. It was, therefore, urged that so far as the period anterior to February 20, 1967 is concerned the effect of the levy would be retrospective. The High Court has taken the view that it does not amount to making the tariff retrospective but the effect of the notification is to recover the surcharge in respect of the energy which was supplied in excess of the permissible quota. It was also urged on behalf of the respondents that insofar as the period anterior to February 20, 1967 was concerned the appellant was not entitled to make the recovery as it would amount to altering the tariff. This argument was advanced in the context of the stipulation in the agreement that one month's notice would be given before increasing the tariff. Since we are of the view that the Board had the statutory authority to impose the surcharge in respect of the electricity supplied in excess of the permissible quota and having regard to the fact that the supply was made after obtaining it from the DVC at a higher rate and having further regard to the fact that the impost of the surcharge is construed as having been made under the statutory authority the stipulation in the agreement does not come into play. Under the circumstances, we do not see any good ground to disturb the findings recorded by the High Court. The appeal therefore, fails and is dismissed. There will be no order as to costs.

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    New Central Jute Mills Co. Ltd. v. Uttar Pradesh State Electricity Board, Lucknow And Others
    (Nov 19, 1986)