Calcutta High Court
Jaishree Steels Private Limited ... vs West Bengal State Electricity ... on 16 August, 2023
APO NO. 82 OF 2023
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
RESERVED ON: 28.07.2023
DELIVERED ON: 16.08.2023
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
A.P.O. NO. 82 OF 2023
(I.A. NO. G.A./01/2023)
JAISHREE STEELS PRIVATE LIMITED AND ANOTHER
VERSUS
WEST BENGAL STATE ELECTRICITY DISTRIBUTION COMPANY
LIMITED AND OTHERS
Appearance:-
Mr. Parathi Sarathi Sengupta, Sr. Adv.
Mr. Ratnanko Banerji, Sr. Adv.
Mr. Ratnesh Kumar Rai, Adv.
Mr. Ankan Rai, Adv.
....for the Appellant.
Mr. Abhratosh Majumder, Sr. Adv.
Mr. Suddhasatva Banerjee, Adv.
Mr. Sandip Dasgupta, Adv.
Mr. Aviroop Mitra, Adv.
.....for the Respondent.
Page 1 of 15
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JUDGMENT
(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)
1. This intra court appeal at the instance of the writ petitioner is directed
against the judgment and order dated 08.06.2023 in WPO No. 2271 of 2022.
The appellant filed the said writ petition challenging the order dated
12.05.2022 passed by the (CGRO) by which the demand made by the
respondent, West Bengal State Electricity Distribution Company Limited
(herein after referred to as the Distribution Company) by supplementary bill
dated 13.08.2015 was affirmed. By the said demand, the distribution
company demanded delayed payment surcharge (DPS) on the electricity
charges due and payable by the appellant.
2. On 14.06.2016 the appellant entered into an agreement with Durgapur
Projects Limited (DPL) for supply of electricity to its mini steel plant. On
16.07.2014, the revised contract demand was entered into between the first
appellant and DPL. As per the respondent the load having been enhanced
from 7 MVA to 12 MVA, bills are required to be raised with MF 400 instead
of MF 200. On 13.08.2015, DPL informed the appellant that upon
enhancement of load to 12 MVA the bills would be raised with the 400 MVA
as opposed to 200 MVA. On 14.08.2015, the first appellant requested
permission to pay 50% of the said bill and allow 60 installments for payment
of the balance 50%. A letter was addressed by DPL to the first appellant on
17.08.2015 to which the appellant responded on 24.08.2015. DPL vide letter
dated 27.08.2015 directed the appellant to pay the entire outstanding
amount in the supplementary bill in 12 equal installments. According to the
appellant, such payment was without any DPS. By letter dated 02.09.2015,
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DPL had called upon the appellant to pay the first installment and stated
that the appellant would be liable to pay 12 installments of Rs. 19,67, 99,
980/-. Subsequently on 04.09.2015 and on 07.09.2015 the appellant
requested to revise the bill on the ground that there was a computation
error while calculating the electricity due at the concessional rate. On
09.09.2015, DPL sent a reply to the appellant informing that the issue was
pending for approval. As the appellant failed to adhere to the installments
schedule, DPL sent demand letters on five occasions. On 28.05.2016, the
appellant requested for revision of bills raised by DPL mentioning certain
reasons. On 03.03.2017, the first appellant and DPL entered into an
agreement. The appellant would contend that on 13.08.2017 the period of
limitation of two years started from the raising of the supplementary bill on
13.08.2015 came to an end. On 31.12.2018, DPL merged with the
respondent distribution company on 12.03.2019. The respondent
distribution company issued notice under Section 56(1) of the Electricity
Act, 2003 (the Act) threatening disconnection of electricity on account of Rs.
8.81 crores remaining due and payable by the appellant. The appellant by
letter dated 26.03.2019 requested for payment in installment. The
distribution company granted 12 installments to the appellant for clearing
the dues pertaining to the supplementary bill dated 26.03.2019, 27.03.2019
and 10.04.2019. On 04.10.2019, DPS was charged in the billing cycle of the
month of September 2019 and the respondent kept on levying DPS till June,
2021 as and when the appellant defaulted in making the payment of the
dues arising out of the supplementary bill in accordance with the
installments. The appellant had submitted representations on various dates
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with the request for grant of installment and waiver of the DPS demand. The
appellant sent a letter dated 09.06.2021 stating that the entire payment of
Rs. 8,81,64,222/- was made by them. The appellant filed the writ petition
before this Court in WPO No. 260 of 2021 on 06.07.2021. The distribution
company intimated the appellant on 08.07.2021 and the entire DPS claimed
would have to be paid by the appellant to avoid disconnection and since the
amount was not paid by the appellant, the electricity supplied was
disconnected. The writ petition being WPO No. 260 of 2021 was dismissed
by order dated 09.08.2021 holding that the critical question would arise in
calculating and arriving at any conclusion as to whether there has been any
payment of any monthly bill between December 2020 and June 2021 within
the time stipulated. Further it was held that it has to be decided as to
whether late payment charges (DPS) have been included in the claim of the
distribution company either for the period from January 2021 till June 2021
or for the earlier period during which electricity was being supplied by the
erstwhile DPL.
3. The learned writ court opined that the CGRO under the Act is fully and
completely equipped and qualified to undertake the exercise. Being
aggrieved by the said order, the appellant filed an appeal in APOT No. 117 of
2021 and by judgment dated 17.11.2021 the appeal was allowed with a
direction to restore the electricity supply coupled with a direction to the
CGRO to decide the dispute connected to the imposition of DPS qua the
validity and proportionality. The appellant approached the CGRO and made
their submissions both oral and written and after hearing the parties on
several dates, the CGRO by order dated 12.05.2021 held that the DPS
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claimed by the distribution company is justified and granted liberty to take
necessary action in accordance with the Rules and Regulations framed by
the West Bengal State Electricity Regulatory Commission. Being aggrieved
by such order, the appellant filed WPO No. 2271 of 2022 which was
dismissed by judgment dated 08.06.2023 holding that the appellants are
liable to pay Rs. 14,67,16,864/- on account of DPS and in the event if they
do not pay the sum by 31.07.2023, the distribution company would be at
liberty to disconnect the electricity connection of the appellant's factory
premises. Aggrieved by such order, the appellants have preferred this
appeal.
4. We have heard Mr. Partha Sarathi Sengupta, learned Senior Advocate
along with Mr. Ratnanko Banerji, learned Senior Advocate, assisted by Mr.
Ratnesh Kr. Rai, Mr. Ankan Rai, learned advocates for the appellant and Mr.
Abhratosh Majumder learned Senior Advocate assisted by Mr. Suddhasatva
Banerjee, Mr. Chayan Gupta, Mr. Sandip Dasgupta and Mr. Aviroop Mitra,
learned advocates for the respondent.
5. The sheet anchor of the argument of the learned Senior Advocate for the
appellant is by referring to Section 56(2) of the Act. It is contended that in
terms of the Sub Section (2) of Section 56 which commences with a non
obstante clause, the sum due from any consumer under the said section
shall not be recoverable after the period of two years from the date when
such sum became first due unless such sum has been shown continuously
as recoverable as arrears of charges for electricity supplied and the licensee
shall not cut off the supply of the electricity. It is submitted that the period
of limitation commenced from raising of the supplementary bill on
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13.08.2015 and ended on 13.08.2017 and during such period, DPS was
neither levied nor charged and for the first time DPS was levied after the
expiry of four years from the date of issuance of the supplementary bill
dated 13.08.2015. Therefore, it is submitted that the demand is not
sustainable and the respondents are not entitled to invoke Sub Section (2) of
Section 5 by which there is a threat to disconnect electricity supply.
6. It is submitted that crucial words in Sub Section (2) of Section 56 are
"when such sum became due". The date on which it is first due should have
been mentioned in the Bill and in terms of the said Sub Section, bills should
be shown as outstanding. In absence of such compliance, the respondents
are not entitled to invoke Section 56(2) of the Act and if permissible under
law, remedy is available under Sub Section (1) of Section 56. However, the
threat of disconnection is meted out by the respondent by invoking power
under Section 56(2) is wholly without jurisdiction. In support of his
contention, learned Senior Advocate referred to the decision of the Hon'ble
Supreme Court in Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam
Limited and Another Versus Rahamatullah Khan 1, Prem Cottex Versus
Uttar Haryana Bijli Vitran Nigam Limited and Others 2 and K.C. Ninan
Versus Kerala State Electricity Board and Others 3.
7. The learned Senior Advocates had elaborately referred to the various
documents which have been appended to the petition to demonstrate that in
none of the bills which have been raised after 13.08.2015 there is any
mention of any outstanding and the relevant column has been left blank
(2020) 4 SCC 650
(2021) SCC Online SC 870
(2023) SCC Online SC 663
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and for the first time in the bill dated 07.11.2017, the amount was shown as
outstanding and by then, the period of limitation of two years had expired
and therefore Section 56 (2) cannot be invoked.
8. The provision of the West Bengal Electricity Regulatory Commission
(Electricity Supplied Court) Regulations, 2013 was referred to and in
particular Regulation Nos. 3.3.9, 3.4, 3.4.3 and 4.0, the attention of the
court was drawn to the representation given by the appellant dated
27.08.2015 to DPL wherein they sought for payment of the supplementary
bill in equal installments without any delayed payment surcharge. It is
submitted that in terms of the said representation made by the appellant,
DPL had not charged any delayed payment surcharge and only after DPL
had merged with the respondent distribution company for the first time in
the year 2017, power under Section 56(2) was invoked and DPS was
demanded and upon failure to pay DPS there was a threat of disconnection
of electricity.
9. It is submitted that the question of any acknowledgement of liability by
the appellant would not arise as even assuming by certain letters, the
appellant had sought for waiver of DPS, those representations having been
made much after the expiry of the period of limitation of two years, the same
cannot be taken to be acknowledgement of any liability. In this regard,
reliance was placed on the decision of the Hon'ble Supreme Court in Asset
Reconstruction Company (India) Limited Versus Bishal Jaiswal and
Another 4.
(2021) 6 SCC 366
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10. The learned Senior Counsel elaborately referred to the findings
recorded by the CGRO and submitted that the contention which was
canvassed by the appellant before the CGRO were not properly dealt with
and the findings rendered by the CGRO is unsustainable in law. It is
submitted that though substantial portion of the findings rendered by the
learned Single Judge would enure in favour of the appellant, the ultimate
conclusion while dismissing the writ petition was contrary to the findings
recorded earlier more particularly in paragraph 16 of the impugned
judgment and order. With the above submissions, the learned senior
counsel prayed for setting aside the order passed in the writ petition and
allowing the appeal.
11. Mr. Abharatosh Majumder, learned Senior Advocate appearing for the
respondent submitted that in terms of 2013 Regulations, the respondent
distribution company is empowered to charge DPS. As could be seen from
Regulation 3.3.9, the demand for DPS is well within the jurisdiction of the
respondent distribution company. It is submitted that the chargeable event
for levy of DPS is the payment or part payment of the dues and therefore the
appellant cannot contend that the demand made in the year 2017 was
barred by limitation. It is submitted that it is incorrect to state that in the
bills which were raised during 2015 there was no mention about the DPS. In
this regard, learned Senior Advocate has drawn the attention of the court to
the Bill dated 13.06.2015 and submitted that in the bill it is clearly mention
as to what will be the rate of DPS which will be chargeable depending upon
the delay or pro-rated or part thereof. It is submitted that Rs. 9.80 crores
was paid by the appellant to DPL and a sum of Rs. 8.81 crores was due and
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payable to the respondent distribution company upon its merger. The 12
installments given to the appellant commenced from 27.03.2019.
12. On 08.11.2019, the second agreement was entered into and the
appellant had made a part-payment and accordingly DPS was calculated
reckoning the part-payment paid by the appellant. It is further submitted
that the appellant was fully aware of the legal position and that they are due
and liable to pay the DPS and, therefore, sought for waiver of payment of the
DPS by their representations dated 10th February, 2021 and 10th March,
2021. It is submitted that the contention raised by the appellant with regard
to the interpretation of the period of limitation under Section 56(2) of the Act
is an incorrect interpretation as calculation of DPS is a dynamic formula
and is not a static formula and DPS will become liable for payment as and
when the payment is made belatedly. Therefore, the respondents have
accordingly calculated the period of delay and levied DPS on pro-rata basis
taking into consideration the delay in remittance of each of the instalments.
Therefore, it is incorrect to contend that the period of limitation would
commence from the date of the raising of the first supplementary bill on
13.08.2015. Thus, it is contended that the appellant cannot take advantage
of its own wrong and contend that the demand for DPS is beyond the period
of limitation under Section 56(12) of the Act. With the above submission the
learned Senior Advocate prayed for dismissal of the appeal.
13. Power to levy surcharge is traceable to the regulations framed by the
West Bengal Electricity Regulation Commission. Regulation 3.3.9 of the
2013 Regulation states that all categories of consumers committing default
of payment of the bill amount in time and in the stipulated manner shall be
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liable to pay surcharge, penalty etc. at the rates made applicable in the
concerned tariff order or in the Act or in the Regulations along with other
penal actions as per the provisions of the Act and the Regulations. The 2011
Regulation also provides for collection of delayed payment surcharge and in
terms of Regulation 4.1.4. the rates of applicable delay in payment
surcharge arising from non-payment of electricity charges as also other
charges by a consumer shall be 1.2% per month of delay or pro-rated for
part thereof upto 3 months of delay, at 1.5% per month of delay or pro-rated
part thereof for any period beyond 3 months of delay but upto the next 3
months and at 2% per month of delay or pro-rated for part thereof beyond
first 6 months of delay. It further states the delay in payment shall be
accounted from the due date for payment. Thus, delayed payment,
surcharge (DPS) is without prejudice to the provisions of disconnection
under the Act and the Regulations made thereunder. The appellant had
entered into an agreement with DPL and in terms of Clause 12 of the said
agreement and Clause 13 of the agreement would be relevant. Sub-clause
(1) of clause 13 states if the consumer fails/ fail to pay the amount of any
bill under the agreement within the due date of the bill referred to, shall give
the consumer 15 days notice of an intimation to discontinue the supply of
the electricity energy and after the expiry of such period, if payment has not
been received in the meantime, may forthwith disconnect the supply until
full payment for all obligation pending including charge for the work of
disconnection and reconnection has been made. Sub-clause (2) of clause 13
states that for non-payment of any bill within the due date, the consumer
shall pay late payment surcharge at the rate specified in the Schedule II to
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the said agreement. In Schedule II under the column delayed payment
surcharge, it is stated that it shall be as per the tariff order issued by the
West Bengal Electricity Regulatory Commission from time to time. Therefore,
the appellants are precluded and estopped from pleading that no DPC can
be levied and collected from them whenever there is delay in payments of
charges. The question would be as to whether the respondent could have
invoked Sub-section (2) of Section 56 for the purpose of recovery of the DPS
and upon failure to remit the same threatening disconnection. The
contention of the learned Senior Advocate for the appellant is that the period
of limitation for computing the 2 year period as stipulated under Sub-
section (2) of Section 56 is the date on which the supplementary bill dated
13.08.2015 was raised. It is further contended that the bills which were
raised subsequently, there was no indication of any errors payable by the
appellant and for the first time in bill date 07.11.2017 alone the arrears
were shown. Therefore, it is submitted that on and after the date of expiry of
2 years period, computed from 13.08.2015, DPS cannot be recovered by
invoking Section 56(2) of the Act though, it will be open to the respondents
to resort to the procedure under Section 56(1) of the Act in the accordance
with law.
14. Late payment surcharge means the charge on all amounts not paid by
the consumer by the due date prescribed. A surcharge is simply a type of
cost that is applied over and above a standardized cost. Surcharge is an
additional fee an added charge, or an extra tax that gets added to the total
cost of a good or service. Default surcharge is in the nature of a civil penalty
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and this is with a view to encourage business houses to pay the charges/
taxes due on time.
15. On a perusal of the bill dated 13.08.2015 we find that there is clear
mention about the rate of surcharge payable. Even assuming, it was not
explicitly mentioned in the supplementary bill, yet the appellant cannot
escape from the levy charges and liability in the light of the statutory
regulation read with the agreement entered into between the appellant and
the distribution company. Therefore, such argument which is contrary to
the factual position has to be outrightly rejected and accordingly rejected.
Having held thus, if we examine the order passed by the learned Single
Bench, we find that the reasons to be perfectly in order. It has been rightly
held that a combined reading of Regulation 4.1.4 with Section 56 clearly
indicates the approval of the liability to pay DPS arises not from the date
when the bill was first raised for payment of the original principal amount
but from the first instance of non-payment of the concerned charges.
Regulation 4.1.4 states that the licensee may disconnect or cut off supply of
electricity of any defaulting consumer who fails or neglects to pay the
electrify charges and/or other charges due from the consumer as per the
electricity bill and/or demand unless subject to fulfilment of the conditions
of Regulation 4.1.3, 4.1.1 or 4.1.2 whichever is applicable. Thus, the
liability to pay other charges (DPS) would arise as and when a default is
committed. It is not in dispute that the appellant did not adhere to the
payment schedule which was initially granted by DPL and subsequently,
granted by the respondent distribution company by virtue of an agreement
on 08.11.2019. We are not concerned about the dues payable to DPL before
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its merger with the respondent distribution company as it is admitted that
no DPS has been charged in respect of any of the payments which were
made to DPL though belatedly, and the DPL has been calculated taking into
consideration the defaults committed by the appellant from time to time only
with regard to the amount of Rs. 8.81 crores which was due and payable by
the appellant on the date when DPL merged with the respondent
distribution company. The appellants having admitted the default it goes
without saying that the respondent distribution company is entitled to take
into consideration the period of delay and accordingly, levy the DPS as per
the tariff schedule. By way of illustration if the 3rd instalment which was due
and payable was not paid on time and there has been a delay committed by
the appellant for a period of 30 days, then the DPS will become chargeable
for the 30 days period of delay, and this is so because the liability for
payment of DPS is only upon delay in payment. Therefore, learned Senior
Advocate appearing for the respondent distribution company is right in his
contention that the calculation of the DPS is a dynamic formula and is not
static, as DPS is leviable when payment is made belatedly. With regard to
the plea of waiver made by the appellant which was pressed into service by
the respondent during the course of argument in the writ petition, the
learned Writ Court has ruled in favour of the appellant, and in the absence
of any appeal by the respondents distribution company we are not required
to examine the said aspect though we have a slightly different opinion on the
said issue. This is so because of the concept that DPS and calculation
thereof is a dynamic formula then it goes without saying that on every
occasion when there was a delay and DPS become leviable and the
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consumer consciously seeks for waiver of such payment it goes without
saying that at the relevant point of time there was acknowledgement of
liability. However, we do not wish to render any finding on the said issue for
the reason mentioned above. Consequently, there would not be any need to
deal with the decision in Asset Reconstruction Company (India) Limited
Versus Bishal Jaiswal 5.
16. Mr. Sengupta, learned Senior Advocate referred to the decision of the
Hon'ble Supreme Court in Rahamatullah to support the contention that
obligation of a consumer to pay electricity charges arises after the bill is
issued by the licensing company. We need to take note of the facts of the
said case where the issue was an additional demand for consumption of
electricity for the past period and the question arose was whether the
appellant thereunder could have invoked Section 56(2) of the Act.
Considering the said facts and circumstances, the Hon'ble Supreme Court
interpreted Section 56(1) and (2) and held that the obligation of a consumer
to pay would arise when bill is issued by the licensing company quantifying
the charges to be paid and electricity charges would become first due only
after the bill is issued to the consumer, even though the liability to pay may
arise on the consumption of electricity.
17. In our considered view, the decision is clearly distinguishable on facts.
In the case on hand, the demand is with regard to DPS and not for
electricity consumption charges. Admittedly, on the date of merger Rs. 8.81
crores was due and payable towards consumption charges. This was
permitted to be paid in instalments making it clear that DPS will be levied.
(2021) 6 SCC 366
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The appellant did not adhere to the instalment payment committed default,
and admittedly there was delay in payment. Therefore, as and when the
delay occurs, automatically DPS will stand attracted and the appellant
cannot escape from such liability. The decision in case of K.C. Ninan, the
Hon'ble Supreme Court had elaborately considered the implication of
Section 56(2) of the Act on recovery of electricity dues by electric utilities.
However, we find that in the said decision, the aspect regarding levy of DPS
was not the subject matter in controversy and consequently the
interpretation to the period of limitation under Section 56(2) of the Act
should enure in favour of the respondent distribution company having held
that the levy of demand of DPS is a dynamic exercise and not static exercise
and the cause of action continues to arise as and when delay in payment
arises.
18. For all the above reasons, we find no ground to interfere with the
judgment and order passed by the learned Single Bench. Accordingly, the
appeal fails and dismissed. The time stipulated in paragraph 51 of the
impugned order is extended till 30.09.2023. In the event of non-payment,
the respondents are at liberty to proceed in terms of the direction issued in
paragraph 52 of the impugned judgment.
(T.S. SIVAGNANAM, CJ.)
I Agree.
(HIRANMAY BHATTACHARYYA, J.)
(P.A- PRAMITA/SACHIN)
