Matsaya Metal Udyog (P) Ltd. vs Municipal Corporation Of Delhi ...
1991 Latest Caselaw 173 Del

JUDGMENT

N.N. Goswamy, J.

(1) This batch of writ petitions is by the petitioners who are covered by the category of Large Industrial Power as each one of them has a sanctioned load of mare than l00 K.W. The petitioners have set up installed furnaces for the manufacture of casting and for their factories in Delhi. These furnaces have been set up after having obtained valid licenses from the respondent Corporation. For the levy of charges for the supply of electricity there are two systems of tarrif which are followed; one is the flat rate system and the other is known as two part tarrif system. The flat rate is charged on the units of energy consumed while the later system is meant for big consumers of electricity like the petitioners and is comprised of two charges-one minimum consumption guarantee charges, called demand charges and (2) energy charges for the actual amount of energy consumed. It is the later system, that is, two part tariff system which is applicable to the petitioners who are large industrial consumers. Under this system a Lip consumer pays a minimum guarantee consumption charges at the rate fixed by the respondent. If the Lip consumer does not consume quantity of electricity or no energy at all he has still to pay the minimum guarantee charges. But in case the consumer consumes more electricity the minimum guarantee charges then what is prescribed in the minimum guarantee charges, the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges.

(2) For the period from 1985-86 the respondent had fixed rates of minimum consumption charges at the rate of Rs. 40.00 per K.V. A. for 1000 K.V.As. and Rs. 38.00 per K.V.A. above 1000 K.V.A. The tariff for the Lip consumers in respect of the said period including the minimum guarantee charges was as indicated. However, the same was revised by a resolution of the Municipal Corporation of Delhi and charges from Rs. 40.00 per K.V.A. were increased to Rs. 340.00 per K.V.A. in respect of induction furnaces. The said resolution was challenged by a batch of writ petitions by the petitioners and the said writ petitions were dismissed by this Court by judgment dated March 1,1990.

 (3) By the present writ petitions the petitioners besides challenging the tariff have also challenged the bills submitted to them by the respondent for various months on the ground that the petitioners were entitled to certain rebates which have not been allowed to them in the bills. The rebates have been claimed on the following grounds :-    (1)weekly off days; (2) peak hour load restrictions; (3) low voltage electric supply; and (4) power cuts and break downs.   

 In addition to -the aforesaid rebates the petitioners have also challenged the inclusion of fuel adjustment charges, load violation charges, shunt capacitor charges, payment of sur-charge @ 3%, and misuse charges. In addition some of the petitioners have also challenged the provision in the tariff providing for disconnection of electricity without notice in case of theft of electricity.   

(4) Notice to show cause was issued in all petitions and various interim orders were passed. However, considering the nature of the case and the fact that by interim orders the recovery of crores of rupees was being stayed by this Court, it was directed that the petitions would be heard and finally decided at this stage itself and as such the petitions have been heard on number of days by us. Initially the respondents had filed affidavit in opposition in C.W.P. 1748/90, that is, M/s. Matsaya Metal Udyog (P) Ltd. v. Municipal Corporation of Delhi (DESU) and this writ petition did not cover all the points mentioned above. Thereafter another counter affidavit was filed in opposition to C.W.P. 2345/90, that is, M/s. Ambeecee Consolidated Enterprises (1) Pvt. Ltd. The two counter affidavits covered all the points mentioned above and it was prayed by the respondents that they may be permitted to adopt their contentions in these two counter affidavits in all the writ petitions.

(5) Though in some of the petitions an attempt was made to again challenge the resolution whereby the amount of Rs. 40.00 was raised to Rs. 340.00 , the counsel for the petitioners have rightly not canvassed that point in view of the earlier Bench decision of this Court referred to above. Thus, we are concerned with the remaining points regarding the rebate on various grounds.

(6) Rebate claimed on the basis of weekly offdays :- The contention of the learned counsel for the petitioners was that in a month four or five days have to be observed as off days when they cannot operate their furnaces and as such they are entitled to the rebate for those days. This contention has simply to be rejected on the ground that this weekly day off is observed on the basis of the provision of Delhi Electricity Control Order, 1959 which has been in force for over a decade. The agreements were entered into between the petitioners and the respondents with open eyes and there has never been a challenge on that ground till 1990. The learned counsel for the petitioners did not press this point any further.

(7) Rebate on the basis of peak hour restrictions :- This restriction is also on the basis of clause 4(12) of Delhi Electricity Control Order under which the consumer cannot use the load for the purposes of industries for 3 to 3 hours a day depending on the season. The case of the petitioners is that while entering into contract for supply of the electricity, the respondents promised that they would continue to supply electricity for 24 hours a day and on their failure to supply for any reason whatsoever the petitioners are entitled to proportionate rebate. This is, of course, in case 'of consumers who are being charged on minimum consumption basis and not on actual unit basis. Reliance is placed on clauses 5 and 15(b) of the contract entered into between the parties. The said clauses are as under :-

"5.Failure of supply :-Same as provided herein, the supply shall be made available except in cases of strikes of the employees of the Undertaking, breakdowns of machinery or plant, lockouts or where the supply is affected by a cause or causes over which the Undertaking has no control. The Undertaking shall not be liable for any claims for loss, damage or compensations whatsoever, arising out of failure of supply due to any of the aforementioned causes."

"15(b) Adjustment of charges in emergency conditions:-if at any time, the consumer is prevented from receiving or using electrical energy to be supplied under this agreement, whether in whole or in part. owing to all or any of the causes mentioned in clause 5 of this agreement, or if the Undertaking is prevented from supplying or is unable to supply such electrical energy owing to all or any of these causes; then the minimum charge pay able by the consumer shall be reduced in proportion to the ability of the consumer to take, or the Undertaking to supply such power."

(8) Reliance is also placed on paragraph Iob of the counter affidavit wherein the respondents have brought out a table showing the manner and the circumstances under which the figure of Rs. 340.00 was brought into existence. According to the table a consumer can consume 306 units of electricity by utilising 60/o of the load. The formal table is as under :- 1 x -85- 25 X 24 x 60 ==306 units/K.V.A./month According to the learned counsel while fixing the tariff the respondents calculated on the basis of 24 hours and did not take into consideration the peak hour load restrictions and as such the petitioners were entitled to the rebate for the peak hour load restrictions.

(9) As against that the case of the respondents is that the peak hour load restriction is imposed by Delhi Electricity Control Order and has been in force for over a decade. While fixing the tariff the respondents had taken into consideration the factors of weekly off days as also of the peak hour load restrictions and for this purpose the consumer has been given a benefit of 40% with respect to utilisation of load in running the furnaces. It is further stated in the affidavit that in actual terms 40% of the time per day means about 9.6 hours a day and by using the electricity for 14.4 hours a day a consumer can achieve the target. Therefore, the load hour restrictions of 3 to 4 hours a day are taken into account and are in-built into the tariff. The tariff has also taken into account the other minor interruptions, break downs and minor load shedding apart from peak load restrictions. The respondents have also relied on a representation dated March 8, 1987 submitted by All India Induction Furnaces Association wherein according to their calculation they could achieve 300 units a month by working the furnance for 12 hours a day and for 25 days a month. That calculation was on the basis of 24 hours a day and, therefore, the table furnished by the respondents takes care of the peak load restrictions and the calculation has been made on the basis of 20 hours a day and according to the calculation the target can be achieved by working for 14.4 hours a day. Thus, the petitioners are not entitled to any rebate on the basis of peak hour restrictions.

(10) Low Voltage Electric Supply :- The contention of the learned counsel for the petitioners was that under the agreement between the parties electri

(11) Power Cuts & Break-downs :- The guidelines for power cuts and break-downs are provided in clause 5 and 15(b) of the agreement between the parties. The said clauses have already been reproduced above under the heading Rebate on the basis of peak hour restrictions. However, inspite of the aforesaid clauses of the agreement the necessary rebate was not being allowed to the consumers. During the course of arguments Mr. Sibal, the learned counsel for the respondents pointed out that it had been decided by the respondents tallow the rebate if the case was covered by the aforesaid clauses. After the statement was made, certain bills were brought to our notice wherein the rebate was in fact allowed. The respondents would therefore, look into the old bills which have also been challenged and allow the rebate permissible to the consumers in accordance with the aforesaid clauses and the decision of the respondent Undertaking. This will, however, be done within one month from the date of this order.

 (12) Fuel Adjustment Charges :- Fuel adjustment charges are the charges by which the licensee of electricity is able to recover its actual cost of supply per unit of electricity. This charge is presently being recovered from the following categories of consumers :    (A)Large Industrial Power: (b) Non-domestic mixed load; and (c) Railway tractions.  

 The other consumers of electricity are consequently being supplied electricity at subsidised rates and no such charge is being imposed on that. The method of computing fuel adjustment charges is prescribed in clause xviii of General Conditions of Application contained in the Tariff which is as under :    "(xviii):The tariff for the large industrial power and nondomestic Mixed load" (HT) consumers and railway traction will be subject to adjustment as under : (a) The energy charges specified in this schedule are based on the average fuel and purchase cost of 53.35 paise per KWH; (b) The actual cost of fuel used during any period shall be the amount in rupees of the cost of all types of fuel burnt in Undertaking's generating plants (including gas turbines) in that period; (c) The actual cost of energy purchased shall be the amount paid in rupees for import of energy for that period; (d) The fuel and purchase cost of energy per K.W.H. sold shall be the quotient computed on dividing the sum of (b) and (c) by the Kwh sold during that period; (e) The increase or decrease in fuel and purchase cost of power Kwh sold shall be the difference of (d) and (a) above and accordingly shall be added or sub-tracted to the energy charges; Final adjustment on account of variation in energy charges will be made as soon as possible after the close of the period of account but adjustment as may be provisionally fixed by the Desu Management from time to time will be incorporated as a part of the monthly bill and shall be payable by the consumer. Such provisional rates as and when finalised shall have retrospective effect from the beginning of that financial year;"  

(13) The validity of these clauses was rightly not challenged by the earned counsel for the petitioners since the question stands concluded by various Sons of this Court including 'D.CM. Limited v. M.C.D', Air 1989 Delhi 30. The contention of the learned counsel for the petitioners was that the charge is on the basis of units and as such cannot be levied on the consumers who are being charged on minimum guarantee basis. This contention in our opinion is not valid realise 19 accept this submission the tariff will have to be re-written by this Court which is not permissible in law. The impugned bills clearly indicate that the charge is levied on the basis of the actual units consumed and in case the actual units consumed are less than the minimum guarantee there is no charge over and above the units consumed. It is not the case of the petitioners that they are being charged on the minimum guarantee basis and, therefore, the tariff is quite clear that the consumers are liable to pay this charge on the units consumed. In fact a learned Single Judge of this Court in Suit No. 2026 of 1990 has even refused to refer the dispute with respect to fuel adjustment charges even to arbitration. In the circumstances this question has also to be decided against the petitioners.

(14) Shunt Capacitor Charges :- The purpose of the shunt capacitor is to regulate the supply and to see that the power factor does not fall below 0.85. In clause (xiii) of the General Conditions of Application as contained in the Tariff for the year 1990-91 the Undertaking does not connect installations where the connected load includes motors of 5 Bhp and above, welding sets, battery chargers and rectifiers of any capacity unless the same are provided with the shunt capacitors (except equipments with built in capacitors) of adequate rating. The adequate rating has also been dealt with under the said clause. Further clause (xix) provides :- .'(XIX):The tariff is based on power factor of 0.8 5 and no consumer shall allow the power factor of the supply taken by him to fall below 0.85. In case shunt capacitors of adequate ratings, as specified in (xiii) above are not installed and maintained in proper working order and/or the power factor is found to be below 0.85, a sur-charge of 10 per cent shall be levied on the total amount of bill from the month of the date of inspection."

(15) The charges are being levied on the strength of inspection reports which according to the respondents indicate that either there was no shunt capacitor installed at all or the one installed was not working properly. It is understandable that in case shunt capacitor was not installed any further show cause notice may not serve any useful purpose. However, if the correctness of the inspection report has been challenged by the consumers by their representations it would be the duty of the respondents to look into the same and carry out fresh inspection, if necessary, before levying the charge, it is admittedly in the nature of penal charge. Further we find that in some of the reports it is indicated that the power factor could not be measured due to break down in sub-stations and inspite of that charges have been levied on the consumers on the basis that the shunt capacitors were not of proper quality or that the same were not functioning properly. In such cases it is incumbent of the respondent to comply with the rules of natural justice and issue a show cause notice before levying such charges. As a result the charges levied in such cases have to be quashed but it would be open to the respondents to issue show cause notices and decide the matter afresh even for the bills wherein such charges have been quashed.

(16) Misuse Charges :- Clause (h) under the heading Large Industrial Power (LIP) in the tariff provides that misuse of all kinds of electricity will attract the levy of a combined surchage of 50/o. The indication of misuse is provided in clause (xii) under the heading General Conditions of Application in the tariff which is to the effect that the electricity supplied under these tariff shall not be utilised for purpose other than those admissible under the relevant tariff schedule. Similarly in clause (xx) it is provided that misuse charges, wherever applicable are also subject to fuel and purchase cost adjustment as set out in (xviii) and shall be applied for 3 years prior to the date of detection unless evidence is produced by the consumer to substantiate that misuse started afterwards. According to the learned counsel for the petitioners the term 'misuse' has hot been defined any where, either in the Act or in the tariff and as such no such charge can be levied. After giving our careful consideration we are of the opinion that this contention of the learned counsel for the petitioners is unfounded. The tariff provides for any kind of misuse and clause 21 of the agreement between the parties explains the misuser; The said clause reads as under :- "21.Neither this contract nor any interest herein shall be transferred or assigned by the consumer in any manner whatsoever without the previous consent in writing of the Undertaking."

The guidelines have also been provided in the circular issued by the respondent Undertaking. In the circular/office order dated 10.9.1985 issued by the respondents the said office order deals with various types of sub-letting/use of connection by other than the registered consumers and has provided clarifications where exceptions have to be made. The said office order specifically provides that it will be necessary to serve a registered show cause notice and give an opportunity to the consumer before the bill for misuse charges is raised. Inspite of the fact that this office order has been issued and is being relied upon' in most of the cases no such show cause notice has been issued and no opportunity has been provided to the consumers to explain their point of view. The reliance is being placed by the respondents again on their inspection reports. The contendtion of the learned counsel for the respondents was that acopy of the inspectior report is given to the respondents which should be treated as sufficient notice This in our opinion is not the correct procedure and is contrary to the principle of natural justice. It is incumbent on the respondents to specifically mental the charge against the consumer and establish the same. It will be open to the consumer to explain his point of view and in case he falls within the exception; or clarifications as given in the office order, he would not be liable to pay the misuse charges. Some glaring examples have been brought to our notice when the partnership firm is consisting of the consumer and other partners and still misuse charges have been levied. Further we find that the inspection reports are old ones and there is nothing to show that the misuse continued on the date of the issue of the bill. It may be that the consumer had stopped the misuse immediately after the inspection but the bills had been raised against him for future periods. The consumer has had no opportunity to represent against the bills being raised and even where the representations have been made, the same do not appear to . have been considered. In these circumstances 'the misuse charges as levied on the consumers/petitioners are hereby quashed but we leave it open to the respondents to serve proper show cause notice and after hearing the petitioners, the respondents would be at liberty to pass fresh orders This order will also hold good even regarding the old bills for which the orders have been quashed.

(17) Load Violation Charges :- It is an admitted fact that in every agreement entered between the petitioners and the respondents there is a list of equipment with a capacity as indicated in the agreement itself. The said equipment must conform or be relied proportionately to the committed load indicated in KVA/KW The idea seems to be to indicate and agree at the time of signing of the agreement itself that for the purpose of utilising the sanction/committed load the consumer would require or use the equipment etc., with a specific load capacity in terms of the list attached to the agreement and will not deviate there from. In order to secure this part of the agreement a specific power has been conferred under the tariff in clause (i) at page 17 to levy a surcharge of 30% on the total amount of the bill till the excess load is removed by the consumer. The said clause is as under:- "WHEREthe demand exceeds the committed load a surcharge of 30/o shall be levied on the total amount of the bill till the excess load is removed. The surcharge so levied shall be without prejudice to any action as may be called for under the Rules/Regulations."

From the aforesaid clause it appears that the excess demand referred to is to be determined primarily with reference to the total connected load as defined in the tariff actually installed at the premises. According to the respondents it comes to the knowledge of the respondent on joint inspection or raids that the equipment actually installed is capable at any point of time by accelerating alone on the system of the consumer which is an excess of the committed load. In case the inspection report reveals that the equipment is in excess than as mentioned in the agreement and is capable of taking more load, the load violation charges are imposed.

(18) The contention of the learned counsel for the petitioners was that load violation charges are again in the nature of penalty and, therefore, the same cannot be levied unless a proper show cause notice is issued to the consumers and have an opportunity to answer the same. In some of the cases it was brought to our notice that in fact the equipment as installed was the same which was provided in the agreement but the respondents on inspection changed their mind and came to the conclusion that the equipment was capable of taking extra load and as such load violation charges were imposed. However, in such cases, it was conceded by the learned counsel for the respondents that a proper show cause notice will have to be issued and the matter will have to be verified before levying the said charges. In other cases the contention of the learned counsel for the respondents was that the inspection reports clearly indicate the additional equipment and as such it was not necessary to serve any further notice particularly when the report bad not been challenged by the consumer when a copy of the report duly signed by the consumer was handed over to the consumer. It is true that ordinarily it is open to the consumer to represent against the inspection report and raise his defense but it cannot be said that in all cases the inspection report is to be treated as final. However, wherever the inspection report has been challenged by the consumer and/or it has been brought to the notice of the respondents that the excess load has since been removed and has deposited the inspection fee, it will be incumbent upon the respondents to carry out fresh inspections in presence of the consumer.

(19) The contention of the learned counsel for the petitioners that clause (i) at page 17 of the Tariff indicates that unless the maximum demand indicator meter indicates excess demand the provision is not retracted is not tenable. Clause (i) at page 17 is related to the connected and sanctioned load and not necessarily to the recorded consumption. It is true that determination of excess demand with reference to actual consumption is also possible but the type of industry with which we are dealing with is such where there is large scale theft of energy and in these circumstances the interpretation put by the respondents is valid. The interpretation is that if the equipment installed is capable of exeeding the demand then the respondents are entitled to levy the load violation charges till the excess load is removed. The term 'demand' has been defined, inter alia, in clauses (vii), (viii) and (ix) at pages 2 and 3 of the tariff with reference to load. Keeping in view the context in which these clauses have to be interpretted and the object sought to be achieved. The only conclusion is that clause.(i) at page 17 of the tariff is related to the connected and sanctioned load and not necessarily to the recorded load.

(20) In addition to the aforesaid specific headings, we, have certain cases where although there has been no power supply for the entire billiag period but the bills have been raised which included the minimum guarantee charges as also the misuse and load violation charge's.

(21) It was conceded by Mr. Sibal, learned counsel for the respondents that in cases where there has been no power supply for the entire period, the question of including the misuse charges and the load violation charges did not arise and as such the same would be deleted by the respondents.

(22) As regards the minimum guarantee charges it was held in 'Bihar State Electricity Board, Patna and others v. M/s. Green Rubber Industries and others', , the stipulation to pay minimum guaranteed charges, irrespective of whether energy was connected or not is not ultra vires. It will have to be seen as to whether the supply was disrupted because of the default of the consumer or of the Department. In case the supply was disrupted for any reason or default on the part of the consumer then obviously the respondents are entitled to minimum guarantee charges. However, in case it is shown that the disruption was because of the respondents and for no fault of the consumers,-then obviously the respondents are not entitled to raise, a bill of even minimum guarantee. This being a disputed question of fact can be raised in arbitration proceedings if the..consumers so like.

(23) There is yet another grievance in .C.W.Ps. 2340/90. 2044/90 and 1775/90 by Mr. Rohit Kochar, the learned counsel for the petitioners. According to the learned counsel the agreement between the parties provided for 758 Kvs while according to the latest test reports the committed load is only 625.35 KVS. The representation to this effect was made to the respondents in May 1990 Along with necessary test reports. All the same the respondents kept on sending the bill on the basis of 758 Kvs thereby charging heavy amount illegally from the petitioners. Initially the learned counsel for the respondents contended that under clause 20 of the agreement it was incumbent on either party to give a clear notice of 12 calender months for effecting any change and only thereafter the change could be effected. However, on reading of the clause the learned counsel for the respondents conceded that the petitioners would be entitled to the rebate from the date he filed complete set of papers with the respondents. According to the learned counsel the complete set was filed on October 23, 1990 whereas according to the learned counsel the complete information was furnished as far back as on May 28, 1990. The learned counsel for the respondents agreed that the adjustment will be given to the petitioner with effect from Oct., 23, 1990. In this situation it is not possible to go into the disputed question as to whether complete papers were filed on May 28, 1990 or on October 23, 1990. It would be sufficient that the petitioner is allowed rebate with effect from October 23, 1990 as agreed to by the respondents.

(24) Before we part with this batch of writ petitions we make it clear that what we have decided are the questions of law and in case of any further dispute it would be open to the parties to claim reference in terms of clause 25 of the agreement between the parties. The petitions are disposed of accordingly with no order as to costs.