M/S. Suri & Suri (P) Ltd. vs Delhi Electirc Supply Electric ...
1991 Latest Caselaw 470 Del

ORDER

1. This order will dispose of two applications being I.A. Nos. 4048 and 6387 of .1991 in Suit No. 2588 of 1988 while I. A. No. 4048 of 1991 is petitioner's application under Schedule II read with Section 41 of the Arbitration Act, 1940 for grant of interim injunction restraining the respondents from disconnecting power and electricity supply under K. No. BS 289 (XI 390) installed at, B-33, Lawrence Road Industrial Area, Delhi, I. A. 6387 of 1991 is an application under Order 6 Rule 17, CPC for amendment of the petition under Section 20 of the Arbitration Act.

2. The relevant facts as appear from the pleadings of the parties may be stated thus:

The petitioner is having a cold storage for which the electric power was being supplied by the respondent under bulk supply agreement dated October 24, 1975. Under the terms and conditions of the said agreement, respondent No. 1 agreed to supply load of 330 H.P. (Industrial Power) plus 5 KW (Lighting) at the cold storage. The petitioner did not want to remain in the category of large industrial power consumer and as such requested the respondents to reduce the load. The respondents vide their letter dated February 28, 1986 communicated their decision to reduce ad from 330 H.P. (IP) and 5 KW (Lighting) to 120 HP, inter alia, on the following terms and conditions:

" 1. The existing 11 KV S / Stn. will remain in the same location. However, existing transformer will be handed over to DESU free of cost. Further, maintenance of HT line and transformer will be carried out by DESU and as such you will not be required to pay the necessary maintenance and rental charges on HT switch gear and transformer etc. The LT connection for meeting your reduced load requirement shall be provided from the same transformer and accordingly nec. metering will be done on LT.

2. x x x x x x x x x x x x x x x x x x x

3. In lieu of your handing over of your transformer to DESU free of cost, your lien for sanction of load up to 200 KW on LT will be kept for future.

4. x x x x x x x x x x x x x x x x x x x

5. x x x x x x x x x x x x x x x x x x x

6. All outstandings dues against the present LT connection will have to be cleared and certificate to that effect to be submitted from A.XEN(MR)".

3. Pursuant to the aforesaid letter of the respondents, the petitioner in order to comply with the terms and conditions thereof gave its undertaking on July 20, 1988. It is averred by the petitioner that despite the letter on February 28, 1986 and the undertaking furnished by it, reduction in load was not carried out by the respondents. In C.M. No. 4016 of 1988 in C.W.P. No. 2533 of 1985 a Division Bench of this Court by its order dated September 8, 1988 directed the respondents to reduce the load within four weeks. Accordingly the load was reduced in terms of the letter of the respondents dated February 28, 1986. Despite the reduction in load the petitioner was not satisfied with the monthly bills being raised by the respondents.

4. In the main petition under S.20 of the Arbitration Act, being Suit No. 2588 of 1988 the petitioner has raised a dispute with regard to provisional supplementary bill dated October 11, 1988 which was for the period July, 1985 to August, 1988 on the ground that the demand was illegal and the amount was neither recoverable nor payable by it. In I. A. No. 4048 /91 the petitioner points out that besides usual charges for consumption of energy the respondents have issued two bills for the month ending March, 1991 in which equipment charges and normative conditions charges (surcharge) are being levied. According to the petitioner the respondents are only entitled to charge @ Rs. 0.75 paise per unit consumption plus meter rent and electricity tax. In the petition it is averred that the petitioner is not liable to pay equipment charges and normative condition charges as this is violative of the terms and conditions contained in the letter dated February 28, 1986. The following are the details of the equipment charges and normative condition charges which have been included in the two bills:

FIRST BILL.

  i) Equipment Charges          Rs.523.29
 
ii) Normative Condition
 
    Charges           Rs.29,895.75 
 
 

SECOND BILL
 
  i) Equipment Charges             Rs.523.29
 
ii) Normative Cond 
 
    Charges     Rs.49, 826.25 
 
 

5. On the other hand, the case setup in the reply filed by the respondent is that normative condition charges are leviable upon all consumers of Small Industrial Power (SIP) who do not conform to normative e conditions stipulated for the supply of electricity According to the tariff fixed by the respondent No. I the petitioner is entitled to consume 30,000 units in a Month at the normal rate and beyond this limit is liable to pay the surcharge on the total amount of the bill.

6. I have heard the learned counsel for the parties on the question of interim injunction. Shri Nayyar learned counsel for the petitioner submitted that Normative Cond Charges and the equipment charges cannot be levied as it is violative of the terms and conditions postulated in the letter dated February,28, 1986. He submitted that the letter was issued by the defendants in pursuance of S. 283 of the Municipal Corporation of Delhi Act, 1957 (for short "the Act"). In the alternative it was argued that in case It w as not possible to hold that the letter was issued tinder the statutory power contained in the said section, tile parties were entitled to contract out of the statute and the Normative Cond Charges fixed by the respondents pursuant to the provisions of S. 283 of the Act will not apply.

7. In reply the learned counsel for the respondents submitted that the Normative Cond Charges have been fixed by the respondents in exercise of its legislative powers and the terms and conditions laid down in the said letter dated February 28, 1986 will give way to the statute. It was further submitted that in any event the terms and conditions embodied in the said letter do not relate to fixation of tariff.

8. In order to appreciate the respective submissions of the learned counsel for the parties it will be necessary to notice S. 283 of the Act which reads as follows:

"Section 293. Subject to the provisions of any law for the time being in force, charges shall be leviable for the supply of electricity by the Corporation at such rates as may, from time to time, be fixed by the Delhi Electric Supply Committee with the approval of the Corporation".

As is clear from the above provision the respondent Corporation has been empowered to levy charges for the supply of energy at the rates to be fixed by Delhi Electric Supply Committee. The power of the respondent Committee to fix the tariff is statutory and legislative in character. This power is, however, subject to the provisions of any law for the time being in force. It is only to the extent of the restrictions placed by the opening words, namely, "subject to any law for the time being in force" that the power can be said to have been fettered and inhibited but otherwise the authority is free to fix the tariff in exercise of the said powers and the same cannot be controlled or curtailed by a contract.

9. In this view of the matter I am fortified by the decision of the Delhi High Court in Delhi Cloth & General Mills Co. Ltd. V. Municipal Corporation of Delhi, 2nd (1984) 2 Delhi 758 at page 769:

"In the case of Indian Aluminium Co. (supra), there was an agreement which had been entered into between the Board and the Company. It was held by the Supreme Court that the said agreement was entered into by virtue of the provisions of sub-sec. (3) of such an agreement is entered into, the provisions of sub-sees. (1) and (2) do not apply the statute itself, namely, S. 49(3), gave the power to the Board to fix special tariff. Thereafter, if the tariff had to be changed, it could not be done under the provisions of sub-sec. (1) of S. 49. In the present case, however, by virtue of S. 286 of the Corporation Act, the provisions of the Electricity (Supply) Act are not applicable. In the Corporation Act the provisions of S. 283 are somewhat analogous to S.49 (l) and (2), of the (Supply) Act. The Municipal Corporation Act does not have any provision similar to S. 49(3) of the (Supply) Act. Whereas under S. 49(3) of the Supply Act the Board could, by an agreement, fix different tariff for the supply of electricity to any person, under the Delhi Municipal Corporation Act different tariff cannot be fixed. The tariff which is fixed under S. 283 of the Corporation Act is applicable to all the consumers and the statute, namely the Delhi Municipal Corporation Act, does not recognise tariff being fixed under an agreement. This being so, the decision in Indian Aluminium Co.'s case (supra) can be little assistance to the petitioners. "

10. Having regard to the above decision the tariff fixed under S. 283 of the Act would apply. The rates at which the electricity was to be supplied to the small industrial power units is as follows:

3. SMALL INDUSTRIAL POWER (S.I.P.)

a) Availability

Available to industrial consumers with connected load up to and including 100 KW including lighting load.

b) Character of Service

A.C. 50 Cycles, single phase, 230 volts.

A.C. 50 Cycles, 3 phase, 400 volts.

c) Tariff

75 paise per unit;

For energy consumption up to 200/300 units per KW or part thereof' per month for general/ continuous industries.

Plus

5 Paise per unit on the energy consumption if the payment is not made within the time specified on the energy bill. The lighting and fans consumption will be separately metered and billed at the Non-domestic (LT) Tariff.

d)

The above is subject to minimum charges of Rs. 50/per KW or part thereof per month.

e) Single Point Delivery:

The above tariff is based on the supply being given through a single delivery and metering point and at a single voltage.

In case energy consumption exceeds the limit specified in (C) above by 5%, a surcharge of 50% shall be levied on the total amount of the bill. The surcharge so levied shall be without prejudice to any action as may be called for under the Rules/ Regulations.

Misuse of all kinds of electricity will attract the levy of combined surcharge of 50%".

(See: Pages 14 - 15 of the booklet published by Delhi Electric Supply Undertaking relating to for the year 1990-91.)

However, from January 1, 1991 the tariff has been increased from 75 paise to Rs. 1.25 paise,

11. From the bare reading of the above, it is manifest that the surcharge is leviable in a case where the consumption exceeds by 5 per cent of the said limit viz. 200/300 K.W. or part thereof per month. It is not disputed that consumption in the instant case exceeded the said limit. Accordingly I am prima facie of the view that the petitioner will be liable to pay Normative Cond charges.

12. There is another aspect of the matter as well. A perusal of the letter dated February 28, 1986 would show that there was no agreement between the parties which provided for special rate of tariff at which the electricity had to be supplied to the petitioner. The said letter therefore cannot exclude the operation of S. 283 of the Act or tariff fixed there under besides the letter also does not contain any stipulation as to specific period for which the arrangement would continue. In The Fertilisers and Chemical Travancore Ltd. v. Kerala State Electricity Board, , the Supreme Court took the view that though S. 49(1) & (2) of the Electricity (Supply) Act, 1948 delegates to the State Electricity Board the power of a subordinate legislation to frame tariffs, it would still be open to the Board in exercise of power conferred under sub-sec. (3) of S. 49 to enter into an agreement and fix special tariff for supply of electricity for a specific period of time to a consumer. It further held that a contract which does not provide for an obligation to supply electricity at a specific rate does not have the effect of excluding S. 49(i) of the Electricity (Supply) Act, 1948 and cannot be said to fall under S. 49(3) of the Electricity (Supply) Act, 1948. In this connection it was observed as under (at Pp. 1994-1995 of AIR):

"9. If an agreement, entered into by the Board does not contain any stipulation as to the specific period for which a particular rate should apply or, after so providing, also

contains a specific stipulation that the rates agreed upon under it could unilaterally be altered at the instance of the Board, then It becomes merely academic whether such an agreement does not qualify itself to be considered as one entered into by the Board in exercise of its statutory power under S. 49(3) or even if so qualified, yet it does not have the effect of excluding the exertion of the other statutory powers under S. 49(i)."

The real question is whether a unilateral increase could be effected or not. In such a case, from the point of view of practical consequences, it is immaterial whether the importance of the absence of the period factor lies in taking the agreement out of S. 49(3) or whether, being within S. 49(3), yet it does not exclude the exercise of the statutory power under S. 49(1). It has been held that the Board's power to enter into an agreement fixing a special tariff for a 'specified period' is relatable to S. 49(3), or conversely, one of the tests whether an agreement is entered into in exercise. of the Power- under S 49(3) that such agreement has the effect of excluding the other statutory power under S. 49(1). The main consideration from protection from unilateral increase under S. 49(1) is the 'period factor' in an agreement. In the Indian Aluminium Company's case, , it was observed :

"...............It would, therefore, seem clear that the Board can, in exercise of the power conferred under sub-sec. (3) of S. 49, enter into an agreement with a consumer stipulating for a special tariff for supply of electricity for a specific period of time. Such a stipulation would amount to fixing of special tariff and it would clearly be in exercise of the power to fix special tariff granted Linder sub sec. (3) of S. 49 .............."

"...............The power to enter into an agreement fixing a special tariff for supply of electricity for a specified period of' time is, therefore, relatable to sub-sec. (3) of S.49 and such an agreement entered into by the Board would in exercise of the power under that sub-section ............."

" ........................................To hold that the Board could unilaterally revise the charges notwithstanding these stipulations would negate the existence of statutory powers in the Board under words, the Board had no power to enter into such stipulations. That would negate the existence of statutory power in the Board under sub-sec. (3) of S. 49 to fix the charges for a specified period of time which would be contrary to the plain meaning and intendment of the section"

The above excerpts would suggest that a contract which does not have, and provide for, an obligation to supply electricity at a specific rate for a specific period and does not therefore, have the effect of excluding S. 49(1) cannot be said to fall under S. 49(3). If by a unilateral volitional act on the part of the Board the assurance of a fixed rate to the consumer could be denuded, that circumstance, in itself, would be such as to detract from the agreement being considered as one entered into in exercise of power under S. 49(3). The importance of the period factor was again referred to in Delhi Cloth and General Mills Co. Ltd. v. Rajasthan State Electricity Board, . It was observed :

"..............In the Indian Aluminium Company's case, the Court speaking through Bhagwati, J., held that agreements for supply of electricity to the consumers for a specified period at a special tariff are the result of negotiations between the Board and the consumers and hence a matter of agreement between them. Such agreements for the supply of electricity to the consumer must therefore be regarded as having been entered into by the Board in exercise of the statutory powers conferred under S. 49(3) and thus there could be no question of such stipulation being void as fettering the exercise of the statutory powers of the Board under S. 49(1)......... ".

The agreement in this case was precarious in regard to the period of its operation and was susceptible to termination at the volition of the Board. It cannot, therefore, be construed as one which was intended to give a statutory protection for the tariff by means of a special agreement by the exercise of the statutory power of the Board under S. 49(3)".

13. It may be pointed out that S.49 of the Electricity (Supply) Act will not be applicable to the present case as the operation of the same has been excluded by virtue of S. 286 of the Act and there is no provision similar to S. 49(3) of the Electricity Act, which could permit the parties to enter into an agreement for fixation of tariff for a specified period. Even if S .49(3) of the Electricity Act was applicable, the letter dated February 28, 1986 will not fall within the scope and ambit of the said provision as it does not fix the period for which the agreement was to remain in force.

14. It is not necessary to dilate on the submission of the learned counsel for the petitioner that the parties were entitled to contract out of the statute as this question is no longer reintegrate in view of the law laid down by this Court in Delhi Cloth & General Mills Co. Ltd. (2nd (1984) 2 Delhi 758) (supra).

15. It was also urged that the aforesaid tariff is not applicable to the petitioner as supply to it is not through single delivery point. The respondent has in its affidavit denied this position. This is basically a question of fact which would be decided in the arbitration proceedings, At this stage there is no reason to disbelieve the affidavit of the respondent which should be allowed to recover the Normative Cond Charges. The balance of convenience also lies in favor of the respondent which is a public authority entrusted to generate and supply electricity at colossal expense. The petitioner will not suffer irreparable loss and injury in case of payment of the charges at this stage as the payment will be subject to the final adjudication in the arbitration proceedings,

16. In so far as the question of equipment charges are concerned. I am prima facie of the opinion that the respondents are not entitled to recover the same in view of the letter dated February 28, 1986 which stipulates that the petitioner will not be required to pay maintenance and rental charges on H.T. Switchgear and transformer etc. The parties can enter into an agreement with regard to these matters as they do not fall within the purview of S. 283 of the Delhi Municipal Corporation Act.

17. In the light of the above discussion, the stay granted on April 22, 1991 shall stand vacated except to the extent of equipment charges, with regard to which it will remain in operation. With these observations I.A. No. 4048 of 1991 is disposed of.

18. It is clarified that the observations made hereinabove will not be construed as an expression of opinion on merits of the case and the arbitrator, as and when appointed, will be at liberty to come to his own conclusions.

19. With regard to other application I.A. No. 6387 of 1991 1 am of the opinion that the amendment should be allowed as two bills for the month ending March, 1991 is an event subsequent to the filing of the arbitration application. It is well settled that the amendment of the pleadings can be carried out at any stage of the proceedings and the courts should be liberal in granting the prayer for the same. The amendment sought does not alter the nature of the claim made by the petitioner nor the same appears to be mala fide. The amendment application has been filed without any delay. The bills were issued in March, 1991 and the application under 0. 6, R. 17, C.P.C. for amendment of petition under S. 20 of the Arbitration Act has been filed on April 26, 1991. In this view of the matter I allow this application. The amended petition is directed to be taken on record. The respondent may file reply to the amended petition within two weeks. Replication, if any, be filed within a week thereafter.

Both I. As. stand disposed as indicated above but with no order as to costs.

20. Order accordingly.