Norma Industries vs Municipal Corporation Of Delhi
1993 Latest Caselaw 696 Del

JUDGMENT

Sat Pal, J.

(1) This is a petition filed on behalf of M/s. Nonna Industries (hereinafter referred to as 'the petitioner') against the Municipal Corporation of Delhi, (DESU) (for short called 'DESU') under Section 20 of the Arbitration Act and in this petition the petitioner has prayed for referring the following disputes to arbitration in terms of arbitration Clause 25 of the agreement between the parties. (A)Whether the respondents are justified in levying shunt capacitor charges/low power factor charges on the petitioner in the impugned bill for the month of April 1992 or in future bills? (B) Whether the respondents can levy demand charges on 1580 Kva for the month of April 1992 instead of 1524 KVA? (C) Whether the respondents can levy demand charges on a load higher than the sanctioned load?

(2) Besides the above disputes, in para 10 of the petition it has also been stated that the Desu has arbitrarily raised the minimum demand from 1524 Kva to 1580 Kva, and has calculated the minimum guarantee charges on the basis of 1580 Kva, which is arbitrary and contrary to the tariff. Notice of this petition was issued to Desu and the allegations and averments made in the petition have been controverter by Desu in their written statement.

(3) Dr. Singhvi, learned Senior Counsel, appearing on behalf of the Desu submitted that the dispute mentioned in clause (A) hereinabove is not referable as the same is covered by the tariff for the relevant period i.e. 1992-93. In this connection he drew my attention to clause (x) and (xx) of the Tariff and submitted that since the power factor in the present case was found to be below 0.85, the petitioner was liable to pay shunt capacitor charges/low power factor charges. In suport of his contention the learned counsel placed reliance on two judgments of this Court in Delhi Cloth & General. Mills Company Ltd. v. Municipal Corporation of Delhi, 2nd (1984) 2 Delhi 758 and M/s. Suri b Suri (P) Ltd. v. Delhi Electric Supply Undertaking, Air 1992 Delhi 351.

(4) As regards the disputes mentioned in Clause (B), (C) and para 10 of the petition, the learned Counsel drew my attention to the formula mentioned in para 2(iii)(e) of the preliminary objections of the written statement and submitted that in terms of the aforesaid formula the petitioner was liable to pay demand charges and minimum guarantee charges on the basis of figures mentioned against Mdi (maximum demand indicator) in the Bill which in the present case has been shown as 1580. In this connection he referred to clause (c) pertaining to Large Industrial Power (LIP) of the Tariff which reads as under:- "C)Tariff : Demand charges : Rs.60.00 per month per Kva or part thereof of the highest of the following:- (i) connected load. (ii) Load as per test report/contract demand. (iii) Reading of the Maximum Demand Indicator as indicated during the month. Plus Energy charges : 200 paise per unit for all consumption Subject to minimum payment as laid down in item (d) below and adjustment Clause (xix) above under General Conditions of Application."

(5) He submitted that from the above, it is clear that the demand charges can be levied per Kva or part thereof of the highest of the three sub-clauses mentioned hereinabove and in the present case these are on the basis of the third clause i.e. maximum demand indicator as indicated during the month. He submitted that similarly the minimum guarantee charges can also be based on the "maximum demand indicator". He further submitted that in the present case maximum demand indicator has been shown as 1580 and as such the demand charges and minimum guarantee charges have been charged on the basis of 1580 KVA. He, therefore, contended that these disputes are also not referable to arbitration since they are covered by the Tariff, and as such the petition should be dismissed.

(6) Mr. V.P. Singh, learned Senior Counsel, appearing on behalf of the petitioner admitted that the shunt capacitor charges/low power factor charges could be levied in case the power factor is found to be below 0.85. He also admitted that in the present case the power factor has been found to be 0.82 (which is below 0.85).

(7) As regards the disputes pertaining to demand charges and minimum guarantee charges, the learned Counsel submitted that in terms of the Tariff for the relevant period (1992-93) the demand charges could be levied per Kva or part thereof of highest of the three sub-clauses mentioned herein-above. He submitted that in terms of Sub-clause (iii) which has been relied upon by the learned Counsel for the Desu, such charges could be based on reading of the maximum demand indicator as indicated during the month. He, however, submitted that in the Tariff there is no mention of the formula mentioned in para 2(iii)(e) of the preliminary objections of the written statement which has been relied upon by the learned Counsel for the DESU. He, therefore, contended that prima fade, a dispute exists between the parties with regard to the demand charges and this dispute is referable in terms of the arbitration clause.

(8) Regarding the dispute pertaining to minimum guarantee charges, the learned counsel submitted that the term "minimum consumption guarantee charges" has not been defined in the Tariff but the said term has been mentioned in Note (i) Large Industrial Power (LIP) of the Tariff. In this note it has been stated that minimum consumption guarantee is (a) Rs.340.00 per Kva or part thereof per month of the highest of the followings:- (I)Connected load (ii) Load as per test report/contract demand. (iii) Reading of the maximum demand indicator as indicating during the month. He submitted that even in terms of this note, minimum consumption guarantee charges can be based on the reading of the maximum demand indicator as indicated during the month and there is no mention of the formula relied upon by the learned Counsel for the DESU.

(9) I have given my anxious consideration to the submissions made by the learned counsel for the parties. As held in the case of Delhi Cloth & General Mills (supra) and M/s. Suri & Suri (P) Ltd. (supra) the power of Desu to fix the charges is statutory and legislative in character which is only subject to the provision of any law for the time being in force. Desu is free to fix the charges in exercise of its power and the same cannot be controlled or curtailed by a contract. Admittedly in terms of Clause (x) and (xx) of the Tariff, shunt capacitor charges / low power factor charges can be levied by Desu in case the power factor is found to be below 0.85. Since in the present case the power factor was found to be below 0.85, the levy of shunt capacitor charges/low power factor charges were in accordance with the Tariff. Accordingly, the dispute mentioned in Clause (A) here in above is not referable.

(10) As regards the disputes pertaining to demand charges and minimum consumption guarantee charges, the said charges can be based on the highest of (i) connected load or (ii)load as per test report/contract demand or (iii) reading of the maximum demand indicator as indicating during the month. As per the bill these charges have been based on the figures mentioned against maximum demand indicator but there is no averment in the written statement that the said figures are based on the reading of the maximum demand indicator as indicating during the month. On the contrary the learned Counsel has relied on a formula mentioned in para 2(iii)(e) of the preliminary objections for ascertaining the figures mentioned against MDI. For the aforesaid reasons I am of the view that the disputes pertaining to demand charges and minimum consumption guarantee charges are referable to arbitration. Accordingly, the petition is partly allowed and the following disputes are referred to arbitration:- (1)Whether Desu can levy demand charges and minimum guarantee charges on 1580 Kva for the month of Arpil, 1992 instead of 1524 KVA? (2) Whether Desu can levy demand charges on a load higher than sanctioned load? Since the disputes involved in the connected cases are identical, I direct that all these cases viz Suits No. 2031/92, 2098/92, 2097/92, 2100/92, 2123/ 92, 2032/92,2033/92, 2091/92, 2034/92, 2096/92 and 2090/92 be consolidated and tried together before the arbitrator.

(11) In the arbitration agreement no arbitrator has been named. Accordingly, I appoint Mr. Justice S.N.Sapra, a retired Judge of this Court, as the sole arbitrator. He shall bepaidRs.2500.00 perdayplusoutofpocketexpenses. The fee in the first instance will be paid in equal shares by all the petitioners which will be subject to the orders to be eventually passed by the arbitrator from time to time. Let the award be made within four months of entering into the reference by the arbitrator or within such time as the parties by mutual consent agree from time to time. The parties are left to bear their own costs.

(12) While admitting the petition, disconnection of the electricity was stayed subject to the condition that the admitted amount of the bill was paid to DESU. Since I have held that the disputes pertaining to the shunt capacitor charges/low power factor charges is not referable, I direct the petitioner to deposit the amount of the bill pertaining to the said charges within four weeks. Subject to this deposit, the interim order is confirmed.