Bansal Industries vs Municipal Corporation Of Delhi
1994 Latest Caselaw 665 Del

JUDGMENT

R.C. Lahoti, J.

(1) This is a petition under section 20 of the Indian Arbitration Act, 1940 seeking the filing of arbitration agreement and reference of the following disputes for adjudication by arbitration: (A)Whether the impugned bill for the month of July, 1992 is legal and payable by the plaintiff ? (b) Whether the defendant can levy demand charges in excess to the sanctioned/ connected load of 912 Kva ? (c) Whether the defendant can levy both demand charges as well as cost of units consumed when the amount of the demand charges is in excess to the cost of the units ? (d) Whether the defendant can levy low power factor charges ?

(2) The petitioner is a large industrial power consumer. The sanctioned load and connected load of the petitioner is 912 KVA. The plaintiff has been billed by the respondent for Demand Charges as well as energy charges. The petitioner has also been billed for Low Power Factor charges (Shunt Capacitor Charges).

(3) According to the respondent, M.C.D. (DESU), the dispute as to Demand Charges and Energy Charges involves interpretation of tariff which cannot be subject matter of arbitration, as the tariff is statutory. In the matter of Lpf charges, it is submitted that the petitioner has been billed in accordance with the agreement and so the dispute raised by the petitioner is not bona fide.

(4) In so far as the first dispute is concerned, the issue stands eclipsed by pronouncement of the Supreme Court in Mcd vs Asian Art Printers, 1994 (5) Judgment Today 607. It has been held therein that under the two part tariff system applicable to Lip category, the consumer is liable to pay demand charges plus energy charges. Nothing survives to be adjudicated upon by the arbitrator.

(5) In so far as the Low Power Factor charges are concerned, there is available a Division Bench decision of this Court in M/s. Matsya Metal Udyog vs MCD. . It has been held therein: "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 admitted in the nature of penal charge. Further, we find that in some of the reports it is 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 station and in spite 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 is incumbent on 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 notice and decide the matter afresh even for the bills wherein such charges have been quashed."

In view of the above said observations, it is clear that the dispute raised by the plaintiff and seeking arbitration thereof is premature.

(6) The petition is disposed of with the following directions : (1)The petitioner is held liable to pay Demand Charges and Energy Charges- both consistently with the tariff: (2) As to Low Power Factor charges or Shunt Capacitor charges, the respondent shall afford to the petitioner an opportunity of hearing after issuing a show cause notice before levying such charges. (3) The respondent shall withdraw the bill to the extent to which it imposes Shunt Capacitor Charges and shall issue and raise a demand afresh if an occasion may arise for the purpose after carrying out the directions made hereinabove. (4) In so far as the demand charges are concerned, the interim order dated 31.8.92 stands vacated. The petitioner shall be bound to pay the demand charges which the petitioner has not paid under the interim orders of this Court with in two weeks and till then the petitioners supply shall not be disconnected.

(7) The petition stands disposed of accordingly.