M/S Continental Device India Ltd. vs Delhi Vidyut Board & Anr
2010 Latest Caselaw 39 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     CS(OS) No.745A/1998

                                           7th January, 2010
M/S CONTINENTAL DEVICE INDIA LTD.                    ...Petitioner

                      Through: Mr. Lalit Kumar and Mr. Deepak
                               Vohra, Advocates.
            VERSUS

DELHI VIDYUT BOARD & ANR                         ....Respondents

Through: Ms. Avnish Ahlawat, Advocate for DPCL.

Mr. Vikram Nandrajog, Advocate for NDPL.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in the Digest?

Yes

% JUDGMENT (ORAL)

VALMIKI J.MEHTA, J

I.A.No.4491/1999 in CS(OS) No. 745A/1998

1. This application has been filed under Sections 30 and 33

of the Arbitration Act, 1940 challenging the Award dated

16.3.1998 passed by the sole Arbitrator Justice J.D.Jain (retd.). A

CS(OS) 745A/98 Page 1 copy of the Award was not on record and I have with the

consent of the parties taken a copy of the same from the

counsel for the objector.

2. The disputes between the parties pertained to the claims

of the objector for load violation charges, misuse charges and

low power factor levied on the basis of an inspection conducted

on 7.9.1989 in the premises of the petitioner, which is the

registered consumer of the electricity connection.

3. By the impugned Award, the Arbitrator has disallowed the

claims based on each of the three aforesaid charges.

4. The first issue pertains to the claim for misuse charges.

The Objector alleged misuse of the electricity connection on

account of the fact that the electricity connection which was

sanctioned in the name of the petitioner was being used by

one M/s Delta Electronics (P) Ltd. As per the contention of the

objector this amounted to misuse and therefore misuse charges

were payable.

5. The Arbitrator has held that misuse charges are not

payable for the reasons:-

(i) The company M/s Delta Electronics (P) Ltd. was found to

be a sister concern of the petitioner/registered consumer and

CS(OS) 745A/98 Page 2 which sister concern was under the same management and

which had around 99% common share holding.

(ii) The Arbitrator held that there is no definition of misuse in

the relevant tariff rules and consequently, the ordinary

meaning of misuse as applicable in a relationship between a

landlord and tenant should be looked into, and which when

done shows that there is no sub-letting.

(iii) It has been thirdly held by the Arbitrator by referring to

the agreement that the user of electricity by a sister concern

does not amount to transfer or parting with possession of the

electricity connection.

6. All the above reasons are perfectly valid and I do not find

that the objections by the objector with regard to sustaining of

its claim for misuse charges are at all justified. The Arbitrator

has arrived at a finding of fact after referring to the returns

filed by both the companies before the Registrar of Companies

and also with reference to the provisions of Companies Act that

both the companies are sister concerns and alter egos of each

other. The facts of the present case are not such that there is

subletting of electricity from one company to another company

or from one entity to another entity which are wholly unrelated

CS(OS) 745A/98 Page 3 to each other, in the sense that one is a complete stranger to

the other. The counsel for the non objector has rightly relied

upon a Division Bench judgment of this court reported as JB

Exports Ltd. and Anr. Vs. BSES Rajdhani Power Ltd., 135

(2006) DLT 225 wherein it has been held by this Court that on

piercing the corporate veil of a corporate entity if it is found

that both the companies are effectively under the same

management/shareholding, then, the doctrine of lifting of

corporate veil must be utilized in favour of the registered

consumer in order to facilitate industrialization and not to

obstruct the same. It was further held that the mechanical

interpretation of the principle of corporate personality is to be

avoided. In the aforesaid case of JB Exports (supra) the

electricity connection was in the name of BVM Engineering

Industry (P) Ltd. but the user thereof was JB Exports Ltd. It was

held that use of electricity by JB Exports Ltd., which was a sister

concern of BVM Engineering Industry (P) Ltd., cannot amount to

subletting. The said judgment would apply in the facts of the

present case with greater force because in the case of JB

Exports, the registered consumer was in fact not doing

business at all, whereas in the present case, the registered

CS(OS) 745A/98 Page 4 consumer has been doing business and it is not that it has

wholly effaced itself from the subject premises whereby it can

be said that the electricity connection has been transferred or

assigned to Delta Electronics (P) Ltd.

7. The Arbitrator has applied valid principles of law and held

that since there is no definition of misuse in the tariff rules, the

usual meaning of the expression would apply. He has further

arrived at a finding of fact with regard to the two concerns

being sister concerns and by arriving at such conclusions it

cannot be said that the Arbitrator has mis-conducted himself or

the proceedings so that this court can interfere with the

findings in the Award on this aspect.

8. The second claim of the objector on the basis of the

subject inspection dated 7.9.1989, was the claim towards load

violation charges. On this aspect, the Arbitrator has held as

under:-

(i) The load violation charges cannot be claimed unless an

appropriate show cause notice is given.

(ii) The instrument being the Maximum Demand Indicator

(MDI) in the premises which records maximum load consumed

by the industry at a particular point of time did not support the

CS(OS) 745A/98 Page 5 stand of the objector that instead of the consumer utilising only

sanctioned load of 636.4 KW there was in fact a connected load

of 1116.048 KW.

(iii) It has been held, inferentially, that the load of machineries

having a particular capacity cannot be added to the definition

of connected load unless they are both installed and connected

inasmuch as the tariff rules for the subsequent year to date of

inspection which say so, and which is relied upon by the

objector, can apply not retrospectively but only prospectively

and thus machines which stand installed but not connected

cannot be included in the definition of connected load.

9. From the arguments of the learned counsel for the

objector, I have not found any contention worth accepting so as

to set aside the Award when it holds the disentitlement of load

violation charges on the basis of the subject inspection. All the

three findings and conclusions on the issue of load violation are

in accordance with law. A reference to the two notices dated

7.9.1989 and 20.10.1989 issued by the objector shows that the

said show cause notices which were issued were only towards

the claim for misuse/subletting charges and not for the load

violation charges. Therefore, the Arbitrator has rightly relied

CS(OS) 745A/98 Page 6 upon and followed the judgment of a Division Bench of this

court in the case of M/s Matsaya Metal Udyog (P)Ltd. vs.

MCD 44 (1991) DLT 13, wherein it has been held in

paragraphs 17 and 18, that load violation charges cannot be

claimed without issuing an appropriate notice for the purpose.

Accordingly, no fault can be found with the finding of the

Arbitrator in that the load violation charges could not be

claimed without issuing of an appropriate show cause notice.

10. The Arbitrator has arrived at a finding of fact with regard

to the connected load in the premises being not as alleged in

the inspection dated 7.9.1989 relying upon the instrument of

the Maximum Demand Indicator which is fixed by the objector

itself in the premises. Admittedly, this instrument records the

maximum load which is consumed by a consumer at a

particular point of time. This MDI established the correctness in

the stand of the petitioner as the said instrument nowhere

recorded that the sanctioned load was ever violated. Also, the

Arbitrator has rightly held that the definition of 'connected load'

of a subsequent year cannot be applied retrospectively to hold

the connected load exists as was alleged by the objector

because in the relevant tariff year a machinery which was not

CS(OS) 745A/98 Page 7 connected to the supply point cannot be included in the

connected load.

11. So far as the shunt capacitor charges are concerned, the

Arbitrator has held that the said charges cannot be claimed in

the absence of issuance of an appropriate show cause notice in

terms of the aforesaid judgment in the case of M/s Matsaya

Metal Udyog (P)Ltd (supra) . Again this finding based on

the Division Bench judgment of this court cannot be in any

manner faulted with.

12. On all the aforesaid three aspects/ issues and claims

based thereupon, an additional issue was that whether the

charges can be claimed retrospectively for a period of three

years and can continue further even if the consumer files a

fresh test load report and also deposits the inspection charges

for conducting a fresh inspection. It is not disputed that in the

tariff rules for the relevant year, there was no statutory

provision for claiming the charges retrospectively. The claim

for retrospective charges was only based upon office orders of

the objector. The Arbitrator has noticed the fact that these

office orders were never published for information to the public.

The counsel for the objector very fairly states that on this

CS(OS) 745A/98 Page 8 aspect of entitlement of claiming the charges retrospectively

for three years, no objection has been preferred by the objector

in this court and that consequently no challenge is laid on this

aspect of the Award. I therefore need not dilate any further on

this aspect.

13. I may incidentally note certain other findings of the

Arbitrator, and which have a bearing of the facts of the present

case. The Arbitrator has noted that the petitioner gave a notice

to the objector vide letter dated 30.7.1990 informing that the

sister concern M/s Delta Electronics (P) Ltd. had shifted from

the premises in or about June 1990. The petitioner also

deposited the re-inspection charges. However, the fact of the

matter is that in spite of the intimation and the deposit of the

re-inspection charges, the objector never carried out any

inspection for many years and which inspection was only done

on 5.5.1994 and which inspection in any case showed that

there was no concern in the name of M/s Delta Electronics (P)

Ltd in the subject premises. On the aspect of load violation

charges, the Arbitrator has referred to the various provisions of

the tariff rules defining 'connected load' and 'sanctioned load'.

The Arbitrator on reference to the definitions has found that the

CS(OS) 745A/98 Page 9 issue, therefore, pertains to violation of the sanctioned load

only and not the connected load inasmuch as the MDI

instrument did not support the stand of the objector that the

load as found in the inspection dated 7.9.1989 was used by the

petitioner.

14. The scope of hearing objections to an Award by means of

a petition under Sections 30 and 33 of the Arbitration Act, 1940

is well settled. It is necessary before the court can interfere

with the Award, that, the Arbitrator must have mis-conducted

himself or the proceedings. If the Arbitrator takes one plausible

view, then, it cannot be said that the Arbitrator has mis-

conducted himself or the proceedings merely because another

view is possible from the same facts and circumstances on both

the issues of load violation charges and misuse charges, the

Arbitrator has referred to the relevant provisions of the tariff

rules, the provisions of the agreement, various documents and

the facts of the case to give one interpretation. This was thus a

plausible view. Accordingly, this court has no jurisdiction to

interfere with such findings and interpretation as the said

findings and interpretation are not perverse and one which only

an unreasonable man could have taken. I am thus not inclined

CS(OS) 745A/98 Page 10 to interfere with the findings in the Award. Further, it is settled

law that an Arbitrator is the final fact finding authority. The

Arbitrator has found as a matter of fact that the show cause

notice was not given. He has further found as a fact that

concerns are sister concerns. He has further found that the

maximum demand indicator did not indicate load violation

charge. There are various other findings in the detailed Award

of the Arbitrator running into 38 pages. The Arbitrator has

recorded in detail all the arguments raised by the counsel for

the parties, the relevant provisions of the tariff rules, the

relevant provisions of the agreement and the relevant

documents and has therefore given valid and reasonable basis

to arrive at his conclusions and findings. By doing so, in my

opinion, the Award falls out of the scope of challenge on the

ground of the Arbitrator having mis-conducted himself or the

proceedings in passing the Award.

15. Mr. Vikram Nandrajog, Advocate appearing for the NDPL

has canvassed that the rate of interest granted by Award is

excessive. I am in fact distressed that such an objection has

been raised because the Arbitrator has only awarded interest at

9% per annum simple. In view of this position, I fail to

CS(OS) 745A/98 Page 11 understand how this argument can at all be canvassed that the

rate of interest is in any manner excessive. I do not therefore

find any reason whatsoever to sustain this objection to reduce

the rate of interest awarded, more so as the Distcoms are

charging interest varying from 18% to 24% for the payment

due to it from the consumers.

16. In view of the above, I find no force in the objections which

are dismissed leaving the parties to bear their own costs. The

Award dated 16.3.1998 passed by the sole Arbitrator is made a

rule of the Court.

                                           VALMIKI J.MEHTA, J


January 07, 2010
ib




CS(OS) 745A/98                                             Page 12