Delhi Cloth & General Mills Company Ltd. & ANR Vs. Rajasthan State Electricity Board & ANR [1986] INSC 35 (12 March 1986)

SEN, A.P. (J) SEN, A.P. (J) MADON, D.P.

CITATION: 1986 AIR 1126 1986 SCR (1) 633 1986 SCC (3) 431 1986 SCALE (1)416

CITATOR INFO:

RF 1986 SC1999 (6) RF 1988 SC1989 (9) RF 1992 SC2169 (12)

ACT:

Electricity Supply Act, 1948 - SS. 49A and 49B (as introduced by Electricity (supply) (Rajasthan Amendment) Act, 1976) - Scope of - Electricity Board - Power of - To frame uniform tariffs unilaterally - Raise demands for payment of difference between uniform tariffs plus surcharge and agreed tariffs with retrospective effect - Whether permissible - Whether s.49 of the Act is violative of Arts.

14, 19(1)(f) & (g) and 31 (2) of the Constitution - Whether doctrine of Promissory estoppel attracted.

Words and Phrases - 'Escalation clause', 'Review', and 'Surcharge' - Meaning of.

HEADNOTE:

By an agreement dated July 28, 1961, the Respondent- State Electricity Board agreed to supply the appellants with bulk electrical energy for their power oriented industry at a concessional rate for a period of 20 years. Under cl. 18 of the agreement, it was provided that the rate of supply was reviewable by the Board every five years after January, 1971, and the revision of rate was to be effected if to rise in the cost of generation out of the total cost varied by 25% or more from the cost last fixed. It was further envisaged by cl.34(b) that the mutual rights and obligations of the parties would be subject to alteration by further legislation relating to supply and consumption of electricity enacted during the period of the agreement. The Board commenced supplying electrical energy to the appellants with effect from March 1, 1963. The Board issued various notifications from time to time bringing into effect the revised tariffs for the supply of electricity to its different classes of consumers at different rates. By Notification dated July 26, 1966, the Board imposed general surcharge on the appellants at the rate of 15% on the normal tariff.

634 The appellants filed a petition under Article 226 challenging the power of the Board to levy the general sur- charge of 15%. The High Court allowed the petition and held that the levy of general surcharge of 15% on the appellants was ultra vires the Board insofar as the appellants were concerned because the parties having entered into a statutory agreement dated July 28, 1961, there was a fetter created on the power of the Board to unilaterally increase the tariff under s. 49 of the Electricity (Supply) Act, 1948 and there-fore the appellants could not be subjected to payment of the general surcharge of 15%. The Board preferred an appeal against the judgment of the Single Judge.

From January 1, 1971, the Board intimated its intention to the appellants to revise the concessional rate of supply and charge them the uniform rate of tariff under Schedule HS/LP/HT-1 as applicable to all large industrial consumers and the general surcharge of 15% thereon in exercise of its powers under cl. 18 of the agreement. Accordingly, the Board by its letter dated February 1, 1971 forwarded a bill for the billing month January 1971, raising a demand on that basis.

The appellants thereupon filed a writ petition under Article 226. A Single Judge of the High Court quashed the impugned bill and held: (i) that the Board was entitled under the first part of cl.18 to review the rate of supply 'every fifth year starting from the first date of supply', but in view of the restrictive clause contained in the second part of cl.18 it was impermisible for the Board to make any such upward revision in the rate of supply till January 1, 1971; (ii) that in the circumstances it can be inferred that the rise in the cost of generation was at least 25% and accordingly the Board was entitled to revise the rate of supply by 25% and (iii) that if the Board claimed a further rise, it would have to establish that the rise in the cost of generation was more than 25% and it had to for that purposes get the percentage in the cost of generation determined either by mutual dialogue or by reference to arbitration.

During the pendency of the appeals preferred both by the appellants and the Board, on February 7, 1976 the Governor of Rajasthan promulgated the Electricity (supply) (Rajasthan Amendment) Ordinance, 1976, by which new sections 49-A and 635 49-B were introduced into the Act with retrospective effect to overcome the difficulty created by the judgment of the High Court in this case, and more particularly by the judgment of this court in Indian Aluminium Co. v. Kerala State Electricity Board, [1976] 1 S.C.R. 70. By the use of a non obstante clause in sub-s.(1) of s. 49A the Legislature made it lawful for the Board to revise, from time to time, the tariffs fixed for the supply of electricity to persons other than licensees and to frame uniform tariffs for the purpose of such supply. Sub-s.(2) thereof provided that in revising or framing tariffs under sub-s.(1), the Board shall be guided by the principles set out in s. 59 and as respects any period commencing on and from September 16, 1966 i.e.

the date on which the new s. 49 of the Act was brought into force, by the provisions laid down in sub-ss. (2), (3) and (4) of s. 49-A notwithstanding anything contained in the Act or in any agreement, undertaking, commitment or concession made before the first day of April, 1964 i.e. the date when the uniform tariffs were first framed by the Board. Sub- s.(3) of s. 49A provided that all such agreements, undertakings, commitments or concessions as are referred to in sub-s.(1), shall, insofar as they are inconsistent with the provisions of sub-ss.(1) and (2) and to the extent of the tariffs fixed or provisions made therein for such fixation, be void and shall be deemed always to have been void. Section 49A (3) thus had the effect of nullifying the agreement entered into by the appellants with the Board under s.49 for supply of electricity at concessional rate.

Similarly by use of a non obstante clause, s. 49B provided that any amount realised or demand made or created by the Board or the Government, etc. according to the uniform tariffs in force from time to time or against any person claiming any special tariffs under any such agreement, undertaking or concession made before February 7, 1976, the date of promulgation of the Ordinance, shall be deemed to have been validly realised, made or created under the Act as amended by the Ordinance.

Immediately thereafter on March 12, 1976, the Board furnished the appellants with a bill for the billing month of February 1976 at uniform rate, under Schedule LP/HT-1 framed by the Board's tariff Notification dated May 28, 1974 together with the general surcharge of 15%.

The appellants, therefore, filed petition under Art.

226 636 challenging the constitutional validity of ss. 49A and 49B of the Act, as introduced by the Amending Ordinance as also the impugned bill sent by the Board for the billing month of February, 1976.

On November 4, 1976 the Board issued another Notification under s.49(1) framing revised uniform tariffs to be applicable for the billing month of December, 1976.

But unlike the earlier notifications, this notification did not contain any exclusionary clause granting exemption for specially negotiated loads. On November 3, 1977 the Board furnished another bill to the appellants claiming arrears amounting to Rs. 5.57 crores on account of the difference between the normal rate of tariff and the agreed rate for the supply of electrical energy for the period from January 1, 1971 to January 31, 1976.

The appellants filed another petition under Article 226 questioning their liability to pay the said amount.

The High Court upheld the constitutional validity of ss. 49A and 49B of the Act as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976 and also the right of the Board to revise the rate of supply as agreed upon for the period commencing from January 1, 1971 onwards and enforce a demand for payment of the difference between the uniform tariffs as fixed from time to time and the agreed rate.

In the appeals to the Court, the questions for consideration were : (i) Interpretation of the terms of agreement between the parties dated July 28, 1961, particularly cl. 18 and 34(b) thereof; (ii) Interpretation of ss. 49A and 49B of the Act; and (iii) whether the demands raised by the Board for payment of the difference by the impugned bills dated February 1, 1971 and March 12, 1976 which involved the imposition of a liability on the appellants by the retrospective conferment of a prospective power under s.49A and the validation of such power under s.49B was wholly arbitrary and irrational, confiscatory in nature and amounted to deprivation of property without payment of compensation and was thus violative of Arts. 14, 19(1)(f) and (g) and 31(2) of the Constitution.

637 On behalf of the appellants it was contended : (i) that cl.18 was an escalation clause and therefore the Board was not entitled to unilaterally frame uniform tariffs as due and payable by the appellants but the rate of increase must be in proportion to, or correlated with, the actual rise in the cost of generation; (ii) that the stipulation in cl.34(b) cannot be regarded as a contractual stipulation at all and that in no case cl.34(b) can possibly be made applicable to any purported alteration of contracting parties' right for a past period by means of retrospective legislation; all that the parties contemplated was that the mutual rights and obligations would be subject to future legislations on supply and consumption of electricity but such legislations necessarily had to be valid legislations and if cl.34(b) was to be treated as a contractual stipulation providing that the rights stipulated in the agreement were subject to any modification by any legislation, valid or invalid, cl.34(b) will have to be struck down as a totally uncertain clause which cannot find place in any contract; (iii) that while the concessions stipulated by the agreement under s.49(1) could have been altered in proportion to the rise in the cost of generation, such concession could not have been altogether eliminated as that would amount to a total disregard of the guiding principles contained in section 49(3) and thus contrary to the mandate of s.49(2) of the Act; (iv) that ss.49A and 49B were integrally connected and were intended and meant to achieve a joint purpose which was merely to validate such of the past actions of the Board as would have been valid if s.49A had already been in force at the relevant time and the demand to be validated had to be raised prior to February 7, 1976 and not on a date subsequent thereto; since the bill dated March 12, 1976 was subsequent to the date of promulgation of the Ordinance, the same was not validated under s.49B; it was not open to the Board to make a demand from the appellants for payment of charges for the period commencing from June 1, 1974 and ending with February 6, 1976 according to the uniform tariff of 1974; and (v) that the demand raised by the Board against the appellants for payment of the difference between the uniform tariffs and the agreed rate for the period subsequent to January 1, 1971 was violative of Arts. 14, 19(1)(f) and (g), and 31(2) of the Constitution.

On behalf of the Respondent-Board it was contended: (i) that cl. 18 is not an escalation clause; (ii) that cl.34(b) 638 makes the contract subject to any legislation; that the rights which the parties derived under the agreement for supply of electricity at a concessional rate under s.49 of the Act was defeasible; and that being so, ss.49A and 49B had to be read into the contract and therefore became a contractual term; that the appellants derived a right to get electricity at a concessional rate only for a limited period till January 1, 1971 and thereafter the Board derived the power to revise the rate of supply under cl.18 and it was, therefore competent for the Legislature to enact a law providing for application of uniform tariffs notwithstanding any such commitment, undertaking or concession to the contrary made during any period prior to April 1, 1964.

HELD : 1. By virtue of ss. 49A and 49B of the Electricity (Supply) Act, 1948 as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976, it was lawful for the Respondent-Board to revise the special rate of tariff agreed upon and to raise a demand against the appellants by its letter dated February 1, 1971 for payment of the difference between the uniform tariff under Schedule HS/LP/HT-I applicable to all large industrial consumers under the Board's tariff notification dated April 26, 1969 and the concessional rate in terms of cl.18 of the agreement between the parties dated July 28, 1961 for the period from January 1, 1971 upto February 6, 1976, i.e. the date of promulgation of the Electricity (Supply) (Rajasthan Amendment) Ordinance, 1976, as also the general surcharge of 15% thereon levied by the Board by its tariff notification dated April 26, 1969 as from September 16, 1966 onwards.

[689 C-E]

2. The Board's letter dated March 12, 1976 being subsequent to the date of promulgation of the ordinance the demand raised by the Board for payment of the revised uniform tariff under Schedule LP/HT-I applicable to all such large industrial consumers under the Board's tariff notification dated May 28, 1974 purporting to act under ss.

49A and 49B of the Act read with cl.18 of the agreement, was not validated by s.49B and, therefore, the Board was only entitled to recover uniform tariff at the same rate i.e.

under Schedule HS/LP/HT-1 of 1969 for the period from July 1, 1974 to February 6, 1976, that is, prior to the promulgation of the Ordinance. [689 E-G] 639

3. The Board was entitled by the terms of s.49A to raise a demand for payment of the revised uniform tariff under Schedule LP/HT-I of 1974 w.e.f. February 7, 1976 and thereafter as per the revised uniform tariffs framed from time to time as applicable to all large industrial consumers in terms of c1.18 of the agreement. [689 G-H; 690 A]

4. An "escalation clause" according to its accepted legal connotation means a clause which takes care of the rise and fall of prices in the market, whereas the right to review confers the power to revise the rate of supply. [666 D-E]

5. The word 'review' in c1.18 necessarily implies the power of the Board to have a second look and to so adjust from time to time its charges as to carry on its operations under the Act without sustaining a loss. The parties clearly contemplated by c1.18 for a fresh revision of the rate once in a block of five years. The only fetter on the power of the review is that contained in the proviso to c1.18, according to which power of review shall be exercisable if the component of cost of generation out of the total cost varies by 25% or more and that such power shall not be exercisable by the Board till January 1, 1971. Therefore, c1.18 cannot be regarded to be an escalation clause. [666 F- H] Butterworths' Encyclopadeia of Forms and Precedents, 4th Edn., Vol.3, p.148; Hudson's Building and Engineering Contracts, 10th Edn., Keating's Buiding Contracts, 4th Edn., p.498;

Black's Law Dictionary, 4th Edn., p.639; American Jurisprudence, 2nd Edn., Vol.17, p.786 and Corpus Juris Secundum, Vol.17, p.806, referred to.

6. The true object and purpose of the enactment should not be ignored and due effect should be given to the provisions of ss.49A and 49B of the Act with a retrospective effect which clothed the Board with power to make the uniform tariffs applicable to bulk consumers like the appellants who under agreements entered into with the Board on July 28, 1961, that is, before April 1, 1964, the cut-out date mentioned in sub-s.(1) of s.49A had been, to the great financial detriment of the Board, enjoying a concessional rate of supply which had no relation to the existing cost of generation, with the 640 result that the burden of this cost had to be passed over to other consumers. As is clear from the Statement of Objects and Reasons of the Bill, the Legislature thought it expedient to amend the Act so as to cover the rising cost of generation from time to time, notwithstanding any special contract, undertaking or concession to the contrary. The legislative mandate contained in ss.49A and 49B of the Act as introduced by the Rajasthan Electricity (Supply) Amendment Act, 1976, sub serves the public interest to ensure that the Board shall not, as far as practicable, after taking credit for any subvention from the State Government under s.63, carry on its operations under the Act at a loss.

[672 A-E]

7.1 It is not uncommon for statutory contracts to contain a term like c1.34(b) which makes the contract subject to future legislation. Such a clause can usually be found in forest or excise contracts relating to the grant of a privilege which subjects the mutual rights and obligations flowing from such a contract to be liable to be altered or modified by subsequent legislations. [669 A-B]

7.2 In the instant case, the rights which the appellants derived under the agreement for supply of electricity at a concessional rate under s.49 was defeasible inasmuch as on a fair construction of the terms of c1.34(b) taken in conjunction with the conduct of the parties, it is clear that the parties had contemplated that the mutual rights and obligations under the contract would be subject to alteration by future legislation. That being so, ss.49A and 49B have to be read into the contract and these provisions by virtue of c1.34(b) became a contractual stipulation. [668 E-F; 670 H; 671 A-B]

8. The State Legislature under Entry 38 of the Concurrent List was competent to enact the Rajasthan Electricity (Supply) Amendment Act, 1976 and introduced the impugned ss.49A and 49B with retrospective effect to overcome the difficulty created by the decision of this Court in Indian Aluminium Company's case (Supra). There being a change in the law brought about by the introduction of ss.49A and 49B of the Amending Act, the Court is bound to give effect to these provisions notwithstanding anything contained in the Act or in any agreement, undertaking, commitment or concession to the contrary made by the Board before the first day of April, 641 1964, or the decision of this Court in Indian Aluminium Company's case (supra). [673 D-D] Indian Aluminium Company v. Kerala State Electricity Board, [1976] 1 S.C.R. 70 referred to.

9. A combined reading of the provisions contained in ss.49A and 49B shows that the Board is relieved of the shackles of the contractual obligations flowing from the agreements relatable to s.49(3), and the Board is empowered in terms of s.49A to revise the tariffs or frame uniform tariffs with respect to consumers enjoying special benefits as from September 16, 1966. However, the Board could not on the strength of s.49A alone recover the difference between the uniform tariffs fixed from time to time and the agreed rate of supply from the appellants for the period from January 1, 1971 to February 6, 1976 without the aid of s.49B. [677 F-H; 678 A]

10. Section 49B on its terms has no application unless there was a demand raised or created prior to February 7, 1976, the date of promulgation of the ordinance. There is, therefore, insuperable barrier in applying the uniform tariff under Schedule LP/HT-I framed by the Board's tariff notification dated May 28, 1974 from the billing month of July 1974 i.e. from June 1, 1974 to February 6, 1976. The Board never intimated the appellants that they would have to pay charges for the supply of electricity to them at that rate. Therefore, the appellants would be liable for that period to pay charges at the uniform tariff as per Schedule HS/LP/HT-I framed by Board's tariff notification dated April 26, 1969. [678 A-D] 11. The word "surcharge" is not defined in the Act.

Plainly, it means an additional or extra charge of payment.

A surcharge is in substance an addition to the stipulated rates of tariff. The general surcharge of 15% as also that the uniform tariff were part of the general burden borne by all consumers alike. Whatever may have been the position under the old s.49, the new section as substituted by the Amendment Act 30 of 1976, makes it plain that the Board can fix uniform tariffs. The power to fix uniform tariffs must necessarily include power to make uniform increase in tariffs. Section 49A had the effect of removing the Board from the shackles of the agreement to supply electricity as a concessional rate entered 642 into under s.49. The effect of the non/obstante clause in sub-s.(1) of s.49A was to nullify the agreement. [678 E-F;

679 G-H; 680 A-B] Bisra Stone Lime Co. Ltd. v. Orissa State Electricity Board, [1976] 2 S.C.R. 307; and Shorter Oxford English Dictionary, p. 2199 relied upon.

Indian Aluminium Co. v. Kerala State Electricity Board, [1976] 1 S.C.R. 70; and Titagarh Papers Mills Ltd. v. Orissa State Electricity Board & Anr., [1975] 2 S.C.R. 436 referred to.

12. Where a law does not, in reality, affect a transfer of ownership or possession, Art. 31(2) cannot be attracted.

In order to constitute acquisition within the meaning of Art. 31(2), there must be transfer of ownership of property to the State or to a Corporation owned or controlled by the State. [683 F-G]

13. Unless the taking of property had taken place in either of the two way i.e. "acquisition or requisitioning", there was no obligation to pay compensation under the Constitution. The extinction of the right of the appellants under the contract with the Board to get electric supply at a concessional rate under cl.18 of the agreement for the period after January 1, 1971 when revision of tariff was due under cl. 18 thereof, had not amounted to acquisition of property under Art. 31(2). Further, there was no question of any transfer of money representing any debt owned by the Board from the appellants which stood extinguished by reason of ss.49A and 49B of the Act. All that the appellants had under their contracts with the Board was a defeasible right by reason of cl. 34(b) of the agreement. The appellants had contracted themselves by cl. 34(b) to be subject to any subsequent legislation, and s. 49A of the Act struck at the agreement. It is an enabling provision and empowers the Board to revise the tariffs for supply of electricity to a class of consumers enjoying special benefit under agreement entered into under s. 49(3). The Board was competent to review the tariff in terms of cl. 18 of the agreement as from January 1, 1971. Section 49A liberates the Board from the constraints of the agreed rate under the agreement entered into by the Board with the appellants under s.49 of the Act and empowers the 643 raising of demand according to the uniform tariffs. Here, there was no debt due or owing to the State or a Corporation owned or controlled by the State. Article 31(2) was thus not attracted. [683 G-H; 684 A-B; 683 C-F]

14. The concept of "property" in Art. 31 is not a narrow concept and is used in a comprehensive sense. Any legal right which can be enforced through a Court is a right in the nature of property within the meaning of Art. 31.

[682 G-H; 683 A] Indian Aluminium Co. v. Kerala State Electricity Board, [1976] 1 S.C.R. 70; Madan Mohan Pathak v. Union of India, [1978] 3 S.C.R. 334; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur v. Union of India, [1971] 3 S.C.R. 9;

and State of M.P. v. Rajojirao Shindi, [1968] 3 S.C.R. 489 distinguished.

15. The contention based on Art. 19(1)(f) and (g) cannot prevail. The present case concerns only with sale of goods i.e. electricity and price to be paid therefor, for "tariff" is nothing but the price. The contract itself provided for revision of the rate under c1.18 of the agreement after January 1, 1971. The Board was within its powers in applying the uniform tariffs to the appellants after the period stipulated for had expired. There was nothing unreasonable for the Board to have enforced the uniform tariffs as against the appellants as from January 1, 1971. Reasonableness of the increase in tariff is established by the fact that the Board was not bound to supply electricity to the appellants at a concessional rate by incurring operational losses beyond that date. [687 D-F]

16. The appellants have not shown nor produced any material to show that they have suffered any loss on account of the increase in tariff. There is nothing to show that the appellants had not the capacity to bear the burden of uniform tariffs. It cannot be said that the impugned demand made by the Board as against the appellants were confiscatory in nature. When all the large industrial undertakings including the public sector undertakings of the Government of India and the State Government were paying for the supply of electricity at uniform tariffs fixed from time to time, the appellants had no right to claim immunity. [687 F; 688 D-E] 644

17. It is evident that the cost of generation in the grid was far higher than the concessional rate at which the appellants were getting the supply. As a result the Board was incurring very heavy losses on account of this low rate for a large bulk consumption. It would have been unreasonable for the Board not to have applied the uniform tariffs to the appellants as from January 1, 1971 when the Board derived the power to revise the rate under c1.18 of the agreement. The component of cost of generation worked out by the Board shows that the appellants were getting their electricity free of all charge. Even the uniform tariff under HS/LP/HT-I was very much less than the price at which the Board was getting its supply. Therefore, there was no reason why the appellants should not be treated alike wit all other large industrial undertakings which were all subjected to payment of uniform tariffs fixed from time to time. The contention based on Art.14 must, therefore fail.

[686 D-F; H; 687 A-C]

18. There was no question of any estoppel against the Board inasmuch as the appellants did not open their PVC plant on account of any assurance or promise by the Board.

The appellants approached the Board for supply of high tension ower for their industrial complex and the Board complied with the request. Even otherwise, the appellants have not made out that but for the statutory contract for supply of electricity at a concessional rate under s.49 they would not have established their industry. There were number of incentives offered by the State Government to enterpreneurs to set up their industries in the State. The Board is not the Government and the appellants cannot rely on promissory estoppel for the incentive offered by the Government. [688 F-H; 689 A-B]

19. All the appeals, except CA. No. 2675/80 are dismissed. Civil Appeal No. 2675/80 arising out of the judgment and order of the Division Bench of the High Court dated September 12, 1980 dismissing S.B. Writ Petition No.

8579/80 filed by the appellants challenging the validity of the bill dated March 12, 1976, for payment of Rs. 21,35, 506.70p. for the billing month of February 1976, is partly allowed to the extent that the said bill is quashed with the declaration that the Respondent Board is empowered in terms of s.49A of the Electricity (Supply) Act, 1948 as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976 to 645 raise a fresh demand for payment under Schedule HS/LP/HT-1 of 1969 for the period from July 1, 1974 to February 6, 1976 and further that the Board is entitled to recover from the appellants charges under Schedule LP/HT/1 of 1974 as from February 6, 1976 and thereafter as per the revised uniform tariffs, framed from time to time as applicable to all large industrial consumers together with general surcharge of 15% thereon in terms of c1. 18 of the agreement. [690 E-H; 691 A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2675- 2679 of 1980.

From the Judgment and Order dated 12th September, 1980 of the Rajasthan High Court in Writ Petitions Nos. 628/76, 525/77, 114, 121 and 152 of 1973.

Shanti Bhushan and P.H. Parekh for the Appellants.

Dr. Y.S. Chitale, S.N. Kakkar, V.M. Tarkunde, B.D. Sharma, Sushil Kumar Jain, Sudhanshu Atreye, Badri Das Sharma, R.K. Mehta and H.P. Gupta for the Respondents.

The Judgment of the Court was delivered by SEN, J. These five consolidated appeals by special leave from the common judgment and orders of a Division Bench of the Rajasthan High Court dated September 12, 1980 raise questions of far-reaching importance. By the judgment under appeal, the Division Bench has upheld the constitutional validity of ss. 49A and 49B of the Electricity (Supply) Act, 1948, as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976, with retrospective effect, making it lawful for the Rajasthan State Electricity Board to revise from time to time the tariffs fixed for the supply of electricity in respect of any period commencing from September 16, 1966 i.e. the date of introduction of the new s. 49 by the Electricity (Supply) (Amendment) Act, 1966, and for the validation of amount realized, demand made or created by the Board according to the uniform tariffs in force from time to time before the publication in the official Gazette of the Electricity (Supply) (Rajasthan Amendment) Ordinance, 1976, i.e. prior to February 7, 1976, the date of promulgation of the Ordinance.

646 Upon that view, the Division Bench has reversed the judgment and order of Tyagi, J. dated October 17, 1969 and upheld the impugned notification dated July 26, 1966 issued by the Board for the levy of a general surcharge of 15% of the normal tariff as also the judgment and order of J.P.

Jain, J. dated April 13, 1973 holding that the Board was entitled to recover from the appellants the difference between the normal rate of tariff and the special rate of tariff agreed upon between the parties in terms of a statutory agreement dated July 28, 1961 under s.49 of the Act as it then stood, by virtue of ss. 49A and 49B of the Act read with cl.18 of the agreement as from January 1971 onwards for the supply of electrical energy to the appellants for the electro-chemical, electro-thermal and poli-vinyl chloride industry known as Messrs Shriram Vinyl & Chemical Industries, Kota, formerly known as Rajasthan Vinyl & Chemical Industries, and to levy the general surcharge of 15% thereon contrary to the terms and conditions of the aforesaid agreement for the supply of such electrical energy to the appellants at a concessional rate for a periot of 20 years. Pursuant thereto, the Division Bench has upheld the demand raised by the Board by its letter dated February 1, 1971 for payment of Rs.11,67,959.95p. for the billing month January 1971 onwards at normal tariffs together with general surcharge of 15% thereon under Schedule HS/LP/HT-1, applicable to all large industrial consumers under the Board's tariff notification dated April 26, 1969, under c1.18 of the agreement i.e. prior to the promulgation of the Ordinance. It has also upheld the demand raised by the Board's letter dated March 12, 1976 for payment of Rs.21,35,506.72p. for the billing month February 1976 at normal tariff plus the general surcharge of 15% thereon under Schedule LP/HT-1 applicable to all large industrial consumers under the Board's tariff notification dated May 28, 1974 purporting to act under ss. 49A and 49B of the Act read with c1.18 of the agreement for the period subsequent to the promulgation of the Ordinance.

The principal question in controversy is whether ss. 49A and 49B of the Act were integrally connected with each other; and if so, the retrospective conferment of a prospective power validated any amount realized, or demand made or created by the Board, according to the uniform tariffs from time to time, 647 from or against any person claiming any special tariffs under any agreement, undertaking, commitment or concessions made, before the first day of April 1964 i.e. the date when the uniform tariffs were first framed by the Board at different rates for different clasess of consumers by its notification dated March 18, 1964, notwithstanding anything contained in the Act or in any such agreement, undertaking, commitment or concessions so made. This question turns on a construction of the provisions contained in ss. 49A and 49B of the Act, the constitutionality of which has not been challenged before us.

Sub-s. (1) of s. 49A of the Act by the use of a non-obstante clause has the effect of nullifying all such agreements, undertakings or commitments made before the first day of April 1964 by the Board or the Government of Rajasthan or the Government of any covenanting State of Rajasthan or in any judgment and order of any court, and provides that it shall be lawful for the Board to revise, from time to time, the tariffs fixed for the supply of electricity to persons other than licensees and to frame uniform tariffs for the purpose of such supply in respect of any period commencing on and from September 16, 1966, the date when new s. 49 had come in force. Sub- s.(2) thereof provides that in revising the tariffs or framing uniform tariffs under sub-s.(1), the Board shall be guided by the principles set out in s.59 and as respects any period commencing on and from September 16, 1966 i.e. after the introduction of the new s. 49 of the Act, by the principles laid down in sub-ss. (2), (3) and (4) of s. 49. Sub- s. (3) of s. 49A provides that all such agreements, undertaking, commitment or concessions as are referred to in sub-s.(1), shall, insofar as they are inconsistent with the provisions of sub-ss.(1) and (2) and to the extent of the tariffs fixed or provisions made therein for such fixation, be void and shall be deemed always to have been void. One of the crucial questions is whether the demand to be validated in terms of s. 49B of the Act, had to be raised prior to February 7, 1976 and not on a date subsequent thereto and therefore the appellants were liable to pay the revised uniform tariff under Schedule LP/HT-1 of the Board's tariff notification dated May 28, 1974 w.e.f. July 1, 1974. The contention on behalf of the appellants is that s. 49B of the Act in terms does not have the effect of validating the demand raised by the Board by its letter dated March 12, 1976 for payment of charges for the 648 supply of electrical energy to them at uniform tariff framed by the aforesaid Board's notification dated May 28, 1974, such a demand having been made after the promulgation of the Ordinance i.e. after February 7, 1976; and if that be so, whether the Board was only entitled to recover from the appellants uniform tariff under Schedule HS/LP/HT-1 framed by the Board's tariff notification dated April 26, 1969 as from January 1971 onwards. Various subsidiary questions also arise, viz. whether the demands so raised are violative of Art.14, Art.19(1)(f) and (g) and Art.31(2) of the Constitution.

The Facts Facts giving rise to these appeals are these. By an agreement dated July 28, 1961 the Rajasthan State Electricity Board, Jaipur agreed to apply the appellants with bulk electrical energy upto maximum of 25,000 KW per year for their Rajasthan Vinyl & Chemical Industries situate at Kota for electro-chemical, electro-thermal and PVC and allied industrial products at a concessional rate for a period of 20 years upon the terms and conditions contained therein. Cl.17 of the agreement provides for a special rate of tariff as negotiated between the parties and is in these terms :

"17. The consumer shall pay to the Board every month charges for the electrical demand made by the consumer during the preceding month at the rate of 201.04/12 = Rs. 16.753 per KVA of the demand assessed which shall be calculated as defined in clause 19." We are informed that this works out roughly to 3p. per unit.

Under c1.18 of the agreement, the rate of supply was reviewable by the Board every five years after January 1, 1971. Proviso thereto was in the nature of a rider and it provided that the revision of rate shall be effected provided the component of cost of generation out of the total cost varied by 25% or more from the cost last fixed.

The relevant part of c1.18 may be reproduced :

"18.........The rate of supply as determined in clause 17 above shall be reviewed every fifth year 649 starting from the date of first supply provided the component of cost of generation out of total cost varies by 25% or more from the cost last fixed. Further the rate fixed by this Agreement shall be reviewed only on or after 1st January, 1971." It is not necessary to set out c1.31 which is the arbitration clause. C1.34(b) of the agreement which has a material bearing upon these appeals reads as follows :

"34(b) Nothing contained in this Agreement or any amendment thereof shall restrict any rights, obligations and discretions which the Board or the Consumer has derived under any legislation relating to supply and consumption of Electricity enacted during the period of this Agreement." It is necessary to mention that Messrs Rajasthan Vinyl & Chemical Industries was set up by the appellants at Kota for electro-chemical, electro-thermal and PVC and allied industrial products with a capital investment of Rs.10 crores as a result of the Board agreeing to supply electrical energy at a concessional rate which came to be known later as Messrs Shriram Vinyl & Chemical Industries.

It is a power oriented industry and electricity is the basic raw material. The only other industry of this kind in the country was the one set up by Messrs Calico Mills Ltd. which has since been closed.

It is common ground that the Board commenced supplying electrical energy to the appellants with effect from March 1, 1963. The Board in pursuance of its powers under s. 49 of the Act, with the prior concurrence of the State Government, has been issuing various notifications from time to time bringing into effect the revised tariffs for the supply of electricity to its different classes of consumers at different rates. The first of these was notification dated March 18, 1964 which brought into effect the revised tariffs for the supply of electricity to its consumers and they became applicable for the consumption recorded for the billing month May 1964 onwards. C1.3 of the said notification provided that the revised tariffs shall replace all existing tariffs and shall supersede all the existing orders of the Board and the State Government in that behalf with effect from the date of introduction of the revised tariffs, except for the following, namely :

650 "(i) Special contracts for Large or Special loads separately negotiated or to be negotiated; and (ii) Special loads for which concessional tariffs have been already given under the orders of the Government/Board." The second of these notifications was the one dated July 26, 1966 by which the Board purported to levy different rates of surcharge on different classes of consumers with effect from the billing month of September 1966. The general surcharge imposed on the appellants was 15% on the normal tariff. The third notification dated April 26, 1969 brought into effect the revised tariffs for supply of electricity to consumers falling under the category 'large industrial loads' viz. schedule HS/LP/HT-1 with effect from the billing month June 1969, and the fourth dated May 28, 1974 making effective revised tariffs for the supply of electricity to its consumers from the billing month of July 1974. The third and fourth notifications contained similar exclusionary clause. According to the appellants, the uniform tariffs as revised from time to time under the aforesaid notifications were not applicable to them in view of the said exclusionary clause.

The appellants filed a petition in the High Court under Art.226 of the Constitution assailing the power of the Board to levy the general surcharge of 15% under the impugned notification dated July 26, 1966. The aforesaid writ petition was allowed by Tyagi, J. by his judgment dated October 17, 1969 by which the leared Judge held that the impugned notification levying general surcharge of 15% was ultra vires the powers of the Board insofar as the appellants were concerned. The decision was based on the ground that the parties having entered into a statutory agreement dated July 28, 1961 for a concessional rate of tariff for the supply of electrical energy to the appellants, there was a fetter created on the power of the Board to unilaterally increase the tariff under s.49 of the Act and therefore the appellants could not be subjected to payment of the general surcharge of 15%. Feeling aggrieved, the Board preferred an appeal against the judgment of the learned single Judge.

As from January 1, 1971, the Board manifested its 651 intention to the appellants to revise the concessional rate of supply and charge them the uniform rate of tariff under Schedule HS/LP/HT-1 as applicable to all large industrial consumers and the general surcharge of 15% thereon in exercise of its powers under cl.18 of the agreement. There followed several meetings between the officers of the Board and the representatives of the appellants and they were informed that they would have to pay for the consumption of electricity at the normal rate of tariff prevalent plus the general surcharge of 15%. It is quite evident from the appellants' letter dated September 5, 1970 addressed to the Chairman of the Board that the Board had the power to review the tariff insofar as they were concerned as and from January 1, 1971. In their letter they adverted to cl.18 of the agreement which conferred power on the Board to review the tariff on or after January 1, 1971 and referred to the discussion they had with the Chairman and other officials of the Board, making a request that the Board should furnish the necessary details with regard to the total cost and the component of cost of generation at the time of the supply under the agreement as well as the relevant time, if any review of tariff was being contemplated. In response thereto, the Board by its letter dated December 22/24, 1970 drew the attention of the appellants to cl.18 and stated that the cost of generation had been worked out in the office of the Board and it had been found that the present cost was higher than 25% of the cost of the time of executing the agreement as detailed below :

"Component of cost of generation at the time of agreement : 2.089 P/Kwh.

Component of cost of generation during the year 1969-70 : 5.17 P/Kwh." It went on to say :

"In view of this, the Board is entitled to review the rates of supply to you and intends to charge from 1st January, 1971, at the normal tariff Schedule HS/LP/HT-1 (copy enclosed) plus 15% general surcharge." Accordingly, the Board by its letter dated February 1, 652 1971 enclosed a bill for the billing month January 1971 for a sum of Rs.12,18,740.60p. at the normal tariff with a rebate of Rs.50,780.65p. which worked out to Rs.11,67,959.95p. It was stated that the rate of supply had been reviewed by the Board under cl.18 of the agreement w.e.f. January 1, 1971 and the rate charged was under Schedule HS/LP/HT-1 applicable to all large industrial consumers. We are informed that this works out to 7.67 p.

per unit exclusive of the general surcharge of 15% and to 8.73p. inclusive thereof and this more or less represented the actual cost of generation.

On a petition filed by the appellants under Art.226 of the Constitution assailing the validity of the demand raised by the Board by its letter dated February 1, 1971 and the enclosed bill for Rs.11,67,959.95p. on the ground that the Board was not entitled to revise the tariffs applicable to them under cl.18 as from January 1, 1971, J.P. Jain, J. by his order dated April 13, 1973 quashed the impugned bill issued by the Board. He repelled the construction sought to be placed by the appellants on the terms of cl.18 of the agreement and held that the Board was entitled under the first part of cl.18 to review the rate of supply 'every fifth year starting from the first date of supply', but in view of the restrictive clause contained in the second part of cl.18 it was impermissible for the Board to make any such upward revision in the rate of supply till January 1, 1971.

He further rejected the contention of the appellants that the Board was not competent to review the tariff under cl.18 prior to March 1, 1973. He also held that it was not open for them to contend that the cost of generation had not varied by 25% or more, they having by their letter dated January 18, 1971 addressed to the Board declined to go into the question of cost of generation as on the date last fixed and at the relevant time i.e. in the year 1969-70 on the pretext that they were advised that the rate revision was in no case due till March 1, 1973. The learned Judge next held that in the circumstances he would infer that the rise in the cost of generation was at least 25% and accordingly the Board was entitled to revise the rate of supply by 25% of the rate specified in cl.17 upon the basis that the upward revision in the rate of supply under cl.18 must be in proportion to, or correlated with, the actual rise in the cost of generation. In that view, he held that the Board could not unilaterally impose the normal tariff in disregard of the agreement, and added :

653 "Sub-s.(3) of s.49 of the Electric Supply Act, 1948 clearly empowers the Board to fix different tariffs if it considers it necessary or expedient for the supply of electricity to any non-licensee having regard to the geographical position of the area, the nature of the supply is required and any other relevant factor. The petitioner company is admittedly the biggest consumer in the State and the Board at one time under the agreement agreed to give it an exceptional rate. Sub-s.(3) is an exception to sub-s.(1) which lays down that the Board shall frame uniform tariff. Sub-s.(4) again prescribes a limitation to sub-s.(3) that the Board shall not give undue preference. It has not been the case of the Board that by executing the agreement any undue preference was shown to the petitioner company." In conclusion, the learned Judge held that if the Board claimed a further rise, it would have to establish that the rise in the cost of generation was more than 25% and it had to for that purpose get the percentage in the cost of generation determined either by mutual dialogue or reference to arbitration.

Promulgation of the Electricity (Supply) (Rajasthan Amendment) Ordinance, 1976 :

Introduction of Sections 49A And 49B into the Act.

Both the appellants and the Board preferred appeals.

While the aforesaid appeals were pending in the High Court, on February 7, 1976 the Governor of Rajasthan promulgated the Electricity (Supply) (Rajasthan Amendment) Ordinance, 1976 by which new ss.49A and 49B were introduced into the Act with retrospective effect to overcome the difficulty created by the judgment of the High Court in this case, and more particularly by the judgment of this Court in Indian Aluminium Company v.Kerala State Electricity Board [1976] 1 S.C.R. 70. By the use of a non-obstante clause in sub-s.(1) of s.49A the Legislature made it lawful for the Board to revise, from time to time, the tariffs fixed for the supply of electricity to persons other 654 than licensees and to frame uniform tariffs for the purpose of such supply. Sub-s. (2) thereof provided that in revising or framing tariffs under sub-s.(1) the Board shall be guided by the principles set out in s.59 and as respects any period commencing on and from September 16, 1966 i.e. the date on which the new s.49 of the Act was brought into force, by the provisions laid down in sub-ss.(2), (3) and (4) of s.49A notwithstanding anything contained in the Act or in any agreement, undertaking, commitment or concession made before the first day of April 1964, i.e. the date when the uniform tariffs were first framed by the Board by its tariff notification dated March 18, 1964. Sub-s. (3) of s.49A provides that all such agreements, undertakings, commitments or concessions as are referred to in sub-s. (1), shall, insofar as they are inconsistent with the provisions of sub- ss.(1) and (2) and to the extent of the tariffs fixed or provisions made therein for such fixation, be void and shall be deemed always to have been void. The agreement between the parties thus had the effect of nullifying the agreement between the parties entered into by the Board with the appellants under s.49 of the Act for the supply of electricity at a concessional rate for their industrial undertaking. Similarly, by the use of a non obstante clause s.49B provided that notwithstanding anything contained in the Act or in any agreement, undertaking or concession as are referred to in sub-s.(1) of s.49A, any amount realized or demand made or created by the Board or the Government etc. according to the uniform tariffs in force from time to time from or against any person claiming any special tariffs under any such agreement, undertaking or concession made before February 7, 1976, the date of promulgation of the Ordinance, shall be deemed to have been validly realized, made or created under the Act as amended by the Ordinance.

It is necessary to reproduce s.49A in its entirety and s.49B insofar as relevant, which read:

"49A. Power of the Board to revise certain tariffs :- (1) Notwithstanding anything contained in this Act or in any agreement, undertaking, commitment or concessions made, before the first day of April, 1964 by the Rajasthan State Electricity Board or the Government of Rajasthan or by the ruler or 655 Government of any covenanting State of Rajasthan, or in any judgment or order of any court, it shall be lawful for the said Board to revise, from time to time, the tariffs fixed for the supply of electricity to persons other than licensees and to frame uniform tariffs for the purpose of such supply.

(2) In revising the tariffs or framing uniform tariffs under sub-section (1), the said Board shall be guided by the principles set out in section 59 and as respects any period commencing on and from the 16th day of September, 1966, by the principles laid down in sub-sections (2), (3) and (4) of section 49.

(3) All such agreements, undertakings, commitments or concessions as are referred to in sub-section (1), shall, in so far as they are inconsistent with the provisions of sub-sections (1) and (2) and to the extent of the tariffs fixed or provisions made therein for such fixation, be void and shall be deemed always to have been void.

49B. Validation of certain tariffs etc. - Notwithstanding anything contained in this Act or in any agreement, undertaking or concession referred to in sub-section (1) of secton 49A, or in any judgment or order of any Court - (a) any amount realized, or demand made or created, by the Rajasthan State Electricity Board, or the Government of Rajasthan or the ruler or Government of any covenanting State of Rajasthan, according to the uniform tariffs in force from time to time, from or against any person claiming any special tariffs under any such agreement, undertaking or concession before the publications in the official Gazette of the Electricity Supply (Rajasthan Amendment) Ordinance, 1976, shall be deemed to have been validly realised, made or created under this Act as amended by the said Ordinance." 656 Immediately thereafter on March 12, 1976 the Board furnished the appellants with a bill for payment of an amount of Rs.21,35,506.72p. for the billing month of February 1976 at uniform rate, under Schedule LP/HT-1 framed by the Board's tariff notification dated May 28, 1974 together with the general surcharge of 15%.

The appellants were therefore constrained to move the High Court under Art.226 of the Constitution challenging the constitutional validity of ss.49A and 49B of the Act, as introduced by the aforesaid Ordinance as also the impugned bill sent by the Board for the billing month of February 1976 for Rs.21,35,506.72p. On November 4, 1976 the Board issued another notification under s.49(1) framing revised uniform tariffs at different rates for different class of consumers which became applicable from the billing month of December 1976. But unlike the earlier notifications prescribing uniform tariffs under s.49(1) of the Act, this notification did not contain any exclusionary clause granting exemption for specially negotiated loads. While the matters were pending before the High Court, on November 3, 1977 the Board furnished another bill to the appellants claiming arrears amounting to Rs.5.57 crores on account of the difference between the normal rate of tariff and the agreed rate for the supply of electrical energy to them for the period from January 1, 1971 to January 31, 1976.

Again, the appellants filed another petition in the High Court under Art.226 of the Constitution questioning their liability to pay the said amounts. Both the aforesaid writ petitions, namely, the one challenging the vires of ss.49A and 49B of the Act as well as the legality of the impugned bill sent by the Board claiming Rs.21,35,506.72p.

for the billing month of February 1976, and the other questioning the legality and propriety of the bill dated November 3, 1977 raising a demand for payment of Rs.5.57 crores on account of the difference between the uniform rates of tariffs and the agreed rate of supply for the period from January 1, 1971 to January 31, 1976 were referred to a Division Bench.

By the judgment under appeal, a Division Bench speaking through Fudal, J. allowed the appeal preferred by the Board 657 and dismissed that of the appellants as well as the writ petitions filed by them. The learned Judge disallowed the contention raised on behalf of the appellants as to the constitutional validity of ss.49A and 49B of the Act as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976 and upheld the right of the Board to revise the rate of supply as agreed upon for the period commencing from January 1, 1971 onwards and enforced a demand for payment of the difference between the uniform tariffs as fixed from time to time and the agreed rate. Learned counsel for the parties have placed no reliance on the judgment of the Division Bench which, according to them, does not deal with the points raised.

Extent of the Appellants liability We find it convenient at this stage to indicate the extent of the appellants' liability involved in these appeals. From the abstract statement filed by the Board, the net amount due with interest as per the uniform tariffs under Schedule HS/LP/HT-1 framed by the Board's tariff notification dated April 26, 1969 for the period from January 1, 1971 to June 30, 1974 and the uniform tariff Schedule LP/HT-1 framed by the Board's tariff notification dated May 28, 1974 for the period from July 1, 1974 to February 6, 1976 together with the general surcharge of 15% on the tariff from September 16, 1966 and the interest thereon comes to Rs.14,50,99,654-47p. On the other hand, if the appellants contention regarding the in applicability of the uniform tariffs under Schedule LP/HT-1 of 1974 were to prevail on the ground that the Board had failed to raise a demand for payment of electricity charges at that rate prior to February 7, 1976, the date of promulgation of the Ordinance, the net amount due on account of this difference for the aforesaid period applying the uniform tariff Schedule HS/LP/HT-1 of 1969 comes to Rs.12,10,51,510-46p.

The resultant sums have been arrived at after making adjustment of various payments made by the appellants from time to time towards the bills submitted by the Board as per the interim orders passed by the High Court from time to time together with interest, as also under the interim order of this Court dated October 6, 1980 while granting special leave and stay of the operation of the judgment of the High Court. We may state that the figures given in the abstract statement filed by the 658 Board more or less correspond with those in the statement filed by the appellants. The difference between the two amounts with interest thereon at 9% works out to Rs.2,41,58,937. That is the magnitude of the claim in these appeals.

We had the benefit of hearing Shri Shanti Bhushan appearing for the appellants and Dr. Y.S. Chitale, on behalf of the Board. At the very outset Shri Shanti Bhushan, learned counsel for the appellants with all fairness stated that he does not challenge the constitutional validity of ss.49A and 49B of the Act.

The nature of controversy.

The controversy in these appeals can be viewed from three aspects. First rests on the interpretation of the terms of the agreement between the parties dated July 28, 1961 and the various clauses thereof, particularly clauses 18 and 34(b) which both have a material bearing. The second on the construction of ss.49A and 49B of the Act, the scope and effect of s.49A which by the non-obstante clause nullifies the agreement for the supply of electrical energy at a concessional rate to the appellants and makes it lawful for the Board to charge the uniform tariff with retrospective effect from September 16, 1966 i.e. the date on which the new s.49 was introduced, and s.49B which validates the making of such demand with retrospective effect. As also the validity of the demands created by the Board by its letter dated February 1, 1971 for the billing month January 1971 for Rs.11,67,959. 95p. under Schedule HS/LP/HT-1 to the Board's tariff notification dated April 26, 1969 applicable to all large industrial consumers, and the bill sent by the Board on March 12, 1976 for the billing month February 1976 for payment of Rs.21,35,506-72p. under Schedule LP/HT-1 to the Board's tariff notification dated May 28, 1974. The third comprises of various subsidiary issues as to whether the Board is precluded by the doctrine of promissory estoppel from raising these demands, as also whether such demands are violative of Arts. 14, 19(1)(f) and (g) and 31(2) of the Constitution. We shall deal with these contentions in seriatim.

659 In order to appreciate the issues involved, it is necessary to deal with the legislative changes. Under s.49 of the Act as it stood at the relevant time i.e. on July 28, 1961, the date of agreement, a general power was conferred on the Board to supply electricity upon such terms and conditions as it may, from time to time, fix having regard to the matters referred to in that section and the proviso thereto directed the Board not to show undue preference to any person in fixing the tariffs. The section was in the following terms :

"49. Provision for the sale of electricity by the Board to persons other than licensees :

Subject to the provisions of this Act and of any regulations made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board may from time to time fix having regard to the nature and geographical position of the supply and the purposes for which it is required :

Provided that in fixing any such terms and conditions the Board shall not show undue preference to any person." It appears that a view was taken by the Bombay High Court in a case relating to the Kalyan Borough Municipality that s.49 of the Act as it then stood, did not permit the Board to frame uniform tariffs for consumers in compact areas as well as consumers in sparse areas, so as to require the former to pay a part of the cost involved in the supply of electricity to the latter i.e. so as to cast a higher burden on the consumer in a compact area, where the cost of supply was less. An appeal was brought by the Maharashtra Electricity Board to this Court. During the pendency of the appeal, Parliament enacted the Electricity (Supply) Amendment Act, 1966 by which the Act was amended in various particulars. It is only necessary to refer to two sections of the Amendment Act viz. ss.11 and 24. Section 11 substituted, with retrospective effect, new s. 49 in the place of old s.49, and s.24 of the amending Act validated the imposition and collection of charges for the supply of electricity, preventing any person from claiming refund of any amount paid by him in excess of 660 the amount due under the Act. The new s.49 of the Act runs as follows :

"49. Provision for the sale of electricity by the Board to persons other than Licensees :

(1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.

(2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely :- (a) the nature of the supply and the purposes for which it is required;

(b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee;

(3) Nothing in the foregoing provisions of this section shall derogate from the power of Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purposes for which supply is required and any other relevant factors.

(4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person." 661 In Maharashtra State Electricity Board v. Kalyan Borough Municipality & Anr. [1968] 3 S.C.R. 137, this Court reversed the decision of the Bombay High Court and it was held that the levying of uniform tariff on the consumers irrespective of whether they were in sparse areas or in compact areas, which was not directly related to the cost of supply, did not amount to a colourable exercise of taxing power by Parliament.

The Electricity (Supply) (Rajasthan Amendment) Ordinance was first promulgated on February 7, 1976, later replaced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976 introducing ss.49A and 49B to the Act, to obviate the difficulty created by the judgment of the High Court in this case as also by the decision of this Court in the case of the Indian Aluminium Company v. Kerala State Electricity Board [1976] 1 S.C.R. 70. 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 spec