Bihar 440 Volt Vidyut Upbhokta Sangh vs The Chairman, Bihar State Electricity Board and Others

S.B. Sinha and G.S. Sharma, JJ.—In all these writ applications, the Petitioners have questioned the validity of tariff Notification of 1993 (hereinafter referred to as the ''1993'' Tariff) issued by the Bihar State Electricity Board (hereinafter to be referred to as the Board'') in terms of the notification dated 23.6.1993 which has come into force with effect from 1.7.1993. The said notification (sic) been issued by the Board with approval of the State Government and in supersession of the earlier notification dated 26.8.1991, in exercise of its powers conferred upon it under Sections 49 and 59 of the Electricity (Supply) Act, 1948 (hereinafter to be referred to as ''1948 Act'').

By reason of the said notification, various changes have been effected in Low Tension Industrial and Medium Power Services, High Tension Industrial Services, Irrigation and Agriculture Consumer''s Services, Domestic Consumer''s Services and also the Commercial Consumer''s Services etc.

The validity of the said 1993 Tariff has been questioned on various grounds. Attack has particularly been made in relation to clauses 15.2, 15.2(b), 15.3(c), 15.3(b), 15.3(e), 16.10 and 16.44 of the 1993 Tariff and some other clauses of the Schedule appended thereto.

In this case an application for intervention was filed by the Singhbhum Chamber of Commerce and Industry and others, who had filed a writ application (C.W.J.C. No. 2476 of 1993/R) in the Ranchi Bench of this Court questioning the validity of the said Tariff. With the consent of the counsels for the parties, the intervention application was allowed and the intervenor was permitted to make submissions in this writ application.

Mr. Ganesh, appearing on behalf of the intervenors, spearheaded the arguments on behalf of the Petitioners and was supplemented by Mr. Basudeo Prasad, Mr. Indu Shekhar Prasad Sinha, Mr. L.K. Bajla and Mr. Navniti Prasad Singh.

Mr. Ganesh has raised the following contentions:

(I)(a) Section 49 of the 1948 Act does not confer any arbitrary power on BSEB to fix tariffs.

(b) The tariff fixed by the Board and increases made by it have to be justified on rational grounds and relevant materials.

(c) The Court may scrutinise these materials in order to ascertain whether the tariff is rational and reasonable.

(II) There is a statutory obligation cast on Board to carry on its operations in an efficient and economical manner.

(III) Board''s operations are being carried on in a highly inefficient and uneconomical manner, as a consequence of which it incurs unconscionably high costs which are sought to be passed on to the consumers.

(IV) The increases in tariffs which are reflected in the 1993 Tariff are excessive, inordinately high and disproportionate to the increase in costs and are unjust and oppressive to consumers.

(V) The demand for security deposit made by the Board should be reasonable and based on rational grounds, which will depend on the length of the billing and recovery cycle. The security deposit demanded should only be for the length of the billing and recovery cycle. Otherwise, it will become a source of revenue and profit for the BSEB, which is not permissible.

(VI) The undisputed factual position is that the billing and recovery cycle of the Board is only 45 days, whereas the cash security deposit demanded is for 3 months, which is arbitrary and unreasonable. Earlier, the amount of the cash security deposit was only to the extent of Rs. 1 Lakh plus 50% of the balance and the remainder could be kept in the form of a bank guarantee. The said cash deposit fully met the requirement for consumption deposit, having regard to the fact that in Bihar, the billing and recovery cycle comes to only 45 days. Further, the bank guarantee for an amount of approximately 45 days consumption fully meets any need which the Board may feel for a security deposit.

(VII) In any event, the calculation of the amount of security deposit cannot include the maximum demand charges and the amount of electricity duly. This is because the maximum demand charges are only in respect of the fixed capital capacity created to meet a consumer''s contract demand. This does not entail the blocking of any working capital. Further, the Board is given sufficient time to make payment of electricity duty. Consequently no consumption deposit is required against these items.

(VIII) The provision in the 1993 Tariff under which interest need not be paid to consumers, on security deposits is also arbitrary and unreasonable. According to the learned Counsel withdrawal of payment of interest is contrary to the decisions of Supreme Court in Ferro Alloys Corpn. Ltd. Vs. A.P. State Electricity Board and another, (hereinafter to be referred to an ''FACOR'').

(IX) The monthly minimum guarantee charge has been held to be unreasonable and already struck down by this Hon''ble Court, in Bihar State Electricity Board and Others Vs. State of Bihar and Others, . The 1993 Tariff seeks to reintroduce this through the back door in a camouflaged manner. It was submitted that although a provision of adjustment has been made, but no provision for refund or adjustment of the shortfalls has been made, in the next bill, even if later on it is found to be higher than the monthly minimum charge.

(X) There are several other provisions in the 1993 Tariff which are highly unreasonable, arbitrary and oppressive to the consumers: (a) The fuel surcharge has been wrongly computed on the basis of an artificially reduced base figures with the object of inflating the fuel surcharge demand to be raised on consumers. It is further contended that in any event by reason of the aforementioned provisions two different types of guarantees are being sought for and for that there cannot be any justification.

(b) The provision for monthly minimum base charge does not permit adjustment of the minimum base charge paid in a particular month against the charge paid for another month, where the consumption is far more than the minimum amount. The additional amount paid by the consumer remains with the Board and is retained by it up to the end of the year and very possibly upto the next year as well. There is no provision for refund within any specified period. Further, no interest is to be paid on this excess amount which remains with the Board for many months.

(c) L.I.T.S. consumers have now been made subject to a two distinct minimum guarantees - (a) the minimum charge which existed earlier of Rs. 50/- per BHP for L.T.I.S.-I and Rs. 70/- per BHP for L.T.I.S.-II consumers and (b) the new minimum energy consumption charge of 70 units per BHP per month. The combined effect of these two minimum charges results in an extremely heavy burden on the L.T.I.S. consumers.

(d) In the case of L.T.I.S.-I consumer, they security deposit has been increased from Rs. 100/- per BHP to Rs. 300/- per BHP. For L.T.I.S.-II consumers, the increase is from Rs. 125/- per BHP to Rs. 400/- per BHP. These increases are arbitrary and unjustifiable.

(e) The 1993 Tariff introduces, for the first time, an operational surcharge, which comprises a fuel surcharge and "Other Operational Surcharge" which is to cover increases in the cost of repairs and maintenance and the employee cost. As a direct result of this surcharge, the consumer is made to bear the cost of the inefficiencies of Board and a premium is put on its mismanagement. Further, this operational surcharge will cover a very large portion of the total costs of Board. By introducing this surcharge, Board is seeking to bye-pass its obligation to comply with the specified and mandatory procedures which are applicable when Board revises the Tariff. Board may revise the tariff through the back-door by simply raising a demand towards operational surcharge, which is illegal and arbitrary.

(f) Consumers with connected load between 80-100 H.P. were previously classified in the L.T.I.S. category. However, the 1993, Tariff provides that they shall be classified in the H.T.I.S. category with immediate effect. As a consequence, the power cost of these consumers may go up as much as 4-1/2 to 5 times.

(g) The 1993 Tariff introduces, for the first time, a scheme of double tariff rates, one for computing the energy charge, and, the other for computing the minimum guaranteed consumption charge. This is nothing but a cleverly disguised and camouflaged method for increasing the minimum guaranteed consumption amount which is computed on the basis of the accepted formula. This is wholly unjustifiable.

(h) There is a sleep increase in the demand charge from Rs. 93 per KVa to Rs. 115 per KVa, without any basis or justification. Such a demand is illegal as the same involves increasing infrastructural, costs to the extent of 25% although no basis therefore has been disclosed by the Board.

(i) The extremely low tariff rate at which power supply is made for irrigation imposes a huge loss on the Board which has to be borne by other classes of consumers who, consequently, have to pay the highest power tariffs prevailing in the whole country. Such high tariff have greatly eroded the viability and competitive ability of industries located in Bihar.

(j) The Board is seeking to cover past accumulated losses by its present increase of tariff rates by the 1993 Tariff. This is not permissible.

(k) The provision that if a consumer has a power Transformer of a capacity of more than 150% of his contract demand he is liable to be penalised, is highly unjust to consumers who have already lawfully installed their transformers. Reliance in this connection has been placed in Arya Steel Private Limited v. State of Bihar reported in (1987) 64 STC 196.

(l) It was submitted that, in any event, retrospective effect cannot be given to this provision so as to affect transformers lawfully installed earlier.

Firstly, our attention has been drawn to the fact that in between 1.6.1991 when the 1991 tariff was framed and 21.6.1993 when the impugned 1993 Tariff has been framed, the rate of inflation was merely 20-25%. It has been submitted that so far as the HTS-I consumers are concerned, increase in the rate of tariff has been made to the extent of 164% in between 1983 and Tariff of 1991, whereas 79%, have been increased in the 1993 Tariff i.e. only after a period of two years.

It has been stated that Section 59 of the 1948 Act not only casts a right but also a duly upon the Board to carry out its function in such a manner so as to enable it to earn at least 3% profit but even if 1993 Tariff is implemented, it would still make losses. It has been submitted that the Board cannot manage its affairs in whatever way it likes and cannot at the same time contend that the same cannot be questioned by the consumers.

Our attention has been drawn to the statements made in the writ application to the effect that the Comptroller and Auditor General of India had also found various irregularities in the functioning of the Board and the losses incurred by it to the extent of 100 crores.

Our attention was further drawn to the order passed by this Court which is contained in Annexure-12 to C.W.J.C. No. 2811 of 1993 (R).

It has been contended that the Tariff made by the Board is highest in India except the State of Maharashtra and Haryana. In this connection, our attention has been drawn to Annexure 10 to the intervention application wherein a comparative chart has been annexed.

Learned Counsel contends that keeping in view the fact that the Board has a monopoly power to supply electrical energy, its contract with the consumers must be held to be in the nature of adhesion contract as has been held by the Supreme Court of India in the case of Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, .

It has been submitted that the Board should evolve its tariff structure in such a manner so as to make it compatible with its duty to manage its affairs in a business like manner. In support of the said contention, learned Counsel has placed reliance in the case of Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, ; Indian Aluminium Company Limited and another Vs. Karnataka Electricity Board and others, .

It was submitted that Clause 15.3(b) and 15.3(c) of the Tariff amounts to oppressive exaction by the Board which, in fact, amounts to earning profit in an illegal manner without any need, inasmuch as the Board in terms of the tariff is not required to pay any interest on the security. Despite the decision of the Supreme Court in the case of Ferro Alloys Corpn. Ltd. Vs. A.P. State Electricity Board and another, (hereinafter to be referred to as FACOR) that the Board had all along been paying 4-5% interest on the security deposit, the same has since been withdrawn without assigning, any valid and cogent reason.

Reliance in this connection, has been placed on the case of Jagdamba Paper Industries (Pvt.) Ltd. and Others Vs. Haryana State Electricity Board and Others, ; Kistna Cement Works, Tadepalli Vs. The Secretary, APSEB, Vidyut Soudha, Hyderabad and Others, ; B.R. Oil Mills, Bharatpur Vs. Assistant Engineer (D) R.S.E.B., Bharatpur and Another, and the Chairman, Karnataka Electricity Board v. Mining Co. and Ors. reported in AIR 1986 Kar 252.

The learned Counsel enumerated the following three important circumstances for showing as to why non-payment of interest on the security deposit is unjustifiable; (i) the amount of deposit would continue even beyond the period of average billing and recovery cycle, (ii) the Board recovers interest from the consumers at the rate of 2% per month whereas the consumers are merely asking for 5% interest and (iii) monthly minimum guarantee charges have been included in the amount of security deposit which can be adjusted only upon completion of the order or beyond so and if the amount in question is deposited even in fixed deposit on a short term basis the same would have fetched 10.5 percent interest.

It was next contended that in the last two years there has been an increase of three times in the charges in respect of LTIS-1, 2.51 times in relation to L.T.I.S. II and two times in HT consumers which cannot be justified keeping in view the billing and recovery cycles.

With regard to the imposition of operational surcharge, it has been contended that the overhead cost of the Board is highest in India and its capacity of generation and distribution is lowest except Haryana. It has been stated that the Board purchases a major portion of Electricity for supply to its consumes from National Thermal Power Corporation and Damodar Valley Corporation at a rate which included profit of the said organisation. It is further submitted that the Board is the most over staffed organisation in India.

With regard to the Clause 15.2(b) of the 1993 Tariff, it was submitted that the same provides for two way tariff which is not contemplated in law. It has been contended that whereas a consumer is required to pay Rs. 1.72 paise per KWH for consumption of electrical energy, it has to pay Rs. 2.18 paise per KWH for non-consumption thereof. By way of example, it has been placed before us that whereas under the 1991 tariff, for consumption of 200 per KWH, one was required to pay a sum of Rs. 34,400/-, but under the 1993 Tariff by application of the special rate one has to pay a sum of Rs. 43,500/- for the non-consumption of the same amount of electrical energy.

Mr. Basudev Prasad submitted that Section 49 of the 1948 Act is ultra vires Articles 19(1)(g) of the Constitution of India as it has no power to revise the tariff, in view of the fact that the Board could revise the tariff only when it has been functioning in a proper manner with view to earn profit. According to the learned Counsel, the said provision is confiscatory in nature.

It was also submitted that in terms of Section 59 of the 1948 Act, tariff cannot be revised for making good its losses. The learned Counsel, in this connection, has drawn our attention to paragraph 23 of the decision of Bihar Chambers of Commerce (supra) and paragraphs 5 and 7 of the Supreme Court decision in Kerala State Electricity Board v. S.N. Govinda Prabhu & Bros. AIR 1986 SC 1000 and the decision in the case of M/s. Hindustan Zinc Ltd. etc. Vs. Andhra Pradesh State Electricity Board and others, .

In relation to, Clause 16.10.4 of the 1993 Tariff, it has been submitted that the formula laid down therein cannot he adhered to as the accounts for the years 1992-93 are still to be audited and thus, an internal account of made Board without being audited cannot be made the basis for increase in operational surcharges by way of a tariff. The learned Counsel in this connection relied upon a decision in the case of the Bihar State Electricity Board and Anr. v. Jawaharlal and Ors. reported in AIR 1976 Pat 326 ; Ashok Soap Factory and Another Vs. Municipal Corporation of Delhi and Others, ; Dumraon Textiles Limited Vs. Bihar State Electricity Board and Others , and Delhi Cloth and General Mills Co. Ltd. and Another Vs. Rajasthan State Electricity Board and Another, .

Mr. Bajla, the learned Counsel, appearing on behalf of the Petitioners in C.W.J.C. No. 10342 of 1993 submitted that in terms of the 1993 Tariff the consumers of low tension electrical energy is required to pay more than the consumers of high tension electrical energy. It has been submitted that although both types of consumers obtain supply of similar quality of electrical energy and as such there is no justification as to why the consumer of low tension electrical energy should be made to pay more than the consumers of high tension electrical energy.

It has been further submitted that LT consumers having load of electrical supply from 80 HP to 100 HP would be the worst sufferers, inasmuch as they will have to bear a heavy burden to convert the supply of electricity into high tension.

In this connection, our attention has been drawn to the fact that the LTIS consumers consumes only 4.25% of electricity sold by the Respondent Board, whereas the HTIS consumers consume 44.13% of such electricity, as on 31.3.1090. However, number of LTIS consumers in the State of Bihar is 79,355, whereas the number of HTIS consumers is only 1,425.

It was submitted that increase in tariff so far as LT consumers are concerned is 240% whereas the increase in the tariff to LT consumers having connected load of more than 80 HP is about 400% whereas in the case of HT consumers, the increase is only to the extent of 130%.

According to the learned Counsel, therefore, the tariff in question ought to have been framed in a manner which would have served the highest number of consumers. It has further been submitted that HT consumers are well organised, whereas LT consumers like Atta Chakki, Rice Mill owners etc. are not so.

Mr. Pawan Kumar, learned Counsel appearing on behalf of the Petitioner in C.W.J.C. No. 8740 of 1993, submitted that the Petitioner of the said case is a consumer of extra HT electrical energy and as such the proposed tariff would affect the Petitioner''s industry. It has been pointed out that the work in the Petitioner''s industry is being done through the electric furnace and in that view of the matter if the supply of electrical energy is disrupted even for two minutes, the same would have disastrous effect on the working, inasmuch as steel moulding, if cooled down due to disruption in supply of electrical energy; the entire process for healing the furnace, has to be restarted, as a result of which an hour''s time would be taken for bringing back the moulded material to the same position in which it was before such disruption of electrical energy took place. It was further submitted that no provision has been made for compensating the consumers for such losses, inasmuch as even Clause 13 of the HT agreement would not be applicable in such a case.

Mr. Navaniti Prasad Singh, the learned Counsel appearing for the Petitioner in C.W.J.C. No. 10979 of 1993 mainly questioned the discrimination meted out to the urban consumers vis-a-vis the rural consumers. He has drawn our attention to the chart as contained in Annexure 1 to the writ application for the purpose of comparison of 1993 Tariff with 1991 Tariff. It has been further submitted that the rural consumers for consumption of 400 units of electrical energy has to pay only a sum of Rs. 90/- per month in respect of electrical energy consumed whereas the urban consumers have to pay about Rs. 790/- for the consumption of same load of electrical energy. Learned Counsel further submitted that the 1993 Tariff amounts to a colourable exercise of legislative power.

Our attention has further been drawn to the fact that so far as the fixed charges are concerned, consumers concerned, have to pay although they may not consume electrical energy at all and even if there occurs disruption electrical energy. It has been submitted that the levy of fixed charges is wholly unrelated with the generation, supply and consumption of electricity as envisaged under the 1948 Act. According to the learned Counsel, this factor has also to be viewed with the admitted position that Board is not in a position to supply electrical energy to all its consumers. It has been submitted that in some case the fixed charges payable by the consumers may go to the extent of Rs. 900/- or more.

It was next contended that the fixed charges on air-conditioner is really a lax on installation of machinery which is not contemplated under the 1948 Act. It has been submitted that as fixed charges are to be paid on the entire load connected at the premises of consumers, extra charge cannot be levied on installation of air-conditioners irrespective of the fact that whether the same would remain operational or not and thus it is violative of Article 14 of the Constitution.

With regard to levy of other operational surcharge, the learned Counsel submitted that the Board in the name of repairing, maintenance, etc. may renovate entire industry or purchase new machinery and recruit more employees, but in such matters the consumers would absolutely have no say.

It is submitted that so far as LT consumers are concerned no provision exists for remission of charge as is permissible in the case of HT consumers by reason of Clause 13 of the HT agreement. The learned Counsel submitted that on these grounds the 1993 Tariff must be held to be illegal.

In this connection, reliance has been placed in the case of Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another, .

Mr. Reddy, the learned Additional Solicitor General, who appeared on behalf of the Board firstly submitted that as prior to framing of 1991 Tariff, the Tariff was framed in the year 1983, this Court may consider as to whether the revision in tariff in 1993 is justified or not keeping in view the facts and conditions prevailing in the year 1983 and not in 1991. According to the learned Additional Solicitor General, in view of the fact that 1990 Tariff was made after a period of eight years, the situation obtaining at that point of time was not fully taken into account by the Board keeping in view the fact that the consumers concerned may not be in a position to bear a heavy burden at a time.

With regard to the power of the Respondent-Board to frame tariff, our attention has been drawn to the preamble, and objects and the reasons of the 1948 Act. It has been submitted that from a perusal of the provisions of the 1948 Act, and particularly Sections 18, 26, 49, 59, 61, 63, 64, 69 and 75 it will be evident that neither any unguided nor any uncanalised power has been conferred upon the Board. It is stated that all actions of the Board including expenditure, budget etc. are controlled and regulated by the statutory provisions.

According to the learned Additional Solicitor General the 1948 Act was enacted so as to make co-ordination and development in supply of electrical energy to different consumers, inasmuch as prior thereto only licensees were used to be granted under the provisions of the Indian Electricity Act, 1910 but there was no provision for creation of a national grid for the purpose of supply of electrical energy to consumers of various States. It was further submitted that the Statute itself has laid emphasis on the supply of electrical energy to rural and semi-urban area and as such the concessions given to the consumers of semi-urban or rural area cannot be held to be unjustified or arbitrary.

It has further been submitted that the Board is not authorised to make any capital expenditure while making revenue expenditure and thus the question of misusing its power by incurring capital expenditure in the name of the revenue expenditure does not arise.

Mr. Reddy in this connection has strongly relied upon the decision of the Supreme Court in the case of Kalyan Borough Municipality (supra) and submitted that the Supreme Court had rejected the contention that by reason of Sections 49 and 59 of the Act a wholly unguided and uncanalised power has been conferred upon the Board. The Supreme Court according to the learned Counsel has also acknowledged the power of the Board to frame different tariffs for urban or rural consumers.

With regard to the argument that the Board is duty bound to operate in a most efficient and economical manner, it was submitted that efficiency of a particular organisation depends upon many factors. According to the learned Counsel the conditions of the plants and other local factors must also be taken into consideration for the purpose of determining as to whether the Board had been carrying out its functions in a most efficient and economical manner or not. It has been submitted that the Board had been generating electricity from their own resources only to the extent of 23% of the total need. It has been submitted that there are six units of 50 Mega Watts of Thermal power stations which were installed long back i.e. in the years 1966-75, two units 110 Mega Watts in 1977-78 and 8 units 110 Mega Watts thermal power plant were later on installed. Thus the total generating capacity of the Bihar State Electricity Board is 1380 KWH which was however, rated by the Central Electricity Authority on a much lower side. It was submitted that the plants for thermal power generation were supplied by the Russian and other East European countries which have not been functioning properly.

According to the learned Counsel, the plants of 110 Mega Watts have their own limitations and only the plants of 200 Mega Watts are working satisfactorily.

In this connection our attention has been drawn to Annexure-B of the Supplementary counter-affidavit filed in C.W.J.C. No. 8421 of 1993.

The learned Counsel has further taken us to a comparative chart from the Electrical Statistics of the year 1991-92 to show statewise transmission and distribution losses. Our attention has further been drawn to comparative statements indicating relevant positions in different years which is contained in Annexure-B to the supplementary counter-affidavit and it has been submitted that from a perusal thereof it would appear that although there is scope of improvement but in the recent past a considerable improvement in the affairs of the Board has been achieved, which is reflective of its prevailing short-comings also.

The learned Counsel submitted that the only question which is justiciable is as to whether the tariff fulfils the requirements of Sections 59 of the 1948 Act or not.

It is stated that the 1993 tariff has been framed keeping in view the sources of generation, and cost of purchase of electricity. It has been submitted that if the generation of electricity is made both from Hydel Power Stations and Thermal Power Stations, the cost of generation would be made less than the cost of production if electricity is generated only in thermal power station.

The learned Counsel further submitted that in fact the Board has to purchase more than 50% of its requirements from National Thermal Power Corporation and the Damodar Valley Corporation.

The learned Counsel referred to Sub-section (4) of Section 59 of the 1948 Act and submitted that the word ''undue preference'' occurring therein controls Only Sub-section (3) and not Sub-sections (1) and (2).

It has been submitted that favour shown to the consumers of rural and semi-urban areas is necessitated in view of the policy decision of the State keeping in view the socio-economic condition and other facts.

With regard to the reasonableness of the tariff, the learned Counsel drew our alienation to the fact that the National Thermal Power Corporation was supplying electrical energy @ 92.5 paise per unit and over the same, transmission, distribution and over-head expenses are also taken into consideration. It is stated that in fact the Corporation, uses, rule of thumb and its price may go to the extent of 185.0 per unit. It was submitted that NTPC has also levied fixed charge apart from the unit charges.

The learned Counsel further submitted that the charges levied by the Northern Grid is 120 paise per unit whereas the charge of Damodar Valley Corporation remains between 130 to 135 paise per unit.

With regard to tariff structure, our attention has been drawn to the fact that fixed charges are levied for supply of electricity applicable to commercial services only when it exceeds two Megawatts in relation whereto concession has been given to the consumers of rural area.

It has been submitted that as the average unit charges are only 102 per unit and if no fixed charge is levied the unit charges, would necessarily go up.

It is submitted that while determining the unit charges, the fact that the consumers are

also to pay fixed charge has been taken into account.

With regard to the Annual Minimum Guarantee charges it has been submitted that such charges are being levied from a long time and the same is not a new concept. Our alienation in this connection has been drawn to the case of Bihar Chambers of Commerce (supra).

According to the learned Counsel, this Court in the aforementioned case struck down the levy of monthly minimum guarantee charges keeping in view shortfall in consumption of month-wise electrical energy for which no, adjustment was made on annual basis. The learned Counsel in this connection has referred to a circular, wherein it was stated that if a consumer consumes electricity to the extent of minimum guarantee charges, no monthly basis shall be levied upon him any further.

With regard to a higher rate of charges, it, was submitted that the said measure has been introduced in order to enforce rigorous discipline to the consumers to consume atleast the minimum guaranteed electrical energy. According to the learned Counsel, the Board is entitled to alter the terms and conditions of supply in view of Section 49 of the 1948 Act.

In this connection, strong reliance has, been placed upon a decision of the Supreme Court in the The Adoni Cotton Mills Ltd. and Others Vs. The Andhra Pradesh State Electricity Board and Others, .

With regard to the operational surcharges as contained in Clause 16.10 of the 1993 tariff it was submitted that the same is in the nature of escalation charges. It has been submitted that the rate of operation charges cannot be levied every year in view of the fact that Section 59 postulates only revenue expenditure to be incurred by the Board in relation where of the Board is answerable to various authorities as provided under Sections 61, 69 and 75 of 1948 Act in terms whereof a control over the management and functioning of the Board by various statutory authorities has been imposed.

It was further submitted that operational surcharge has to be fixed with reference to Board''s annual statement in the same manner as is done in the matter of levy of fuel surcharge and the same is necessary for the purpose of neutralising the cost factors. The learned Counsel has, in this connection strongly relied upon a decision of the Supreme Court in Hindustan Zinc Ltd. (Supra)

According to Mr. Reddy, such a clause had to be introduced so as to enable the Board not to revise the tariff too frequently.

With regard to security deposit it has been submitted that there has been two significant changes which have been noticed by the Board of Directors of the Board after the decision of the Supreme Court in FACOR''s case (supra).

According to the learned Counsel, it was found that the cycle of billing and recovery extends to three months and the Board''s financial condition is such that it is not in a position to pay any interest on security deposit.

According to the learned Counsel, even furnishing of bank guarantee by the consumer was not found sufficient inasmuch as the Board was not in a position to utilise the amount deposited by the consumers by way of security deposit.

So far as charges towards consumption of electrical energy of LT consumers upto 80 BHP is concerned, it was pointed out that even in 1983 tariff, such provision was made but by an executive instruction, the same had not been given effect to keeping in view the objections raised by the concerned consumers. It has been submitted that the conditions stated therein are applicable to the consumers who are taking new connection and now it has been decided that the anomaly cannot be allowed to continue for ever.

Learned Counsel pointed out that for converting low tension electrical energy to HT electrical energy, the Board is required to convert the electrical connections of 11 KVA and has to make arrangements for installation of transformers. The consumers are required to instal transformers and enter into an agreement.

It was submitted that in this situation, the Board has also issued a notification not to give effect to its power, to disconnect the electrical energy of the consumers for sometime so that the consumer may, in the meanwhile make necessary, arrangement. Learned Counsel submitted that this Court may also direct that the said provision may come into force after a reasonable time. Mr. Reddy submitted that the Board has power to alter the condition of supply and in support of the said contention, reliance has been placed upon the case of Hyderabad Engineering Industries Ltd. and Others Vs. A.P. State Electricity Board and Others, .

With regard to alteration in transformer capacity, it was submitted that in this regard the consumers were allowed to instal transformers having, a capacity of 175% of contract demand and now, keeping in view the fact that no wastage in electrical energy can be permitted, the capacity of the transformer has been brought down 150% thereof. It was submitted that, similar provisions existed in 1991 Tariff also. According to the learned Counsel, Clause 16.4 of the 1993 Tariff would ensure stoppage of loss of energy as also the provision of fluctuation of voltage.

So far the grievance of domestic consumers relating to charges on the installation of air-conditioner is concerned, it was submitted that at the time of starting of the air-conditioner, great deal of current is required and thus a provision to pay some amount on installation of air-conditioners has been laid down. The learned Counsel submitted that installation of air-conditioner is a luxury and as the consumers are in a position to pay a higher charge, the same has been levied.

Mr. Shiv Kirti Singh, who appeared on behalf of the Board in some of the matters, submitted that the Board''s financial position is stringent and the grant in aid by the State is also not sufficient to meet its expenditure. Learned Counsel has drawn our attention to paragraph 29 of the decision in the case of Ashok Soap Factory and Anr. (supra) and submitted that the Supreme Court in that case has upheld the increase of KVA from 240/- to Rs. 340/-.

The learned Counsel has also submitted that the charge of inefficiency on the part of the Board by itself would not render the tariff invalid.

Reference in this connection has been made to the cases of K. Nagaraj and Others Vs. State of Andhra Pradesh and Another, , Bihar Chambers of Commerce (supra) and Eastern U.P. Chamber of Commerce and Industry, Allahabad and others Vs. U.P. State Electricity Board, .

With regard to the fixed charge and he minimum guarantee charges, our attention has been drawn to Annexure C in the counter affidavit filed by the Board and it was submitted that the calculations have been made by the Board upon taking into consideration he ground reality and the average consumption of electrical energy. It has also been submitted that in calculating the tariff, so far as the unit charge is concerned, fuel surcharge prevailing at the relevant time has also been merged therewith and now the fuel surcharge rate is zero.

The learned Counsel submitted that the Board apart from generating electricity also purchases the same keeping in view the area-wise need.

With regard to installation of transformers the learned Counsel submitted that fluctuation of overhead even for a minute in a factory at a particular time may cause rise in abrupt demand for which eventuality, the Board has to keep itself in readiness as it may also create problem in the overhead and thus the Board considers it necessary to impose some kind of discipline amongst the consumers.

We had called upon the learned Advocate General to assist us in the matter, bill except producing before us the dale of production of the books of accounts before the Legislative Assembly submitted by the Board and a copy of the report of the Comptroller and Auditor General, he did not make any submissions.

Mr. Ganesh in reply drew our attention to the excerpts from the audit report which is contained in Annexure VI. It has been stated that neither any recent figure is available, nor the Board had supplied any. With regard to the cost of generation, it was reiterated that the cost incurred by the Board is highest in India.

The learned Counsel termed the attempt of the Board to justify its action on the basis of the said figures as ''desparate''. It was submitted that logical inevitable sequitor is that the Court must break new ground by giving a direction upon the Board to meet its efficiency.

With regard to the contention of Mr. Reddy that the Bihar State Electricity Board had been making losses and thus revision in Tariff has become essential, our attention had been drawn to the balance sheet of the year 1992-93 and it was submitted that therein a profit for the year 1990-91 had been shown. In the said balance sheet the Board had shown 13.46 lakhs as net profit.

Referring the Annexure C to the Supplementary counter-affidavit the learned Counsel submitted that the figures given are wrong and in this connection our attention has been drawn to Annexure-VIII to the reply to the supplementary counter affidavit filed by the intervenor.

According to the learned Counsel the said figures are totally disproportionate to the rate of inflation and thus the industries cannot bear them any longer.

It was submitted that even before 1991, the Tariff of the Board was amongst the highest in India, and if in the year l993 the consumers are required to pay the electrical charges in terms of l993 Tariff, the fate of the industries would be doomed.

According to the learned Counsel, the increase in the tariff rate should commensurate with the rate of inflation i.e. 25% and any increase beyond the same would be arbitrary and violative of Article 14 of the Constitution of India.

With regard to the submission made in the supplementary counter affidavit to the effect that 78 days time is required for completing the process of recovery of charge it was submitted that the said calculation is based on wrong premises, inasmuch its the average time therefore; will have to be calculated taking into consideration the case of honest consumers and not of defaulting consumers.

It was submitted that recovery cycle is only 40 days and even if some margin is given the same cannot exceed 45 days and thus demand of cash security by the Board for a period of 90 days is unjustified.

With regard to monthly minimum guarantee charges it has been submitted that the Board is not in a position to make supply of electrical energy and thus the said demand on the consumers is unjustified. It has been stated that the levy at monthly minimum guarantee charges does not lake into consideration the cases of seasonal industries as well as the cases of such consumers whose demand varies from time to time. According to the learned Counsel by making provision for granting adjustments only, an additional burden cannot be imposed as the same burdens the consumers with great hardship on the following grounds:

a. Recovery is made at the penal rate which may be held up for a period of nine months;

b. The excess amount lies with the Board throughout the year;

c. No time has been provided for refund of the amount;

d. The so called concessions that in the event, the consumers consume the entire amount of guaranteed energy then only the minimum guarantee amount could not be charged.

It was submitted that the purported concession is no concession at all; as the consumer was also entitled thereto in law.

With regard to the scheme of double rate tariff it was submitted that in case of H.T.S.I. whereas for consumption of electrical energy the consumer is to pay 172 per unit; for the amount of short fall they have to pay 2.38 paise per unit.

The learned Counsel submitted that the same may give rise to wastage of electrical energy. No consumer likes to pay for the electrical energy not consumed.

The learned Counsel submitted that such a provision of law, in the context of short supply of electrical energy in the State of Bihar, should result in a bad consequence and thus the said tariff rate is an epitome of unreasonableness.

The learned Counsel distinguished the decision of the Supreme Court in the case of the Adoni Mill Ltd. (Supra) stating that in that case the power was rationed and quota for electrical energy was fixed. On the other hand, in this case the consumers are asked to consume more electrical energy. It was further submitted that concept of penalty has a natural corrolary bringing within its sweep the concept of mens rea and thus without taking into consideration the said factor, no penalty can be imposed. It was submitted that before imposing a penalty an adjudication is required which having not been provided, the impugned provisions cannot stand the scrutiny of law.

It was further submitted that the said provisions are arbitrary and irrational, as no provision has been made for complying with the principles of natural justice.

With regard to operational surcharge, it was submitted that as the Board had made the said provision with a view to avoid frequent amendment in tariff, the same is ultra vires inasmuch as in terms of the provisions of Vth Schedule appended to 1948 Act no increase can be effected in the name of operational surcharge without taking recourse to the safeguards provided in the Act.

According to the learned Counsel the provisions are brazenely unjustified in view of the track record of the inefficiency of Bihar State Electricity Board.

With regard to Clause 10.4.1, i.e., the capacity of the transformer, the learned Counsel submitted that in view of the fact that even the Board in 1991 tariff understood the said provisions to have a prospective operation and thus the doctrine of ''contemparanea exposito'' would apply in the instant case.

The learned Counsel in support of his contention has relied upon two decisions of the Supreme Court of India in (i) Desh Bandhu Gupta and Co. and Ors. v. Delhi Stock Exchange Association Ltd. AIR 1970 SC 1049 and (ii) K.P. Varghese v. Income Tax Officer, Ernakulam and Anr. AIR 1981 S.C. 1022.

It was pointed out that extreme hardship shall be caused to the consumers if they are required to replace the transformer which may cost 15-20 lakhs.

The learned Counsel pointed out that a higher capacity transformer is installed keeping in view the expected growth of industries as a result of which the contract demand may be enhanced. However, in this case the Board has adopted a devise that if the consumer does not intend to replace, the transformer, it may increase their contract demand.

It was submitted that as in this category there are only a few consumers and even if the said provision is given a prospective effect, it would not cause any loss to the Board.

With regard to interest on deposit, the learned Counsel drew our attention to paragraph 160 of the judgment in FACOR''S Case (Supra).

The learned Counsel pointed out that the crucial words in the judgment are: "However, if there is any change in the circumstances" and submitted that no great change has occurred in the affairs of the Board inasmuch as the Board has all along been making losses.

Our attention was further drawn to page-7(iii) of the report of the Comptroller and Auditor-General wherein it has been pointed out that the Respondent Board has been show ing the losses on the lower side.

The learned Counsel pointed out that so far as clubbing the consumers situate within one campus is concerned the Bihar State Electricity Board has not answered the question raised by the Petitioner.

Mr. Pawan Kumar has raised only contention with regard to conversion of L.T. from 80 BHP to 100 BHP; it was submitted that option should be given to the consumers to reduce the contract demand.

Mr. L.K. Bajla, submitted that the consumers of L.T.I''s have been discriminated against. In reply to the arguments of Mr. Reddy to the effect that the National Thermal Power Corporation also charged fixed charges, it was submitted that the said charge is levied because of higher voltage of supply; as higher the voltage lesser is the transmission loss.

It was submitted that the Board while supplying electrical energy to its consumers is not concerned with such matters.

With regard to monthly minimum guarantee charges, the learned Counsel submitted that the same is an escalation clause in tariff which is not permissible in law.

It was pointed out that although in U.P. as was submitted by Mr. Reddy the operational surcharge comes to about 1% if the same is compared to the increases made in the fuel surcharge, it would appear fuel surcharge has been increased to 12%.

With regard to cash security deposit it was pointed out that upon increase of the tariff the cash security deposit would be in the tune of 200 crores in place of 40 crores in the year 1988-89. It was pointed out that the Board has to pay the salary of the stall only on completion of the month, and they also take supply of materials on credit.

It is stated that even the fuel surcharge it adjusted at the end of the year.

The learned Counsel also drew our attention to paragraph 19(IX) of the statement made in C.W.J.C. No. 10342 of 1993 wherein the following submissions have been made:

The Petitioner; has reasons to believe that the Respondent Boards have been unduly influenced by the High Tension Industrial Consumers, in framing of the new tariff.

In C.W.J.C. No. 13090 of 1993, the learned Counsel pointed out that High Tension Consumers are the Petitioners thereof.

It was submitted that increase in the rate of Annual Minimum Guarantee Charges cannot have any justification in the matter of fixation of a higher rate for non-consumption, inter-alia, on the ground that (i) cost of fuel had already been taken into account (2) rate is 33% higher which is inappropriate keeping in view the fact that generation much below the amount of consumption of electrical energy (3) as the Electricity cannot be stored, it must be presumed that whatever the Electricity is generated in Bihar State Electricity Board, the same is consumed immediately and thus there can not be any rational in fixing higher rate of charges for non-consumption of electrical energy.

The learned Counsel submitted that the electrical energy reaches the consumers through the transformer and thus installation of a higher capacity of transformer has no direct nexus with the use of the electrical, energy.

With regard to fuel surcharge formula, the learned Counsel drew our attention to the difference thereof in 1991 and 1993 Tariff:

16.10 Fuel Surcharge:

16.10.1 Tariff of Commercial Service-II and III, L.T.I. Services, H.T. Services, EHT Service and Railway Traction Service are subject to Fuel Surcharge i.e. all consumers of the aforesaid categories shall be required to pay fuel surcharge at a rate to be determined every year in accordance with the formula given below in addition to other charges as laid down in the tariff schedule.

16.10.2 Formula for determining fuel surcharge applicable during the financial year in paise per unit shall be:

S+A1�A3+B3�C1�C3+D1�D3+E1�E3+F1�F3+G1�G3+H1�H3 ----------------------------------------------------------- (A2+B2+C2+D2+E2+F2+G2+H2) or X

Whereas S - Average Fuel Surcharge per unit in paise applicable during the financial year.

A1, B1, C1 = Unit generated from PTPS, BTPS and MTPS respectively.

D1, E1, F1, G1, H1 = Unit purchased from DVC, UPSEB, OSEB, NTPC and any other source respectively.

A2, B2, C2 = Unit sold, out of sent out from PTPS, BTPS and MTPS on; which Fuel Surcharge is leviable.

D2, E2, F2, G2, H2 = Fuel surcharge in paise per unit computed for Board''s Generation at PTPS, BTPS and MTPS.

D3, E3, F3, G3, H3 = In case in the average unit rate of purchase of energy from DVC, UPSEB, OSEB, NTPC and any other source respectively during the year for which the surcharge is to be calculated. The said increase to be calculated with respect of the base year 1989-90.

X = Total units sold out of energy available for sale from Board''s generation and purchase from DVC, UPSEB, OSEB NTPC and any other source on which fuel surcharge is leviable.

1993 Tariff

16.10 Operation charge

16.10.1 Tariff sales of Cs Categories of II & III, LT. Industrial Service, H.T. Service, E HT Service and Railway Traction Service are subject to aforesaid categories shall be required to pay operational surcharge at a rate to be determined every year in accordance with the formula given below in addition to the other charges as laid down in the tariff schedule:

16.10.2 Operational surcharge shall consist of two elements namely:

(a) Fuel Surcharge (s1) &

(b) Other operational surcharge (s2)

The operational Surcharge (5) in paise per unit would thus be S-S1.S2

16.10.3 Fuel Surcharge: Formula for determining Fuel Surcharge applicable during financial year in paise per unit A1�A3+B1�B3, C1�C3, D1�D3, E1�E3, F1�F3, G1�G3, H1�H3.

(A2.B2.C2.D2.E2 + F2 + G2 + H2)

Whereas Average Fuel surcharge per unit in paise applicable during the financial year.

This learned Counsel pointed out that now from the existing formula in terms whereof the same was to be divided by ''X'' has been deleted.

With regard to levy of fixed charge it was submitted that the same is illegal as it has no concern with demand or supply or consumption of electrical energy as envisaged u/s 59 of the said Act.

The learned Counsel pointed out that although the words ''any undue performance'' occurring in Section 59(4) of the 1948 Act only control Sub-section 3 and not Sub-sections 1 and 2 thereof; Article 14 is clearly attracted even in such cases.

Mr. Navniti Pd. Singh appearing for the Petitioner in C.W.J.C. No. 10979 of 1993 made the following submissions:

With regard to the power of the Board to frame tariff it was submitted that in each decided case the Supreme Court has noticed Section 18 of the 1948 Act and in none of the decisions the Supreme Court has stated that the inefficiency on the part of the Board has to be encouraged.

According to the learned Counsel the words ''properly chargeable'' are crucial for the purpose of construction of Section 59 of the Act, inasmuch as in terms of the said provisions a duty has been cast upon the Board to levy only such charges which are leviable and which should be levied.

According to the learned Counsel the Board cannot take any benefit of its own default nor can it take advantage of its own wrong in framing the said tariff.

Reference in this connection has been made to the case of All India Groundnut Syndicate Ltd. Vs. Commissioner of Income Tax, Bombay City, and the case of L. Hirday Narain Vs. Income Tax Officer, Bareilly, .

With regard to fixed charge it was submitted that earlier the said charges were known as ''demand charges'' and that is the reason why the same was upheld by the Supreme Court in the case of Kalyan Borough Municipality''s case (Supra).

In view of the aforementioned rival contentions of the parties as noticed hereinbefore the following questions arise for consideration in these writ applications:

(a) Whether Sections 49 and 59 of the 1948 Act are ultra vires the Constitution of India?

(b) Whether the 1993 tariff is ultra vires Article 14 of the Constitution of India, read with Sections 49 and 59 of the 1948 Act?

(c) Whether the Board has been acting in a most efficient and economical manner as contemplated u/s 18(a) of the 1948 Act and if it be not so, whether the 1993 tariff is liable to be struck down on that ground alone?

(d) Whether this Court can issue any direction to the Board to improve its generation capacity as also to act in an efficient and economical manner?

(e) Whether the levy of the minimum guarantee charges and the demand charges on monthly basis is justified in law?

(f) Whether the Board had any jurisdiction to charge penal rate for short fall in the supply of the electrical energy?

(g) Whether enhancement of the amount in security in terms of Clause 15 of 1993 tariff and deletion of the provision about payment of interest on security deposit is valid in law?

(h) Whether Clause 16.4 of the tariff, whereby and whereunder the transformer capacity is not to exceed 150% of the contract demand is valid in law and in any event whether the same should be given a prospective effect?

(i) Whether Clause 16.10 of the Tariff providing for levy of operational surcharge is ultra vires Sections 49 and 59 of the 1948 Act?

(j) Whether levy of fuel surcharge is valid in law?

(k) Whether the provisions relating to those L.T. Consumers who had connected load more than 80 Horse Power can be directed to convert the same into High Tension electrical energy is valid in law?

(l) Whether the levy of fixed charges on L.T. consumers is ultra vires?

(m) Whether the levy of fixed charges on Air-conditioner is permissible under Sections 49 and 59 of 1948 Act?

(n) Whether clubbing of different consumers in the same premises is permissible in law?

Re: QUESTIONS (a) to (d):

All the aforementioned questions are inter-related and thus they are being taken up for consideration together:

As indicated hereinbefore, Mr. Basudev Pd. and Mr. Indu Shekhar Prasad Sinha submitted that the 1993 Tariff is ultra vires Articles 19(1)(g) of the Constitution of India, as allegedly thereby the fundamental right of the consumers to carry on its business has; substantially been affected by reason of sleep rise in the tariff rate.

According to Mr. Indu Shekhar Prasad Sinha, it has been stated in C.W.J.C. No. 8567 of 1993, that unless the provisions are struck down, many industries situate in the State of Bihar would face closure.

In our opinion, there is no substance in the aforementioned, contention. Article 19(1)(g) of the Constitution of India merely guarantees any person to carry on trade or business. Fundamental fight of a citizen to carry on, business or trade by a citizen can reasonably be regulated by any law.

Further for supply of electrical energy, the consumers enter into an agreement with the Board with a stipulation to pay the charges as may be levied from time to time. Levy of charges for supply of electrical energy may be liable to be challenged on other grounds but for that purpose the provisions of Article 19(1)(g) of Constitution cannot be invoked. Only because certain industries may have to be closed down (assuming that the statements made in that regard are correct) cannot be the ground for holding that the 1993 tariff itself is unconstitutional or confiscatory in nature. In fact tariff is not a tax and thus the same being confiscatory in nature does not arise.

It was further contended that the said provisions confer an unguided and arbitrary power and thus the same is violative of Article 14 of the Constitution of India.

The 1948 Act was enacted with a view to make coordination and development in the supply of electrical energy to different consumers.

The learned Additional Solicitor General had rightly drawn our attention to the fact that prior to the said enactment of 1948 Act, only licences used to be granted to various persons in terms of the provisions of the Indian Electricity Act, 1910 and there was no provisions for a National Grid for the purpose of supply of Electrical Energy to the consumers of various States.

We are also of the view that in terms of the provisions of Sub-section (2) of Section 48 of 1948 Act whereby and whereunder the annual financial statement and supplementary statement are to be placed before the State Electricity Consultative Council and under the provisions of Section 61 the annual financial statement had to be submitted before the State Govt. which has also to be placed before the State Legislature under Sub-section (3) of Section 49 for discussions by it and further in terms of Sub-section (4) of Section 61 the Board has to take into consideration any comments made on the said statements in the State Legislature as also Section 75 and other provisions, there cannot be any doubt that sufficient guidelines have been provided to the Board for framing its tariff in exercise of its jurisdiction under Sections 49 and 59 of the 1948 Act.

In Kalyan Borough Municipality''s case (Supra), the Supreme Court has held that Section 49 is constitutional.

In terms of the provisions of the 1948 Act various restrictions have been imposed which are required to be complied by the Board in fixing the tariff which provide a proper guideline in relation thereto. The Board in the matter of framing the tariff is also obliged to comply, with any directions which may be issued by the State in exercise of its power u/s 78A of the 1948 Act.

In our opinion, there are inbuilt safeguards in the 1948 Act itself which may prohibit the Board from exercising its power to frame the tariff in an arbitrary manner.

If, however, the Board exercises its power in an arbitrary or irrational manner, the same itself may be questioned before this Court, but for that reason, the provisions of Sections 49 and 59 of the 1948 Act cannot be struck down.

The Supreme Court in Kalyan Borough Municipality''s case (Supra) further, held that extension and cheapening of supping of electricity to sparsely developed area under Clause (d) of Sections 49(2) of the 1948 Act can only be complied with by keeping the uniform rate at such level which will meet the requirements of Section 59 of the Act.

In this case also, an argument has been advanced that there has been a considerable reduction in the rate of tariff to the agricultural section, but as noticed here-in-before such a power exists in the Board in terms of the aforementioned provisions. It has consistently been held by the Supreme Court of India, that different tariffs can be framed for different consumers. As consumers residing in the rural area form a class by themselves, the question of discrimination being meted out to the consumers of urban area does not arises.

Thus, the question as to whether such gross reduction of tariff to the agriculturist is justified or not does not arise for consideration.

In this view of the matter, we are of the view that the provisions of Sections 49 and 59 of the 1948 Act are not ultra vires, Articles 14 and 19(1)(g) of the Constitution of India.

This aspect of the matter has also been considered by the Supreme Court in FACOR''s case (Supra) wherein it has clearly been held that the provisions of the 1948 Act as also the provisions for demanding the amount of security deposit is neither arbitrary nor against public policy.

There cannot be any doubt whatsoever that the question as to whether the Board has framed tariff within the frame-work of Sections 49 and 59 of 1948 Act or not and/or the same is otherwise justified or not can fall for court''s judicial review and for that purpose the court can scrutinise the materials with a view to judge the rationality or reasonableness thereof. There cannot further be any doubt that a statutory obligation has been cast on the Board to carry on its operations in a most efficient and economical manner. See Bihar Chamber of Commerce''s Case (Supra).

It cannot further be doubted that the Board exercises a monopoly power in the Supply of the electrical energy and thus it is bound to act in a fair and reasonable manner, particularly in view of the fact that it is a ''State'' within the meaning of Article 12 of the Constitution of India, but it is not possible for us to accept the contentions of Mr. Ganesh that the contract for supply of electrical energy by the Board to its consumers is an adhesion contract. The decision of the Supreme Court of India in the case of Central Inland Water Transport Corporation Ltd. (Supra) was rendered in a completely different situation.

In that case it was held that a term of the contract whereby the employer has been, conferred with an absolute power to terminate the services of its employees only on service of three months notice or pay in lieu thereof was violative of public policy and hit by Section 23 of the Indian Contract Act and being arbitrary is also violative of Article 14 of the Constitution of India. As noticed hereinbefore, in Kalyan Borough Municipality case (Supra) it has clearly been held by the apex court that the power to frame tariff conferred upon the Board in terms of Sections 49 and 59 of 1948 Act is not arbitrary, inasmuch as sufficient guidelines have been provided and the right to frame such a tariff is hedged by the conditions laid down therein.

Central Inland Water Transport Corporation Ltd.''s case (Supra) in our opinion, therefore, has no application to the facts and circumstances of the case. In FACOR''s case (Supra), the Supreme Court held that framing tariff is not opposed to public policy as in any, event the same is not unconscienable.

In Kerala State Electricity Board''s case (Supra), the Supreme Court elaborately dealt with the powers of the Board to frame tariff. It has been held that Section 49 read with Section 59 of 1948 Act is mandated by the Parliament to generate surplus.

Upon consideration of the amendments made in the year 1978 in Section 59 of the Act, the Supreme Court observed that the original negative approach of functioning so as not to suffer a loss is replaced by the positive approach of requiring a surplus to be created.

It was held that the Board cannot shade its public utility character. The Court may only strike down the revision of tariff only when it is plainly arbitrary but not until then. It has been held that unless and until the Board becomes extravagant, the Court will refrain from touching the tariff.

The decision of Gujarat High Court in 1076 TLT 2041 is not relevant. In Bihar Chambers of Commerce''s case (Supra) it has been held that tariff framed by the Board is open to judicial review if it is found to be unreasonably excessive and not based on any ineligible criteria. This Court observed that the Board is under statutory obligation to increase production capacity and bring efficiency in the administration. No exception be taken to the aforementioned propositions of law.

In Indian Aluminium Company Limited and another Vs. Karnataka Electricity Board and others, it has been held as follows:

Before we part with this matter, it appears to us that the question of tariff for the supply of electricity to the smelter plant requires a sympathetic consideration. In 1975 policy of the Central Government regarding the aluminium industry, it has highlighted that despite the increase in the productive capacity of the aluminium plants in India, the production as a whole decreased for various factors particularly in view of irregular supply of electricity to the plants. It was also noted in the said policy that the costs for generating the power and transmission of power to the plants had increased over the years and it was not possible for the Boards to stick to rates agreed earlier for supply of electricity to the aluminium plants. The Central Government felt the necessity to strike a balance so that the Boards do not suffer and the plants for aluminium get proper supply of electricity at reasonable rates. It was noted that high rate of tariff and consequential increase in the price of aluminium industry are to be reconciled with a pragmatic approach and the Central Government, the State Governments concerned and the Boards should try to evolve a more realistic policy by which the interest of both the Boards and the aluminium industry are safeguarded to the extent practicable. We have no manner of doubt that if a joint venture is made an effective policy may be evolved which will ensure to the benefit of both the supplier and the consumers in the filed of production of aluminium, in the national interest as a whole.

In Indian Aluminium Co. v. Kerala State Electricity Board (Supra) the Supreme Court followed its earlier decision in Kalyan Borough Municipality case (Supra). In that case the Supreme Court was dealing with a case of contractual stipulation. It held that Section 59 of 1948 Act does not confer any power on the Board to enhance the charges for the supply of electricity in disregard to the contractual stipulation entered into under Sub-section (3) of Section 49 of 1948 Act. Such is not the case of any of the Petitioners that any contract had been entered into by the Board in terms of Sub-section (3) of Section 49 of the 1948 Act. The said decision, therefore, has no application in the facts and circumstances of the case.

In terms of Section 46 of 1948 Act the Board is empowered to fix a tariff. In a publication entitled, "The Electrical year Book, 1960 published by Messers. Emmott & Co., Ltd. the following appears:

As electricity cannot be stored in quantity, but must be generated as it is required, the total costs of an electricity supply depend not only on the total output of the source in units of energy or KWH, but also upon the capacity of the plant required to meet the combined maximum demand of all the consumers. These total costs are divisible into two components; first, the running part of the costs of fuel, oil, water and wages; and secondly, the standing costs, proportionate to plant capacity, and including all but the running costs. If the total costs of supply, including profit, are shared equitably by all consumers, then the cost of supply to any consumer depends upon his consumption in KWH and upon his contribution to the combined maximum demand which fixes the plant capacity. This contribution to the combined maximum demand depends upon the diversity of the group of which he is a member, the higher the diversity the less will each KW of his maximum demand increase the combined maximum. As the maximum demand per KWh of consumption depends on load factor, it follows that as either or both the load factor and the diversity of a consumer''s supply increases, the cost of supply per KWh falls. The foregoing is a summary of the Hopkinson principle of charging for electricity supplies, according to which each consumer contributes his equitable quota of both the total standing and running costs of supply. Tariffs, or schemes for charging, applicable to domestic and shop consumers fall, into three main classes.

There are various principles of Tariff Making.

However, in fixing tariffs certain basic principles have to be borne in mind as has been stated in Naushir Bharucha''s Electricity (Supply) Act:

(a) It should be secured that the charges reflect cost of supply. The charges should be related as closely as possible to the cost of supply. No doubt joint costs would involve a certain amount of arbitrary allocation.

(b) The process of determining the cost of supply cannot be carried beyond a point where the expense of determining the cost outweight the advantages of fine measurement.

(c) The charges should take into consideration the electrical characteristics of the consumers. The classification should be rational and based upon distinctive electrical characteristics.

(d) The tariff should be simple as far as possible though the closer the tariff to the cost of generation incurred the greater would be its divergence from simplicity.

(e) There should be no undue preference.

Section 49 confers upon, the Board a wide power to regulate its tariffs for supply to all persons requiring electricity other than licensees. Although the Board in terms of Section 26 of the 1948 Act is a deemed licensee but in the one major respect it differs from the licensee. A licensee is bound to supply energy within his area of supply to any applicant within a reasonable time and whereas the Board is not bound to supply electricity to any person within its area of supply though once it enters into a contract, it cannot discontinue supply except on lapse of the period mentioned in the contract or for a breach thereof or under the provisions of the Indian Electricity Act, 1910. The Board in special case where it has to incur extra cost may depart from its normal Grid tariff and prescribe special tariff for consumer.

Section 59 of the 1948 Act not only provides that the price charged for electricity should, be sufficient to recover from consumers the real value of the resources used up each year in serving them after taking credit, for any subventions from the State Government except in a very special situation, as for example, where a plant is under construction, but also to leave a surplus of 3%.

Section 59 of the 1948 Act leaves no justification to the Board to impair the capital structure of a scheme by defraying normal revenue expenditure out of capital.

Reference in this connection may be made to Rohtas Industries Ltd. and Others Vs. Chairman, Bihar State Electricity Board and Others, and Kerala State Electricity Board''s case (Supra).

We, however, can not accept the submissions of Mr. Basudev Prasad that only because the Board would continue to make losses, the tariff should be struck down as violative of Section 59 of the 1948 Act. It is true, that the Board should adjust its accounts in such a manner that the same generates, a surplus of 3%, but the same does not mean that Board will have to put so much burden on the consumers which they can not bear. In fact the said submission are absolutely contrary to and inconsistent with the other submissions made by the Learned Counsel.

The power of the Board, however to frame a tariff can neither be arbitrary nor unreasonable. Section 18(a) clearly lays down a mandatory duty on the Board to act in the most efficient and economical manner with particular reference to those area which are not for the time being supplied or adequately supplied with the electricity.

Section 26 of the 1948 Act postulates that except some provisions enumerated therein the Board has some power and obligations of licensees under Indian Electricity Act, 1910.

There cannot be any doubt that the court in exercise of its jurisdiction under Article 226 of the Constitution of India would not normally go into the details of the provisions of any rate fixed or tariff made by an expert committee.

One of the contentions raised in this application is as to whether, in framing tariff the rate of inflation in India should have been taken into consideration from the year 1983 or from 1991. According to the learned Counsel for the Petitioners the rate of inflation should be considered with reference to the date when 1991 tariff came into force, whereas according to the learned Addl. Solicitor General, the same should be taken into consideration with reference to the date when 1983 tariff came into force. In our opinion, keeping in view the phraseology used in Sections 49 and 59 of 1948 Act, whereby the Board has been empowered to adjust its rate, it must be from the date when 1991 tariff was framed as at that point of time the Board must, have taken into consideration all the relevant factors enumerated in Section 49(2) as also provisions of Section 59 of the Act.

However, in fixing tariff, in our considered view the general rate of inflation may not have any direct bearing. The tariff has to be framed keeping in view the statutory limitations and the financial condition of the Board as also the statutory main date laid down u/s 59 of the Act that the Board shall generate a surplus of 3%. Thus while framing tariff the Board has to keep in mind the said purpose, which as mentioned hereinbefore, got no direct nexus with the general rate of inflation.

Although, framing of tariff is a legislative function but it can be the subject matter of judicial review when it infringes legislative policy.

It is not a case like fixing of telephone rates where proposal are made in the budget itself and sanctioned by the Parliament and thus become unjusticeable.

The fixation of tariff under the 1948 Act does not undergo the legislative process as is done in the case of fixation of telephone rate.

In Kartik Enterprise (Pvt.) Ltd. Vs. The Orissa State Electricity Board and Another, a Division Bench Comprising of Hon''ble Mr. Justice R.N. Mishra (as his Lordship then was) and Hon''ble Mr. Justice P.K. Mohanti, observed:

The entire scheme under the statute is one and the duties cast on the Board u/s 18 go along with the wide powers conferred on the Board by the other provisions of the Supply Act. The Legislature has conferred these wide powers taking into consideration the mandatory obligation that the Board must act efficiently and economically and it is not open to the Board to act in an irresponsible manner, operate uneconomically and allow any type of inefficiency in its activities. If the Board does not operate efficiently and economically and thereby allows inflation of its operational cost and yet in exercise of powers under Sections 49 and 59 of the Act raises the rates of tariff and in exercise of its monopoly powers forces the consumer to pay for electricity at a higher tariff, it would lead to situation of harassment and the purpose of the Supply Act would be defeated. There can be no doubt that provision has been made in Sections 49 and 59 of the Act giving power of revision and the Board has been allowed statutory right to transfer the entire operational liability in terms of money to the consumers. Without the corresponding obligation, to act efficiently and economically, the Board is not intended to exercise the power to adjust its tariffs so as not either to run at a loss or to have such surplus as the State Government may specify. We cannot accept a situation where the State or any of its instrumentalities would have power without any correlative duty to exercise such powers as are contemplated u/s 59 of the Act. The State has an in built scheme of supervision. The State and the Legislature have been conferred powers of control and the accounting aspect is subject to the thorough checking by the Comptroller and Auditor-General of India. The Board is a high powered body and as Section 5 of the Act would show. Parliament has given special attention for the constitution of the Board. Such a high powered Board is expected to function diligently and in a manner indicated in Section 18 of the Supply Act.

It further held:

Uncontrolled power is bound to lead to arbitrariness. We cannot lose sight of the dictum: "Power corrupts; absolute power corrupts absolutely". Arbitrary power has the necessary tendency of leading to oppressive harassment. An authority vested with power owes an obligation to fulfil the purpose for which power is conferred and to act within the framework of law. Parliament having prescribed the duty of operating economically and efficiently so far as the Board is concerned, it has to fulfil these obligations.

The Bench proceeded to observe:

Under the Rule of Law, whether the system of checks and balance appropriately operates is ultimately to be scrutinized by the Courts and in order that the system of Rule of Law be maintained, the Court has to strike down every arbitrary act and require the exercise of power to conform to the requirement of law. It was pointed out by the Supreme Court in the case of Bennett Coleman & Co. Ltd. v. Union of India, AIR 1973 SC 106 that all executive action which operate to the prejudice of any person must have the authority of law to support it.

92A. In Hindustan Zinc''s case (Supra) the Supreme Court while dealing with the imposition on fuel coal cost adjustment H.T. Consumers inter alia observed:

In Govind Prabhu, it was pointed out that the Court would not strike down the revision of tariff as arbitrary unless the resulting surplus reaches such a height as to lead to the inevitable decision that the Board has shed its public utility character and is observed by the profit motive of private entrepreneur in order to generate a surplus which is extravagant.

In Ashoke Soap Factory''s case (Supra) it was observed:

Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground of unreasonableness or arbitrariness and not on demonstrative grounds in the sense that the reason for the levy of charge must be disclosed in the order imposing the levy or disclosed to the court, so long as it is based on the objective criteria.

In Dumraon Textile''s case (Supra), a Bench of this Court of Which one of us (S.B. Sinha, J.) was a member, the Court observed:

The Board being a public authority discharges Governmental function. A consumer depends upon the authorities of the Board for its day to day amenities which are essential for human existence. It is the State within the meaning of Article 12 of the Constitution of India. It is thus required to act fairly, judiciously and in accordance with the principles of natural justice. Its action thus must be fair and conform to the standards of public morality. Its officer can not act arbitrarily or raise demand for substantial, amount of money without affording opportunity of hearing to the consumer.

In Hindustan Zinc Ltd. (Supra) the apex Court held:

It was held.-

It was argued on behalf of the Appellants that Section 59 as amended by the 1978 Act did not empower the board to adjust its tariffs to generate any surplus unless the surplus had been specified by the State Government and when specified, the surplus generated could not exceed the specified surplus. In other words it was argued that when the State Government did not specify any surplus, the Board had no power to adjust its tariffs in a manner which resulted in generating any surplus. We are unable to construe Section 59 is that prior to the 1978 amendment, tariff could be adjusted to avoid any loss, but as, a result of the shift made by the 1978 amendment, the power could be exercised to generate a surplus and when the Stated Government specified the amount of surplus then the Board was bound to adjust the tariffs to ensure generation of the specified surplus.

The intervenor in reply to the supplementary counter affidavit has placed before us a chart showing plant load factor of thermal power station of State Electricity Boards from 1980-81 to 1991-92 which reads thus:

Plant Load Factor Of Thermal Power Stations of SEBS From 1980-81 To 1991-92 PLF(z) Year Ended 31st Mar.

SEBS 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Andhra Pradesh 36.3 46.8 51.1 54.6 54.4 64.8 68.7 76.2 69.6 66.2 65.8 62.1

Bihar 31.4 35.5 38.5 32.6 29.7 35.5 33.3 33.0 37.10 31.19 24 21.4

Gujarat 50.0 53.6 57.9 55.3 54.0 53.3 54.0 60.0 56.10 60.4 57.7 56.9

Haryana 31.70 37.3 32.2 31.4 37.7 32.7 33.8 40.6 46.20 44.2 34.6 45.0

Himachal Pradesh No Thermal Generation

Karnataka Do

Kerala Do

Madhya Pradesh 52.4 49.9 58.5 53.1 51.7 53.2 53.8 53.3 50.10 50.4 52.70 40.2

Maharashtra 52.6 49.4 50.2 51.0 49.9 54.0 50.7 57.0 53.4 58.4 58.7 59.0

Orissa 34.0 35.9 35.2 33.3 32.2 31.7 31.7 32.5 30.9 35.4 39.9 30.4

Punjab 37.6 41.6 51.0 57.0 64.3 58.9 68.3 71.3 62.6 60.8 53.01 53.50

Rajasthan - - - 41.2 57.2 57.5 54.8 71.5 56.0 58.0 62.59 65.0

Tamil Nadu 34.5 37.8 44.0 39.4 49.0 56.5 64.7 68.7 66.7 64.4 58.3 55.7

Uttar Pradesh 36.5 37.6 39.6 35.1 31.6 37.3 40.8 47.1 54.1 43.9 52.1 44.7

West Bengal 42.1 37.6 38.5 35.9 34.7 42.2 40.2 38.6 35.7 34.8 30.90 30.8

Assam 36.5 34.6 36.9 34.2 29.6 27.56 18.5 31.0 27.0 26.8 24.6 24.6

Meghalaya No Thermal Generation

SEBS 43.0 44.0 47.1 44.3 45.0 49.2 49.8 58.5 51.6 53.0 51.3 50.0

INDIA 44.2 46.4 49.4 47.9 31.4 52.4 53.2 56.5 56.0 56.2 53.9 53.3

Sl. No. Name of SEB/UT/Elecy.Deptt./Licensees/Govt. Undertakings Small Industry 5 Hp 10% LF (272 Kwh/month Medium Industry 50. Kw 30% LF (10950 Kwh/month Large Industry 1000 Kw 50% LF (365000 Kwh/ month

1.4.90 1.4.91 1.4.90 1.4.90 1.4.90 1.4.91

32 Pondicherry 75.00 75.00 75.00 75.00 81.50 106.73

33 Ahmedabad 115.64 115.64 121.34 125.80 122.54 136.40

34 Bombay a) BEST b) Sub-urban c) Tatas 185.00 155.00 - 210.49 184.00 - 185.54 152.85 - 225.95 196.05 - 115.49 133.20 104.21 126.05 164.04 100.70

35 Calcutta 80.00 80.00 107.50 135.65 81.20 100.70

36 D.V.C. a) Bihar Area b) WB Area - - - - - - - - 67.08 68.58 79.99 81.49

37 Durgapur Projects Ltd. 78.50 78.50 63.50 170.33 84.45 199.45

Note: Average Electric Rules and Duties in India, CEA

The above average rate are inclusive of Electricity Duty and fuel surcharge wherever applicable, and reported to ETZ & ADte. of CEA upto 1.4.90

From the aforementioned charts it would appear that plant load factor in Bihar is only 21.4% against National average of 54%.

The aforementioned charts have been prepared on the basis of the figures supplied by the Central Electricity Authority and the content''s whereof have neither been denied nor disputed by the Bihar State Electricity Board.

If the Board increases its plant load factor to 48% it may not incur loss what-so-ever, whereas if it increases its generation, up to the national average of 54% it would earn a return of 3.89% P.A.

The submission of Mr. Reddy that the efficiency of the Board would depend upon many factors, namely, age and make of generating unit and thermal station cannot be accepted as no foundational facts whatsoever has been stated in the counter-affidavit in relation thereto.

The Board, however, while making tariff is not only required to make revenue expenditure for running the thermal power plant but is also required to make capital investment in relation thereto either by way of installation of new power generating plants or otherwise. It is not the fault of the consumer that power plant were purchased from Russia or Eastern European countries. In any event as noticed hereinbefore such statements have not been made on oath before us in the counter-affidavit. From the aforementioned figures it is also apparent that the Respondent-Board incurs the highest costs of power generation amongst all the Electricity Boards. It''s cost of generation is 1.58 per unit whereas it purchases electricity from National Thermal Power Corporation, U.P. State Electricity Board and Damodar Valley Corporation etc. which includes the cost of distribution at Rs. 1.09 per unit. Since the last few years its power generation has registered a sharp fall.

Quantum of power generated by the Board qua employees of the Board is one of the lowest in the country and is making steady fall for the last three years. Its auxiliary conversion of power and transmission losses are well in excess in the prescribed norms and faces excess loss is Rs. 100 crores per annum. It has increasingly been purchasing more power than generating the same.

At this juncture it is also relevant to note the statewise generation and purchase, of power by the different Electricity Boards and generation of electricity per employee.

Purchased Power as Percentage of Total Availability (as it appears from statistics published by Central Electricity Authority). 1989-90

Electricity Board

Net Generation

Purchase

Total

Purchase as Percentage of Total

GWH

GWH

GWH

%

Haryana

2,296

3041

5337

57%

Punjab

8,603

5,090

13,693

37%

Rajasthan

2,507

2,662

5,169

52%

U.P.

17,278

268

17,546

2%

Gujrat

17,698

491

18,189

3%

M.P.

9,924

1,861

11,785

16%

Maharashtra

31,977

549

32,526

2%

Andhra Pradesh

13,734

490

14,224

3%

Karnataka

10,859

665

11,524

6%

Kerala

5,050

Nil

6,050

Nil%

Tamil Nadu

11,043

57

11,100

1%

Bihar

3,373

4,568

7,941

58%

Orissa

4,505

542

5,047

11%

West Bengal

7,136

2,509

9,645

26%

From a comparative Statewise Transmission and Distribution losses, it appears as follows:

State/Electricity Board

Transmission & Distribution Losses during

Percentage

1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1.

2.

3.

4.

5.

6.

7.

8.

Andhra Pradesh

21.40

20.62

20.20

19.01

20.31

19.60

Assam

23.31

26.43

24.00

21.30

21.58

21.00

Bihar

22.48

22.05

21.74

22.23

22.75

21.07

Gujarat

35.51

24.33

21.57

19.73

22.00

22.05

Haryana

20.08

21.87

25.54

24.95

29.19

27.59

Himachal Pradesh

20.83

21.37

22.84

19.11

18.74

17.51

Jammu & Kashmir

39.78

45.92

15.05

41.00

49.46

46.16

Karnataka

24.11

24.05

21.99

20.50

20.48

19.60

Kerala

25.10

26.40

29.77

25.57

22.54

21.02

Madhya Pradesh

19.28

20.67

21.97

20.34

19.48

18.76

Maharashtra

14.55

14.52

14.32

15.7

17.60

15.52

Meghalaya

-

9.72

9.57

9.68

10.90

11.35

Orissa

43.42

23.71

24.95

24.50

23.96

23.00

Punjab

19.23

18.75

18.86

37.07

18.09

19.00

Rajasthan

26.34

24.92

24.39

23.28

24.39

24.89

Tamilnadu

18.84

17.40

18.44

18.50

18.51

18.40

Uttar Pradesh

20.57

21.00

26.83

26.45

26.10

26.08

West Bengal

23.54

23.62

23.45

23.00

22.69

21.90

Damodar Valley

Corporation

1.95

2.72

2.15

1.65

1.35

2.61

All India

21.74

21.74

22.48

22.31

22.85

22.90

Source: Figures have been obtained from Electricity Supply Industry Salient Data published by CEA.

We may also note that the number of employees per MKWH generation is 17.5 in Bihar, whereas the same is 4.7 in Andhra Pradesh.

A Statewise comparative chart runs thus:

Comparative Statement indicating Relative Position SEBs in Reference to National/All Boards Average (1989-90)

Sl.

Board

Hydro

Thermal

Availability

Plant

Auxiliary

L & D

Coal (kg.)

Oil

No. of

No.

(%)

Load

Generation

Losses

(kg)

Employ-

Factor

Thermal

(%)

ees per

(Thermal)

MKWH

(90-91)

(1988-89)

1.

Andhra Pradesh

66.8

33.2

77.9

66.6

10.0

19.0

0.78

2.2

1.7

2.

Assam

100.1

55.0

35.0

-

-

21.2

9.60

50.0

17.5

3.

Bihar

9.5

90.5

56.6

37.1

15.0

21.5

0.82

35.4

84

4.

Gujrat

8.8

91.2

75.0

55.5

10.6

19.5

0.61

8.1

3.0

5.

Haryana

4.2

95.8

68.2

46.2

12.0

21.5

0.74

17.0

7.0

6.

Himachal Pradesh

100.0

-

-

-

-

18.0

-

-

10.9

7.

J & K

78.9

21.4

-

-

-

49.5

-

-

12.0

8.

Karnataka

83.3

16.7

81.0

63.9

10.0

20.0

0.68

2.0

5.8

9.

Kerala

100.0

-

-

-

-

22.0

-

-

68

10.

Madhya Pradesh

9.5

90.5

70.4

56.2

10.2

19.0

0.80

12.0

7.3

11.

Maharashtra

21.0

79.0

75.8

56.2

10.2

14.4

0.76

14.0

4.3

12.

Meghalaya

100.0

-

-

-

-

9.0

-

-

10.8

13.

Orissa

65.4

34.6

60.6

34.7

10.6

24.0

0.85

11.5

8.0

14.

Punjab

27.9

72.1

79.5

66.0

9.1

18.0

0.72

7.5

6.5

15.

Rajasthan

34.9

65.1

71.5

56.2

10.2

0.68

18.0

-

8.4

16.

Tamil Nadu

51.5

48.5

76.4

59.3

10.0

18.5

0.75

6.7

6.8

17.

Uttar Pradesh

26.0

74.0

64.7

52.1

11.5

26.1

0.80

5.4

5.4

18.

West Bengal

2.6

97.4

56.2

36.6

10.0

21.5

0.55

11.8

8.1

Total

15.2

64.2

70.5

53.5

10.0

20.0

0.24

10.1

5.8

Table A/1 Generation of Electricity Per Employee 1989-90

Electricity Board

Generation In GWH

Employee No.

Generation per Employee

MWH per Employee

Haryana

2,296

39,343

58

Punjab

8,603

92,306

93

Rajasthan

2,507

57,306

44

Uttar Pradesh

17,278

101,034

171

Gujrat

17,698

44,306

399

Madhya Pradesh

9,924

100,358

99

Maharashtra

31,977

108,358

295

Andhra Pradesh

13,714

63,571

216

Karnataka

10,859

45,943

236

Kerala

5,050

31,110

162

Tamil Nadu

11,043

92,565

119

Bihar

3,373

42,191

80

Orissa

4,505

33,963

133

West Bengal

7,136

40,877

175

Note: GWH equal 100 MWH

Source: Statistics published by Central Electricity Authority.

The Board in its counter affidavit which has been sworn by the Assistant Law Officer, who cannot have any personal knowledge in the matter, inter alia, stated that the total loss during financial year 1992-93 was 297 crores against the estimated loss of Rs. 364 crores. It has been further stated that now it stands crystalised with annual loss of 242.40 crores which shows improvement in the financial year. The Board has further stated that an agreement has been entered into the State Government and itself as would be evident from the letter dated 1.1.1991, as Annexure A to the supplementary counter affidavit that the Board would not claim any subsidy from the State Government and in lieu thereof no interest would be charged by the State Government on his load to the Board till 31.3.1995. It has been stated that the decision of the State Govt. to stop subsidy has caused adverse impact on the Board''s finance. However, in paragraph 7 itself it has been stated that the Board has to meet heavy amount on default serving charges every year on the loan taken from the market and various financial institutions and in the year 1992-93 a sum of Rs. 126.20 crores as to be paid by way of interest and Rs. 39.33 crores by way of loan, i.e. to the tune of Rs. 165.93 crores.

Along with the said supplementary counter affidavit the Respondent has brought out a chart which is contained in Annexure B thereto.

From the facts stated hereinbefore there cannot be any doubt whatsoever that the Petitioners have brought out materials on records to show the overall operational inefficiencies on the part of the Board. In fact, about the inefficiency on the part of the Board, less said is better. It has failed to perform its duties on all fronts i.e. from generation of power to recovery of bills. Bihar Motion Pictures Association in its writ petition has also furnished figures to show that the Board had not realised a huge amount from the State Govt. and Private Sector Undertakings. The Court can also take judicial notice of the most erratic manner in which power supply is made in this State by the Board.

It has been noticed hereinbefore that only the number of small and domestic consumers have increased to a great extent, whereas admittedly the electricity generated by the Bihar State Electricity Board has fallen down. The Petitioners in their rejoinder have pointed out that the figure set out in Annexure B to the counter-affidavit suffer from patent arithmetical mistakes. The figures supplied by the Bihar State Electricity Board itself shows the following:

Year

Energy sold per

Energy sold per

consumer (KWH)

Employee of BSEB

(KWH)

1989-90

4088

1,33,251

1990-91

3860

1,32,453

1991-92

3532

1,31,613

In this connection reference may also be made to Annexure-VII to the rejoinder to the supplementary counter affidavit filed on behalf of the Board which is as follows:

Declining Operating Efficiency of the Board''s'' working as brought out by the Board itself as per data submitted as Annexure-B of the Supplementary Counter-affidavit.

1989-90

1990-91

1991-92

1

Energy sold (Million KWH)

5,622

5,620

5,376

2

No. of Consumers

13,75,557

14,55,659

15,22,021

3

No. of Employees

42,191

42,430

40,847

4

Energy sold per consumer (KWH) (1+2)

4,088

3,861

3,532

5

Energy sold per Employee KWH 1+3)

1,33,251

1,32,453

1,31,613

The figures at item 1, 2 & 3 are as per Annexure-B of the Board''s own supplementary counter-affidavit.

Item 4 is a computed figure of item 1 divided by item 2.

Item 5 is a computed figure of item 1 divided by item 3.

The Board in its counter-affidavit has further placed strong reliance upon a chart which is contained in Annexure-C to the supplementary counter-affidavit for the purpose of showing that the increase in tariff as pointed out by the Petitioners is not as that bad as projected by them.

However, the figures given in Annexure-C to the supplementary counter-affidavit is neither supported by any calculation nor any break up thereof has been stated. While doing so the Board had not taken into consideration the minimum guarantee charges in relation whereof it had levied 27% higher payment than regular energy tariff rate for HTs consumers. The Board has also not excluded the fuel surcharge caused by inflation so that percentage of increase in the other elements or component of the Tariff excluding fuel surcharge would be considered. It is relevant to notice the average increase per annum as per 1991 tariff over 1983 tariff and as per 1993 Tariff over 1991 Tariff, which are as follows:

Tariff

Average rate per KWH

Increase over earlier Tariff %

Average yearly increase. %

HTS I

-

-

-

1983

0.79

-

-

1991

1.57

99%

12.4%

1993

2.98

90%

45%

HTS II

1983

0.73

-

-

1990

1.46

100%

12.5%

1993

2.64

81%

40.5%

The intervenor has also annexed statements showing detailed computation for arriving the comparative average rate per KWH under 1983 Tariff, 1991 Tariff and 1993 Tariff which is contained in Annexure-VIII to the rejoinder to the supplementary counter-affidavit.

However, the contention of the learned Counsel for the Petitioners to the effect that the Board itself has shown a profit of 199 crore in the supplementary counter-affidavit which leaves a surplus of 14.2% goes to show that it has not made any loss, cannot be accepted. The Petitioners in this connection have annexed a chart which is Annexure-V to the rejoinder to the supplementary counter-affidavit.

It appears that the aforementioned amount of surplus has been made only because a huge loan was advanced by the State of Bihar in the relevant year. Although, subvention by the State of Bihar has to be taken into consideration for the purpose of Section 59 of 1948 Act but one time grant cannot be the criteria is for the purpose of determining as to whether the Board had met any loss or not.

From the statement as noticed hereinbefore it is evident that the Board has accepted the fact that not only it has been making losses, but in fact a huge amount by way of interest etc. are duo to be paid which has not been taken into consideration in para-8 of the supplementary counter affidavit. We wonder why such a statement has been made in the counter affidavit at all. We may, however, note that the Petitioners in the writ petitions also have proceeded on the basis that the Board has been running at losses. In fact, as noticed hereinbefore, the submission of Mr. Basudev Prasad was that despite the 1993 Tariff the Board would not be able to make up its losses and thus the same is illegal.

The provisions of Section 59 of the 1948 Act however, clearly stipulates that subventions are to be given to it by the State. Such subventions are required to be given by the State not only for the benefit of the Board but also for the purpose of implementing its own policy decision relating to supply of electrical energy at a concessional rate to special class of consumers as for example agriculture sector in order to enable the Board to make capital investment for supply of electrical energy at a far away places. The State also grants subsidy to some Industrial Undertakings pursuant to its own industrial policies formulated by it from time to time. The inefficiency on the part of the Board is also Writ large on the face of the report of Comptroller and Auditor General in its report who not only commented upon the inefficiency of the Board, but has also pointed out that it had not been maintaining its accounts in a proper manner. In paragraphs after paragraphs, it has highlighted as to how the Board had been making wasteful, unnecessary and unprofitable expenditures. It has also been pointed out that the Board had also not properly been maintaining the account of transmission loss etc.

It is true that in terms of the provisions of Section 69(5) of the Act, accounts of the Board have to be placed annually before the State Legislature. But it appears that even accounts of the year 1989-90 and 1990-91 were placed before the House on 30.12.1993, i.e., much after framing of the impugned tariff. We have noticed earlier that the learned Advocate General despite our requests to assist us in the matter had not done so. We at this juncture may also note that we had requested the learned Advocate General to state before us on seeking instructions as to whether any discussions ever had taken place in either House of the Legislature about the accounts of the Board. But he did not make any statement whatsoever in this regard nor furnished before us the details thereof.

It is thus evident that even the State Govt. had been dealing, with the accounts of the Board in a most casual and cavalier manner. The State had failed to perform its statutory duties imposed upon it under the 1948 Act. We have come across the case where the State had also not cared to see that its directive to the Board in terms of Section 78A of the Electricity (Supply) Act, to take its prior approval before framing 1991 Tariff had been properly followed. Even in that matter, the State did not apply its mind at all. It is also evident that the State Govt. has also failed to perform its statutory duty in supervising the affairs of the Board and providing guidelines to it on the policy matter, as was required to do in terms of Section 78A of the 1948 Act, keeping in view the high degree of inefficiency on the part of the Board as also the fact that it had been incurring huge, losses.

In fact a Division Bench of this Court in C.W.J.C. No. 2811 of 1993(R) (Vijay Mining Co. v. Bihar State Electricity Board and Ors.) observed:

The fact that the supply of electricity by the Bihar State Electricity Board is erratic is not a matter which can even be doubted by any citizen living in this State. The common condition in this State is that we may take judicial notice of that fact. Barring the capital of Patna, and in the capital also only in some selected areas, uncertain and prolonged power cuts is a regular feature. In the city of Ranchi between 5 P.M. and 10 P.M. citizens get electricity only for two hours. The result is that if any person has to perform any work at home, as most of us have to, we have to revert back to 19th century and use of hurricans lamps. Such is the progress to which the Bihar State Electricity Board, has contributed by its so called effective implementation of the policy to take this country to the 21st century. If the progress of the State has been hampered to the extent it has been, we may squarely compliment the Bihar State Electricity Board for its performance. Because of its unreasonable attitude and arbitrary conduct it has not only ruined the Industrial Undertakings from establishing new units in this State. Some of the bigger giants in the industry who have contributed greatly to the economic development particularly of the south Bihar have now chosen to get up their industries else where other than the Bihar. There is only other field in which the Bihar State Electricity Board has made its useful contribution, and that is to the prospering litigation in the High Court.

The provisions of Section 18(a) and (b) as also Section 59(2)(b) of the 1948 Act cast a statutory duty upon the Board to carry out its operations in most efficient and economical manner. The words ''properly chargeable'' also signifies great vigilance on the part of the Board in this matter, involving revenue expenditures.

Sections 49 and 59 of the 1948 Act envisage that the Board is to fix uniform tariff having regard to factors enumerated in Section 49(2) of the Act. However, the Board as indicated hereinbefore undoubtedly has the power 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 supply and purpose for which supply is required and any other relevant factor. But in doing so it cannot show undue preference to any person. It is true that Section 49(4) of the 1948 Act is a proviso to Sub-section (3) thereof. But in such a case Article 14 may be attracted. The very fact that even u/s 59(1) of the Act a tariff is to be adjusted after meeting all expenses properly chargeable to revenue is a factor to be taken into consideration as the same also, in our opinion, in unmistakable term shows that the Board has a statutory duty to see that all precautions should be taken by it so that no undue loss in the revenue takes place nor any undue expenditure is incurred. For that matter the State is also required to keep a strict vigil over the affairs of the Board.

It is a trite law that no body can take advantage of its own wrong. The consumers cannot be made to suffer because of the inefficiencies on the part of the Board.

In All India Groundnut Syndicate Ltd. (Supra) it has been held:

But the most surprising contention is put forward by the department that because of their own officer failed to discharge his statutory duty, the Assessee is deprived of his right which the law has given to him under Sub-section (2) of Section 24. In other words the department wants to benefit from and wants to lake advantage of its own default. It is an elementary principle of law that no person--we take it that Income Tax Department is included in that definition--can put forward his own default in defence to a right asserted by the other party. A person cannot say that a party claiming the right is deprived of that right because "I have committed, a default and the right is lost because of that default.

In L. Hirday Narain (Supra) the Supreme Court observed:

If a statute invests a public officer with authority to do an act in a specified set of circumstances it is imperative upon him to exercise his authority in a manner, appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the Statute are prima facie enabling the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right, public or private of a citizen.

In Jullius v. Bishop of Oxford V (1880) ACC 214, it was observed by Cairns L.C. at pp. 222-223 that the words "it shall be lawful" conferred a faculty or power, and they did not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so. "Lord Blackburn observed in the same case at pp. 244-245 that the enabling words give a power which prima facie night be exercised or not, but if the object for which the power is conferred is for the purpose of effectuating a right there may be a duty cast upon the donee of the power to exercise it for the benefit for those who have that right when required on their behalf. Lord Penzance and Lord Selborne made similar observations at pp. 229 and 235."

However, the decision of the Supreme Court in Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another, upon which reliance hits been placed by Mr. Navniti Prasad Singh, is of no assistance, inasmuch as in the said cases the Supreme Court was considering the matter of annual minimum, guarantee charges and maximum demand charges.

The decision of the Allahabad High Court in Eastern U.P. Chamber of Commerce and Industry (Supra) reliance upon which was placed by Mr. Reddy is not of much assistance as this aspect of the matter was not considered therein at all. The attention of the learned Judges was not drawn to the relevant provisions of the 1948 Act. The Allahabad high Court has also not taken into consideration the decisions of the Supreme Court and other High Courts as referred to hereinbefore. It has also not discussed the points involved in details.

It has only observed:

For the Board Mr. Budhwar pointed out that apart from the fact that these allegations with regard to the actual production vis-a-vis a generating capacity and the transmission losses are not admitted by the Board, the inefficiency on the part of the Board, if any, is a matter which has to be taken cognizance of by the State Government which has the power and authority to issue appropriate directions to the Board and the said alleged inefficiency cannot be summoned in aid for the purposes of assailing the fixation or revision of tariffs. We are inclined to accept the above submission made by Mr. Budhwar.

The question which has still to be answered is if even the State fails in its duties, the consumers shall have no remedy at all?

In this case, however, the details supplied by the Petitioners, are not disputed. In fact most of the figures have been taken from the book published by the Central Electricity Authority. The statements made by the Petitioners in various paras of the writ application, particularly paras 21, 22, 23, 24 and 26 of C.W.J.C. No. 10979 of 1993 remain unrebutted.

We have also noticed hereinbefore that the State in the past has also not taken steps to issue any direction in this regard. No material has been brought to our notice either by the learned Counsel for the Board or by the learned Advocate General that any directive has been issued by the State asking the Board to take any corrective measure in this regard. Even the State has failed to lay the accounts of the Board annually before both the Houses of the Legislature.

The question, therefore, which now arises for consideration would be as to whether the tariff should be struck down on this ground alone at this stage. In our opinion, it may not be so done for the present. However, time has come when the Court cannot fold its hands in helplessness and refuse to issue any direction to the State Government and the Board. It is rightly suggested that time has come when new ground has to be broken by the Court.

Whenever a statutory duty has been cast on a State within the meaning of Article 12 of the Constitution of India, the Supreme Court of India and this Court in exercise of jurisdiction respectively under Articles 32 and 226 of the Constitution have not hesitated in issuing proper directions.

It is true that framing of tariff is a legislative function.

But the Board is also statutorily obliged and has a legal duty to manage its affairs in the manner laid down u/s 18(a) and 59(2)(b) of the 1948 Act. The power to frame tariff is, thus, hedged by the statutory conditions. In such a situation, this Court, in our opinion, can give suitable directions.

We, therefore, consider that in this situation the Board should be directed to improve ils efficiency by raising it generation capacity to a substantive level expeditiously and preferably within three years from today. We also hope and trust that the State shall from time to time issue necessary guidelines in this regard.

The power of this Court to issue a writ of or in the nature of mandamus in the interest of justice is not in dispute. In Rajat Nath Roy and another Vs. State of Bihar and others, this Court has observed as under:

The question which now arises for consideration is as to whether this Court should issue a writ of or in the nature of mandamus or a direction upon the Respondent Deputy Commissioner to renew the leases of the Petitioner.

In Shri Anadi Mukta Sadguru Shree Mukherjee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V.R. Rudani and Ors. reported in AIR 1989 S.C. 1007, it was held that under Article 226 of the Constitution, the High Court can issue writs to ''any person or authority for the enforcement of any of the fundamental rights and for any other purpose''. It was further held that the authority used in Article 226 must receive a liberal meaning unlike the terms in Article 12. The Supreme Court observed:

Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, professor De Smith states: ''To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charier, common law, custom or even contract (Judicial Review of Administrative Action 4th Ed.p.540). We share this view.''

Reference in this connection may also be made to another decision of the Calcutta High Court in State of West Bengal and others etc. Vs. Nani Gopal Dutta and others, wherein the Calcutta High Court observed:

Mr. Gupta cited next Comptroller and Auditor-general of India, Gian Prakash, New Delhi and Another Vs. K.S. Jagannathan and Another, , where the Supreme Court has discussed the circumstances under which the Court can pass a mandatory order or even pass an order or given directions which the Government or a public authority should have passed or given had it properly and lawfully exercised its discretions. The decision makes it quite clear that the Court can pass such orders where the Government/Public Authority has failed to exercise or has wrongly exercised the discretion conferred upon it by Statute, or a rule or a policy decision of the Government or has exercised such discretions malafide or in such a manner as to frustrate the object of conferring such discretion. Can it be said that the Government has exercised its discretions in this case wrongly and milafide.

In the Comptroller and Auditor-general of India, Gian Prakash, New Delhi and Another Vs. K.S. Jagannathan and Another, , the law has been laid down thus:

There is thus no doubt that the High Courts in India exercising, their jurisdiction under Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion malafide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion, or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case, a High Court can, in the exercise of its jurisdiction under Article 226 issue a writ of mandamus or a writ in the nature of a mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the Government or a public authority and in a proper case, in order to prevent injustice resulting to the concern of parties the court may itself pass an order or give directions which the Government or the public authority should have passed or given had it properly and lawfully exercised its discretion.

Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the Statute. Commenting on the development of this law, professor De Smith states:

"To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even con-tract." (Judicial Review of Administrative Action 4th Ed. p. 540). We share this view. The judicial control over the, fast expanding maze of bodies affecting the right of the people should not be put into water-tight compartment. It would remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available to reach in justice wherever it is found. Technicalities should not stand in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the Appellants on the maintainability of the writ petition.

In Halsbury''s Laws of England Vol (sic) 4th Edition it is stated that the purpose of issuance of a writ in the nature of mandamus is to remedy defects of justice, and accordingly it will issue to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right. It is a discretionary remedy and may issue in cases where, although there is an alternative legal remedy, yet that mode or redress is less convenient, beneficial and effective.

We are not oblivious, to the fact that this Court cannot supervise the affairs of the Board from day to day. We, therefore, request the Central Electricity Authority to form a committee within one month from the date of receipt of a copy of this order comprising of experts in the field which would suggest ways and means for improvement in the condition of the generation and supply of electrical energy to the Board. The entire expenses of the Committee shall be borne by the Board. The committee should submit its report within a period of six months thereafter before the State Government. We have no doubt in our mind that the State Govt. shall issue necessary direction in exercise of its jurisdiction u/s 78-A of 1948 Act and see to it that the recommendations of the aforementioned expert committee be implemented forthwith. The committee shall consist of two members nominated by the Central Govt., two members by the Central Electricity Board and one member of the State Govt.

We also request the Comptroller and Auditor General of India to cause an up to date auditing of the accounts of the Board made forthwith by an expert team, which may also suggest ways and means for improvement in the conditions of the working of the Board to its authorities pointing out the areas of deficiencies. The aforesaid committee shall take into consideration the report of the Comptroller and Auditor General of India in this regard.

We hope and trust that keeping in view the pitiable condition of the consumers of the electrical energy who are made to pay through their noses to see that the adequate steps are taken to ameliorate their difficulties.

Probably, restructuring of the Board is also necessary in public interest, keeping in view the financial emergency faced by the Board as also the high degree of its inefficiency.

Question No. (e):

It is not in dispute that minimum guarantee charges used to be charged on annual basis. However, in 1991 tariff provision was made for payment of minimum guarantee charges and maximum demand charges on monthly basis.

Clause 15.2 (b) of the tariff reads thus:

15.2 (b) in respect of energy charge:

It shall be chargeable annually in the manner as indicated below, but it will be realised on monthly basis. Final adjustment will be given in the last bill of the financial year. However, in case of a new point of supply, it shall be chargeable on pro-rata basis from the month in which connection was given for the remaining months, or part thereof, of that financial year.

(i) for 11 KV services (HTS-I): energy charge basis on load factor of 25 percent and power of 85 percent on contract demand shall be payable at the rate of (sic) paise per unit.

(ii) for 33 KV services (HTS-II)-energy charge basis of load factor of 85 percent on contract demand shall be payable at the rate of 218 paise per unit.

(iii) for 132 KV extra high tension service (EHTS)-energy charge based on load factor of 50% and power factor of 85 percent on contract demand shall be payable at the rate of 195 paise per unit.

(iv) For 132 KV/25 KV railway traction service (RTS)-energy charge based on load factor of 25 percent and power factor of 85 percent on contract demand shall be payable at the rate of 262/268 paise per unit respectively.

An almost similar provision in 1991 was the subject matter of decision of a Division Bench of this Court in the case of Bihar Chambers of Commerce (Supra).

The Division Bench, inter-alia, had held that the system of calculation on monthly basis introduced in the said tariff is irrational and unreasonable as well.

The Board thereafter by reason of the impugned Tariff made a provision to the effect that although the annual minimum guarantee charges will be charged on annual basis but the same would be proportionately realised every month.

The contention of the Board is that this Court in the Bihar Chamber of Commerce''s case (Supra) struck down the relevant provision, inler-alia, on the ground that the calculation on shortfall in consumption was although charged monthwise but no adjustment therefore is given on annual basis.

There cannot be any doubt that the levy of annual minimum guarantee charge is not a new concept. The Supreme Court of India in Bihar State Electricity Board and Another Vs. Dhanawat Rice and Oil Mills, upheld the provision for levy on minimum guarantee.

It has been contended that by reason of the 1993 tariff, the defects pointed out by this Court stand rectified.

Clauses 1(a), 4(a), 4(c) and 13 of agreement entered into by and between the Board and a High Tension Consumer read thus:

1(a) The Board shall furnish to the Consumer and the consumer shall accept at the point of supply mentioned in the schedule hereto, on and from the date on which the said premises shall be connected with the supply distributing mains and during the continuance of the agreement a constant supply of electrical energy at the pressure of Volts, 50 cycles, 3 phases, 3 wires, alternating current system subject to standard variations as provided in Indian Electricity Rules, 1956 or any other statutory modification thereof as may be in force from time to time for the purpose and up to the maximum specified (hereinafter referred to as the contract demand) and under the conditions, laid down in the schedule:

Provided firstly that the supply of electricity as stipulated a hove, may with previous general or particular warning he regulated, curtailed, staggered, or cut off altogether by or on behalf of the Board if in the opinion of the Board or its Electrical Executive Engineer for the supply area concerned by power position or any other emergency in the power system warrants such course of action:

Provided secondly that the Board shall in no case whatsoever have any liability for any compensation to the consumer on account of failure in part or whole of supply of electrical energy.

4(a) Subject to the minimum contract demand applicable; for the category of supply in which the consumer fails as per Board''s tariff, the consumer shall pay to the Board for the energy so supplied and registered or taken to have been supplied as aforesaid at the appropriate rates applicable to the consumer according to the tariffs framed by the Board and in force from time to time, the presently enforced tariffs being given in the schedule to this agreement for easy reference. Such reference is subject to provisions of Clause 14 appearing hereinafter:

Provided that notwithstanding anything said above but subject to the provisions of Clause 13 appearing hereinafter, the consumer shall have to pay minimum charges as specified in the above said tariffs framed by the Board and enforced from time to time irrespective of whether energy to that extent has been consumed or not, (such minimum charges are referred as minimum guarantees charges at other places in this agreement).

4(c) Maximum demand charges for supply in any month, will be based on the maximum KVA demand for the month of 75% of the contract, demand whichever is higher, subject to provision of Clause 13. For the first twelve months'' will; however, be based, on the actual monthly maximum demand for that month.

If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole, or in part due to strikes, riots, fire, floods, explosions, act of God or any other case reasonably beyond control or if the Board is prevented from supplying or unable to supply such electrical energy owing to any or all the causes mentioned above then the demand charge and guarantees energy charge set out in the schedule shall be reduced in proportion to the ability of the consumer to take or the Board to supply such power and the decision of the Chief Engineer, Bihar State Electricity Board, in this respect shall be final.

NOTE: The term Chief Engineer includes Additional Chief Engineer for the area concerned.

In Bihar State Electricity Board v. Green Rubber Industries reported in 1990(1) PLJR 73(SC) the Supreme Court referred to several earlier decisions of different courts and upheld its validity.

In the Schedule appended to the Indian Electricity Act, clauses XI and XI-A of the said Schedule empowering the licensee to charge maximum demand charge & minimum guarantee were deleted by the Indian Electricity (Amendment) Act, 1959, Section 3(2)(d)(i) was also suitably amended. However, despite deletion of Clauses XI and XIA from the said schedule appended to the Indian Electricity Act did not deprive the licensee of his discretion of levy of minimum charges.

In Naushir Bharucha''s Indian Electricity Act, 1910 at pages 468 and 469 it has been stated:

...This point of view is reinforced by the fact that there is no provision in the Act preventing the licensee from levying a minimum charge. Had the intention of the Parliament, been to prevent the licensee, it would have expressed this intention in very clear terms. The Parliament must have known that by merely repealing Clause XIA which was a clarifying Clause, the licensee was not disabled from levying minimum charge and a specific prohibitory clause to that effect would be necessary. It should also be appreciated that side by side with the repeal of Clause XIA, Clause XI which provided for maximum charges has been repealed. This is because the practice of incorporating in the license a maximum charge beyond which the licensee could not charge was also rendered superfluous in view of the fact that a ceiling over the charges was automatically placed, when the licensee under paragraph I of the Sixth Schedule was required so to adjust his rates that his clear profit would not exceed the amount of his reasonable return. The repeal of Clause XI also reinforces the view that the intention of the Parliament was to remove the conflict and not to disable the licensee from imposing a minimum charge.

Minimum charge Justified: Apart from the legal aspect of the problem, a minimum charge is justified in view of the fact that the licensee has to maintain in constant readiness generating capacity irrespective of the fact whether such capacity is utilized by the consumer or not. It requires an amount of capital cost to keep such generating capacity in constant readiness, as also the cost of maintaining the plant and to provide for the depreciation, even though it may not be put into operation, and the licensee is entitled to be reimbursed on this account. If the minimum charges were not levied, on one category of consumers, the total clear profit to which a licensee would be entitled, would have to be made good by increased charges on other categories of consumers. This in itself would be unfair.

It is a well settled principle of construction that the relevant provisions of an instrument have to be read as a whole so as to enable the Court to gather the intention of the parties thereto. Clause 1(a) of the Agreement imposes a contractual obligation on the part of the Board to make constant supply of electrical energy. The Board has a statutory obligation to supply electrical energy to a consumer in terms of the provisions of the Electricity (Supply) Act, 1948 read with Indian Electricity Act, 1910 and the rules framed thereunder. It therefore matters not as to whether at a given point of time the consumer requires supply of electrical energy or not. A consumer at his convenience may run his factory for a part of the day or for the whole day.

Even when the machines are not operating, the consumer may require supply of electrical energy for the purpose of maintenance of machinery, security etc. The provisions, of contract supply of electrical energy vis-a-vis the power of the Board to charge minimum guarantee charges and maximum demand charges has to be viewed in that context.

As has been noticed hereinbefore the minimum guarantee charges are levied so as to compensate the Board from incurring any losses that it may suffer by reason of its not being able to supply electrical energy which may be wasted; although, it had kept itself in readiness to supply the same constantly. The electrical energy as is well known cannot be stored. Whatever be the generation of the electrical energy or whatever supplies of electrical energy are received by the Board from other sources like National Thermal Power Corporation and Damodar Valley Corporation etc. are required to be supplied to the consumers immediately. In a case when the consumer is not in a position to take supply of electrical energy, the Board may have to stop or curtail generation/supply of electrical energy.

In Northern Indian Iron and Steel Co. case (Supra) the Supreme Court observed:

Under Clause 4(f) the consumer is entitled to a proportionate reduction of demand charges in the event of lock out, fire or any other circumstances considered by the supplier beyond the control of the consumer; that is to say, if the consumer is not able to consume any part of the electric energy due to any circumstance beyond its control and which is considered by the Board to be so, then it shall get a proportionate reduction in the demand charge. The circumstance of power cut which disabled the Board to give the full supply to the Appellant because of the Government order u/s 22 of the 1910 Act, undoubtedly would be a circumstance which disabled the consumer from consuming electricity as per the contract. And this was circumstance which was beyond its control and could not be considered otherwise by the Board. It entitled the consumer to a proportionate reduction of the demand charges. This interpretation of Sub-clause (f) of Clause 4 of the tariff was accepted to be the correct, legal and equitable interpretation on all hands. In our opinion it is so. In a circumstance like this, it is plain, the obligation of the consumer to serve at least 3 days notice on the supplier as per the latter part of Sub-clause (f) was not attracted, as the requirement of notice was only in the case of shut down of not less than 15 days duration.

We are, therefore of the view that the inability of the Board to supply electric energy due to power cut or any other circumstance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with Sub-clause (b) of Clause 4 of the tariff and, therefrom, a proportionate reduction will have to be made as per Sub-clause (f). We hope, in the light of the judgment there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference of dispute as to the quantum of the demand charge or the proportionate reduction, parties will he at liberty to pursue their remedy as may he available to them in accordance with law.

The Supreme Court in Dhanawat Rice & Oil Mill''s case (Supra) followed its earlier decision in Northern India Iron and Steel Co. (Supra) and observed:

We are, therefore, of the view that the inability of the Board to supply electric energy due to power cut or any other circumstance beyond the control as per the demand of the consumer according to the contract will be reflected in and considered as circumstance beyond the control of the consumer which prevented in from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with Sub-clause (h) of Clause 4 of the tariff and therefrom proportionate reduction will have to be made as per Sub-clause (f). We hope in the light of the judgment there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference or dispute as to the quantum of the demand-charge of the proportionate reduction parties will be at liberty to pursue their remedy as may be available to them in accordance with law.

Reference in the connection may also be made to the case of Green Rubber Industries (Supra).

The Board charges annual minimum guarantee charges on the basis of the formula, i.e. contract demand � load factor � power factors � total hours in a year.

In relation to the aforementioned formula what is variable is the contract demand only; other elements being fixed i.e. the load factor is .25 whereas the power factor is .85 and the number of hours in a year in 8760.

In view of the Supreme Court decisions referred to hereinbefore, the consumer is not only entitled to proportionate reduction to the extern of the tripping, load shedding and power cut but would also he so entitled thereto to the extent he was unable to consume electrical energy if the case came within the purview of Clause 13 of the agreement.

The Board is entitled to be protected from any loss which it is likely to suffer by reason of its keeping itself in readiness to make constant supply of electrical energy. The Supreme Court in Dhanwat Rice & Oil Mill''s case (Supra) also observed the right of the Board to levy minimum guarantee charges, subject of course right to claim remission in relation thereto by the consumers of High Tension Electrical energy in terms of Clause 13 of the agreement.

132A. In view of the decisions of the Supreme Court in Dhanawat Rice & Oil Mill''s case and Green Rubber Industries case (Supra), it is difficult to uphold the contention of the Petitioners'' counsel that in view of the inability on the part of the Board to supply electrical energy 24 hours a day and 365 days a year the levy of minimum guarantee itself is illegal. The Supreme Court clearly held that constant supply does not mean continuous supply. However, the concept of levy of annual minimum guarantee charges was that in a given situation the consumer must consume at least 25% of the supply of electrical energy in a day minimum thereby six hours a day.

An industry, however, may he a seasonal industry and the demand of taking supply of electrical energy by the industry may vary from case to case.

It is true as has been pointed out by Mr. Reddy that in view of the circular issued by the Board, it would not levy any shortfall charges upon the consumers'' consuming the electrical energy to the extent of annual minimum guarantee units, but such a circular was not necessary as even otherwise in law the Board could not have levied any charges by any of minimum guarantee after the consumers satisfy the requirements therefor.

The impugned provisions of the tariff, however, has to he construed upon taking into consideration the fact that so long the annual minimum guarantee charges is not consumed the short fall in relation thereto is to be charged at the penal rate. The excess amount lies with the Board throughout the year and no time limit has been provided for the refund of the excess amount. No reason far less any cogent reason has been made out for effecting a change in the long standing practice. The provision in the tariff appears to be a device to achieve the same object which was sought to be done by the Board in its 1991 tariff despite the same having been struck down by the Court in Bihar Chamber of Commerce''s case (Supra).

It has also to be borne in mind that in terms of 1993 tariff, the Board has made provisions for two way tariff in place of one way tariff.

In this view of the matter, we are of the opinion that the provision of levy of proportionate minimum guarantee charges on monthly basis is illegal and the Board can realise such charges only on annual basis.

135A. It has, however, been submitted that the Petitioners of C.W.J.C. No. 8740 of 1993 are consumers of High Tension electrical energy and if the supply of electrical energy of the industry of the Petitioner is disrupted for two minutes, the same would affect on the working of the factory and owing to disruption it would have to revise the entire process once again.

The Supreme Court in Indian Aluminium case (Supra) has categorically held that Sections 49 and 59 of the 1948 Act do not debar the Board from entering into special contract with the consumers. In a case of this nature, in our opinion, the Petitioners may hold the Board liable for damages but in our view the entire tariff cannot he struck down because a few consumer could be put to extra inconvenience. Even Clause 13 of High Tension Agreement would not apply in such a case. The remedy of the Petitioners, in our opinion, would only be to ask to the Board to enter into special agreement in this regard. We have no doubt that the Board, being the State within the meaning of Article 12 of the Constitution of India and having been exercising monopoly power in the matter of supply of electrical energy, would act fairly if a special category consumers have opted to enter into a special agreement with it, keeping in view the difficulties faced by such type of consumers.

Re: Question No. (f):

It is not disputed that whereas for consumption of electrical energy by the consumers'' 1.72 paise per unit is to charged, Rs. 2.38 paise per unit has to be paid for short-fall.

Mr. Reddy submitted that the said provision has been made, for the purpose of enforcing a discipline amongst the consumers. The stand taken by the Board appears to be self-contradictory. It has not at all been disputed that the generation capacity of the Board is low and it is not in a position to meet the demand of all the consumers. It is also not disputed that there is a large scale trippings, and power cuts and consumers in general greatly suffer by reason of non-supply of electrical energy.

We can also take judicial notice of the fact that the supply of electrical energy in Bihar is so erratic that hardly on any day of 365 days in a year there is a constant supply. In many towns in Bihar, electrical energy is supplied only for a few hours in a day.

In such a situation, the question of imposing any discipline amongst the consumer by charging a higher rate for non-consumption of electrical energy in our view is wholly irrational and will have a disastrous effect.

In a given situation, a consumer may unnecessarily Waste electrical energy, only with a view to meet the short fall so as to enable him to avoid the payment of additional amount by way of higher rate of electrical energy payable by him in case of short fall. There cannot be any doubt that the Board has the requisite jurisdiction to alter the conditions of supply, but alteration of such condition must be reasonable and not arbitrary.

The decision in the case of the Adoni Cotton Mills Ltd. (Supra) upon which strong reliance has been placed by Mr. Reddy has no application in the facts and circumstances of the case. In that case, the power of generation quota of electrical energy was fixed. Andhra Pradesh Electricity Board fixed higher rate for consumption of electrical energy in excess of quota. In that situation, it was held that the Board had power to levy the said penalty in terms of the provisions of Section 49 of the Act and there did not exist any conflict between the said provisions and Section 22(6) of the Indian Electricity Act, 1910.

By reason of 1993 Tariff, no quota has been fixed for consumption of electrical energy despite any acute shortage thereof. The Supreme Court in the aforementioned case also noticed that the Board removed the restrictions imposed earlier, wherefrom it was inferred that the Board tried its best to maintain the terms and conditions in Clause 6.8 of the power tariff framed by it. In this view of the matter non-consumption of electrical energy to the extent of short fall is illegal.

The learned Counsel for the Petitioners are, however, not correct in contending that in such matter there must be an adjudicating forum and the principles of natural justice must be complied with. We also do not find any merit in the submission that before imposing such a penalty the element of mens-rea must be proved Charging, a higher rate for supply of electrical energy by way of condition of supply in terms of the provisions of Section 49 and 59 of the Act is legislative in character and thus for enforcing the said provision, it is neither necessary to provide for an adjudicating machinery, wherein the question of existence of mens-rea on the part of the consumer can be gone into nor, therefor, the principles of natural justice are required to be complied with.

In our view, therefore, the Board cannot charge a higher rate for the short fall in taking supply of electrical energy by the consumer.

Re: Question No. (g):

Clause 15.3 of the Tariff in question mandates the consumers to deposit which is due from the consumers to the Board in respect of supply of energy on credit. It further provides that no interest would be paid towards the deposit of security. The said security amount had to be deposited in cash in terms of Sub-clause (c) of Clause 15.3 of the Tariff. The Security deposit is to cover three months'' of estimated consumption subject to the minimum as referred to therein.

The first question, in view of rival contention of the parties, therefore, which requires consideration is as to whether the billing and recovery cycle of the Board is 40 days or 78 days. The Supreme Court in FACOR''s case (Supra) considered the matter relating to furnishing of security as prevalent in the State of Bihar in paragraphs No. 75 to 80 thereof. The Supreme Court held that the Security being, a condition in the contract of supply, the Board has the requisite jurisdiction to alter the same. In paragraph no 99 of the aforementioned decision it observed as follows:

As a matter of fact, electricity is supplied in anticipation of payment. In almost every case it takes nearly 2-1/2 months for the recovery of the amount before action for disconnection could be taken. We will give one illustration as is in the case of Rajas-than.

The following is the billing cycle:

(a)

Consumption period

30 days

(b)

Period consumed after taking the meter readings to issue bills

10 days

(c)

Period allowed for pay- ment

17 days

(d)

Notice for disconnecting supply if consumer fails to deposit energy bill in time

7 days

(e)

Period taken in actual dis- connection after expiry of notice

10 days

Total:

74 days

(Underlining is ours)

Clause, 15.3(b) and 15.3(e) read thus:

15.3(b) The amount of security deposit to be paid before commencement of supply shall cover three months estimated consumption subject to following minimum:

(i) For domestic (Rural), Commercial (Rural) & Street light service Rs. 150/- per connection.

(ii) For Domestic (Urban) Rs. 400/- per KW per connection.

(iii) For irrigation & agriculture service Rs. 100/- per H.P. per connection.

(iv) For LTIS-I, a sum of Rs. 300/- per BHP or part thereof and for LTIS, II a sum of Rs. 400/- per BHP or part thereof. (v) for service for which minimum base charge has been specified in Clause 15.2, the security deposit shall be equal to three months minimum charges.

15.3(e) The entire amount of security deposit in case of all categories of consumers will be deposited in cash.

However, as noticed hereinbefore it was contended that in Bihar the billing and recovery cycle of the Board is only 45 days. The intervenors in reply to the Supplementary Counter affidavit filed by the Board have stated thus:

But it is stated that here in Bihar according to the practice adopted by the Board it takes not more than 45 days for the recovery of the amount before action for disconnection is taken which will be clear from the table below:

(i) Period of consumption-1st July to 31st July.

(ii) Meter reading-1st August.

(iii) Consumption during the month, say 20000 KWH

(iv) Average 15 days utilisation of 2000 KWH i.e. 15 days-(A)

(v) Bill dated 5th August.

(vi) Time allowed for payment-20 days.

(vii) Due date of payment 25th August i.e. 25 days (B)

(viii) Total Credit-40 days (A + B).

The actual figure, on the basis of average estimates is approximately as follows:

i.

No. of days in the month concerned

30 days.

ii.

Time taken in meter read- ing and preparation of bills.

7 days.

iii.

Grace period for payment of bill as indicated by the due date.

20 days.

iv.

Period involved in collecting information of case of non-payment.

7 days.

v.

Notice period

7 days.

vi.

Actual disconnections

7 days.

Total

78 days.

In paragraph 11 of the rejoinder filed by the intervenor to the supplementary counter-affidavit reads thus:

The submissions made by the Respondent Board in para 14 of the Supplementary Counter-affidavit is complete distortion of facts. I reiterate that the recovery cycle of the Bihar State Electricity Board, is only 40 days and, occasionally, that too due to their own fault, it may extend to 42 or 43 days. In our writ application we have suggested that this could at the worst be as much as 45 days and never more than this. I repeal and reiterate that the period of time for which Bihar State Electricity Board''s Working capital is deployed for the purpose of supplying electricity to the consumers before the amount is collected is only 40 days, and not 78 days as falsely stated in para 14 of the said Affidavit. In the first place, the average amount of working capital can be taken as having been deployed for generation of power only from the middle of the relevant calendar month i.e. for half month and not from the very first day of the month. This is a simple matter of averaging. Bihar State Electricity Board has, therefore, erred grossly in taking the full number of days in the month i.e. 30, whereas the correct figure of only 15 days ought to have been taken. Further, the period of time taken in meter reading and the preparation of the bill is only 5 days and not 7 days. To this must be added the time allowed for payment of the Bill, which is 20 days.

I say and reiterate that the period for which working capital is locked up for generating and delivering the power for a consumer before the collection take place is only 40 days or even say 42 days, as shown below:

1.

Month of power supply- Average

15 days.

2.

Period taken for Billing

5 days.

3.

Time allowed for payment

20 days.

4.

Total days for which the consumer is supplied power before collecting the dues

40 days.

The Intervenor Petitioners say and submit that the following periods of time are irrelevant and cannot be included in the billing and recovery cycle:

1.

Period involved in collection of information of non-payment

7 days.

2.

Notice period for discon- nection

7 days.

3.

Actual disconnection

7 days.

This is because the Intervenor Petitioners are concerned with the billing and recovery cycle of an ordinary customer who is paying his electricity bill and not with the exceptional case of a defaulter who does not pay his bill, to whom notice has to be issued and whose supply ultimately has to be disconnected. In the exceptional case of defaulting customer, the Bihar State Electricity Board protects its interest by invoking the Bank guarantee provided by the customer which is equal to 45 days'' consumption.

From the statements as noticed hereinbefore it is evident that normally billing and recovery cycle can not be 45 days, but according to the Board certain situations may arise wherein long period may be taken. There cannot be any dispute that the consumption period would be 30 days whereafter the consumer will be directed to pay the amount in question within the time stipulated in bill itself. The consumers who do not dispute the correctness or otherwise of the bill, would deposit the amount forthwith failing which they would run the risk of disconnection of electrical energy. In relation to only such consumer who raises a bonafide dispute with regard to the amount of the bill or defaults in making payment thereof, the notice of disconnection in terms of Section 24 may immediately be served on him. The Board in this regard is, however, expected to act promptly. The Supreme Court in FACOR''s case (Supra) has clearly pointed out that it is billing and recovery cycle which is relevant for the purpose of security deposit. There is absolutely no reason as to why the entire period of one month of consumption shall not be taken into consideration and only 15 days thereof would be calculated as has been contended by the Petitioners. As noticed hereinbefore even in Rajasthan the billing and recovery cycle is 74 days. In this situation we do not think that payment of cash security by the Board for a period of three months would be unjustified. It may be true that the provisions of Section 24 of the Indian Electricity Act is not a substitute of but in addition to other modes of recovery provided for under the general law as also under the tariff itself. The cash security to the extent of 50% beyond a sum of rupees one lac and furnishing of Bank guarantee to the extent of 50% of the remainder in our opinion, would not serve the purpose. We also do not agree with the submissions of the learned Counsel for the Petitioners that no security amount should be directed to be deposited in relation to maximum demand charges and Electricity duty. The said charges are integral part of the Tariff. Security deposit are required to be made on three months estimated consumption subject to the minimum mentioned in Clause 15.3(b) of the tariff, which in our opinion cannot be said to be either arbitrary or irrational. This Court, in our considered view cannot also decide the rationality of the quantum of the security deposit.

The next question which arises for consideration is as to the effect that interest is not payable on the amount of security is justified or not.

In paragraph No. 126 of the decision of the Supreme Court in FACOR''s case (Supra), it was held as follows:

It requires to be carefully noted that the question of interest on security was not raised before the Court. Therefore, the Court had no occasion to decide this issue of interest. That part of the judgment, as rightly contended by Mr. Soli, J. Sorabjee, learned Counsel, is sub-silentio. However, the learned Counsel for the consumers pressed into service the various orders passed by this Court in relation to interest and urged that it is concluded by those orders. We are unable to accept this argument. All the orders have their root in Interlocutory Application No. 1 of 1989 in Writ petition No. 578 of 1987. That order is extracted in full:

We have heard counsel for the parties. Mr. Gopal Subramaniam, counsel for the State Electricity Board on instructions states that the initial deposit which has been made by the consumer Petitioner, to the tune of Rs. 10,07,378.81 was intended as security for payment of energy dues. In terms of our order of 5th May, 1988 the Petitioner would be entitled to the interest on that amount from the date of the deposit at the rate of 12% per annum. Mr. Govind Mukhoty, counsel for the Petitioner now agrees to deposit the balance amount of Rs. 6,91,621 minus the interest which is said to be the additional security and while making the deposit of the additional amount, the Petitioner is entitled to deduct the interest already accrued on the deposit of Rs. 10,07,378.81 from the date of the deposit at the rate of 12% per annum. The balance amount after deduction of the interest shall be deposited in two equal quarterly instalments, the first being due by 15.10.1989.

The application for directions is disposed of accordingly.

In FACOR''s case (Supra) it was decided that the Board had all along been being paid 4 to 5% interest on security deposit. In that case it was observed:

In view of the above finding, up-holding the clause, relating to non-payment of interest, for example, Rajasthan and Orissa, what is to happen to such of those cases where interest is provided like Andhara Pradesh, Uttar Pradesh and Bihar? In all those cases wherever the Electricity Boards have framed a provision for payment of interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause. The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position. Further, keeping in view the quantum and mode of security deposit and billing and recovery practice, nor again, could the Board withhold payment of interest on the basis of this judgment. However, if there is any change in the circumstances affecting the budgetary and financial position, the Board can examine, the case and decide the future course of action. But any change resulting in non-payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case.

From a perusal of the observations made by the Supreme Court, it appears that the Board could withdraw the provisions relating to payment of interest only if there is basic and fundamental change in arrangement.

The Supreme Court in that case clearly held that the provisions for payment of interest can be withdrawn only on assigning valid and cogent reasons.

The Respondents-Board has merely pointed out that it has been incurring losses. This by itself, in our opinion, was not sufficient in view of the observations made by the Supreme Court inasmuch as it is admitted case of the Board that except for a brief period when the State had made one time grant it had all along been making losses.

The amount of deposit continues even beyond the period of average billing and recovery cycle. The Board further earns interest on the aforementioned deposit. It directs furnishing of security amount on the maximum demand charges but also on electricity duty, both maximum demand charges are payable on the expiry of one year and the electricity duty are to be paid only after the assessment thereof.

The Board also recovers delayed payment surcharge by way of interest from the consumers at the rate of 2% per month.

In view of the fact that we do not find that any sufficient or cogent reason has been assigned by the Board in refusing to pay 4% interest on the security deposit and thus, in our opinion, the same is contrary to the decision of the Supreme Court in the FACOR''s case (Supra).

In our opinion, therefore, the Board is liable to grant interest on the security deposit to the consumers.

Re: Question No. (h):

Clause 16.4 and 16.4(1) read thus:

16.4: Transformer Capacity

16.4.1: The Transformer capacity of M.H.T. and E.H.T. consumers shall not be more than 150 percent of the contract demand.

It has not been disputed that such a provision existed in 1983 tariff as well as in 1991 tariff. The learned Counsel appearing on behalf of the Petitioners have not disputed that the Board has the power to alter the terms and conditions of the supply of the electrical energy. The submission of the learned Counsel, however, is that such a provision should not be given a retrospective effect. It has been pointed out that the Bihar State Electricity Board, keeping in view the difficulties which may be faced by the consumers, agreed to give a prospective operation and thus the doctrine of contemporanea expositio should be applied in such a case.

It has not been disputed before us that such a provision was given a prospective effect not by way of interpretation of relevant provisions of 1983 and 1991 tariffs but by issuance of an executive instruction because of the difficulties expressed by the consumers. It is also not disputed that the said provision has been applied to all the consumers who had taken a new connection. The very fact that all the consumers who had obtained new connections have/had to install a transformer to the extent of 150% of its connected load, clearly goes to show that only because some consumers have installed their transformers prior to coming into force of the 1983 tariff, the said provision would not be attracted in their case. We are also unable to agree that the said provision has been made malafide with a view to compel the consumers to increase the contract demand inasmuch as the choice is clearly of the consumers themselves. It may increase the contract demand or in a given case it may ask the Board for reduction of the contract demand. In our view, the Board itself may consider this aspect of the matter and pass an appropriate order.

The submission of the learned Counsel has also to be considered in the context of the other submissions made at the Bar that a transformer of higher capacity is installed keeping in view the future growth of the industries. If the transformer of the higher capacity is installed keeping in view the growth of the industries, in our opinion, the Board must be held to have given sufficient time to the consumers to ascertain their own requirements as to whether they require an increased contract demand keeping in view the growth of their industries or not.

The submission of the learned Counsel for the Petitioners to the effect that there would be difficulties in disposing of the old transformer and purchasing new ones but the same in our opinion, cannot justify striking down a legislative provision. The power of the Board to alter the conditions of supply of electricity to the consumers is not disputed.

The contentions of Mr. Pawan Kumar to the effect that in some industries some extra load is necessary at the time of starting of the motors or furnaces is also of no help; inasmuch as it is well known that for sufficient time a transformer can work to the extent of 110% of its capacity. Such an argument cannot also be accepted keeping in view the fact that so far as the new consumers are concerned, they have not faced any such difficulty.

It is now well known principles of construction of statute that some personal inconvenience or difficulties faced by a person or by a group of persons cannot be a ground for striking down a legislation, if it is otherwise valid in law.

In Desh Bandhu Gupta & Co. and Ors. (Supra) and K.P. Varghese (Supra) the Supreme Court was considering a matter in which a circular was issued by the Central Board of Taxes interpreting the provisions of the Income Tax Act. In that case circulars were issued in terms of the amended provision of Section 52(2). In that situation it was held that it was not only binding on the subordinate authorities but also was in the nature of contemporanea expositio to legislate on construction of the said provision.

In M/s. Oswal Agro Mills Ltd. Vs. Collector of Central Excise and others etc. etc., , the Supreme Court considered its earlier decisions and held that the doctrine of ''contemporanea expositio'' can be applied to interprete words. In that case the question of interpretation of the relevant instruction arose within a few years of enforcement of amended item 15 of Schedule I to the Central Excise and Salt Act. In this case however, the validity of 1993 tariff, is being considered at the earliest by this Court.

So far as the submission of Mr. Bajla that in relation to some industries some extra amount of energy is necessary, at the point of litting of furnance, in my opinion, the same may be a matter for consideration of the Board. The consumers having special difficulties may always approach the Board for entering into some special agreement which is not repugnant to the provisions of 1948 Act. Further the consumers may not be required to switch on all the machinery at one point of time.

It is not disputed that the Board has power to alter the terms and conditions of supply. It is also not in dispute that the said provision has been applied uniformally in the case of new consumers. The Petitioner have been in an advantageous position for a long time. It is not and cannot be disputed that, but for the circulars issued by the Board not to insist on change of the transformers by the existing consumers, the same should have been given effect to long back. The Petitioners themselves having enjoyed the aforementioned benefit now cannot turn round and contend that the said provision is unreasonable or should be given prospective operation.

We are not aware of any rule or interpretation of statute that a provision of law may be held to be prospective only for a section of people and retrospective for others. In fact, the question of consideration of the aforementioned provisions prospectively or retrospectively does not and cannot arise, inasmuch as the said provision were always required to apply in the cases of all the consumers.

The Board only had kept the said provision in abeyance and/or otherwise did not implement the said provision in the cases of those consumers who installed the transformers prior to 1983 tariff. The said circulars were thus issued at best by way of exemption and not by interpretation of the relevant provision.

In our considered view, the doctrine of ''contemporanea expositio'' has also no application in the facts and circumstances of the case, inasmuch as neither the Board nor the consumers interpreted the said provision to have only a prospective (sic) was not implemented by the Board and/or was kept in abeyance. See M/s. Oswal Agro Mills Ltd. Vs. Collector of Central Excise and others etc. etc., .

It is true that by reason of 1993 tariff a provision has been introduced that if a consumer is found violating the said provision his service connection may be disconnected but then again, in our opinion, on that ground alone such a provision cannot be struck down on the ground of arbitrariness.

We may note here that Mr. Reddy appearing for the Board has drawn our attention to a circular that the Board would not implement the said provision immediately. It was further submitted by Mr. Reddy that the Board will have no objection whatsoever if sufficient time is granted to the consumers for changing their transformers and/or for taking steps for increasing their contract demand.

Having considered the fact that some of the consumers have been utilising their transformers for a long time and further keeping in view the fact that the same may require some time for arranging additional resources and also for procuring new transformer six months time should be considered a reasonable period for this purpose.

The decision of this Court in Arya Steel''s case reported in 64 STC 198, relied upon by Mr. Ganesh has no application to the facts, and circumstances of this case. In that case the court was dealing with completely a different situation.

Re: Question No. (i) & (j)

Clause 16.10 of the Tariff reads thus:

16.10.1: Tariff rates of CS categories of I & II, L.T. Industrial Service, H.T. Service, EHT Service and Railway Traction Service are subject to operational surcharge i.e. all consumers of the aforesaid categories shall be required to pay operational surcharge at a rate to be determined every year in accordance with the formula given below in addition to the other charges as laid down in the tariff schedule:

16.10.2: Operation Surcharge shall consist of two elements namely (a) Fuel Surcharge (SI) and (b) Other operational surcharge (S2).

The operational surcharge (S) in paise per unit would thus be S = S1+S2.

The power of the Board to frame tariff is hedged by the conditions enumerated in Section 49 and 59 of 1948 Act. The Board, therefore, has no power to increase the tariff at its sweet will without taking recourse to the provisions of the Act.

However, by reason of the provision of Clause 16.10 of the tariff, the Board is not only answerable to the State, but its (sic) are required to be actions upon consultation with different authorities. The submission of Mr. Reddy to the effect that since the aforementioned provision is by way of escalation clause and, therefore, does not have to go through the rigours of the provision of tariff cannot be accepted. An escalation clause is normally contained in a contract. The tariff, as noticed hereinbefore is a legislative function. It is true that in a given case, like the case of the fuel surcharge the Board may have the reasonable power and jurisdiction to levy the same, but the fuel surcharges can be increased without taking recourse to the other provisions of 1948 Act, only because there may not be any dispute with regard to the actual cost of fuel. The increase in fuel surcharge would be dependent on the formula laid down therefor.

Further increase in the cost of fuel surcharge necessitates increase in fuel surcharge which is not in the hands of the Board. It cannot and does not have any control over the costs of coal or other fuel which are necessary for generation of electricity. However, in terms of the provisions as contained in Clause 16.10 of the Tariff all revenue expenditures which the Board may have to incur not only by way of necessity but also by way of extravagance will have to be met by the consumers.

168A. The Board while exercising its legislative function in framing the tariff is expected to determine the tariff rate keeping in view its over all revenue expenditures as also the possible future expenditure which may have to be incurred in that regard. In view of the report of the Comptroller and Auditor General as also the statements made by the Advocate General before us, it is clear that the Board has failed even to prepare its annual statement within time. In the report of the Comptroller and Auditor General several deficiencies in proper maintenance of Books of Accounts by the Board have clearly been pointed out. It now also stands admitted that the Accounts of the Board are placed before the Legislature after a period of many years.

At this juncture we may point out that we had asked the Advocate General to inform the Court as to whether any debate had ever taken place in either of the Houses of the Legislature with regard to the statements of accounts produced before it, but he did not supply the said information.

Although a presumption arises to the effect that the official acts and the legislative acts had been done in regular course of business, but when the same has been questioned by the Petitioners in the writ petitions it was the bounden duty of the Board as also the State of Bihar to place all cards before the Court to show that they have been acting bonafide and fairly. Even otherwise, the State should withhold any information sought for by the Court.

We, therefore, draw an adverse inference in this regard against the State.

It has to be borne in mind that the provisions of Sections 49 and 59 of the 1948 Act were declared constitutional by the Supreme Court in Kalyan Borough Municipality''s case (Supra) and several other decisions, including the decision of the Supreme Court in FACOR''s case (Supra), only on the ground that 1948 Act contains in built safeguards and in view of the said provisions the argument that the Board has an arbitrary, uncanalised, unguided and naked power to frame tariff was repelled. The power of the Board to levy oilier operational surcharge in our opinion, has to be viewed from that angle and keeping in view the aforementioned decisions of the Supreme Court.

It is no doubt true that the other operational surcharge does not contemplate within its purview any capital expenditures, as for example, installation of new machinery or installation of new plants but keeping in view the high degree of efficiency and mal-administration prevailing in the Board, the apprehension of the Petitioners that even the additional unnecessary revenue expenditure which may be incurred by the Board, would be thrust upon the consumers, cannot be ruled out. These observations we are constrained to make keeping in view the track record of the Board.

It may be noticed that the Board and the State of Bihar had even flouted the requirements of Sections 61, 69 and 75 of 1948 Act, as it had neither prepared the annual statement in time nor the same had been produced before both the Houses of Legislature within a reasonable time.

Further even in a case, the Legislature of Bihar subsequently disapproves the accounts or the statements of accounts prepared by the Board or the same receives adverse criticism of the Comptroller and Auditor General after a number of years, the same would be of no benefit whatsoever to the consumers; as by that time the consumers would have paid the demand raised by the Board.

The very submission of Mr. Reddy to the effect that such a provision had to be made in order, to avoid the contingency of revising the tariff too frequently clearly demonstrates that the Board intends to bypass the statutory safeguards embodied in 1948 Act by passing the statutory functionaries who are entitled to scrutinise the accounts of the Board. Further Sections 49 and 59 of 1948 Act do not impose any restriction on the power of the Board to revise its tariff as and when necessary. Thus, in our opinion, there cannot be any justifiable reason whatsoever to concede such a drastic power at the hands of the Board in raising its tariff by way of other operational surcharge as and when it thinks it necessary. It is now well known that what cannot be done directly cannot be permitted to be done indirectly. If such a power of the Board is recognised, it may not have the necessity of framing any tariff in relation to the class of consumers who would be affected thereby.

Hindustan Zinc Ltd. (Supra) upon which strong reliance has been placed by Mr. Reddy has no application to the facts and circumstances of this case. In fact, the said decision, in our considered view, runs counter to the argument advanced by Mr. Reddy.

It was held in Hindustan Zinc Ltd. (Supra) that as the consequence of non-compliance of Section 16(C) is not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, the revision of tariff without its advice does not render the same invalid.

As noticed hereinbefore the state of affairs prevailing in the State of Bihar is not the same as that in Andhra Pradesh. In Hindustan Zinc Ltd.''s case (Supra) the Supreme Court was dealing with the imposition of the Fuel Surcharge and fuel cost adjustment applicable to high tension consumers.

In Bisra Stone Lime Co. Ltd. and Another Vs. Orissa State Electricity Board and Another, , the Supreme Court in para-11 held as follows:

The word surcharge is not denied in the Act, but etymologically, inter alia, surcharge stands for an additional or extra charge or payment (see Shorter Oxford English Dictionary). Surcharge is thus a super added charge, a charge over and above the usual or current dues. Although, therefore, in the present case it is in the form of a surcharge, it is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act. The first submission of counsel is, therefore, of no avail. As no operational charge had ever been levied, a surcharge on the operational cost, in our opinion, is not contemplated u/s 49 of the Act.

In view of our findings aforementioned, it must be held that the Board has no jurisdiction to levy other operational surcharge.

In relation to levy of fuel surcharge, the only contention raised by the learned Counsel for the Petitioners is that the same is based on artificial formula. We do not agree with this contention. By reason of 1993 Tariff the only change put in the formula is deletion of the word ''or X''. In view of the fact that the Board is entitled to change the condition of supply of electrical energy, no exception can be taken to the power of the Board in redefining the same unless it is held to be arbitrary. From a comparison of the two formula, as indicated herein-above, it would appear that whereas in the year 1981 Tariff fuel surcharge could have been calculated on the basis of the two formula, by reason of the 1993 Tariff only one formula has been adopted. In this view of the matter, in our opinion, the change in the formula can neither be said to be arbitrary nor artificial. In Hindustan Zinc Ltd. (Supra), as noticed above, validity of levy of fuel surcharge has been upheld.

Thus in our opinion, the provisions of other operational surcharge does not satisfy the requirements of the provisions of 1948 Act and had been enacted by way of camouflage.

Re: Question No. (k):

In 1993 (sic) as well as 1993 Tariffs also provisions have been made that low tension electricity supply may be confined to connected loads upto 80 BHP. However, keeping in view the objections raised by the concerned consumers the same was not given effect to by an executive instruction. It is not, disputed that the said provision is applicable to the consumers who would be taking new connections.

According to the Board the aforementioned anomaly should not be allowed to continue. For the purpose of conversion of low tension electrical energy to high tension electrical energy, the consumer has to enter into an agreement and install a transformer whereas the Board, has to make arrangement for supply of high tension electrical energy.

The contention of the Petitioners, however, is that the quality of supply of electrical energy in both high tension and low (sic) is same cannot be accepted. It was (sic) that if the validity of the aforementioned provisions is up-held the impact on the (sic) in this regard would be 45% in (sic) bills which is unreasonable.

It is not in dispute that the Board (sic) to change the terms and conditions (sic) apply. It may be stated that some (sic) who have connected installed load (sic) 80 BHP may suffer. But in our opinion, (sic) of the said consumers may by (sic) will not justify striking down the (sic). The rationality of the policy (sic) in such matter on the part of the (sic) in our opinion, cannot be questioned.

The contention of the learned Counsel the Petitioners to the effect that the (sic) will be entitled extra amount without (sic) the low tension connection to high (sic) connection does appear to be correct, (sic) Bench of this Court in Jaiswal (sic) Industries v. Bihar State Electricity Board and Ors. 1980 B.B.C.J. 179 (sic) held that unless arrangements are (sic) the Board for supply of high tension (sic) energy, the consumer cannot be (sic) on the basis of H.T. Tariff. The (sic) view has also recently been (sic) by a Division Bench of this Court in (sic) Trident Tubes Ltd. v. Bihar State Electricity Board and Anr. C.W.J.C. No. 10006 of 1992 disposed of on 21.9.1993.

We are not aware of any rule or (sic) of Statute that the provision may (sic) to be prospective only for a section of (sic) and retrospective for others. In fact, (sic) of consideration of the (sic) provisions prospectively or (sic) does not and cannot arise, inasmuch as (sic) provision always required to be (sic) the cases of all the consumers.

(sic) Board only had kept the said (sic) in abeyance and/or it otherwise did (sic) the said provision in the cases (sic) consumers who had connected load upto 100 BHP.

Re: Question No. (l):

The grievances of the Petitioners in this regard is that L.T.I.S. consumers have now been made subject to two distinct minimum guarantees--

(a) The minimum charge which existed earlier of Rs. 50/- per B.H.P. for L.T.I.S. I and Rs. 70/- per B.H.P. for L.T.I.S. II consumers; and

(b) a new minimum energy consumption charge of 70 units per B.H.P. per month.

The combined effect of these two minimum charges result in an extremely heavy burden on the L.T.I.S. consumer.

The contention of the Petitioners to the effect that no fixed charge can be levied at all cannot be accepted. It is true as has been contended by the learned Counsel for the Petitioners that the Board may not be in a position to supply the electrical energy constantly or continuously, but there cannot be any doubt whatsoever that the Board is entitled to fix two way tariff. The principle for fixing tariffs are:

Principles of Tariff Making.--In fixing tariffs certain basic principles have to be borne in mind:

a. It should be secured that the charges reflect cost of supply. The charges should be related as closely as possible to the cost of supply. No doubt joint costs would involve a certain amount of arbitrary allocation.

b. The process of determining the cost of supply cannot be carried beyond a point where the expense of determining the cost outweights the advantages of fine measurements.

c. The charges should take into consideration the electrical characterstics of the consumers. The classification should be rational and based upon distinctive electrical characteristics.

d. The tariff should be simple as far as possible, though the closer the tariff to the cost of generation incurred the greater would be its divergence from simplicity.

e. There should be no undue preference.

While framing tariff two part tariff is permissible. When a two part tariff is framed the charge for supply is divided into two components, one purported to KWH consumption and the other on the quantity of supply on payment of maximum demand and second the fix charge is according to consumption. The fixed charge is what is often called Norwitch system of charge.

Fixed charge has also been levied by the Board by reason of 1991 tariff. At this juncture, it is necessary to notice a comparative chart between 1991 and 1993.

1991 Tariff

1993 Tariff

Character CSI-Rural areas up to 2 KW-single phase.

CSI-Rural area up to 2 KW- single phase

CSII-Urban areas up to 2KW-single phase

CSII-Urban & other area up to 4KW-single phase.

CS III-Connected load 2 KW+60 KW-3 Phase

CSIII-Connected load exceeding 4 KW to 60 KW-3 Phase

Meter Rent CSI & II-10 month CS III-30/- month

Same

Fixed charge: CSI Rs. 47/- for 1KW + 25/- for next KW or part: Rs. 72 monthly

CSI Rs. 60/-, for 1KW CSI + 30/- for rest upto 2 KW: Rs. 90/-

CSII-Rs. 85/- per KW or part upto 2 KW (Rs. 170/- for 2KW)

CSII-Rs. 100/- per KW or part thereof upto 4KW.

CSIII-Rs. 100/- per KW or part thereof

CSIII-Rs. 120/- per KW or part thereof upto 60 KW.

Energy Charge : CSI-nil (See Fixed charge Rs. 72/-) CSII-first 100 units 85 p/unit excess of 100 units 80 p/unit

CSI-nil (see fixed charge Rs. 90/- CSII-first 150 units 132 p/unit Excess of 150 units 160 p/unit

CSIII- do

do

Fuel Surcharge CSII & III as notified from time to time.

Operational surcharge ''S''-For CSII & III only.

CS 1-A/A

S = S1 + S2 (SI Fuel surcharge) (CL: 16.10.3)

(F.S. @ 68 p/unit fixed in 1989 merged in basic rate when this tariff framed)

S2 = Over operational surcharge) (C1: 16.10.4)

Air conditioners: (in addition to above) (i) Windows type :Rs. 150/- per AC per month, (ii) Central A/C load: Rs. 150/- per KW per month.

Minimum Monthly consumption charge For CS II & III only-50 units/KW/ month.

The submission of the learned Counsel for the Petitioners that the fixed charge is ultra vires of Sections 49 and 59 of the Act cannot be accepted.

According to the Respondents levy of fixed charges has been done in a manner which has a real co-relation to generation and supply of electricity. As indicated hereinabove the Board is entitled to make different Tariffs for different consumers which per se cannot be held to be arbitrary or unreasonable. The consumers of the rural area form a class by themselves and thus the question of violating the provision of Article 14 of the Constitution of India does not arise. The Respondents in their counter affidavits have categorically stated that the same had been done with a view to check mal-practice. The Respondents have further brought on records the figures to show that even the minimum level of consumption is reached then also the levy of fixed charge would be justified.

Respondents have also stated that keeping in view the fixed charges, the overall rates have been kept at such a level that if a consumer uses load for 2 to 3 hours a day the rate would reach at the desired level.

It is true that in a given case a consumer may have to pay fixed charge although he may not consume electrical energy at all or there occur disruption in supply of electrical energy. However, as noticed hereinbefore, the Board is entitled to frame double rate tariff in exercise of its power under Sections 49 and 59 of the 1948 Act. In that view of the matter, it cannot be said that levy of fixed charge on connected load is not envisaged u/s 59 of the said Act. As noticed hereinbefore the Supreme Court in Kalyan Borough Municipality case (Supra) had up-held the validity of such charges.

So far as the submission of Mr. Bajla that L.T. consumer has to pay higher than H.T. consumer is not correct. He is also not correct in contending that the quantity of supply in both the cases of L.T. consumer and H.T. consumer is the same. The High Tension consumers are directly supplied electrical energy from the power sub-station and the transformer is placed at the premises of the consumer, whereas in the case of L.T. consumer, electricity is supplied from transformer.

So far as the annual minimum guarantee charges in concerned, however, by reason of 1993 Tariff apart from the fixed charge the Board had introduced one more minimum guarantee charge to the energy consumer, according to which consumers have to pay fixed charge of Rs. 50/- per BHP for L.T.I.S-II consumer even if their consumption of electricity is nil.

So far L.T.I.S. II consumers are concerned, by levying the said minimum guarantee charges at flat rate, in our opinion, a hevy burden have been imposed upon the consumers. The levy of such minimum guarantee charges, in our opinion is also arbitrary inasmuch as:

i. There is no provision for adjustment.

ii. There is no provision for remission of the same owing to non-availability of the electricity by reason of tariff, load sheding or power cuts.

iii. Admittedly such proportionate reduction are granted in the case of High Tension consumer and, in our opinion, there cannot be any justification what-so-ever for not extending such benefit to L.T. consumers. The L.T. consumers have thus, in our opinion been discriminated against.

iv. Such provision, therefore, in our view is arbitrary and irrational.

We are, therefore, of the view that imposition of annual minimum guarantee charges on L.T.I. consumers over and above the fixed charges is illegal.

In fact Mr. Reddy did not give any reply to this part of the submission made on behalf of the Petitioners.

So far as the tariff rate is concerned, in view of the decisions of the Supreme Court referred to hereinabove in our opinion, this Court cannot go into the question in minutest details, inasmuch as the same is a matter of policy decision. Except for showing that consumers cannot be made to suffer because of the inefficiency of the Board, in our opinion, no other argument can be entertained in this regard.

Re: Question No. (m):

A fixed charge has been levied on installation of airconditioners. The levy of fixed charge on installation of airconditioner, in our opinion is absolutely illegal and without jurisdiction. The Board has levied fixed charge on the connected load installed at the premises of the consumer. Such installations include airconditioners also. The Board has thus sought to impose fixed charge on installation of airconditioners over and above the fixed charges on connected load, which, in our opinion, is impermissible in law. The submission of Mr. Reddy to the effect that as airconditioner is luxury thus who can pay more may be asked to so do cannot be accepted in view of the fact that the Board has no power to levy tax on luxury. Further, there are other electrical gadgets like Aircooler, Room, heaters, Geysers etc. which are also items of luxury but no fixed charges have been levied on installation thereof. Further, in our opinion, the Board in exercise of its jurisdiction under Sections 49 and 59 of the 1948 Act cannot frame any tariff for levying fixed charge on installation of such gadgets alone. We may also take notice of the facts that the airconditioners are also not required to be operated throughout the year.

Mr. Reddy, however, sought to justify the said levy on the ground that when an Airconditioner is switched on, it draws more power, but the same must be the case with all electrical equipments. We, therefore, do not find that there exists any nexus or rationale in levying additional fixed charges on the Airconditioner. The levy of fixed charges on the Air-conditioner, is, therefore, held to be illegal.

Re: Question No. (n):

Whether clubbing of the different consumers in the same premises are permissible in law?

So far clubbing of the different consumers in the same premises is concerned, the same is, in our opinion, ex-facie illegal. Each consumer enters into a separate agreement with the Board. The Supreme Court in Bihar State Electricity Board and Another Vs. Dhanawat Rice and Oil Mills, has clearly held that the matter of supply of electricity by the Board to the consumers is more a matter of contract although terms and conditions thereof are guided by the provisions of the Statute. In that view of the matter as the Board enters into different contracts with different consumers whether situated in the same premises or not does not and cannot arise. In fact the learned Counsel for the Board even did not make any attempt to justify the said provision.

It is, accordingly, held that the Board is not entitled to club different consumers in the same premises.

For the reasons aforementioned, these applications are allowed in part, but in the facts and circumstances of this case, there will be no order as to costs. In view of the interim order, passed by this Court, it will be open to the Board to raise fresh bills in terms of this judgment and recover/adjust the amount accordingly.