Hotel Satkar Pvt. Ltd. vs Bihar State Electricity Board and Others

S.K. Jha and R.P. Mandal, JJ.—In this application under Articles 226 and 227 of the Constitution of India, the plain and simple question involved is as to the true content and scope of Section 24(1) (first part) of the Indian Electricity Act, 1910 (Act 9 of 1910) hereinafter to be referred to as the Act. Respondent No. 1 the Bihar State Electricity Board (to be called "the Board" hereinafter) is a statutory body and a licensee under the provision of the Electricity (Supply) Act, 1948 (Act 54 of 1948) read with the Act and the other respondents are its officers. The petitioner is a consumer of electrical energy supplied to it, electrical installations having been set up and energised in the premises of the petitioner from the month of October, 1976. The prayer made in this writ application is for the issuance of an appropriate writ/direction quashing the notice served by the licensee Board, respondent No. 1 on the petitioner by a letter-cum-notice dated 10th/12th May, 1979, a copy whereof has been incorporated in Annexure 1 to the writ petition. The only question which calls for our decision in this case is as to whether the threat of disconnection after giving 7 clear days'' notice as contained in Annexure-1 served by respondent No. 1 on the petitioner is tainted with illegality or can be said to be in consonance with the provisions of Section 27 (first para) of the Act. At this place, in view of the submissions made at the Bar, it would be proper for us to indicate at the outset that learned counsel for the respondents did not contest-rather conceded that, if there was a bona fide dispute between a licensee and a consumer of electrical energy, then the provisions of Section 27 (first part) of the Act will not apply, unless the controversy or the dispute is resolved at a proper forum and in accordance with law.

While; on the one hand, Mr. A.K. Sen, learned counsel for the petitioner, has confined his submission only to one legal aspect involved; namely; that the instant case is one of those cases in which the bona fide of the dispute is writ large on the materials on record, on the contrary, Mr. Dinesh Charan, learned counsel for the respondents, has tried to persuade us to hold that there was no bona fide dispute at all indeed, learned counsel for the respondents at one stage wanted us to go a step further and hold that on the facts and in the circumstances of the case there was a concluded agreement or contract between the parties (namely, the petitioner and respondent No. 1), the terms of which can be called from pieces for correspondence. He also fairely admitted that the so-called pieces of correspondence were only unilateral, namely, letters sent by way of protest from the petitioner from time to time of which we shall take notice at an appropriate and apt place.

The submission of learned counsel for the respondents as aforesaid with regard to an inference of a concluded agreement to be drawn from the pieces of correspondence available on the record seems to have been rightly abandoned in this proceeding. This we say on account of the admitted fact that in the counter affidavit the stand taken by the respondent Board is that there was no agreement entered into at any time between the parties over since the date of the energisation of the installations in the petitioner''s premises. A letter written by the Resident Engineer of the Patna Electric Supply Undertaking, which is a unit of the Board, dated 11th March, 1978, a copy whereof has been marked annexure-17 to the petitioner''s rejoinder to the counter affidavit filed on behalf of the respondents, clearly states in express terms that the petitioner must execute "a fresh agreement in the prescribed form as required to be executed vide para-6-164 of the Board''s Financial And Accounts Code, Chapter VI". Whereas the petitioner''s stand is that it had done Us part of the job by signing the agreement and handing it over to an officer who was duly authorised in that behalf by the Board, that fact has been expressly controverted in the counter affidavit. But that is a later part of the story.

To begin at the beginning, first we are confining ourselves to the non-controversial facts. These can shortly be stated thus. The petitioner, a 5-Star Hotel, having been set up with the financial help of the Bihar State Financial Corporation and sponsored by the Department of Tourism of the Government of India, after completion of the building, sent two green cards for the purpose of making an application to the licensee requiring it to supply electrical energy in accordance with the legal formality. The two green cards, which have not been placed on the record of this case, have been shown to us, after permission was accorded to learned counsel for the respondents to produce them before us, to indicate that both the green cards after the installation of the electrical appliances duly energised were certified by the competent engineers and contractors, K.K. Gupta and Company. On the basis of the two green cards submitted, as we have already stated earlier, the petitioner''s premises began to be supplied electrical energy and a trisector meter was installed in its premises by the licensee Board and the supply started from October, 1976. A trisector meter admittedly, is a combination of 3 meters performing 3 distinct functions:--

(i) a maximum demand indicator,

(ii) a meter which reads the maximum load availed of in terms of kilovolt ampere (kva) and

(iii) the actual units of electrical energy consumed.

Admittedly, although the supply started from October, 1976, an application was filed by the petitioner to the Resident Engineer of the Patna Electric Supply Undertakings unit of the Board, on 19th November, 1975. This application has also not been produced before us by learned counsel for the respond dents and does not form part of the record. The fact, however, that on that date such an application had been filed is accepted by the petitioner also. Subsequent to the application, an agreement duly filled up and signed on behalf of the petitioner by persons authorised in that behalf was sent to the Board, but it now transpires, as learned counsel for the respondents himself has stated, that the agreement was never executed by or on behalf of the licensee. The high tension (H.T.) agreement form duly signed by persona authorised to do so on behalf of the petitioner has also been produced by learned counsel for the petitioner before us. It would have been more formal and factual if those documents, for whatever worth they are, would have been annexed to the counter affidavit of the respondents after laying down the foundational facts for such annexures to be so appended in the recitals or contents of the counter affidavit itself. We ordinarily and generally feel reluctant to look to any document which does not form part of record of the case. In this case, however, since it would be merely piling unreason upon technicality if we insist upon such a technicality and specially on account of the fact that Mr. Sen did not object to learned counsel for the respondents producing these documents for our perusal, we have taken note of them. In nutshell, in July, 1976 green cards by competent electrical engineers were filed, the application of the petitioner to the licensee was filed on 19th November, 1975 and an agreement was to be executed thereafter which, it seems, was never executed at all. And, yet, in the meantime, the licensee Board, respondent No. 1, energised the petitioner''s premises and began to feed it with electrical energy from the month of October, 1976. That is the first chapter of this case.

Admittedly again any variation either due to the defective functioning of the meter resulting in a wrong reading of the kva indicated by the maximum demand indicator as well as the load factor availed of on any particular day of month is bound to culminate in a variation of the electrical energy, consumed by any consumer. For the period-from October, 1976 to March, 1977 every monthly bill was served on the petitioner on the basis of the actual kva consumed by the petitioner as shown and recorded in the trisector meter installed in its premises by the licensee Board. The actual demand as registered by the meter varied between 86 and 95 kva., with exceptions with regard to a few months, which are not material for the purpose of the issue at hand. To continue the narration for April and May, 1977 the original bills were sent to the petitioner on the basis of 75 per cent of 315 kva which would come to about 236-5 kva. This was on an assumption by the licensee respondent that there had been an agreement between the parties for a maximum demand of 315 kva although, in fact, as we have already indicated earlier, there has been no agreement whatsoever. The petitioner objected to the bills for these two months and on such an objection the bills were revised and the amount of demand reduced, as the petitioner had requested; on the basis of actual consumption in terms of kva as registered by the meter. Again, for the months of June. August, September, October and November, 1977 (i. e. from May, 1977 to November, 1977 excepting July) the petitioner was served with bills on the basis of 75 percent of the maximum demand of 315 kva. But curiously enough, for the month of July the bill was submitted on the basis again of actual consumption recorded by the meter at about 88 kva. The petitioner again protested and as a result of such protest the Technical Committee of the licensee, respondent No. 1, which goes into such questions wherever there is a protest on the ground of wrong billing on account of either wrong functioning of meter or otherwise was mobillsed and on 12.3.78 it passed an order which is incorporated in Annexure 6 to the writ application. Paragraph 10 of the document marked Annexure-6 presents an interesting reading which is quoted below:--

From the above observations as well as from detailed calculations made from the hours of working of the air conditioning plant (obtained from the log book maintained at the installation), the energy recorded and the average power factor, the Maximum Demands at the installation during the disputed period, i.e. From April, ''77 to September, ''77 have been revised as follows:--

It may be mentioned at this stage that error in Maximum demand indicator of the first three combined meters which were primarily due to defect in the timing mechanism of the meter had no bearing on the unit consumptions recorded in the meters. Only in April, ''77 there had been a mis-calculation of unit consumption as stated in para 5 above, which has already been taken into consideration. In the circumstances explained above, you will appreciate that there is no further scope for adjustment in your bills, as demanded.

That explains how the bills for the period-April, 1977 to September, 1977--were revised on the basis of actual consumption. The recitals of this document further show that the meter which had been installed at the petitioner''s premises was defective. It is admitted that the meter installed had to be changed three months by the licensee every time when it was pointed out to the licensee, respondent No. 1, by the petitioner that the meter was not functioning properly. But that is neither here nor there. The bone of contention between the parties is as to whether, since the petitioner in its application dated 19th November, 1975, mentioned earlier, had shown the total consumption load applied for at 315 Kva, the petitioner was liable to be charged at the rate of 75 per cent of 315 Kva or at the rate of actual consumption or, as had been done, as already stated earlier, up to March, 1977 and again as the rectified bill of April, 1977 shows. This was the main point of controversy although the defective reading of the meter was also pointed out and hence the Technical Committee of the respondent licensee having examined the matter thoroughly in its report/order dated 12.3.78 (Annexure-6) revised the bills for the months of June, August and September, 1977 and reduced the monthly bills as submitted at the rate of 75 percent of 315 kva to the actual consumption recorded or calculated by the technical staff, which came to 86 or 88.

The controversy begins now. Whereas the petitioner says that at the instance of the Resident Engineer, to whose letter dated 11.3.78 a reference has been made earlier, namely; annexure-17 to the petitioner''s rejoinder, insisting that the petitioner do enter into a fresh agreement the petitioner had actually filed a fresh agreement wherein the maximum demand of supply was agreed at the figure 100 kva, the stand taken by the respondents in the counter affidavit is that there was no such agreement in existence. We, therefore, proceed upon the assumption, without any prejudice to the rights of the parties to raise the question of existence or otherwise of any agreement entered into between the parties either in a formal document or through correspondence before a proper forum, that there was no such agreement in existence. The respondents say that under the relevant tariff rules as applicable at the relevant time, namely, the Bihar State Electricity Board Tariff, 1975 (published in the Bihar Gazettee Extras ordinary No. 842 dated 25th July, 1975) it is stated at page 36 in the Explanation:--

For the first twelve months of service to a new point of supply of the maximum demand charge for the "month will, however, be based on the actual maximum demand for that month.

It would also be not out of place to mention here that admittedly the petitioner is covered by the term ''High Tension Service'' and Tariff applicable for the purpose of billing of the petitioner''s consumption would be symbol H.T.G.-1 as described at page 23 of the 1975 Tariff. It would also be pertinent to state that admittedly the petitioner is availing of 50 cycles A.C. (alternate current) and 3 phase service at 6.6 kv (6,600 Volts). The point, therefore, that the petitioner is liable to be charged at the tariff prescribed for symbol H.T.G.-1 at page 23 of the 1975 Tariff is not debatable. The stand of the respondents is that in accordance with the Explanation extracted above at page 36 of the Tariff, the bills for the first 12 months on the basis of the actual consumption had to be revised whenever the bills had been submitted originally on the basis of 315 kva maximum demand, 75 per cent of which came to 236 5 kva or so. This being the specific case of the respondents, it is curious as to how even for the months after September, 1977 the respondents submitted bills to the petitioner right upto the month of March, 1978 on the basis of actual consumption showed in terms of kva by the maximum demand indicator. The revised bills for the months of June to November, 1977 excepting July; which was originally already served on the basis of the actual consumption; have been marked annexures 7 series to the application whereas the original faulty bills have been marked annexure-4 series. But for the period from December, 1977 to March, 1978 the original bills submitted to the petitioner by the licensee board were on the basis of the actual consumption recorded by the trisector meter which was generally and ordinarily in the neighbourhood of 86 to 88 kva excepting during one month or two months wherein, for whatever reason it may be, the meter showed a lesser consumption in terms of kva as indicated by the maximum demand indicator. When we confronted learned counsel for the respondents with a query as to how; when on their admitted case the petitioner was being billed and was liable to be billed for the period of first 12 months on the basis of the actual consumption whereafter for the subsequent period in accordance with an agreement which never came into existence, were the bills sent to the petitioner for the months of October, 1977 to March, 1978 on the basis of the actual consumption recorded, learned counsel was not able to give us any satisfactory explanation. Alt that he contended was that it may have been on account of gross mistake on the past of the officers/employees of the Board. All on a sudden, from the month of April, 1978 upto the month of March, 1979 again bills were sent to the petitioner on the basis of 75 percent of 315 kva maximum demand. As has already been stated earlier, according to the petitioner''s case, a fresh agreement had already been entered into or at least executed on its own part in August, 1978 and sent to the Board, but the Board has come with a definite stand that there is in existence no such agreement. If that be so, and if there was never any agreement entered into between the parties, we fail to appreciate as to how and on what basis the bills from April, 1978 upto March, 1979 were inflated from the neighbourhood of 86 to 88 kva maximum demand to 236.5 kva equal to 75 percent of 315 kva. Learned counsel for the respondents tried to persuade us to hold that the petitioner having applied on 19th November, 1975 had shown that it required supply of load factor at 315 kva, it should be presumed that there was a tacit understanding between the parties that the petitioner would be liable to be charged after the period of first 12 months from that date at the rate of 75 per cent of 315 kva. This again is irreconcilable with the bills submitted to the petitioner for the months of October, 1977 to March, 1978. Obviously, therefore, to say the least--and we may not be deemed to have decided the question in any manner finally--there was some mistake somewhere on the part of the licensee Board in the matter of calculation whatever be the basis for such method of computation. But, as we were saying, there is little scope for doubt for this Court to come to a conclusion that there was a bona fide belief in the mind of the petitioner that it was liable to be charged even after the month of September, 1977 upto the month of March, 1979 at the rate of actual recording registered by the trisector meter in so far as maximum demand indicator is concerned. Learned counsel for the respondents, although half-heartedly, submitted, as already hinted at earlier, (hat the act of parties shows that the petitioner had been given the electrical energy on a tacit understanding that it was to be charged at 75 percent of 315 kva maximum demand. In support of our conclusion that there was and is such a bona fide dispute, there are some more materials on the record which are worth mentioning. In spite of the stand of the respondents in'' the counter affidavit that there was no fresh agreement entered into between the parties and duly executed by them in August, 1978, the letters dated 10.8.78, 20.3.79, 16.9.78 26.9.78 and 22.1.79 the first to marked respectively Annexures-11 and 13 to the original writ application and the last three respectively appended as Annexure-18, 18A and 18B to the petitioner''s rejoinder to the counter affidavit filed on behalf of the respondents, all point to one single fact--that the petitioner was all along crying-hoarse from the housetop that it was being served with faulty and inflated bills which were not in consonance with the fresh agreement sent by it (petitioner) in August, 1978 (which was for 100 kva maximum demand) at the rate of 75 per cent of 315 kva. The respondent licensee or any of its officers respondents never chose to send any reply to any of the letters of protest or complaint or grievance sent by the petitioner as contained in Annexure 11 and 13 to the original writ application and those marked Annexures-18, 18 A and 18B to the petitioner''s rejoinder.

Then came the impugned letter of demand-cum-notice pus-ported to have been served u/s 27 (first part) of the Act. In the impugned letter/notice addressed by the respondents to the petitioner accumulated arrear to the tune of Rs. 3,01,449.30 paise upto March, 1979 has been billed for and the petitioner has been requested or directed to clear off the dues within 7 days of the issue of the letter dated 10/12.5.79, falling which the supply of energy to the petitioner''s installation will be disconnected without any further reference to the Board. We have already held that there is a bona fide dispute with regard either (1) to the existence of an agreement or a concluded contract between the parties (11) to the method or mode of computation of consumption of electric energy in terms of kva with its concomitant and resultant variation in the figure showing consumption of electrical energy by the petitioner. The relevant part of Section 2(1) of the Act reads thus:--

24(1) Where any person neglects to pay any charge for energy or any sum; other than a charge for energy'' due from him to a licensee in respect of the supply of energy to him, the licensee may, after giving not less than seven clear days'' notice in writing to such person and without prejudice to his right to recover such charge or other sum by suit, out of the supply.

The question is : If there is a bona fide dispute with regard to either of the two matters aforesaid, can it be said that the petitioner is a person who has neglected to pay any charge for the energy? The answer, in our view, is obviously in favour of the petitioner that there has been no such neglect. ''Neglect'' or ''default'' connotes something like the breach of a duty or legal obligation existing at the time (vide Stroud''s Judicial Dictionary, Vol. 3, Third Edition, page 1880); and ''negligence�, not being an affirmative word, connotes "the absence of such care, skill and diligence, as it was the duty of the person to bring to the performance'' of the work which he is said not to have performed "or" negligence is the omitting to do something that a reasonable man would do, or the doing something which a reasonable man would not do (Ibid page-1881). From the conduct of the parties-more from the conduct of the respondents themselves--it is abundantly clear and an inference is irresistible that there is a bona fide belief in the mind of the petitioner and, justifiably, so that the billings for the period from April, 1978 to March, 1979 have not been made in accordance with law, whether on account of miscalculation or on account of illegal or unfactual presumption of an agreement for 315 kva maximum demand supply or for some other reason best known to the respondents. The respondent Board being a statutory body, it is well settled that it must take care, like all public bodies invested with statutory power, not to exceed or abuse its powers and it must keep within the limits of authority committed to it. It has been repeatedly stated--and it is trite law by now-- that it must act in good faith and reasonable--refer to Lord Macnaughten in Mayor, & Co. of West minister V. London and North Western Railway Company (1905) A.C. 426 at p. 430/-. Decisions of various Courts of law are all one sided in favour of the petitioner. The decisions veiled upon by learned counsel for the petitioner are those in the cases in (1) Corporation of the City of Nagpur Vs. The Nagpur Electric Light and Power Company Ltd., . (2) Maharashtra State Electricity Board Vs. Madhusudandass and Brothers, , (3) Hindustan Aluminium Corporation Ltd. Vs. The U.P. State Electricity Board, and (4) Orissa Fibre Vs. The Orissa State Electricity Board and Another, ; the two decisions of the Bombay High Court and that of the Orissa High Court are the Bench decisions were as the Allahabad decision is that of a single Judge. There is absolutely no doubt expressed in any of these decisions that; where there is a reasonable belief or justifiable reason or cause leading to a bona fide dispute between the licensee and the consumer, there is any scope for application of the first part of Section 27 of the Act- These decisions have rightly been pressed into service by learned counsel for the petitioner.

In the result therefore, we are constrained to allow this application and quash the notice of demand and threat of disconnection as contained in the impugned letter/notice (Annexure-1) and the respondents are commanded by a writ of mandamus not to disconnect the electricity supply line of the petitioner so long as the bona fide dispute is not resolved by a court of competent jurisdiction or resolved in any other legal manner which the respondents may choose to resort to. It is further directed that till such a dispute is resolved and in the absence of any express stipulation in an express agreement to the contrary and due to any increase in the tariff rates the petitioner shall be liable to be charged only on the basis of actual consumption in terms of the maximum demand indication. In the circumstances of the case, however, we shall make no order as to cost.