Indian Oil Corporation Ltd. vs Kanpur Electricity Supply Co. Ltd. and Others

Sunil Ambwani and Ran Vijai Singh, JJ.—M/s. Indian Oil Corporation Ltd., L.P.G. Bottling Plant, Ganga Ganj, Kanpur (I.O.C.L.) has filed these two writ petitions through its Senior Plant Manager, challenging the imposition of ''peak hour penalty'', in the electricity bills raised by the Kanpur Electricity Supply Company Ltd. (K.E.S.C.O.). In Writ Petition No. 14310 of 2002 the I.O.C.L. has prayed for quashing the demand notice dated 16.3.2002 for the month of 12/01 Rev. of Rs. 3,63,926; bill dated 22.3.2002 for the month of 1/02 Rev. of Rs. 8,05,092; bill dated 23.3.2002 for the month of 2/02 Rev. due to MRC of Rs. 6,99,684; bill dated 23.3.2002 for the month of 3/02 for Rs. 5,62,500; a writ of mandamus commanding K.E.S.C.O. to restore the electricity supply of the petitioner forthwith without additional demand of amount of penalty imposed by the impugned orders: and to execute fresh agreement with the petitioner according to the public notice dated 23.3.2002.

In Writ Petition No. 14662 of 2002 the I.O.C.L. has prayed for quashing the order dated 23.3.2002; letter of Asstt. General Manager (Bulk) dated 1.4.2002 to the Manager (T), I.O.C.L., Marketing Division, Panki, Kanpur informing it that the supply, which was disconnected on 24.3.2002 for failing to pay the penalty charges amount to Rs. 23.70,163 for availing power supply during restricted hours for which I.O.C.L. is not entitled/authorised as per existing agreement was recommended on 24.3.2002 on the promise to pay of the dues upto 11 a.m. on 28.3.2002 and that fresh agreement for use of supply during restricted peak hour shall be executed only after payment of all the pending dues/bills of K.E.S.C.O. as per existing rules.

By the Interim orders dated 16.5.2002 while issuing notice the Court directed that if the petitioner deposits Rs. 12 lacs with the respondent No. 1 within 15 days, the electricity supply of the petitioner shall not be disconnected on account of non-payment of the amount in the impugned bills.

We have heard Dr. R. G. Padia, senior advocate assisted by Shri Prakash Padia for the petitioner and Shri P. K. Tripathi for the K.E.S.C.O. The writ petition was amended by order dated 16.5.2002 inserting paragraphs ''27A'' to ''27H'' and grounds ''H'' to ''O''.

The I.O.C.L. is a statutory corporation. It has a marketing division at Kalpi Road, Ganga Ganj, Kanpur Nagar for refilling domestic L.P.G. cylinders from storage tanks of the Corporation. An agreement was executed on 1.1.1987 for 500 KVA under the rate schedule HV-2 (Non Continuous Category). It is stated in paragraphs 6 and 7 of the writ petition that the U.P. Electricity Regulatory Commissioner issued a rate schedule dated 1.9.2001. published in gazette or newspaper notifying a rate schedule. An additional bill dated 16.3.2002 for December, 2001 and January, 2002 charging penalty of Rs. 3,63,926 and Rs. 8,05,092 and further amount of Rs. 6,99,684 for February. 2002 for Rs. 5,62,500 upto 16.3.2002 with covering letter dated 23.3.2002 was sent for use of electricity during the peak hours.

The I.O.C.L. has challenged these bills on the grounds:

(1) the rate schedule dated 1.9.2001 prepared by the U.P. Electricity Regulatory Commissioner was neither published in any gazette or newspaper, nor intimated to the petitioner : (2) Prior to the letter dated 23.3.2002 K.E.S.C.O. did not serve any notice or demand. For the first time the authority of K.E.S.C.O. visited the unit of the Corporation on 24.3.2002 and handed over letter dated 23.3.2002 alongwith demand of bill of Rs. 24,31,202 to the security guard on duty and immediately disconnected the electricity supply of the Corporation; (3) the representation dated 25.3.2002 of the I.O.C.L. was never considered and that a letter was issued on 26.3.2002 again asking the petitioner to deposit the total amount of Rs. 24,31,202 for restoration of electricity supply; (4) the Corporation is neither manufacturing nor using electricity for continuous process of any manufacturing articles; (5) In Civil Misc. Writ Petition No. 34728 of 2000, Indian Oil Corporation Ltd. v. U.P. Power Corporation Ltd. a direction was issued on 29.8.2000 to decide the objections dated 29.8.2000 within two months; the objections have not been decided; (6) the tariff rates are to be approved and finalized by the U.P. Electricity Regulatory Commission under the U.P. Electricity Reforms Act, 1999. No other agency or licensee can finally determine the tariff. The K.E.S.C.O. as a licensee does not have authority to fix the tariff; (7) the K.E.S.C.O. has not been submitted any proposal under the U.P. Electricity Reforms Act, 1999 to the U.P. Electricity Regulatory Commission to impose any penalty in respect of peak hour restrictions; (8) the U.P.P.C.L. in its reply in a questionnaire has clarified that 15% surcharge is required to regulate demand during peak hours, as it has to import costly power during peak hours. The consumers on independent feeders are getting better quality and assured supply of minimum 500 hrs. in a month and therefore the surcharge of 15% is justified; the Kanpur Electricity Supply Company has replied to the questionnaire stating that the consumer is allowed to use the power during restricted hours and is free from any resting except in the case of failure of northern grid; (9) the K.E.S.C.O. is not authorised to levy peak hour penalty by the Electricity Reforms Commission; (10) The change of reschedule published in daily newspaper "Times of India'' dated 9.9.2001 is misleading as proceedings before Regulatory Commission continued until 21.11.2001.

The K.E.S.C.O. in its counter-affidavit sworn by Shri Satish Chandra Pathak, Junior Engineer (Bulk Supply Section) K.E.S.C.O., Kanpur Nagar has replied : (1) An agreement was executed between K.E.S.C.O. and the petitioner on 1.1.1987 for 500 KVA under rate schedule H.V.-2 non-continuous category. H.V.-2 (N.C.) consumers are not allowed to use power during restricted peak hours. They were allowed to use only 10% of their contracted loan during restricted peak hours prior to 21.12.2000 for light and fan purpose. After 21.12.2000 they have been allowed to use 15% of the contracted load.

(2) The billing rate chargeable from H.V.-2 continuous category is higher than the billing rate of H.V.-2 (Non-Continuous Category). The facility of peak hour use of power is available on higher rates for a certain category/process consumers only.

(3) Clause 6 (c) of the agreement provides: "the rate schedule abovementioned may add the description of the supplier, to be revised by the supplier from time to time and in case of revision, rate schedule so revised shall be applicable to the consumers."

(4) H.V.-2 tariff was revised several times since the date of agreement on 1.1.1987. The petitioner was never billed under H.V.-2 continuous category nor requested continuous use of power during restricted peak hours for their industrial use.

The peak hour violations were regulated for the first time in the year 1964 and that penalty was introduced by notification dated 30.4.1984. Prior to 16.9.2001 the provisions of realization of peak hour violations was covered under different orders issued by U.P.S.E.B./U.P.P.C.L. from time to time. The Electricity Regulatory Commission made it part of H.V.-2 tariff to avoid unnecessary legal disputes.

The Electronic Trivector Meters presently installed on all industrial consumers, contain a memory recorder, which gives details of average load use by the consumers at an interval of each 30 minutes. It locates the consumer and also correct figure of the number of days of peak hour violations. The K.E.S.C.O. is realizing peak hour penalties from all defaulting consumers between October, 2001 to 31.3.2002, the K.E.S.C.O. has realized Rs. 52 lacs as penalty charges.

The tariff was published in leading newspapers and also on internet at www.uppcl.org. The I.O.C.L. is old and big consumer. They could have noted down from the newspaper that the rate schedule has been changed. Their billing rate was also changed from Rs. 360 per unit to Rs. 320 per unit w.e.f. 16.9.2001.

The bills were raised in accordance with the peak hour violations, which were matched through M.R.I. brain of the meter obtained through M.R.I. reading of the consumer taken in the presence of consumer''s representatives on 27.1.2002 and 16.3.2002 and ceiling certificates were issued and were signed by the consumer''s representatives. There was no request for personal hearing. The I.O.C.L. contacted K.E.S.C.O. for changing the language of the bill as it was represented that it cannot pay penalty and that many higher officers will have to be questioned about use of power during peak hours without obtaining permission of K.E.S.C.O. authorities.

The I.O.C.L. has used power during peak hours since long ago and they have done violations almost daily. The bill is based upon M.R.I. brain on the bill and cannot be termed as illegal.

The revised bills were issued and delivered on 16.3.2002 with request to clear the old dues of Rs. 11,69,018. The supply was disconnected on 24.3.2002 only after serving a notice of disconnection on 23.3.2002.

The K.E.S.C.O. reconnected the power supply on the instructions of Shri Ashok Khurana, Secretary to the Governor, U.P. that the bills will be paid within one month. The bills have not been paid so far. The petitioner approached the High Court and requested for interim orders.

Dr. R. G. Padia, senior advocate appearing for I.O.C.L. submits that in the matters of disputes between two instrumentalities of the State or Public Sector Corporations the Supreme Court in Oil and Natural Gas Corporation Ltd. v. Collector of Central Excise (1992) Suppl 2 SCC 432 , observed that the department of the Government should not be engaged in the litigation in courts. The Court''s time should not be wasted by such litigation and that such matters should be referred to a High Power Committee. The judgment was followed in Oil and Natural Gas Commission and Another Vs. Collector of Central Excise, and in many other cases.

In these writ petitions we do not find that I.O.C.L. has raised any such dispute, which may be referred to a high power committee. There is no dispute regarding change of tariff and the payment of penalty of H.V.-2 (Non Continuous) consumers for violation of peak hour restrictions in accordance with the notified tariff. We, therefore, do not find any good reason to refer the matter to a High Power Committee.

The U.P. Power Corporation Ltd. as per the orders of U.P. Electricity Regulatory Commission dated 1.9.2001 revised the Rate Schedule applicable to all the licensees w.e.f. 16.9.2001. The new revised Rate Schedule was published in daily newspaper ''Times of India'' Lucknow Edition 9.9.2001 and was placed on the website www.uppcl.org. The unit rates were also changed and were made effective for the petitioner also from Rs. 3.60 paisa to Rs. 3.20 paisa per unit. In the circumstances, it cannot be said that I.O.C.L. was not aware of the change in the Rate Schedule. H.V. 2 (Non Continuous) consumers were not allowed to use power during restricted peak hours. They could use only 10% of their contracted load during restricted peak hour for light and fan purposes. After 21.12.2000 they were allowed to use 15% of the contracted loan vide letter of the U.P.P.C.L. dated 21.12.2000.

In this case the M.R.I. reading were taken in the presence of the consumer''s representatives on 27.1.2002 and 16.3.2002. It is not denied that the ceiling certificates were prepared after the readings, and were signed by the representative of I.O.C.L. It is stated in paragraph 8 of the counter-affidavit that the officers of the I.O.C.L. requested to change the language of the bill and to remove the word ''penalty''. These facts have not been specifically denied in paragraph 12 of the rejoinder-affidavit. The bill was delivered on 16.3.2002 and thereafter on 23.3.2002, after which a notice was given on 23.3.2002 before disconnecting the electric supply on 24.3.2002. The I.O.C.L. approached Shri Ashok Khurana, the Secretary to the Government U.P. to assure U.P.P.C.L. that the amount will be paid within one month. The I.O.C.L. also approached the Principal Secretary (Power) Government of U.P. prior to coming to the Court. The supply was reconnected on 11.4.2002. Instead of paying the bills the I.O.C.L. approached the Court and obtained interim orders.

The Supreme Court in U.P. Power Corporation Ltd. and Anr. v. Lohia Brass (P.) Ltd. and Ors. 2006 AIR SCW 4707 : 2006 (4) AWC 3259 (SC) held that the notification dated 15.10.1998 regarding non-compliance of restrictions of peak hours by U.P. State Electricity Board, Commercial Division, Lucknow and the notification dated 7.4.1999 of the same subject, made held that the notification provided relief only for one time by communications dated 15.10.1998 and 7.4.1999. For violation of restrictions of peak hours on the basis of M.R.I. report for the first time, the penalty could be levied only for one month in the bill. For the second bill and thereafter the procedure of penalty was to remain the same, as mentioned in the circular dated 15.10.1998. Whenever M.R.I. computer print is taken, the number of violations of the consumer were taken to be as many times as it was indicated in M.R.I. It was clearly mentioned that there will be no relaxation nor the violations will be considered to be as one violation and will be treated separately. The judgment of Division Bench of the Allahabad High Court was found to be incorrect. The difference of opinion between the different Division Benches was also explained and resolved by the Supreme Court and the difference between the leather industry and the cold storage units, which were specifically exempted was explained.

In U.P. Power Corporation Ltd. and Others Vs. Bonds and Beyonds (India) (P) Ltd., the Supreme Court again held that one meter reading inspection report storing date for 35 days cannot be treated as one contravention irrespective of the fact that many contraventions have been made of peak hour restriction, as per one meter reading. One time concession was given only for the first time. For each contravention penalty has to be levied separately.

The I.O.C.L. as a Non-Continuous user was not exempt from peak hour restrictions. The employees of I.O.C.L. clearly understood the tariff. They signed on the sealing certificate in proof of the reading and never disputed its corrections; rather an effort was made not to show the penalty in the bill. The I.O.C.L. thereafter exercised influence through the Secretary to the Governor and the Power Secretary of the State. They were assured that the bills will be paid. The I.O.C.L. is also estopped by its conduct in challenging the demand.

In Writ Petition No. 14662 of 2002 the prayer to quash the letter dated 1.4.2002 of K.E.S.C.O. has been made on the same grounds, which have been taken in Writ Petition No. 14310 of 2002. The U.P.P.C.L. had notified the change in statutory tariff both in the newspapers, website. As a H.V. 2 non-continuous user the petitioner was liable to pay penalty for using electricity beyond the authorised limits in peak hours. The I.O.C.L. did not maintain discipline in using the electricity and was penalized in accordance with the new notified rate schedule. The K.E.S.C.O. had clearly informed I.O.C.L. that if it wants to enter into fresh agreement in terms of the invitation in the daily newspapers for using electricity during peak hours, it was required to pay the entire bills. We do not find that the K.E.S.C.O. authorised to charge in accordance with the new rate schedule applicable to I.O.C.L. vide agreement dated 1.1.1987, with all its changes to H.V. 2, (non-continuous) user. K.E.S.C.O. as a licensee is bound to charge in accordance with the notified rate schedule. It did not commit any illegality in making the demand of peak hour penalty''.

Both the writ petitions are dismissed.