Jindal Oil Mills & Ors vs Godhra Electricity Co. Ltd.

K.S. Hegde, J.—Common questions of law arise for decision in these appeals, by certificate. The suits from which these appeals arise have been considered together and decided by common judgments both in the High Court as well as in the courts below. It is convenient to do so in this Court as well.

The suits in questions are representative suits. The plaintiffs-appellants who are consumers of electricity in the Godhra area sued the respondent-company on behalf of all the consumers in that area necking to restrain the respondent from enforcing the enhanced charges sought to be collected from the consumers of power used for lights and fans as well as of motive power.

The facts leading to these appeals may now be stated. On November 19, 1922, the then Government of Bombay granted a licence under the Indian Electricity Act, 1910 to a concern called Lady Sulochna Chinubhui & Co. authorising it to generate and supply electricity to the consumers in Godhra area. Clause 10 of the licence prescribed the maximum charges that the licensee could levy for the power supplied. The respondent is the successor of the said licensee. After the Electricity (Supply) Act, 1948 (to be hereinafter referred to as the Supply Act) came into force. a rating committee was constituted u/s 57(2) of the Supply Act at the request of the respondent on January 19, 1950. On the recommendation of that committee, the Government fixed with effect from February 1, 1952, the following charges for the power supplied :

(i) 0-7-9 pies per unit for the electricity supplied for lights and fans with a minimum of Rs. 3/- per month per installation and

(ii) for motive power at 4 annas per unit with a minimum of Rs. 4-8-0 per month per installation.

The Supply Act was amended in 1956. The respondent increased the charges for motive power from January 1, 1963 to 35 NP. per unit with a minimum of Rs. 7/- per month for every installation. On June 22, 1963, the rates for lights and fans were increased with effect from July 1, 1963 to 70 NP. per unit with a minimum of Rs. 5/- per month for every installation. The contention of the appellants is that the respondent was not competent to enhance the charges in question without the matter having been considered by a rating committee. Their suits to restrain the respondent from levying the proposed increased charges were decreased by the trial court. Those decrees were affirmed by the first appellate court as well as by a single judge of the Gujarat High Court in second appeals but the appellate bench of the Gujarat High Court reversed those decrees and dismissed the suits holding that under the Supply Act as amended in 1956 the respondent has a unilateral right to enhance the charges subject to the conditions prescribed in the VI Schedule to that Act. It is as against those decisions these appeals have been brought. Civil Appeal No. 15 of 1969 relates to" the enhancement of charges for electricity power for lights and fans and Civil Appeal No. 16 of 1969 relates to the enhancement of charges for the motive power.

The only question that arises for decision in these appeals is whether under the provisions of the Supply Act as amended in 1956, the respondent was competent to unilaterally enhance the charges.

In these appeals we are not concerned with the provisions of the Electricity Act, 1910. There is no dispute as regards the charges fixed by the Government with effect from February 1, 1952, u/s 57(2)(c) of the Supply Act on the basis of the recommendation made by the rating committee. The appellants admit their liability to pay enhanced charges that may be fixed by the Government on the basis of any recommendation by a freshly appointed rating committee. They merely challenge the respondent's right to unilaterally enhance the charges. According to the appellants they have a vested right to be governed by the charges fixed in 1952 until the same is revised by the Government on the basis of the recommendation of a rating committee. It was urged on their behalf that the amendments made in 1956 do not affect the charges fixed in 1952 and they continue to rule till altered by the Government in accordance with law. The respondent repudiates those contentions. It denies that the appellants have any vested right in the charges fixed. It was urged on its behalf that the amendments made to the Supply Act in 1956 have substantially altered the scheme as regards levying charges; it is now open to a licensee to alter the charges fixed by the Government unilaterally subject to the conditions prescribed in Section 57(A) and in Schedule VI of the Supply Act. We may mention at this stage that even according to the appellants the charges that may be fixed by the Government now on the basis of the recommendation of a rating committee can be unilaterally altered by the licensee after the period fixed in the Government order in accordance with Clause (e) of Section 57(A)(1), expires.

In order to decide the point in controversy, we have to take into consideration the relevant provisions of the Supply Act as it stands now and as it stood prior to its amendment in 1956. For the sake of convenience we shall set out side by side the relevant provisions.

_________________________________________________________________________________ The Supply Act as it stood before The Supply Act as amended in 1956 1956. _________________________________________________________________________________ Section 57. Licensee's charges to Section 57. The Provisions of the consumers. Sixth-Schedule and the Seventh Schedule

(I) The provisions of the Sixth shall be deemed to be incorporated Schedule and the Table appended in the licence of every licensee, ded to the Seventh Schedule not being a local authority: shall be deemed to be incorp- orated in the licence of every (a) the case of a licence granted licensee, not being a local before the commencement of authority, from the date of this Act, from the date of the the commencement of the lice- commencement of the licensee nsee's next Succeeding year of next succeeding year of accou- account, and from such date nt; and the licensee shall comply therewith accordingly and any pr- (b) in the case of a licencee gra provisions of such licence or of nted after the commencement of the Indian Electricity Act, this Act, from the date of the 1910 (LX of 1910), or any other commencement of supply, and as law, agreement or instrument from the said date, the licen- applicable to the licensee cee shall comply with the pro- Shall, in relation to the licenses provisions of the said Schedules licensee, be void and of no effect accordingly, and any provisions in so far as they are inconsistent of the Indian Electricity Act, inconsistent with the provisions of 1910, and the licence granted this section and the said schedule to him thereunder and of any edule and Table. other law. agreement or instrument applicable to the licen- (2) Where the provisions of the see Shall, in relation to the Sixth Schedule and the Table licensee, be void and of no appended to the Seventh schedule effect in so far as they are ule are under Sub-section (1) inconsistent with the provisi- deemed to be incorporated in ons of Section 57A and the said the licence of any licensee, Schedules. the following provisions shall have effect in relation to the Section 57(A)(1) : where the said licensee, namely: provisions of the Sixth schedule ule and the Seventh Schedule (a) The Board or where no Board we u/s 57 deemed to is constituted under this be incorporated in the licence Act, the Provincial Govern- of any licensee, the following ment, may, if it it satisfied provisions shall have effect ied that the licensee has in relation to the said licen- failed to comply with any cee namely: provisions of the Sixth Schedule and shall when (a) the Board or where no Board requested so to do by the is constituted under this Act. licensee, constitute a rat- the State Government-- ing committee to examine the licensee's charges for (i) may, if satisfied that the the supply of electricity licensee has failed to co- and to recommend thereon comply with any of the prov- to the Provincial Government- provisions of the Sixth schedule ent; ule, and

Provided that no rating committee (ii) shall, when so requested ttee shall be constituted in by the licensee in writing respect of a licensee within constitute a rating commit- three years from the date on tee to examine the license- which such a committee has e's charges for the supply reported in respect of that of electricity and to make licensee, unless the Provincial recommendations in that al Government declares that in behalf to the State Gover- its opinion circumstances have nment : arisen rendering the orders passed on the recommendation Provided that where it is prop- of the previous rating commit- parposed to constitute a rating co- tee unfair to the licensee or mmittee under this section on any of his consumers. account of the failure of the licensee to comply with any pr- (b) The rating committee shall provisions of the Sixth Schedule, after giving the licensee such committee shall not be co- a reasonable opportunity of constituted unless the licensee being heard and after taking has been given a notice in wri- into consideration the efficiency ting of thirty clear days (whi- efficiency of operation and man- ch period,, if the circumstances management and the potentialities so warrant may be extended from ies of his undertaking report time to time) to show cause aga- to the Provincial Government inst the action proposed to be making recommendations (and taken: giving reasons therefore) r- regarding the charges for el- Provided further that no such ectricity which the licencee rating committee shall be con- may make to any class or cl- stituted if the alleged failure asses of consumers so however of the licensee to comply with that the recommendations are any provisions of the Sixth not likely to prevent the li- Schedule raises any dispute or censee from earning clear pr- difference as to the interpre- profits sufficient when taken interpretation of the said provisions with the sums available in or any matter arising therefrom the Tariffs and Dividends Co- and such difference or dispute control Reserve to afford him a has been referred by the licen- reasonable return during his see to the arbitration of the next succeeding three years Authority under paragraph XVI of account if the potentialities of that Schedule before the no- ties of the undertaking of notice referred to in the preced- the licensee, with efficient ing proviso was given or is so operation and management, so referred within the period of permit. the said notice:

(c) Within one month after the Provided further that no rating receipt of the report under committee shall be constituted Clause (b) the Provincial Go- in respect of a licensee within vernment shall cause the rep- three years, from the date on ort to be published in the which such a committee has rep- official Gazette and may at reported in respect of that licen- the same time make an order see, unless the State Governme- in accordance therewith fixing nt declares that in its opinion ng the licence's charges for circumstances have arisen rend- the supply of electricity rendering the orders passed on the with effect from such date, recommendations of the previous not earlier than two months rating committee unfair to the after the date of publication licensee or any of the consume- of the report, as may be rs: specified in the order; and (b) a rating committee under the licensee shall forthwith clause (a) shall, -- give effect to such order: (i) where such committee Provided that nothing in this is to be constituted clause shall be deemed to prevent under Sub-clause (i) a licensee from reducing at any of that clause, be time any charges, so fixed. constituted not later than three months af- ter the expiry of the THE SIXTH SCHEDULE notice referred to in 1. The Licensee shall so adjust his the first proviso to rates for the sale of electricity that clause: by periodical revision that his clear profit in any year shall (ii) where such committee is not as far as possible exceed the to be constituted at the amount of reasonable return: request of the licensee, be constituted within Provided that the licensee shall of such three months of not be considered to have failed the date request; so to adjust his rates if the clear profit in any year of account has (c) a rating committee shall, after giving the licensee a not exceeded the amount of the re- reasonable opportunity of reasonable return by more than thirty being heard and after taki- per centum of the amount of the ng into consideration the reasonable return. efficiency of operation and management and the potentia- II. (1) If the clear profit of a lice- lities of his undertaking, nsee in any year of account is report to the State Government in excess of the amount of re- ent within three months from asonable return one-third of the date of its Constitution, such excess, not exceeding 71/2 making recommendations with per cent of the amount of reasonable reasons therefore, regarding sonable return shall be at the charges for electricity disposal of the undertaking. which the licensee may make Of the balance of the excess, to any class or classes of one half shall be appropriated consumers so, however, that to a reserve which shall be the recommendations are not called the Tariffs and dividends likely to prevent the lice- ends Control Reserve and the nsee from earning clear pr- remaining half shall either be ofit, sufficient when taken proportion able rebate on the with the sums available in amounts collected from the sale the Tariffs and Dividends of electricity and meter rentals Control Reserve to afford or carried forward in the accounts him a reasonable return as accounts of the licensee for distribution defined in the Sixth schedule distribution to the consumers in ule during his next succee- future, in such manner as the ding three years of account: Provincial Government may direct. Provided that the State Gover- (2) The Tariffs and Dividends Con- nment may, if it so deems neces- trol Reserve shall be available necessry, extend the said period of for disposal by the licensee three months by a further period only to the extent by which the not exceeding three months within clear profit is less than the which the report of the rating reasonable return in any year committee may be submitted to it; of account. (d) within one month after the (3) On the purchase of the under- receipt of the report under taking under the terms of its Clause (c), the State Gover- licence any balance remaining nment shall cause the report in the Tariffs and Dividends to be published in the Offi- Control Reserve shall be handed official Gazette, and may at the over to the purchaser and main- same time make an order in maintained as such Tariffs and Div- accordance therewith fixing -dends Control Reserve. the licensee's charges for the supply of electricity with effect from such date, not earlier than two months or later than three months, after the date of publication of the report as1 may be specified in the order and the licensee shall forthwith give effect to such order;

(e) the charges for the supply of electricity fixed under Clause (d) shall be in ope- ration for such period not exceeding three years as the State Government may specify in the order:

Provided that nothing in this clause shall be deemed to prevent a licensee from reducing at any time any charges so fixed.

THE SIXTH SCHEDULE

I. Notwithstanding anything con- tained in the Indian Electri- city Act, 1910 except Sub- section (2) of Section 9 of 1910, 22A, and the provisions in the licence of a licensee, the licensee shall so adjust his (charges) for the sale of electricity whether by enhanc- ing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return:

Provided that such (charges)shall not be enhanced more that once in any year of account:

Provided further that the licen- see shall not be deemed to have failed so to adjust his (charges) if the clear profit in any year of account has not exceeded the amount of reasonable return by (twenty) per centum of the amount of reasonable return:

Provided further that the licen- see shall not enhance the (charges) for the supply of electricity until after the expiry of a notice in writing of not less than sixty clear days of his intention to so enhance the (charges) given by him to the State Governme- nt and and to the Board :

Provided further that if the (charges) of supply fixed in pursuance of the recommendat- ions of a rating committee constituted u/s 57A are lower than those notified by the licensee under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them:

Provided also that nothing in this Schedule shall be deemed to prevent a licensee from levying, with the previous approval of the State Govt. minimum charges for supply of electricity for any pur- pose.

IA. The notice referred to in the third proviso to paragraph I shall be accompanied by such financial and tech- technical data in Support of the proposed enhancement of cha- rges as the State Government may, by general or special order, specify.

II. (1) If the clear profit of a licensee in any year of account is in excess of the amount of reasonable return, one-third of such excess, not exceeding (five per cent) of the amount of reasonable re- turn, shall be at the disposal of the underta- king. Of the balance of the excess, one-half sh- all be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distrib- uted in the form of a proportional rebate on the amounts collected from the sale of elect- ricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct.

(2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear profit is less than the reasonable return in any year of account.

(3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purc- purchaser and maintained as such Tariffs and Divide- nds Control Reserve:

Provided that where the under- taking is purchased by the Board or the State Government the amount of the Reserve may be deducted from the price payable to the licensee.

From an examination of these provisions it would be seen that under the Supply Act prior to its amendment in 1956, the charges fixed by the Govt. u/s 57(2)(c) remained in force unless reduced by the licensee in the meantime till the same were altered by a subsequent order made by the Govt. after getting a fresh recommendation from the rating committee but under the law as it now stands the rate fixed by the Government u/s 57(A)(1)(d) would be in operation only for such period not exceeding three years as the State Govt. may specify in the order. Thereafter it can be enhanced by the licensee in accordance with the provisions contained in Schedule VI. It was urged on behalf of the appellants that the present Section 57(A(1)(e) can only govern the charges fixed u/s 57(A)(1)(d) and it has not impact on an order made, under the old Section 57(2)(c). According to the appellants the charges so fixed can only be modified by the Government after getting a report from the rating committee. Mr. Chagla, learned. Counsel for the appellants contended that the consumers who get power from the respondent have a vested right in the charges fixed in 1952 and that vested right cannot be considered to have been taken away by the provisions of the Amending Act. He argued that the provisions of the Amending Act are not retrospective in character nor is there any inconsistency between those provisions and the present provisions as the two operate on different fields; hence in view of Section 6 of the General Clauses Act, 1897, we must hold that the charges fixed by the Government in 1952 continue to be in operation. In this connection he relied on certain observations made by this Court in State of Punjab Vs. Mohar Singh, and Deep Chand v. State of U.P. and Ors. [1959] 2 Supp. SC.R. 8 On the other hand it was contended by the learned Counsel for the respondent that the rights and liabilities of the respondents at present are exclusively regulated by the provisions of the Supply Act as it stands now; the terms of licence as they originally stood or as they stood on the coming into force of the Supply Act in 1948 are of no consequence now; they cannot be looked into for finding out the rights or duties of the licensee as at present; for that purpose we must look into those terms as modified by the provisions of the Supply Act as it is now. It was also urged on its 'behalf that there is no question of vested rights in these cases; herein we are only concerned with the procedure to be adopted in modifying the charges fixed in 1952.

In State of Punjab Vs. Mohar Singh, this Court laid down that the provisions of Section 6(c), (d) and (e) of the General Clauses Act, 1897 relating to the consequences of the repeal of a law are applicable not only when an Act or Regulation is repealed simpliciter but also to a case of repeal and simultaneous enactment re-enacting all the provisions of the repealed law. In the course of its judgment this Court observed that when the repeal is followed by a fresh legislation on the same subject, the Court has undoubtedly to look into the provisions of the new Act but that only for the purpose of determining whether they indicate a different intention. The line of inquiry would be, not whether the new Act keeps alive the old rights and liabilities but whether it manifests any intention to destroy them. In Deep Chand's case [1959] 2 Supp.S.C.R.8 this Court was considering the effect of repugnancy between a State Act and a Central Act. The observations made in that context, we think, have no bearing on the point in issue in this case. It is true that when an existing Statute or Regulation is repealed and the same is replaced by fresh Statute or Regulation unless the new Statute or Regulation specifically or by necessary implication affects rights created under the old law those rights must be held to continue in force even after the new Statute or Regulation comes into force. But in the cases before us there is no question of affecting any vested right. There is no dispute that the charges fixed can be altered. The controversy relates to the procedure to be adopted in altering them. That controversy does not touch any vested right. The procedure in question must necessarily be regulated by the law in force at the time of the alteration of the charges.

Section 57 of the Supply Act as it stands now lays down that the provisions of Schedule VI shall be deemed to be incorporated in the licence of every licensee not being a local authority, in. the case of a licence granted before the commencement of the Act from the date of the commencement of the licensee's next succeeding year of account. Admittedly the licence with which we are concerned in these cases was granted even before the Supply Act was enacted. Therefore quite clearly the licence in. question is governed by the present Section 57. Hence we have to read into that licence the provisions contained in Schedule VI. If any of the earlier provisions in the licence either as they stood when the licence was originally granted or as they stood modified as per the provisions of the Supply Act prior to its amendment in 1956 are inconsistent with the provisions of Schedule VI or Section 57(A) as they are now they must be held to be void and of no effect. In other words we must read into the licence the provisions of Schedule VI and strike out therefrom such terms as are inconsistent with those provisions and thereafter give effect to the same. For determining the rights and duties of the licensee as at present we have only to look into the terms of the licence as modified by Schedule VI. We cannot go behind them. That much is clear from the language of the Supply Act. The intention of the legislature is clear and unambiguous. Therefore there is no need to call into aid any rule of statutory construction or any legal presumption. Further no reason was advanced before us, nor can we conceive of any why those who obtained licenses prior to the amendment of Supply Act in 1956 should be in a more disadvantageous position than those who got their licenses thereafter. Correspondingly we fail to see why those who arc served by licensees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licenses thereafter. After all, every law has some reason behind it. Section 57(A)(2)(e) was intended to meet the changing economic circumstances. The purpose behind the new provision appears to be to permit the licensees to so adjust their (SIC) to get reasonable profits. But at the same time (sic) provided to see whether any excess charges (sic) get the same refunded to the con-nave been (sic) turners.

The law declared by the Amending Act does not affect any right or privilege, accrued under the repealed provision. It merely prescribes as to what could or should be done in future. Therefore there is no basis for saying that it affects vested rights. For finding but the power of the licensee to alter the charges one has to look to the terms of the licence in the light of the law as it stands, the past history of that law being wholly irrelevant. If the terms of the licence, including the deemed terms permit him to unilaterally alter the charges then he has that right. If we merely look at those terms, as we think we ought to, then there is no dispute that the respondent was within its rights in enhancing the charges as admittedly it has followed the procedure prescribed by law. We also do not agree with Mr. Chagla in his contention that there is no inconsistency between the present scheme relating to the enhancement of charges vis-a-vis the scheme provided under the Supply Act prior to its amendment in 1956. The two schemes are substantially different. Under the former scheme once the Government fixes the charges the licensee cannot alter it but at present at the end of the period fixed in the Government order the licensee has a unilateral right to enhance the charges in accordance with the conditions prescribed in the VI Schedule. Therefore in view of Section 57 the provisions contained in that schedule have an over-riding effect.

In The Amalgamated Electricity Co. Ltd. Vs. N.S. Bhathena and Another, this Court was called upon to consider the scope of Section 37(A) and the Schedule VI as it stands now. Therein the controversy was whether the appellant therein was entitled to levy charges more than the maximum charges prescribed in its licence issued in 1932. It may be noted that in that case the notice of enhancement of the charges was given on September 25, 1958. This Court held that the maximum stipulated in the licence no longer governed the right of the licensee to enhance the charges; his rights were exclusively governed by the provisions contained in paragraph 1 of Schedule VI of the Supply Act. It is true that in that case this Court was considering the right of the licensee under the Supply Act vis-a-vis his right under the licence granted under the Indian Electricity Act, 1910 but that difference is not material. What this Court in fact considered was the right of the licensee under the existing law to enhance the charges. Dealing with the scope of paragraph I of Schedule VI, Ayyangar, J. who spoke for the majority observed thus:

Para I of Schedule VI both as it originally stood and as amended, as seen already, empowered the licensee "to adjust his rates, so that his clear profit (sic) year shall not, as far as possible, exceed the(sic) But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force since the "clear profit" and "reasonable return" which determined the rate to be charged was to be computed on the basis of very different criteria and factors than what obtained under the Electricity Act.

For the reasons above, these appeals fail and they are dismissed with costs. One hearing fee.