MANJU SINGH CHAUHAN vs M.P. Electricity Board

THE Complainant Mrs. Manju Singh Chauhan, (M.D.), Silencers India Pvt.Ltd., Indore has filed the complaint before this Commission against the M.P., Electricity Board alleging illegal disconnection of power supply and claiming compensation for the consequential loss.

THE Opposite Party raised a preliminary objection to the maintainability of the complaint before this Commission. THE Opposite Party has contended that the M.P. Electricity Board was constituted under the Electricity Supply Act, 1948 and being a corporate body is excluded from the provisions of the M.R.T.P. Act and therefore, a charge on the ground of unfair trade practice could not be the subject matter of a complaint before the Consumer Commission and that the Consumer Protection Act, 1986 did not apply to the Opposite Party. In their additional submissions of 5th September, 1991 the Opposite Party (Electricity Board) has contended that the complainant was manufacturing silencers for sale and profit; she purchased electricity for a commercial purpose and hence she is not a consumer under the Consumer Protection Act. Further Opposite Party has argued that there was no element of hiring the sale of electricity and hence the Complainant is not consumer under the Consumer Protection Act.

This Commission has considered these questions in a number of cases previously. It has come to the firm conclusion that corporate bodies like the State Electricity Boards render service under Sec. 2(1)(o) of the Consumer Protection Act and that the sale of electricity is for consideration and supply of electricity on a continuing basis over a period of time against payment therefore is hiring of service under Sec. 2(1)(d)(ii) of the Consumer Protection Act. There is no merit in the contentions of the Opposite Party on the question of jurisdiction.

IT has also to be noted that the Complainant has come before this Commission not on the ground of unfair trade practices but on the charge of illegal disconnection of power supply by the State Electricity Board and this clearly falls under the provisions of the Consumer Protection Act, 1986. The facts of the case leading to the complaint are briefly set out below : The Complainant entered into an agreement with the Opposite Party (Electricity Board) on the 20th June, 1984 for a period of five years for supply of power with a maximum contract demand of 168 KVA. Power under the agree ment was actually supplied from 19th July, 1985.

ON the 23rd March, 1987 the Complainant requested the Opposite Party for reduction of the maximum contract demand from 168 KVA to 93 KVA. The Complainant had put forward the following grounds for seeking reduction in the maximum contract demand incorporated in the agreement : There was heavy recession in the automobile industries and as a result she had given up the idea of manufacturing silencers for four wheelers; the growth of automobile units at Pithampur was not encouraging as had been planned and therefore, she was making only two wheeler silencers and consequently the power requirement for fabrication was much less than that originally envisaged and contracted for. She had reiterated these grounds in her subsequent communications of 31st July, 1987 and 16th October, 1987 and had submitted that, "The Company is not able to utilise its full capacity for want of sufficient demand of its products and is unable to consume electricity worth the minimum charge. While the Company has so far consumed electricity worth about Rs. 25,000/- only, it has paid by the M.P. Electricity Board about Rs. 3.5 Lakhs till July, 1987 as minimum charges." It had emphasised that the Company was unable to pay the minimum charges for supply of electricity and that if its request was not agreed to, the Company would be confronted with acute financial crisis and would be forced to close down the factory. The Opposite Party, however, vide its letter dated the 23rd May, 1987 rejected the request for a reduction in maximum contract demand citing Clause 13(d) of the High Tension Supply Agreement between the parties which is reproduced here for ready reference : "13(d) On being satisfied that for certain compelling reasons the Consumer is not or will not be in a position to consume electricity sufficient to have maximum demand equal to his contract demand, the Board may in its discretion allow the consumer, when request in writing is received in this regard, to reduce his contract demand to such extent and from such date as the Board may decide. Such reduction in the contract demand will be allowed not more than once during the period the agreement remains in force, but it shall not affect the consumer''s liability to pay the amount of the minimum guarantee mentioned in Clause 21(a) hereof."(Clause21(a) stipulates that the Consumer must pay a minimum amount of Rs. 18,932.76 as guaranteed minimum charges.).

The subsequent communications of the Complainant of the 23.5.1987 for reduction in the maximum contract demand were ignored. On the 19th October, 1987 the Complainant asked for arbitration under Clause 37 of the Agreement on the question in dispute whether it was entitled to get a reduction in the maximum contract demand. On the 20th November, 1987 the Opposite Party contended that the issues raised by the Complainant were not covered by Clause 37 of the agreement regarding arbitration.

IN the meanwhile the Opposite Party disconnected power supply on account of non-payment of monthly electricity bills with effect from 1.11.1987.

IN turning down the request of the Complainant for reduction in the maximum contract demand, the Opposite Party had in its communica tion of 23rd May, 1987 taken the stand that "the ground that they (Complainant) dropped the idea of manufacturing the silencers of heavy vehicles.. due to recessionary trend prevailing in the market, was not a justification for reduction in the contract demand and there were no compelling reasons for the consumer to do so, as the manufacture of silencers of two wheelers was the only product which was included in the project report of the Complainant, the Complainant''s request was untenable. The reason that there was recession in the market also cannot be taken as a compelling reason, because if that is taken as compelling reason, every now and then the contract demand will be required to be changed." It concluded that the Complainant herself was to blame for not consuming electricity as per the contract demand. Failing to obtain a reduction in the contract demand from the Opposite Party as per the agreement or having this dispute settled by arbitration, the Complainant filed a writ Petition in the Hon''ble High Court of Madhya Pradesh at Indore that the Opposite Party be restrained from disconnecting the power supply of the Complainant and that the Opposite Party should not demand minimum charges from the Complainant on the basis of contract demand in excess of Rs. 18,031.78 per annum, the guaranteed minimum charges payable. The Complainant had also informed the Opposite Party by its letter dated 31st October, 1987 that a writ had been filed in the Hon''ble High Court and that the High Court had issued show cause notice to the Electricity Board for which hearing had been fixed on the 7th November, 1987.

According to the Complainant vide his letter of 26th May, 1988 to the Opposite Party, he had to withdraw the writ petition as such a withdrawal was a pre-condition for restoration of power supply and reduction in the contract demand though the Opposite Party denies that there was any such pre-condition for withdrawal of the writ petition. In fact, according to the Opposite Party, the Complainant withdrew the petition realising "the weekness and unsubstantial nature of her contentions....."

ON the 14th July, 1988 the Opposite Party (Electricity Board) while reiterating that the request for reduction of contract demand was not found feasible as being justified by compelling reasons, however, as a special case, reduction in the contract demand was permitted from 168KVA to 143 KVA w.e.f. 1.8.1987 and to 126 KVA w.e.f. 1.4.1988. The contract demand was scaled down retrospectively and in the additional submissions of 5.9.1991. the Respondent has explained that this was done in the light of the decisions taken by the M.P. Electricity Board on the representation of the Federation of the M.P, Chambers of Commerce and Industry. The crucial question to be considered is whether the Opposite Party was justified and entitled to refuse a reduction in the maximum cotract demand from 168 KVA HT to 93 KVA LT?

THE Opposite Party had refused to scale down maximum contract demand by invoking Clause 13(a) of the agreement which has been reproduced above. Under this Clause there must be compelling reason for the consumer while seeking reduction in the maximum contract demand, the Board must be satisfied about the compelling reasons being bona fide and that reduction in the maximum contract demand was entirely in the discretion of the Opposite Party. A careful examination of the facts on record would provide the answer whether the grounds on which the Complainant had sought for reduction in the contract demand were compelling and bona fide or not In the first instance, the Complainant as a manufacturer of silencers was the best Judge, whether there were recessionary conditions in the market and whether the automotive industry at Pithampur had developed adequately to create demand locally for the silencers. Again there is no specific reputation of the correctness of these facts by the Opposite Party. On the other hand the Opposite Party maintained that the complainant had not produced evidence in support of his contentions. It is not clear as to what evidence the Complainant should have produced. In any case, he was not called upon to produce evidence that would have satisfied the Electricity Board. As regards the projections made by the Complainant in her project report submitted with her application for supply of power in 1984, it should be noted that all project reports are in the nature of estimates, which are bound to vary on execution. In fact, it is a matter of public knowledge that there are very wide variations in the case of power projects between the orginal estimate and the actual outlay, the power estimated to be generated and actually generated and the estimated unit cost of power generation and actua thereof. More importantly in the project report submitted by the Complainant, she had clearly stated that she would manufacture silencers for two wheelers and for certain scooters "initially". Therefore it could not justifiably be concluded by the Board that the maximum power to be supplied by the Electricity Board was only for the manufacture of silencers for two wheelers.

WE are therefore not satisfied with the grounds on which the M.P. Electricity Board refused to entertain the Complainant''s request for reduction in the maximum contract demand. WE are satisfied that the Complainant had furnished compelling reasons for seeking this reduction in the maximum contract demand and that it was not just and fair on the part of the Board (Opposite Party) to ignore out of hand her contentions that the industry was facing recessionary conditions and nobody could say with certainly whether the recessionary conditions would be temporary or of long duration. Even presuming that she had erred in projecting her demand for power supply as per the project report, it would be manifestly unfair to keep the consumer bound down to the agreement Clause ignoring fact that he or she might not be able to survive the financial burden of that Clause.

IT would also be noted that under the terms of the High Tension Power Agreement the consumer was to get power for her own use. She could not sell electrical energy to any body else and the power was to be used only for industrial power purposes in the factory and could be used for light and ventilation of the factory to a limited extent only. In other words, the Complainant was debarred from using power elsewhere even if she could not consume it for the purpose specified in the agreement. The Complainant in her letter dated the 16th October, 1987 to the Chairman, Electricity Board, the Opposite Party, had also pointed that "As a matter of fact the M.P. Electricity Board is not in a position to supply adequate energy to different industries as per their demand and has from time to time asked industries to reduce the consumption. On the contrary when our Company requested for reduction in the contract demand they have turned down our request." It is a matter of public knowledge that the country including the M.P. Electricity Board has been facing shortage of power and there are also appeals for economising consumption of power and there have been delays in providing electricity to new consumers especially industries. In this case the consumer wanted the contract demand to be reduced but this was refused for reasons which are grossly inadequate. It may be that under Clause 13(d) of the Contract the Opposite Party had to be satisfied in the "discretion" that a consumer was seeking reduction for compelling reasons. But discretion has to be exercised judicially but not arbitrarily. We are unable to see what could be more compelling reasons that a consumer just did not require power as per the contract demand, and what type of evidence the Board needed to satisfy it about the bona fide nature of the request of the Complainant, In any case, we are unable to appreciate why the Opposite Party (Board) could not welcome such a proposal when there is acute power shortage in most of the States and the country in general and the surplus power, if any, could have been transferred to deficit States through the regional and national grids.

The inescapable conclusion from these facts is that the Board in May, 1987 had rejected the request of the Complainant for reduction in the maximum contract demand arbitrarily and unjustly. It may be further noted that Clause 13(d) of the agreement is no bar to the contracting party seeking novation of a particular Clause in the contract

WHEN questioned during the course of the hearing as to what was the difficulty in reducing the maximum contract demand as requested by the Complainant, the counsel for the Opposite Party had no explanation except to reiterate the provisions of Clause 13(d) of the agreement. In fact, he conceded that there might have been omissions on the part of the Board in this regard. We further note that the Complainant sought redress through arbitration. The Opposite Party rebuffed her by saying that Clause 37 of the agreement did not cover disputes of this nature. The dispute was not regarding recovery of charges which is outside the purview of the arbitration but whether under Clause 13(d) of the agreement the Board was justified in refusing to revise downward the contract demand.

WE are mentioning these facts as we cannot resist the impression that the Board had not been handling the requestes for reduction in the maximum contract demand of the Complainant fairly. The second question to be considered is whether the disconnection of the power supply by the Opposite Party from the Ist November, 1987 to the complainant was arbitrary and unjustified.? A notice dated the 1st October, 1987 was served on the Complainant that a sum of Rs. 9,286.45 paise were due to the Respondent for the month of August, 1987 for which a bill had been sent on the 8th September, 1987. The Opposite Party (MPSEB) demanded the payment of the amount within 7 days failing which the supply of electricity would be disconnected without any further notice. Explaining the action taken on the notice the Complainant stated that she had approached the Respondent for reduction in the contract demand from 168 KVA HT to 93 KVA LT on 23.3.1987 and as the Opposite Party (MPSEB) was hot agreeable, she had sought for arbitration on the 19th October, 1987 to which no reply was received till 31st October, 1987 when she moved a writ Petition in the High Court of M.P. that the Electricity Board should not bill the complainant/ consumer on the basis of contract demand and that the contract demand should be reduced from 168 KVA to 100 KVA and that the Electricity Board should not disconnect the supply of power. The Writ Petition was against general question about the reduction in the contract demand as the basis of billing. Also we find that according to the complainant''s own admission the Complainant was allowed time by the Electricity Board till the 28th October, 1987 to pay the latest bill.

ON these facts we have no doubt that the Opposite Party (MPSEB) was within its powers to disconnect the power supply on the failure of the Complainant to pay the Bill for August, 1987 amounting to about Rs. 9,300/- only. In fact, the Opposite Party had extended the time for payment from the first week of October to the 28th October. Consequently, the Complainant has failed to establish that the disconnection of power supply from the 1st November, 1987 was unjustified and arbitrary.

THE Complainant has asked for compensation for consequential loss due to disconnection amounting to Rs. 20,05,770/-. In the complaint she has classified it as cash loss. As she had not justified the quantum of loss from the 1st November, 1987 to the 18th July, 1990 an opportunity was given to the Complainant to substantiate her claim for loss especially in the context of the rejoinder of the Opposite Party (Electricity Board) that the claim had been arbitrarily valued, was vague, fantastic, false and bogus. THE Complainant was directed to furnish the profit and loss accounts of the Unit prior to the 1st November, 1987, the losses incurred from 1st November, 1987 onwards duly supported by the Profit and Loss Accounts and Balance Sheets of the different accounting periods. The details of the compensation claimed were furnished by the Complainant on the 14th September, 1991 (See p. 291, document marked as R.S. 4 of the Paperbook).

A perusal of the details shows that in computting the loss the complainant has taken into account depreciation loss (Rs. 6.17 Lakhs), damages to tools, jigs and fixtures (Rs. 3.01 Lakhs), loss of profits on orders in hand (presumably on the 1st November, 1987) (Rs. 3.18 Lakhs), loss on anticipated future orders, (Rs. 9.50 lakhs). These are not cash losses as claimed in the complaint

SECONDLY the loss of profits on orders in hand viz.3.18 lakhs is hypothetical. Thirdly, it is incomprehensible as to how the Complainant has claimed Rs. 9.50 lakhs on the 18th July, 1990 "Loss on anticipated future orders during the period from 1.11.1987 to 18th July, 1990."

FOURTHLY, from the examination of the profit and loss accounts and the balance sheets for the periods ended September, 1988, 1989 and 31''st March, 1990 it appeared that there were substantial income from sales and manufacturing expense incurred by the Complainant Company. To a query, during the hearing, the Complainant explained that after the closure of the Unit on 1.11.1987 due to disconnection of power supply, the Company had taken to trading in Auto Parts, doing fabrication jobs in other work shops etc. In otherwise, the losses of the Company from 1st November, 1987 onwards are not the losses arising from the closing down of the unit from 1.11.1987 due to power disconnection. It is beyond comprehension that while the Company was not engaged in manufacture of silencers and was doing trading, it claimed to have incurred loss of profits on orders in hand (presumably on 1.11.1987). In this connection it is relevant to note that the concern had accumulated a loss of Rs. 7.90 lakhs prior to 1.11.1987 (excluding depreciation, investment allowance). In other words, the concern was already in the red, before the power supply was disconnected and the extent of extra expenditure, if any, due to billing on "high" contract demand (166 KVA instead of 100 KVA) from 23rd March, 1987 (the date on which request for the reduction of ''contract demand'' was made) to 1.11.1987 would be relatively small. Thus, the loss already accumulated prior to 1.11.1987 could not be attributed to the refusal of the Board to reduce the contract demand. It is, therefore, clear beyond doubt that the Complainant''s claim for damages and compensation is highly inflated and unsubstantiated and the contention of the Opposite Party (Electricity Board) that the claim has been arbitrarily valued, is vague, false and bogus remains unrebutted.

IT may, further, be observed that to a query during the hearing, the Complainant explained that the Profit and Loss Accounts for the period ending 31st October, 1987 was only for one month i.e. October, 1987. She had failed to submit the Balance Sheets and the Profit and Loss Accounts for the periods prior to 1.10.1987 to ascertain to what extend her losses could be attributed to power disconnection from 1.11.1987.

HER claim for damages for the loss due to power disconnection has therefore, to be rejected. We therefore direct as under: - 1. The Opposite Party (Electricity Board) would bill the Complainant from 23rd May, 1987 till 31st October, 1987 on the basis of maximum power demand of 100 KVA instead of 168 KVA. 2. The Complainant''s claim for compensation amounting to Rs. 20.05 lakhs is rejected as the disconnection of power by the Opposite Party from 1.11.1987 was not unjustified and the complainant has failed to substantiate the loss suffered by her due to power disconnection.

Petition dismissed.