Namburnadi Tea Company Limited vs The Assam State Electricity Board and Others

J.N. Sarma, J.—This application under Article 226 of the Constitution of India has been filed with a prayer to quash the impugned Bill and letter, Annexure ''B'' and ''D'' declaring Clause 18(c) of the Terms, and Conditions of Supply 1988 of Assam Electricity Board as ultra vires and with a further direction not to give effect the said impugned Bill and letter (Annexure-B and D).

Annexure-B is a provisional Bill dated 29th November, 1988 and the challenge is with regard to the amount of Rs. 40,490/- which is charged as surcharge in the shape of interest.

Annexure-D is a letter dated 30.11.88 issued by the Superintending Engineer. Jorhat Electrical Board, Jorhat by which the time was extended for payment upto 10.12.88 and it was stated that failing to clear the bill within the date mentioned above suitable action may be taken to disconnect the power supply to the premises of the consumer as per Rules.

The brief facts are as follows:

The Petitioner is a Tea Company and applied to the Respondents for supply of electrical energy and the Respondents after due verification and all necessary tests sanctioned a load of 213 K. W. It is alleged that the Respondent No. 3 i.e. The Superintending Engineer, Jorhat Electricity Circle of A.S.E.B. did not issue the bill every month nor there was any reading of the meters installed in the Petitioner�s aforesaid tea estate. The Respondent No. 3 instead of issuing monthly bill for the electrical energy consumed, issued consolidated bills for electrical energy consumed over a period of several months. That all of a sudden vide bill No. 4126 dated 9.1.88, the Respondents demanded an amount of Rs. 2,54,673.79 for the period from April, 1986 to November, 1987. As the Petitioner was not responsible for accumulation of huge amount, the Petitioner made an application for payment by Instalments. The Respondent No. 2, Sub-Divisional Officer, Bokajan Electrical Sub-Division vide order No. 87 dated 4.4.88 was pleased to defer the last date of payment and allowed the payment of the aforesaid sum in 4 (four) instalments in the following manner:

(i) The first installment of Rs. 65,000/- was to be paid on 7.4.88.

(ii) The second, third and fourth instalments of Rs. 65,000/- Rs. 65,000/- and Rs. 59,000.79 respectively was to be paid along with the next three subsequent bills.

The due date of payment was deferred. The aforesaid sum of Rs. 2,64,673.76 in four instalment were paid by the Petitioner and the receipts were also issued- That the Respondents instead of issuing monthly bills as per procedure continued to raise the consolidated bills for the electricity consumption over a period of several months thereby putting the Petitioner in great financial difficulty. All of a sudden the Respondent No. 3 vide Bill No. 4154 demanded from the Petitioner a sum of Rs. 1,24,212/- which was inclusive of tarrif from 31.8.88 to 5.11.88 and interest of Rs. 40.490.43 was charged at the rate of 5% per month i.e. 60% per annum to be paid within 29.11.88 i.e. Annexure - ''B'' to the writ application. The Petitioner made protest regarding the charge of interest of Rs. 40,490.43 as the Petitioner paid the bills within the date stipulated by the Respondents. On enquiry, the Petitioner found out that the Respondents charged a penal interest of 5% per month i. e. 60% per annum on the payment of Rs. 2,54,673.79 which as per the order of the Respondent the Petitioner paid in four instalments and within the date stipulated by the Respondents. The Petitioner made protest against the demand for payment of this amount of Rs. 40,490.73. However, by Annexure - ''D'' letter dated 30.11.88, the Respondent No. 2 instead of withdrawing the penal interest of Rs. 40,490,43 stated that in the event of failure to clear the bill No. 4154 within 10.12.88 suitable action will be taken to disconnect the power supply to the Petitioner�s premises. The Petitioner made protest again and again but with no effect. Hence, this writ application.

At the time of admission on 14.12.88, the Petitioner was directed to pay Rs. 20,000/- against this amount of Rs. 40,490/- within a month from that date and the electricity department was directed not to disconnect the power supply to the Petitioner�s garden.

An affidavit-in-opposition was filed on 4.3.94 on behalf of Respondents No. 1 to 3. Subsequently, on 2.6.94 when the matter was heard in part another additional Affidavit-in-opposition was filed on behalf of the Respondents No. 1 to 3.

I have heard Smti. Milli Hazarika, Learned Advocate for the Petitioner and Shri N.N. Saikia, Learned Advocate for the Respondents.

Smti. Hazarika objects to the receipt and consideration of the Addl. Affidavit-in-opposition on behalf of the Respondents No. 1 to 3 inasmuch as by the time this affidavit-in-opposition was filed she completed her argument and she had no chance to controvert the statements made therein, I will consider this aspect of the matter later on.

The terms and conditions of Supply, 1988 of Assam State Electricity Board was framed in exercise of the powers conferred by the Section 49(1) of the aforesaid (supply) Act, 1948 and it provides the revised terms and conditions of supply of electrical energy to the consumers. This came into force from 1st of January, 1988. Meter reading, billing and payments provided by Clause 15, 16, 17 and 18 of the terms mentioned above. They are quoted below:

15.METERS:

(a) A correct meter shall be installed, sealed, maintained by the Board at each point of supply on the premises of the consumer and shall be and remain the property of the Board. The Board reserves the right to fix the position of the said meter.

(b) to (j) ....

READING OF METERS AND PAYMENT OF BILLS.

Reading of meter or meters shall be taken by the authorised employees of the Board once in every month or at such periodical interval of time us the Board may determined. The reading of each meter shall be entered by such Meter Readers in a Book Card to be attached to such meter which shall be open to inspection of the consumer, Payment for energy supplied shall be made by the consumer according to the reading referred to above, of each meter and on presentation of a bill thereof by the Board. The consumer shall be responsible for the safety of the said meter reading cord attached to the meter.

BILLING:

(a) Bill will be presented every month or at such periodical interval of time as the Board may fix to the consumer giving them time of 15 days for payment. In case of bulk supply outside the state the period will be of 30 days. The presentation of bill may be made either by post or by hand delivered at the premises of the con-sumer.

(b) If the consumer does not receive a bill is above, he shall inform the appropriate authority about his non-receipt of the bill and on such representation, copy of the bill will be supplied to him.

(c) The net total amount of the monthly energy bill shall be rounded off to the nearest of 10 paise.

(d),(e) & (f) ....

PAYMENT OF BILLS:

(a) Bill should be paid at the Board''s local office or authorised Bank within 15 days from the date of their presentation by cash or by cheque.

(b) Any complaint with regard to the accuracy of bills shall be made in writing to the Board and the amounts of such bills shall be paid under protest within the said period of 15 days; The amount of bills paid under protest will be regarded as advance to the credit of the consumer''s account until such time as the bill in dispute has been fully settled,

(c)...In case of the above consumers a surcharge of 5% P.M. (or part thereof) will be charged for delayed payment. However for payment on or before the due date fixed thereof a rebate of 3% on the energy consumption to the admissible to the above categories.

The ''month'' is defined under the tarrifs in Clause 2 (viii) is as follows:

"Month" means the English (Gregorian) Calender month. The period between the meter reading date in a particular month and the corresponding meter reading dale of the Immediately succeeding or preceding month (as required by the context) shall be recorded as a month for the purpose of billing the charges.

Section 49(1) of the Electricity (Supply) Act, 1948 reads as follows:

Provisions for the sale of electricity by the Board to persons other than licensees:

(1) Subject to the provisions of this Act and of regulations of any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply, frame uniform tariffs.

(2). In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely:

(a) the nature of the supply and the purpose for which it is required;

(b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensees;

(c) the simplification and standardisation of methods and rates of charges for such supplies;

(d) the extension and cheapening of supplies of electricity to sparsely developed areas.

Section 49 as it was originally enacted in the Electricity (Supply) Act of 1948 was substituted in its entirety by the Electricity Supply Amendment Act, 1966. The Amended Act was enforced with effect from 16.9.66. Section 49 of the Electricity (Supply) Act. 1948 empowers the Board to supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and also fix the uniform tarrifs. The word tarrif means a list of charges. A charge for the supply of electricity may include several items of charges such as charge for the facility, a charge for energy actually consumed, charge for the services rendered, a charge for the services available or, demand. Thus in the context of Section 49, the expression terms and conditions include pecuniary terms which constitute a rational system of charging for the supply of Electricity. The constitutional validity of Section 49, Electricity (Supply) Act, 1948 has been upheld by the Supreme Court in Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, The Supreme Court hold that though the said provisions contains various restrictions and directions which the Board will have to comply in the matter of framing uniform tariffs or in the matter of fixing different tariffs, but Section 49, Electricity (Supply) Act, 1948, was not bad on the ground that it gives an unguided and arbitrary power to the Board to fix its tariffs as it likes.

The Supreme Court further pointed out in 1976 SC Page 1100 Northern India Iron and Steel Company v. State of Haryana that the term ''tariffs'' includes not only the fixation of rates but also the Rules and Regulation relating to it.

In Jagdamba Paper Industries (Pvt.) Ltd. and Others Vs. Haryana State Electricity Board and Others, the Supreme Court pointed out that the Board on the basis of the agreement arrived at between the parties has the power to unilaterally revise the conditions of supply. No doubt in fixing the tariffs, the Board must have regard to Sub-section 2 of the Section 49 which provides a guideline while fixing a uniform tariffs and factors mentioned therein have to be taken into account.

Section 49(2) is quoted below:

(2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely:

(a) the nature of we supply and the purpose- for which it is required;

(b) the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensees;

(c) the simplification and standardisation of methods and rates of charges for such supplies;

(d) the extension and cheapening of supplies of electricity to sparsely developed areas.

Regarding surcharge, the law is settled that the tariffs fixing the surcharge could not be held to be Ultra Vires on the ground that there is no expressed provision authorising the Board to charge surcharge. It is settled law that the State Electricity Board are not merely commercial or business concern but they are all statutory public institution with a social commitment and they have an obligation to promote public good and nation''s welfare.

In Adoni Ginning Factory and Others Vs. Secretary, Andhra Pradesh Electricity Board, Hyderabad and Others, the Supreme Court was considering the question regarding the payment of surcharge and the Supreme Court pointed out that the rate of levy of surcharge stipulated in the agreement namely, 1 % p.m. i.e. 12% p.a. is a clear indication that the levy is not meant to be a penalty but as a provision for interest by way of compensation for delayed payment and the Supreme Court further pointed out that the said agreement is a valid agreement in the eye of law.

The other two decisions on this point of surcharge are Bisra Stone Lime Co. Ltd. and Another Vs. Orissa State Electricity Board and Another, Modi Industries Limited (Steels), Modinagar, Ghaziabad Vs. Executive Engineer, Electricity Distribution Division, Modinagar, Ghaziabad and another, Modi Industries Limited v. Executive Engineer Electricity Distribution Division, Modi Nagar. The Supreme Court in 1976 SC pointed out as follows:

The word surcharge is not defined in the Act but etymologically, inter alia, surcharge stands for an additional or extra charge or payment, Surcharge is thus a superadded charge, a charge over and above the usual or current dues. 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 (sic) or revise the rates of tariff under the provisions of the Act.

In Modi Industries Limited (Steels), Modinagar, Ghaziabad Vs. Executive Engineer, Electricity Distribution Division, Modinagar, Ghaziabad and another, the Allahabad High Court pointed out as follows:

Additional charge for delayed payment is nothing but a device for ensuring timely payment of the bills and is necessary for its efficient working''. In the case before the Allahabad High Court the electricity board prescribed additional charge @ 25% on unpaid amount of bill and the Allahabad High Court pointed out that the same could not be termed as penalty but it was a device to ensure timely payment when the same was applicable to the consumer who are big industries whose bills for electricity ran into several crores per month and, as such, was neither arbitrary nor unconscionable. Further, the same being covered by a particular clause in the agreement between the parties under which the consumer had agreed to pay for the supply of the electric energy at the rate enforced by the supplier from time to time the payment of additional charge would be deemed to be part of the agreement. In this view, the providing for charge are not ultra vires of Arts. 14 and 19 of the Constitution and principles of Natural justice were not attracted.

A Division Bench decision of this Court in Civil Rule No. 399/91 dated 28.1.91 Kamrup Flour Mills and Ors. v. A.S.E.B. and Ors. allowed the payment of interest @ 18% p.a. in the light of the order passed by this Court earlier in Civil Rule No. 968/90 and other cases of like nature.

Smti. Hazarika, appearing for the Petitioner did not advance any argument regarding the validity of Clause 18(c) but her thrust of argument was that the demand of surcharge @ 5% p.m. i.e. @ 60% p.a. is absolutely unreasonable and arbitrary, This point need not be decided in the instant case as this matter is being decided by me on other grounds.

The admitted position in this case is that the Bills were not submitted monthly. Bill were submitted in a lump sum manner by the Board. Clause 16 of the terms and conditions provides that the reading of meter or meters shall be taken by the authorised employees of the Board once in every month or on such period or interval of time as the Board may determine. The reading of each meter shall be entered by such meter readers in a book/card to be attached to such meter which shall be open to inspection of the consumer, Clause 17 provides that Bill will be presented every month or at such period of interval of time as the board may fix the consumer being given time of 15 days for payment. Clause 18 provides that Bills should be paid at the Board''s local office or authorised Bank within 15 days from the date of their presentation by cash or cheque.

Here is a case where there is a gross violation of the terms and conditions as the Bills were not submitted by the authority in compliance with the terms and conditions but according to their own sweet will and pleasure causing inconvenience and difficulty to the consumer. Further by order dated 4.4.88, the Respondent No. 2 was pleased to defer the last date of payment and allowed the consumer to make payment in four instalments and that was made. Thereafter, in a subsequent bill the sum of surcharge of Rs. 40,490.43 was charged. Thus the Board has no authority to do inasmuch as if no instalments would have been allowed the consumer would have the option to pay the bill on the due date but as instalment was allowed the consumer paid the Bill according to the instalments fixed by the Board and thereafter giving this benefits of payment by instalments the Board is not authorised and/or entitled to demand surcharge. A benefit given by the right hand cannot be taken away by the left hand. The Board further is not authorised to demand surcharge as the bills were not submitted in time by complying with the terms and conditions of supply 1988.

Accordingly, I allow this application in part and hold that the demand of surcharge of Rs. 40,490,43 in Annexure ''B'' is without authority of law and the same is quashed. The payment of Rs. 20,000/-, if made vide order dated 14.12.88 of this Court shall stand adjusted against the future bill of the Petitioner.

The writ application accordingly is partly allowed. I leave the parties to bear their own costs.