Prabhu Dayal Regar and Others vs United India Ins. Co.Ltd. and Others

Sandeep Mehta, J.—These five writ petitions involve common questions of facts and law and are thus being decided by this common judgment.

The petitioners are all Development Officers (Marketing) working in the respondent insurance companies. Their service conditions are governed by the General Insurance (Rationalisation of Pay Scales and Other Conditions of Service of Development Staff) Scheme, 1976 (hereinafter referred to as ''Scheme of 1976'') framed by the Central Government in exercise of powers conferred upon it under Section 17A of the General Insurance (Nationalisation) Act, 1972. The Scheme of 1976 was amended by the Central Government in the year 2003 and a notification to this effect was published in the Gazette of India on 2.1.2003 and the amendment was notified from the said date.

The Development Officer Marketing governed by cost norms has to perform within stipulated cost ratio which is defined in Clause 3(8) of the Scheme of 1976. As per the pre amended scheme he gets the benefit of two tier cost system i.e. (i) for the purpose of increment and (ii) for the purpose of incentives. Now by the 2003 amendment, single cost system has been introduced, whereby the cost system for the purposes has been withdrawn by deleting the proviso to Clause 7.

"Cost ratio" is the ratio expressed as percentage of cost incurred on a person of the development staff to the scheduled premium income procured through him during the concerned year.

Cost relaxation was done from time to time by amending the scheme. The 2003 amendment brought down the cost ratio by 1% in all centers thereby increasing the cost ratio beyond stipulated limits. This resulted in monetary loss by way of decrement. This would not only lead to reduction in salary but could ultimately result in termination of service.

The controversy involved in these writ petitions revolves around the amendment/enhancement/insertions in the norms relating to the cost ratio to be maintained by the Development Officers. Cost norms were altered substantially by the effect of the Amendment Scheme of 2003 and the respective officers were thereafter required to increase their business to meet the altered norms.

Para 15(C) was inserted in the Scheme whereby an option was given to the Development Officers working in the company to opt for special voluntary retirement package or to render their services as Development Officer (Administration) within a period of 60 days from the notification of the scheme. This proviso was evidently introduced as a measure of providing an escape route to such Development Officers, who were not hopeful of being able to meet the rigour of the amended cost ratio. Para 15(C) further stipulated that such Development Officers, who chose not to exercise either of the options i.e. special voluntary package or to work as a Development Officer (Administration) would continue to render services as Development Officers (Marketing) under the Amendment Scheme 2003. None of the petitioners herein exercised either of the options provided under Clause 15(c) and thus, as a consequence, continued to render their services as Development Officers (Marketing) under the Amendment Scheme of 2003 as further amended from time to time. At the cost of repetition, it may be emphasized that as per the Amendment Scheme of 2003, the Development Officers, who did not exercise either of the options under Para 15(C) were required to work within the cost limits and to maintain a cost ratio in accordance with the amended norms relating to cost control.

Para 11 of the Scheme provides that if the cost ratio of the Development Officer exceeds the stipulated limits, the noncore allowances payable to such Development Officer in the following performance year would be reduced to the extent the cost ratio exceeded the stipulated limits. Upon the cost ratio being exceeded in the second performance year in succession, the Development Officer concerned was liable to be issued a warning letter that in the event of his cost ratio exceeding the stipulated limit for three performance years in succession, his noncore allowances would continue to be reduced proportionately and he would also be liable for decrement in the pay scale as provided in para 4 of Clause 11 of the Scheme.

The validity of the Amendment Scheme was challenged by a few groups/associations of Development Officers of various Insurance Companies in different High Courts. During pendency of the writ petitions, certain provisions of the Amendment Scheme were kept in abeyance in compliance of the interim orders passed by the Courts. All the matters were thereafter withdrawn by Hon''ble Supreme Court. The Hon''ble Supreme Court examined the scope of the Amendment Scheme in detail and upheld the challenged provisions of Scheme of 2003 by its judgment dated 3.4.2008 in the case of titled as National Insurance Co. Ltd. Vs. General Insurance Dev. Officers Asson. and Others, . Upon the dismissal of the aforesaid writ petitions, the provisions of the Amendment Scheme were implemented fully by the insurance companies from the date of notification.

Another Amendment was notified in the scheme by the Government of India on 19.6.2008 extending the benefit of wage revision to the Development Officers. The Amendment Scheme of 2008 was made effective from 1.4.2003. The Development Officers (Marketing), who during the intervening period, had exceeded the stipulated cost ratio in terms of amended provisions were consequently dealt with in accordance with Para 11 of the Scheme by directing reduction of their noncore allowances and decrements in their basic pay in apposite cases.

All the petitioners herein admittedly exceeded the cost ratio between the Financial years 2003-04 to 2008-09 i.e. for a continuous period of six years and consequently, became liable for denial of noncore allowances and reduction in pay scale in accordance with Clause 4 of Para 11 of the Amendment Scheme. Upon the implementation of the wage revision as per the Amendment Scheme of 2008, the cost ratio of the respective petitioners further exceeded beyond the stipulated limit from the Financial Year 2003-04 but looking to the fact that the said increase was attributable to the retrospective application of the wage revision, the said burden was carried forward to Financial Years 2008-09 and 2009-10.

The petitioners have approached this Court by way of the instant writ petitions assailing the action of their respective employer Insurance Companies in directing unilateral recovery of the noncore allowances and reduction in their pay due to the alleged retrospective implementation of the Amendment Scheme of 2003.

Learned counsel for the petitioners vehemently contended that the retrospective implementation of the Amendment Scheme and the consequent endeavour to recover the excess noncore allowances paid to the petitioners, reduction in pay of the petitioners without any notice is unconstitutional, arbitrary and bad in the eye of law. They vehemently urged that since the Amendment Scheme was kept in abeyance by the company itself, the same was required to be made effective from the date of decision of the lis by the Hon''ble Supreme Court and not retrospectively. Learned counsel contended that the additional burden created on account of the increased cost ratio which was kept in abeyance by the company itself cannot be applied upon the petitioners retrospectively. They further contended that the action of the respondent company in directing recovery from the petitioners and that too without any notice and opportunity of hearing is arbitrary, unjust, unreasonable and illegal and suffers from total non-application of mind. They placed reliance on the following decisions in support of their arguments:-

(i) 2004 SC 3606 - M/s. BPL Ltd. and Ors. Vs. R. Sudhakar and Ors.

(ii) Ravi S. Naik and Sanjay Bandekar Vs. Union of India and others,

Relying upon the above judgments, learned counsel vehemently urged that as there was a stay on the operation of the Scheme for almost 5 years, the rigour created by the Scheme should not be visited upon the petitioners retrospectively. The action thus undertaken is in direct infringement of the fundamental rights guaranteed under the Constitution of India. They contended that so far as the petitioners are concerned, they were not the litigants in any of the writ petitions filed challenging the validity of the Scheme of 2003 and as such, the Companies were not justified in burdening them with the rigour of the Amendment Scheme and that too retrospectively. They, therefore, prayed that the writ petitions deserve to be accepted and the action of the respondent Insurance Companies in implementing the stayed provision of the Amendment Scheme of 2003 retrospectively and in directing consequent recovery from the petitioners on account of the additional burden created by the increased cost ratio is liable to be quashed and set aside.

Per contra, Shri Jagdish Vyas, learned counsel appearing for the respondent insurance company vehemently opposed the above contentions and submitted that the Scheme was kept in abeyance because various High Courts had stayed some part/provisions of the Amendment Scheme. Thereafter, the petitions were finally decided by the Hon''ble Supreme Court on 3.4.2008 National Insurance Co. Ltd. Vs. General Insurance Dev. Officers Asson. and Others, upholding the validity of the challenged provisions of the Amendment Scheme. He urged that by implication of the above, the scheme automatically became effective from the date it was notified in the Gazette. He further contended that the writ petitions in question came to be filed by various Associations of the Development Officers and thus, all the Development Officers whether they were parties therein or not, are by effect of Article 141 of the Constitution of India bound by the judgment rendered by the Supreme Court. He further submitted that the petitioners were fully aware of the consequences emanating from the Scheme. No sooner, the Scheme was promulgated and notified, the effect thereof was bound to increase the rigor on the Development Officers (Marketing). An option to choose an escape route was kept open for all the Development Officers under Clause 15(C) of the Amendment Scheme either to seek for special voluntary retirement package or opt to serve as Development Officer (Administration). The said provision of the Amendment Scheme was neither stayed nor was it kept in abeyance. Thus, as per him, if at all the petitioners were desirous to avert being visited by the rigour of the amended provisions and the increased cost ratio, they should have at that very moment availed the option of special voluntary retirement package or could have opted to serve as Development Officer (Admn.). Had they timely exercised either of the options, they could have avoided the likely extra burden created by the higher cost ratio proposed in the Amendment Scheme on the Development Officers (Marketing). He relied upon the decisions rendered by the Hon''ble Supreme Court in the cases of Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State Electricity Board and Others, Nava Bharat Ferro Alloys Ltd. Vs. Transmission Corporation of A.P. Ltd. and Another, , New India Assurance Co. Ltd. Vs. Raghuvir Singh Narang and Another, and submitted that merely because the Scheme was kept in abeyance on account of stay orders passed by the Courts, that by itself would not give rise to a claim that it should be made effective from the date the lis was decided and the decision to keep the Scheme in abeyance was withdrawn. He further submitted that a controversy identical to the one involved in these writ petitions was agitated before the Hon''ble Punjab and Haryana High Court by a Development Officer Sh.Rajesh Parashar by filing a writ petition under Article 226 of the Constitution of India. The Hon''ble Punjab and Haryana High Court while hearing his writ petition No. 4571/2009 opined that if the contention raised by the petitioner was to be accepted, it would lead to interference with the policy, which had already been upheld by the Hon''ble Apex Court and in this situation, the counsel representing the petitioner in that case, sought permission to withdraw the writ petition with liberty to seek clarification by filing an appropriate petition before the Hon''ble Supreme Court. The petition was accordingly dismissed as withdrawn by order dated 27.5.2011. He thus contends that the writ petitions are meritless and deserve to be dismissed.

Heard and considered the arguments advanced by the learned counsel for the parties and perused the material available on record.

The moot question which this Court is called upon to answer in these matters is as to whether or not, the insurance companies are justified in applying retrospectively the rigour of the enhanced cost ratio introduced by the Amendment Scheme of 2003 which was kept in abeyance due to the interim orders passed by the Courts. The controversy is governed by the theory of restitution and can very well be described by the Legal maxim "actus curiae neminem gravabit" i.e. an act of the court shall prejudice no-one. If the argument advanced by the petitioners'' counsel is accepted and the monetary burden befalling the petitioners upon the full-fledged application of the Scheme of 2003 from the date of the notification is quashed, then it would prejudicially affect the right of the insurance company to recover the monies which became due upon the implementation of the Scheme of 2003.

The petitioners are all experienced Development Officers of the company and were aware of the consequences ensuing from the Amended provisions of the Scheme of 2003 particularly the raised cost ratio. As such and if they were at all desirous of escaping the rigor created by the Amendment, then two options were available to them; (A) either to opt for the special voluntary retirement package or to choose to work as Development Officer (Administration) in accordance with Clause 15(C) of the Amended Scheme or (B). If they chose none, then they were required to increase their respective business so as to avoid being visited by the enhanced liability due to increased cost ratio as per the Amended Scheme of 2003.

The petitioners, as per their own case had not challenged the provisions of the Amendment Scheme of 2003 and thus, they were not even entitled to entertain a belief that they would be benefitted by the result of the litigation preferred by the Associations or the other Development Officers as the case may be. As a matter of fact, not having opted for any of the two escape routes provided in Clause 15(C) of the Amendment Scheme of 2003, the petitioners should have gone about increasing their business so as to avoid the effect of the increased cost ratio and thereafter, had the Scheme been struck down, they would have received a bounty as a consequence. Since the petitioners did not exercise any of the options under Clause 15(C) and continued to function as Development Officers (Marketing), they were undoubtedly required to maintain the enhanced cost ratio as per provisions of the amended Scheme.

The Hon''ble Supreme Court examined the effect on the rights of the parties in cases where an interim order granted in a party''s favour is vacated and the lis is decided in a particular manner. In the case of Gursharan Singh and others etc. Vs. New Delhi Municipal Committee and others, , the Court observed as below:

"13. In view of the legal maxim "actus curiae neminem gravabit" which means that an act of Court shall prejudice no man, N.D.M.C. is justified in making a claim for interest over the arrears which have remained unpaid for more than 12 years because of the interim orders passed by this Court. This aspect of the matter has been examined by this Court in the case of Raj Kumar Dey and Others Vs. Tarapada Dey and Others, . Although in the interim orders it has not been stated that in event of dismissal of the appeals and the writ petition, the appellants and the writ petitioner shall be liable to pay interest over the arrears of the licence fee, but that shall not debar this Court from passing any order in respect of payment of reasonable interest over the said amount." 21. The Hon''ble Supreme Court in the case of Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State Electricity Board and Others, upon which reliance was placed by the learned counsel Shri Jagdish Vyas appearing for the insurance company, considered the issue of interim or interlocutory stay orders on government orders whereby duty was levied. The Hon''ble Court held as below in paras No. 11 and 12 of the judgment:-

"The learned Counsel for the appellants in the appeals before us rely upon the portions underlined in the above passage as a decision supporting their contention that where the operation of Government order is stayed, no surcharge can be demanded upon the amount withheld. We find it difficult to agree. In our respectful opinion, the underlined portions do not constitute the decision of the court. They merely refer to the fact that the Board itself did not make a demand for surcharge amount in respect of the period covered by stay under its own understanding of the effect of the stay order granted by the High Court and that it was justified in its opinion. The demand was, the court pointed out, in respect of the period covered by the order of injunction granted by this Court. This Court held expressly that the grant of an injunction does not relieve the consumes of their obligation to pay the charges at the enhanced rates and, therefore, the demand for surcharge/interest for such period is not illegal. The portions underlined cannot be understood as laying down the proposition that in respect of the period covered by stay, no demand can be made. No such proposition can be deduced from the said passage for the reason that the liability for the said period was not at all in issue in the said decision. Unless put in issue and pronounced upon, it cannot be said that there was a decision on the said issue. There was no lis between the parties with respect to the period covered by the stay order of the High Court. If so, it cannot be said that any decision was rendered by this Court on the said issue or aspect, as it may be called. We, therefore, agree with the High Court that Adoni Ginning cannot be read as laying down the proposition that the grant of stay of a Notification revising the electricity charges has the effect of relieving the consumers/petitioners of their obligation to pay late payment surcharge/interest on the amount withheld by them even when their writ petitions are dismissed ultimately. Holding otherwise would mean that even though the Electricity Board, which was the respondent in the writ petitions succeeded therein, is yet deprived of the late payment surcharge which is due to it under the tariff rules/regulations. It would be a case where the Board suffers prejudice on account of the orders of the court and for no fault of its. It succeeds in the writ petition and yet loses. The consumer files the writ petition, obtains stay of operation of the Notification revising the rates and fails in his attack upon the validity of the Notification and yet he is relieved of the obligation to pay the late payment surcharge for the period of stay, which he is liable to pay according to the statutory terms and conditions of supply - which terms and conditions indeed form part of the contract of supply entered into by him with the Board. We do not think that any such unfair and inequitable proposition can be sustained in law. No such proposition flows from Adoni Ginning. It is a matter of common knowledge that several petitioners (their counsel) word the stay petition differently. One petitioner may ask for injunction, another may ask for stay of demand notice, the third one may ask for stay of collection of the amount demanded and the fourth one may ask for the stay of the very Notification. Such distinctions are bound to occur where a large number of writ petitions are filed challenging the Same Notification. The interim orders made by the Court may also vary in their phraseology in such a situation. Take this very case: while the consumers had asked for stay of operation of the Government Order revising the rates, those very consumers asked for an injunction when they came to Supreme Court. Furthermore, as pointed out rightly by the High Court, the order of stay granted by the High Court in writ petitions questioning the validity of the Notification dated April 21, 1990 were not uniform. In the case of writ petition filed by the Eastern U.P. Chamber of Commerce and Industry, Allahabad, the operation of the Notification was stayed while in the case of the writ petition filed by the Employers Association of Northern India, it was directed that "effect shall not be given to the notification dated 21st April, 1990 as against the petitioner", while clarifying at the same time that "in the event of failure of the writ petition, the petitioner shall deposit with the relevant authority within a period of one month from the date of dismissal of the writ petition the difference between the amount of electricity dues to be paid hereinafter by the petitioners under our orders and the sum which may be calculated on the basis of the impugned notification". The words "sum which may be calculated on the basis of the impugned notification" in the later order clearly mean and include the late payment surcharge as well. The acceptance of the appellants'' argument would thus bring about a discrimination between a petitioner and a petitioner just because of the variation of the language employed by the court while granting the interim order though in substance and in all relevant aspects, they are similarly situated. It is equally well settled that an order of stay granted pending disposal of a writ petition/suit or other proceeding comes to an end with the dismissal of the substantive proceeding and that it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner inspite of his failure. We do not think that any such unjust consequence can be countenanced by the courts. As a matter of fact, the contention of the consumers herein, extended logically should mean that even the enhanced rates are also not payable for the period covered by the order of stay because the operation of the very Notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is ununderstandable how the enhanced rates can be said to be payable but not the late payment surcharge thereon, when both the enhancement and the late payment surcharge are provided by the same Notification - the operation of which was stayed.

As has been pointed out by S.C. Agrawal, J., speaking for a three-Judge Bench in Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras, , "while considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result, it only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence."

The view taken by the Hon''ble Supreme Court in the above case was followed in the case of Nava Bharat Ferro Alloys Ltd. Vs. Transmission Corporation of A.P. Ltd. and Another, , which puts the controversy raised in the instant writ petitions to rest beyond all doubt. The judgment in the case of Nava Bharat Ferro Alloys''s case is reproduced herein below for the sake of ready reference:-

"1. These appeals by special leave arise out of an order dated 6th June, 2002 passed by the High Court of Andhra Pradesh whereby Writ Petitions No. 9081 of 1999 and 13458 of 1993 filed by the appellant have been dismissed and the demand for additional charges/surcharge payable on the delayed payment of outstanding electricity dues raised under Clause 32.2.1 and 34 of the Terms and Conditions of supply (TCS) upheld. Facts necessary for the disposal of these appeals may be summarised as under:

The appellant is a public limited company engaged in the manufacture of Ferro Silicon. The industry set up by the appellant is energy intensive in as much as it consumes approximately 10,000 units of electricity for every ton of Ferro Silicon produced. The appellant''s case is that the respondent-Electricity Board had initially agreed to supply power to the appellant @ 6 paise per unit but revised the said rate to 11 paise per unit in the year 1975. The revised rate was in the beginning applicable only to four consumers who were similarly situate but the number of such power intensive consumers gradually rose to 84. On 13th December, 1983 the Board revised the general tariff but a separate order applicable to power intensive consumers like the appellant was issued on 29th January, 1984. Aggrieved by the said order which permitted charging of a higher rate of tariff, the appellant and few others filed writ petitions before the High Court of Andhra Pradesh, which were dismissed by a Division Bench of that Court on 3rd April, 1985. During the pendency of the writ petition, however, the High Court had granted an interim order of 2 stay against the collection of the disputed amount in the following terms:

"There shall be stay of operation of the order in so far as writ petition is concerned, subject to the condition if the writ petitioner pays at the rate of 47.89 paise per unit with effect from April 1984 onwards, furnishing Bank guarantee for the balance to the satisfaction of the Superintending Engineer concerned in four weeks from today. In default of any of the conditions, the stay stands vacated. The bank guarantee furnished shall be renewed for every 3 months. If the petitioner has already paid the demand for the month of April, on the basis of the impugned order, this order passed by me shall be effective from the month of May 1984 otherwise it will be operative from April, 1984." 3. The dismissal of the writ petitions filed by the appellants was assailed by them before this Court by way of special leave petitions Nos. 9206-9207/1985 (C.A. Nos. 2569-2570/1985). This Court by an order dated 22nd July, 1985 while granting leave to appeal directed continuation of interim arrangement made by the High Court in the following terms:

"As regards stay, after hearing learned counsel for the parties we felt that the order passed by the High Court dated 24.4.1984 which operated during the pendency of the writ petitions will continue to operate during the pendency of the appeals 3 with the modification that the rate of 47.89 paise per unit mentioned in the order is rounded to 48 paise per unit.

We would, however, like to make it clear that because of the High Court''s order dated 13.4.1985, for a couple of months, there was no such orders in regard to future payments and the Electricity Board has received the dues at the enhanced rates in lump sum from some of the consumers. There will no question of refunding the amounts back to these consumers.

The bank guarantee already furnished by the petitioners/appellants will be kept alive from time to time and will cover all the differences including the future difference."

It is not in dispute that the above order was modified subsequently in respect of the bills issued from 16th March, 1990 onwards. The appeals, eventually failed and were dismissed by this Court by an order dated 2nd May, 1991. In I.As. filed by the appellant post dismissal of the appeals, this Court passed an order on 9th May, 1991 to the effect that the appellants could after paying outstanding 50% of the amount due under the subsisting bank guarantee make representation to the Board for payment of the balance amount in instalments keeping in view the circumstances and the hardships in each individual case. Consequently, the appellants made a representation to the Board praying for grant of installments for payment of the balance amount. While 4 the said request was under consideration, the appellant received a communication dated 14th June, 1991 from the Superintending Engineer pointing out that an amount of Rs. 5,57,66,539.18 was recoverable from the appellant for the period April 1984 to August 1987. For the recover of the outstanding amount the Board invoked the bank guarantee furnished to it for a sum of Rs. 2,83,53,120.93 thereby leaving a balance of Rs. 2,74,13,218.25 due and payable which amount the appellant was requested to arrange. The communication also pointed out that in addition to the above amount arrears of Rs. 4,45,63,903.21 for the period from August 1987 to July 1989 were also payable besides additional charges for delayed payments of the said amount which the latter proposed to communicate separately.

The request made by the appellant for payment of the balance amount of tariff arrears was accepted by the Board in terms of communication dated 9th July, 1999. It was in the above background that the appellant filed writ petitions No. 9081 of 1999 and 13458 of 1993 raising common questions of law relevant to two different periods in the High Court of Andhra Pradesh, inter alia, assailing the demand of additional charges and interest 5 on the delayed payment of the amounts determined pursuant to the judgment of this Court. By the order impugned in these appeals the said petitions have been dismissed by the High Court. The High Court held that the Terms and Conditions of Supply (TCS) were statutory in character and were not in conflict with any provision of the Electricity Supply Act or the Constitution of India. It also held that Clause 32.2.1 and Clause 34 of the said Terms and Conditions of Supply upon which the Board placed reliance for its demand did not violate any constitutional or statutory provision. The stipulated terms and conditions were, according to the High Court, intended to achieve the objective mentioned in Clause (b) of sub-section 2 of Section 49 of the Act, namely, to discourage delayed payment of electricity dues and to compensate the Board in cases of delay in the making of the payment. Both these conditions, according to the High Court were intended to sustain the economic health of the Board.

The High Court further held that the decisions of this Court in Kerala State Electricity Board through its special officer (revenue) and Another Vs. M.R.F. Limited and Others, and Kanoria Chemicals and Industries Ltd. v. U.P. State Electricity Board (1997) 56 SCC 772 were of no assistance to the appellants. The High Court noted the factual background in which the said decisions were rendered and found that in cases before it there was no justification for nullifying the effect of the Clauses 32.2.1 and 34 of the T.C.S.

Appearing for the appellants Mr. Sudheer Chandra Agarwal, learned senior counsel, strenuously agued that the High Court had fallen in error in declining relief to the appellant which according to the learned counsel was due to it on the analogy of the orders of this Court in Kerala State Electricity Board''s case (supra). It was submitted that in the light of the decision of this Court in Kerala State Electricity Board''s case (supra) the appellant-consumers could not be said to be in default of payment of the outstanding amount during the period the interim order passed by the High Court in its favour had remained operative. It was further contended that this Court had in the above case and in Kanoria Chemicals''s case (supra) dealt with a similar fact situation and granted relief, by awarding interest @ 18% to the Board to compensate it for the monetary loss that it may have suffered on account of delay in the making of such payment and to prevent any prejudice and consequent 7 injustice to the Board on account of the direction issued by the Court. It was argued that the appellant-company was ready and willing to pay interest @ 18% p.a. on the outstanding amount for the relevant period but the demand raised by the Board being far in excess, deserves to be suitably reduced.

On behalf of the respondent it was, on the other hand, argued by Mr. C. Kodanda Ram, learned senior counsel, that the High Court was, in the facts and circumstances of the case, right in distinguishing the decisions relied upon by the appellant and declining the relief prayed for before it. It was submitted that the facts situation in which the relief was granted in those cases was different from that of the present case. It was further argued that the additional charges and interest were payable in terms of the TCS which was statutory in character and to which the appellant had agreed to abide by. The amount which the appellant had not paid would have been utilized by it in its commercial ventures to make profits. Non-payment of the dues recoverable from the appellant would, therefore, expose the Board to serious financial prejudice and loss.

The case of the appellant-company rests entirely upon the decisions of this Court in the case of Kerala State Electricity Board (supra) and that delivered in the case of Kanoria Chemicals Ltd. (supra). The argument advanced on behalf of the appellant in essence is that the fact situation in the said two cases being similar to the one at hand grant of interest @ 18% p.a. on the outstanding amount would meet the ends of justice in the instant case also.

There is, in our opinion, a basic fallacy in the analogy which the appellant draws between its case and the cases referred to above. What is overlooked by the appellant is the fact that the decision of this Court in the Kerala State Electricity Board''s case (supra) has enforced the terms under which the supply of energy was made to the consumers in that case. Award of interest @ 18% p.a. is not an innovation of this Court. The consequence of non-payment of the amount within the time stipulated was on the contrary prescribed in the tariff/conditions subject to which energy was supplied to MRF the consumer in that case. It would not, therefore, be correct to apply the tariff conditions relevant to that case to the case at hand where such conditions are 9 materially different. It is on the contrary necessary to cull out the principle of law settled in the said case for application to the case at hand. This may require recapitulation of a few facts in the backdrop whereof the decision in the Kerala State Electricity Board''s case (supra) was delivered.

MRF was engaged in manufacturing automobile tubes and tread rubber in the State of Kerala. The company entered into an agreement with the Kerala State Electricity Board for supply of power to the factory set up by it. The agreement contained a provision for payment of power and energy supplied to the company by the Board within 15 days from the date of the receipt of the invoice by the consumer-company. The agreement further provided that in the event of a default in the payment of the amount within the stipulated period, interest @ 18% p.a. or at such other rate as may be fixed by the Board from time to time would be chargeable.

The Board revised the tariff for the electricity supplied by it in 1980, 1982 and 1984. These revisions were challenged by MRF in a writ petition filed before the High Court of Kerala, which was together with other 1 similar petitions disposed of by a common order by which the revisions made by the Board were struck down. Consequently MRF Limited and other consumers became entitled to the refund of the excess amount paid by them pursuant to the revised tariffs. The High Court of Kerala directed the adjustment of such amounts towards future bills to be issued by the Board.

Aggrieved by the order passed by the Kerala High Court the Board filed special leave petitions before this Court which were entertained by this Court and an interim order passed, inter alia, directing that pending disposal of the appeals before this Court, the refund of charges already collected shall remain stayed. It was further directed that the future charges would be collected to the extent of 50% only and the balance adjusted towards the past charges.

The appeals filed by the Board were finally allowed by this Court by its judgment dated 26th August, 1986 upholding the validity of the revision of the tariffs by the Board. The inevitable conclusion flowing from that decision was that the consumer-company and other consumers became liable to pay the amounts due on the 1 basis of the revision of tariffs including those that had since been adjusted by them pursuant to the interim directions of this Court. Consequently, the Board raised a demand for the payment of the amount inclusive of interest @ 18% p.a. While the company did not challenge the liability to pay the excess amount pursuant to the revision that had been upheld by this Court it refused to pay the interest and challenged the demand to that extent before the High Court of Kerala in a writ petition filed before it. The Single Judge as also the Division Bench of the High Court in appeal held that the consumer company could not be said to be in default for nonpayment of liability which did not factually exist at the relevant time and struck down the demand for payment of interest.

The Electricity Board appealed to this Court against the said judgment of the High Court. Allowing the appeals preferred by the Board this Court took the view that while the consumers had no obligation to take notice of the revised tariffs and to make any payment on the basis thereof after the judgment of the High Court of Kerala till the said decision was reversed by this Court, yet no sooner the decision of this Court upheld the upward 1 revision of the tariffs, the Board''s entitlement to draw bills on the basis of the revisions and consequently enforce payment of such bills by the consumers revived with full force. This Court repelled the contention that the liability to pay the revised tariffs accrued only after the pronouncement of the judgment of this Court upholding the upward revision and not from any date prior to that. This Court held that once the upward revision was found to be valid and enforceable such revision would be effective from the date the revision was made, no matter such revision had remained unenforceable for some period on account of the decision of the High Court. The following passage from the decision of this Court is in this regard apposite:

"But after the decision of this Court upholding upward revisions of tariffs, the Board''s entitlement to draw bills on the basis of upward revisions and consequential enforceability of payment of such bills by the consumers revived with full force. Hence, it would not be correct to contend that although the Company or for that matter other consumers were required to pay on the basis of revisions of tariffs from the dates when such revisions became effective, liability for such payment would accrue only from the date of pronouncement of the judgment by this Court upholding upward revisions and not from any date prior to that. If the upward revisions are held as valid, enforceability of such upward revisions being consequential to such revisions, though it had remained unenforceable for some period on account of 1 the decision of the High Court, cannot but revive from the dates of upward revisions." 16. This Court then applied the principle of restitution as enunciated by the Privy Council in Rodger v. Comptoir D''Escompte de Paris 1871 (3) PC 465 and held that it will be the endeavour of the Court to ensure that a party who had suffered on account of a decision that is finally reversed should be put back in the same position as far as the same is practicable, in which he would have been if the decision of the Court adversely affecting him had not been passed. This Court observed: "In giving full and complete relief in an action for restitution, the court has not only power but also a duty to order for mesne profits, damages, costs, interest etc. as may deem expedient and fair conforming to justice to be done in the facts of the case. But in giving such relief, the court should not be oblivious of any unmerited hardship to be suffered by the party against whom action by way of restitution is taken. In deciding appropriate action by way of restitution, the court should take a pragmatic view and frame relief in such a manner as may be reasonable, fair and practicable and does not bring about unmerited hardship to either of the parties."

Applying the above principle to the case before it this Court held that the consumer-company was an on-going business concern who must have gainfully utilized the 1 money saved on account of the decision of the High Court, in its commercial activities. The Court further held that the Board had to suffer financial loss because of the erroneous decision delivered by the High Court and that conforming to equity as well as well-established principle of restitution the Board could claim interest @ 18% p.a. on the unpaid portion of the bill drawn on the basis of the revised tariffs to which the consumer company had agreed. The Court observed:

"The Company is an ongoing business concern and must have utilised the money, saved on account of the decision of the High Court, gainfully in its commercial activities. Similarly, other consumers have gainfully utilised the amount saved for being not required to pay on the basis of revised tariffs. The Board had to suffer financial loss because of the said erroneous decision of the High Court. In the aforesaid circumstances, it will be lawful, conforming to equity and well-established principle of restitution for the Board to claim interest at 18% on the unpaid portion of the Bill drawn on the basis of revised tariffs. The Company had agreed to pay interest at 18% on the bills if not paid when it became due and payable." 18. It is quite evident that this Court had upheld the claim for payment of interest @ 18% p.a. primarily because of the stipulation contained in the tariffs/agreement executed between the Board and the consumer providing for payment of interest at that rate 1 in the event of delay in the payment/discharge of the bills raised against the consumer. It is not as though this Court had refused to enforce the stipulation contained in the tariffs providing for recovery of interest from the consumer if the latter failed to pay the amounts within the time stipulated. It is also manifest that this Court had in no uncertain terms held that even after the upward revisions of the tariffs had remained unenforceable for a certain period on account of erroneous judgment of the High Court, the moment the said judgment was set aside in appeal, the liability to pay revived with full force from the date the revisions were made effective. The very fact there was during the intervening period an erroneous decision of the High Court obliterating the revision in full or in part would make little difference in so far as the liability to pay the amount under the revised tariffs was concerned. So also the fact that the consumers were not deliberately in default on account of the judgment of the High Court did not affect the enforceability of the demand arising from the revised tariffs or the stipulation regarding payment of interest demanded on the same on account of the nonpayment or delayed payment of the amount recoverable by the Board.

Suffice it so say that the decision of this Court in the case of Kerala State Electricity Board (supra) does not grant any relief to a defaulting consumer once the demand is upheld nor does it interfere with the principle of restitution which would entitle the successful party to be relegated back to the position it would hold had there been no judgment adverse to it.

Super added to all this is the fact that this Court was dealing with a case where the High Court had finally struck down the revised tariff, but the said decision was reversed in appeal. In the present case the appellant had obtained only an ad interim order of stay against the enforcement of the tariffs. There is a qualitative difference in the two situations. Even if one were to take a charitable view of the legal effect of any direction of the High Court, pending adjudication by the Court, cases in which the High Court finally held the tariffs to be bad would in our opinion stand on a different footing than cases where the party obtains an order granting interim protection to it. While there is an element of finality in the case of a final adjudication by a competent Court in so far as that Court is concerned, an interim order can be vacated at any stage. The interim order may not even prevent a prudent party from paying the charges according to the revised tariffs if it does not propose to take any chance and suffer recovery of an additional amount on account of the non-payment of the dues by the date stipulated for the purpose. We may in this regard refer to the following observations of this Court in Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras, :

[Emphasis supplied]

"While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence."

Suffice it to say that the decision of this Court in Kerala State Electricity Board''s case (supra) does not lend any support to the appellant-company in its endeavour to avoid payment of the amount which became recoverable from it no sooner the judgment of the High 1 Court was reversed in the earlier round of litigation upholding the revision of the tariffs.

That brings us to the decision of this Court in Kanoria Chemicals and Industries Ltd. and Others Vs. U.P. State Electricity Board and Others, . That was also a case where the validity of a notification issued by the U.P. State Electricity Board revising the electricity rates/tariffs under Section 49 of the Electricity (Supply) Act, 1948 was challenged by the consumers. Interlocutory applications filed in the writ petitions for stay of the operation of the impugned notification were eventually dismissed by the High Court whereupon the consumers deposited the differential amount between the pre-revised and the revised electricity rates. Consumers did not, however, deposit the late payment surcharge "recoverable" in terms of Clause 7 (b) of the notification. Notices of demand were, therefore, issued to the consumers which were challenged in a fresh batch of writ petitions filed by them. The main contention urged by the consumers before the High Court was that since the operation of the notification revising the tariffs had been stayed between 25th July, 1990 and 1st March, 1993, no late payment surcharge could be levied on the amount withheld by the petitioners under the orders of the Court, no matter the writ petitions were finally dismissed. That contention was rejected by a Division Bench of the High Court of Allahabad. The matter was then brought up to this Court in appeal by the consumers, inter alia, contending that the stay of the operation of the impugned notification relieved the consumers of the obligation to pay the revised tariffs/rates and consequently additional charges for late payment, if any. Reliance in support of that submission was placed by the consumers upon the decision of this Court in Adoni Ginning Factory and Others Vs. Secretary, Andhra Pradesh Electricity Board, Hyderabad and Others, . Speaking for the Court, Hon''ble B.P. Jeevan Reddy, J. held that the decision of this Court in Adoni Ginning Factory''s case (supra) had no application to the case at hand nor could it be understood to mean that during the period covered by the stay no demand could be made against the consumers as no such issue has been raised before this Court in Adoni Ginning Factory''s case (supra). This Court observed:

"..............We, therefore, agree with the High Court that Adoni Ginning1 cannot be read as laying down the proposition that the grant of stay of a notification revising the electricity charges has the effect of relieving the consumers/petitioners of their obligation to pay late payment surcharge/interest on the amount withheld by them even when their writ petitions are dismissed ultimately. Holding otherwise would mean that even though the Electricity Board, who was the respondent in the writ petitions succeeded therein, is yet deprived of the late payment surcharge which is due to it under the tariff rules/regulations. It would be a case where the Board suffers prejudice on account of the orders of the court and for no fault of its. It succeeds in the writ petition and yet loses. The consumer files the writ petition, obtains stay of operation of the notification revising the rates and fails in his attack upon the validity of the notification and yet he is relieved of the obligation to pay the late payment surcharge for the period of stay, which he is liable to pay according to the statutory terms and conditions of supply--which terms and conditions indeed form part of the contract of supply entered into by him with the Board. We do not think that any such unfair and inequitable proposition can be sustained in law........." 23. This Court further clarified that the terms in which the prayer in the stay application was made by the consumers did not determine the effect of the order issued by the Court in the writ petitions raising similar questions of law. The phraseology used in the prayer for interim orders could be materially different though in essence the relief may be similar. On a question of principle this Court held that the impugned order coming 2 to an end upon dismissal of the substantive proceedings, it is the duty of the Court to put the parties in the same position as they would have occupied but for the interim orders of the Court for otherwise it would give rise to unjust results. This Court said:

"............It is equally well settled that an order of stay granted pending disposal of a writ petition/suit or other proceeding, comes to an end with the dismissal of the substantive proceeding and that it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner in spite of his failure. We do not think that any such unjust consequence can be countenanced by the courts. As a matter of fact, the contention of the consumers herein, extended logically should mean that even the enhanced rates are also not payable for the period covered by the order of stay because the operation of the very notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is ununderstandable how the enhanced rates can be said to be payable but not the late payment surcharge thereon, when both the enhancement and the late payment surcharge are provided by the same notification - the operation of which was stayed..............." 24. It is manifest from the above that both on the question of restitution of the benefit drawn by a party during legal proceedings that eventually fail as also on the general principle that a party who fails in the main proceedings cannot benefit from the interim order issued during the pendency of such proceedings, this Court found against the consumers and upheld the demand for payment of additional charges recoverable on account of the delay in the payment of the outstanding dues. Far from lending any assistance to the appellant-company the decision squarely goes against it and has been correctly appreciated and applied by the High Court.

In the result these appeals fail and are hereby dismissed but without any orders as to costs."

In view of the law as laid down by Hon''ble Apex Court in the aforesaid cases, it is evident that had the petitioners been prudent and if at all they desired to avoid the effects of the extra burden created by the enhanced cost norms, then they should have acted in accordance with the Amendment Scheme of 2003 and should have attempted to increase their business. If they were not hopeful of achieving their target, they had been provided an option under Clause 15(c) to opt out of the active marketing job by choosing the desk job of a Development Officer (Admn.) or to seek voluntary retirement under the special voluntary retirement package. Not having opted for any of the above two, the petitioners put to themselves at risk of maintaining the burden of the increased cost ratio brought around by the Amendment of 2003. As the petitioners admittedly did not satisfy the benchmark of the raised cost ratio, during the relevant years, they are liable to face the consequential fallout i.e. reduction in the noncore allowances and decrement in pay scale in terms of the amendment. The argument advanced by the petitioners'' counsel that the respondents acted in contravention of the principles of natural justice and recovery was directed from the petitioners'' salaries without giving them any notice is also not tenable because the recovery has not been directed in pursuance of any departmental or like action. The amount, which were directed to be recovered from the petitioners accrued on account of the implementation of the Amendment Scheme, which had been kept in abeyance under the orders of the Court. Thus, as soon as the lis was decided and the validity of the Scheme was upheld, as a necessary consequence, the effect of the amendment scheme became operative. Therefore, it was not at all required to give any notice to the petitioners before implementing the Amendment Scheme of 2003. The action of the respondents in this regard cannot be termed to be arbitrary or in breach of the principles of natural justice so as to call for any interference in the instant writ petition.

In the background of the above discussion, the action of the respective insurance companies in effecting recovery from the petitioners of the amounts generated by the application of the Amendment Scheme of 2003 from the date of notification cannot be termed as illegal, arbitrary or unconstitutional so as to call for any interference in the exercise of the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India.

Consequently, the writ petitions being devoid of any merit are hereby dismissed.

No order as to costs.

Copy of this order be placed in each file.