Sarvotham Ispat Limited vs A.P. State Electricity Board and Others

L. Narasimha Reddy, J.—The petitioner is a Mini Steel Plant. It is engaged in the manufacture of Mild Steel Ingots and other allied products. For its functioning, the petitioner needs power supply of very high intensity. It is stated that it can reach break even, if only it functions at 75% of its installed capacity.

The petitioner entered into an agreement with the erstwhile A.P. Electricity Board for supply of electricity at a maximum demand of 4980 KVA. According to the terms and conditions of supply, the petitioner is required to use 80% of the Contracted Maximum Demand (CMD), during non-power cut periods. If the consumption goes below 80% of the CMD, charges at that rate would have to be paid.

For the period from March, 1995 to February, 1997, power cuts in two different spells were imposed on the petitioner. For the spell from March, 1995 to July, 1996, the maximum demand was restricted to 3549 KVA and energy to 15,11,891 KWH. The corresponding figures for the period September, 1996 to February, 1997 are 4384 KVA and 17,25,851/- KWH.

The petitioner contends that during the power cut periods also, the respondents levied maximum charges for various spells, resulting in its inability to undertake production, even to the minimum level, and thereby, it sustained losses. The petitioner feels aggrieved by the action of the respondents in levying the maximum demand charges, for the periods, during which there was total interruption of power supply. The particulars, as to the period, during which there was total failure of supply of power, are mentioned. It prays for a direction to the respondents to restrict levy of maximum demand charges, only for the period during which the power was made available and to refund of the excess amount collected for the periods between March, 1995 and February, 1997.

The respondents filed a counter-affidavit opposing the claim of the petitioner. It is stated that placing restrictions on utilization of power supply is within the prerogative of the Board and that the same is necessitated on account of the difference between the extents of generation of electrical power and consumption thereof, at a given point of time. They state that in the terms and conditions of power supply itself, it is mentioned that the Board cannot be held liable for instances of total or partial failure of supply of power and having agreed for such a condition, the petitioner cannot complain about it.

Sri D.V. Nagarjuna Babu, learned Counsel for the petitioner, submits that the very purpose of entering into an agreement with supply of power, at a particular intensity, is to ensure that it is made available uninterruptedly. He contends that if for any reason, the Board was disabled from making continuous power supply, it has to give remission to the petitioner for the period during which there was failure of supply. Learned Counsel submits that the petitioner has, on the one hand, suffered loss, due to failure of power supply leading to stoppage of production, and on the other hand, is forced to pay the maximum demand charges, even for the period during which there was no supply. He places reliance upon a judgment of the Supreme Court Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another, decisions, on the same lines.

Sri O.Manohar Reddy, learned Standing Counsel for the respondents, on the other hand, submits that the claim made by the petitioner is untenable. He contends that the maximum demand charges are levied towards the cost incurred for arranging the necessary infrastructure and that the same have nothing to do with the power supply, whether continuous or interrupted. Learned Counsel submits that the interruption of power supply, if at all anything, would have a bearing upon the energy charges, which, in turn, depend upon the actuals. He bases his arguments on the judgment of the Supreme Court in Orissa State Electricity Board and another etc. Vs. M/s. IPI Steel Ltd., etc., and certain other decisions.

The question that arises for consideration, is as to the right of the respondents to levy maximum demand charges, for the period during which there is total interruption of power supply. The claim is restricted to a period during which power cuts were imposed. The grievance of the petitioner is that, it was made to suffer detriment, on account of the power cuts and even the supply at restricted quantities was not made continuously. It has no grievance about the levy of the energy charges, which is on the basis of actual consumption. The concept of maximum demand is typical to heavy and bulk consumers of power supply. In the normal parlance, the charges are levied on a consumer on the actual amount of energy utilized by him, at a fixed tariff. In such cases, the power supply is made through an infrastructure, which is common and general to a fairly large number of consumers. Where a consumer needs power supply of very high intensity, separate and special infrastructure in the form of lines, transformers, switch gares etc., are to be provided, exclusively for him. It is through this infrastructure that the power supply is made available to him. A two- part system of billing is adopted, in such cases. The first part is known as maximum demand and the second part, energy charges. The maximum demand connotes the arrangement of equipment, which is necessary to make available the supply at a particular intensity. Instead of collecting the amount involved for such establishment from the consumer, at a time, the expenditure is fragmented and collected in the form of maximum demand charges. This remains constant, unless altered and it does not have anything to do with the quantum of power supply to a consumer. The maximum demand is measured through a trivector meter. The highest reading recorded by it in a given span of half-an-hour would reflect the maximum demand for the entire month. It is beneficial to refer to certain judgments of the Supreme Court on this aspect. In Nipha Steels Ltd. and Another Vs. West Bengal State Electricity Board and Others, , it was observed as under:

Every large scale consumer knows the amount of energy required by him and requests for it form the Board. If the Board agrees to supply that or any other particular amount of energy, it makes necessary arrangements therefore by laying the lines to the extent necessary and installing other requisite equipments. It is obvious that if a factory uses energy at a particular level/load and for a particular period, it consumes a particular quantity of energy. The trivector meter records the highest level/load at which the energy is drawn over any thirty minute period in a month while the other meter records the total consumption of energy in units in the month.

Support was derived for this, from the judgment of the Supreme Court in Orissa State Electricity Board''s case (2 sura). The energy charges on the other hand depend upon the actual amount of the electricity utilized by the consumer. The question as to whether the supplier of electricity is entitled to levy maximum demand charges, even for the period during which there was absolutely no supply, was dealt with by the Hon''ble Supreme Court in several cases.

In M/s. Northern Indian Iron and Steel Company''s case ( supra), it was held that the failure of an electricity board to provide supply for any particular period, the consumer is entitled to claim the reduction of the maximum demand charges for the corresponding period. It, however, needs to be noted that no principle as such was laid down. The relief in that case was granted on the basis of a clause contained in the agreement between the power supplier and the consumer. Admittedly, no such provision exists in the contracts between the petitioner and the respondents. Same is the case in the judgment of the Supreme Court in Bihar State Electricity Board and Another Vs. Dhanawat Rice and Oil Mills, .

In clear and categorical terms, the Supreme Court in Orissa State Electricity Board''s case (supra) held that the liability to pay the maximum demand charges does not depend upon continuous and uninterrupted supply of power, either during normal times, or when power cuts, are imposed. Levy of maximum demand charges was held to be independent of uninterrupted power supply. Similar view was taken by the Supreme Court in Nipha Steels Limited''s case (supra).

Learned Counsel for the petitioner has relied upon an order, dated 25.10.2000, passed by learned single Judge of this Court, in W.P. No. 15690 of 1990. Though reference was made in that order to the judgment of the Supreme Court in M/s.Northern Indian Iron and Steel Company''s case (supra), the distinguishing feature, namely, absence of a clause under which the consumer can claim damages on account of loss caused to him, was not noticed. The attention of this Court was also not drawn to the judgment of the Supreme Court in Orissa State Electricity Board''s case ( supra). Hence, this Court does not find any basis to grant relief, to the petitioner.

The Writ Petition is accordingly dismissed. There shall be no order as to costs.