Tata Yadogawa Limited vs Bihar State Electricity Board

A.K. Ganguly, J.—The Petitioner Company has a mini-steel plant at Gamharia, Adityapur. The primary function of the plant of the Petitioner company is melting of scraps for producing ingors, billets and rolls.

The Petitioner Company claims, that its plant at Gamahria, Adityapur works for 24 hours a day except on Sundays and five other holidays in an year. Some times the said plant has to work even on Sundays and holidays.

The relevant features relating to its operation have been stated in para 5 of the writ petition. From the averments made in Para 5 of the writ petition it appears that below ascertained level of power availability the electric arc furnace cannot be operated. During its period of operation low power energy cannot be used for the electric are furnace. It is therefore claimed that for proper functioning of the electric arc furnace, the Petitioner''s requirement of electricity is a constant supply of power at 10,500 K.V.A.

It has been stated that for supply of electricity the Petitioner Company entered into an agreement dated 1st April, 1979 with Respondent-Board. The copy of the said agreement is annexed as Anriexure-1 to writ petition.

The writ petition was filed for quashing the order dated-26th February, 1990 passed by the Respondent No. 2 whereby the claim of the Petitioner for relief in respect of Annual. Minimum Guarantee charges (hereinafter called as A.M.G. charges) for the years 1980-81, 1981-82 and 1983-84 was rejected. There is also a prayer for quashing the A.M.G. bills which are annexed as Annexures 3, 4 and 5 and delayed payment of surcharge imposed and realised by the Respondent-Board under Clause-16.2 of the Board''s Tariff and for appropriate consequential orders.

The case of the Petitioner is that Respondent No. 2 has illegally and arbitrarily refused to reduce the A.M.G. charges even when Board''s inability to supply electrical energy is admitted. It is argued that the right of Petitioner company to seek reduction in payment of A.M.G. charges, in the event of the Board''s inability to supply energy, is covered, by Clause-13 of the agreement.

Since the entire dispute in this writ petition hinges upon the proper interpretation of Clause-13 of the said agreement, the said Clause-13 of the said agreement is set out below:

If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole, or in part due to strikes, riots, fire, floods explosions, act of God or any other cause reasonably beyond control or if the Board is prevented from supplying or unable to supply such electrical energy owing to any or all of the causes mentioned above then the demand charge and guaranteed energy charges set out in the Schedule shall be reduced in proportion, to the ability of the consumer to take or the Board to supply such power and the decision of the Chief Engineer, Bihar State Electricity Board, in this respect shall be final.

Clause 4 of the said agreement speaks of the imposition of AMG charges. From a reading of Clause-4 of the said agreement it appears that the Petitioner company has to pay such charges at the end of the year, if the consumption falls short of the minimum guaranteed units.

On an analysis of the different clauses of the agreement it would appear that the question of payment of A.M.G charges will arise on the failure of the Petitioner company to consume the minimum guaranteed units in the event the Respondent Board is able to supply the same. On the other hand, if the Board fails to supply electricity and on that account the Petitioner is unable to consume the minimum guaranteed units, the Petitioner is entitled to get reduction under Clause-13 of the Agreement for payment of A.M.G. charges.

The case of the Petitioner is that on account of the inability of the Board to supply the electrical energy agreed to supply under the said agreement, the Petitioner company could not consume the power to the extent of Annual Minimum Guaranteed units, namely, 2, 20, 75, 200 units. The said inability of the Board to supply the energy was as a result of admitted imposition of load restrictions by the Board during the period from April, 1980 to March 1984. As such during the said period the Petitioner paid demand charges for the electricity consumed and also received the bills for A.M.G. charges for the said period. Copies of those bills are annexed as Annexures-3, 4 and 5 to the writ petition.

On receipt of the said bills the Petitioner in accordance with Clause-13 of the Agreement submitted claim for reduction in demand charges and A.M.G. charges for year to year, and the matter was kept pending for quite some time. Ultimately, the matter was taken up by Shri Swami Prasad, the then General Manager-Cum-Chief Engineer, South Bihar and Chhota Nagpur and by an order dated 24th February, 1985 the said Sri Swami Prasad, after examining the entire matter partially allowed the Petitioner''s claim under Clause-13 of the Agreement for demand charges as also A.M.G. charges for the years 1970-71 to 1979-80.

The claim of the Petitioner Company for reduction of the A.M.G. charges for the years, 1980-81, 82-83 and 1983-84 was hoard by Sri Swami Prasad but was decided by the order dated 25th September. 1985 passed by the succeeding General Manager-Cum-Chief Engineer Sri B. Prasad. By the said order Sri B. Prasad rejected the entire claim for A.M.G. charges for the period 1980-81, 82-83 and 1983-84. The said order is at Annexure-8 to the writ Petition.

Pursuant to the said order passed by Sri B. Prasad the Revenue Officer of the Board issued a notice of demand for payment of Rs. 99,46,498.26 paise consisting of A.M.G. charges, delayed payment surcharge and energy bill for August, 1985, but disputed the rest of the amounts.

The Petitioner Company ultimately filed a writ petition before the Ranchi Bench of this Hon''ble Court, and the same was numbered as C.W.J.C. No. 1312 of 1986(R) for quashing the order dated-25th September, 1985 passed by Sri B. Prasad.

In terms of the interim order dated 9th October, 1985 passed in C.W.J.C. No. 1312 of 1985(R) the Petitioner paid the entire amount towards A.M.G. charges and delayed payment surcharge aggregating to Rs. 80.34,328.90. The said writ petition thereafter came up for hearing before the Ranchi Bench of Patna High Court and by an order dated 28th August, 1989 learned Judge of this Court quashed the order dated-25th September, 1985 passed by Sri B. Prasad, inter alia, on the ground that before passing the said order the of fice concerned did not hear the Petitioner Company. After quashing the order the learned Judge directed the matter to be heard afresh.

Pursuant to such direction, the matter was heard on various dates. Ultimately by the order dated-26th February, 1990 passed by the Respondent No. 2 the Petitioner''s claim in respect to A.M.G. charges for the years 1980-81 and 1981-82 and 1983-84, was turned down and by the said order it was held that the Petitioner should be given relief of Rs. 1,32,216 only in respect of demand charges. The said order dated-26th February, 1990 is the subject matter of challenge in this writ application.

In the counter affidavit used by the Respondents, it has been stated that the spirit of Clause-13 is that inability of the Board to supply power must cause the inability of the Petitioner to consume it and then only Clause-13 is attracted, and the impugned order passed by Respondent No. 2 is based on the said ground. In the impugned order at Annexure-12 the Respondent No. 2 proceeded on the basis that the consumer has not regulated its consumption in accordance with the load restriction of the Board. In the impugned order it has been pointed out that on many occasions the consumer continued to draw power at the same level on which it was drawing before imposition of load restriction It is further stated that the consumer consume the power more than its proportionate quota of Annual Minimum Guaranteed units when the power availability was low in the month of June. 1981, but in the month of January, 1984 inspite of power availability being high the consumer has consumed only 16,89.600 units which were much below the proportionate quota of Annual Minimum Guarantee units. The restriction of power in the case of the consumer was not the reason which created the inability in the consumer to consume the required number of Annual Minimum Guaranteed units. It is on that basis, Respondent No. 2 rejected the claim of the Petitioner for reduction in payment of A.M.G. charges.

In the impugned order, there is no denial of the fact that there has been load restriction by the Board and there was inability on the part of the Board in supplying the power in terms of the agreement.

Clause-13 of the agreement is divided broadly in two parts and from a reading of the same it appears that the right of the consumer to seek reduction of A.M.G. charges arises.

I. Where the consumer is prevented from receiving or using the electrical energy to be supplied to him for the reasons beyond its control.

II. Where the Board is prevented from supplying or is unable to supply such electrical energy owing to any reasons beyond its control.

In either of these two situations for the consumer''s failure to consume the minimum guaranteed units, the benefit of reduction in payment of A.M.G. charges cannot be denied to the consumer.

Under Clause-13 of the agreement, a right, being a right to seek reduction in payment of A.M.G. charges, has been given to the consumer. If from the facts of the case the said right of the consumer emerges, it is expected of the Board an authority under Article 12, to deal with the said right reasonably and fairly and it should not resort to any kind of a subterfuge or a process of circuitous reasoning to defeat the said right.

It must also be remembered that this right to seek reduction in the payment of A.M.G. charges is a right to seek reduction in the payment of revenue. So the agreement creating this right must, in accordance with the cardinal rules of interpretation, be so interpreted as not to frustrate this right on consideration of matters which are wholly extraneous to the scope and ambit of the agreement. The Respondent No. 2 seems to have done that in passing the impugned order.

In the instant case, the second condition namely, Board''s inability to supply the electrical energy is admitted, but the consequence of such admitted failure of the Board is sought to be diluted. The fact that the consumer could use energy even when there was a failure of supply by the Board and it could not use energy when there was better supply by the Board are totally extraneous considerations for the purpose of determination of the controversy at issue.

The operational compulsion of the Petitioner company in the matter of use of its energy from time to time may not entitle it to seek a reduction of the A.M.G. charges if the Board has given its agreed supply.

So the Respondent No. 2 may be right in stating that the different nature of the. operation of the consumer cannot compel it to accept a different yard-stick for consideration of the question for reduction of A.M.G. charges. But at the same time Respondent No. 2 cannot refuse to consider favourably the consumer''s plea of reduction of A.M.G. charges, despite the failure of Respondent-Board to supply energy. The unreasonable attitude of the Respondent No. 2 is apparent from the fact that the Respondent No. 2 granted reduction in payment of demand charges and having done so, the refusal to reduce A.M.G. charges makes the decision demonstrably unreasonable.

This Court, is therefore, of the view that Respondent No. 2 while purporting to act within the four corners of Clause-13 of the said Agreement acted on partly relevant and on partly irrelevant and irrational considerations. As such the resultant decision gets vitiated by a process of infirm logic and becomes amenable for judicial review.

It is well setled by the authorities that in the matters of judicial review the Court will not normally, go into the question of correctness of the decision as long as the decision is within the ''bounds of reason'' Where the decision is grossly unreasonable, it becomes a case for judicial review.

What can be called an unreasonable decision warranting a judicial review has been a matter of some debate and principles which have been decided out of such debate have been called ''Wednesbury Principles''.

Those principles have been best expressed in the inimitable words of Lord Diplock in the case of Council of Civil Service Unions v. Minister for the Civil Service reported in (1984) 3 AER 935 951 of the report.

a decision which is so outrageous in its defiance of logic or of accepted moral standard that no sensible person ''who had applied his mind to the question to be decided could have arrived at it.

Those principles have been accepted by the Apex Court in the case of Tata Cellular Vs. Union of India, and various other subsequent and previous cases.

Judging by those standards this Court holds that the impugned order at Annexure-12 is wholly unreasonable and cannot be upheld by this Court.

Clause 13 of the said agreement came up for consideration before the Supreme Court in the case of Bihar State Electricity Board and Anr. v. M/s Dhanawat Rice and Oil Mills reported in AIR 1989 SC 1636 : 1989 PLJR 19 (SC).

In the said judgment in paragraph-8 directions were given to the Board to assess the proportionate reduction in the payment of A.M.G. charges on the basis of hours of non-supply.

The Board directed to follow the said principle indicated in paragraph 8 of Bihar State Electricity Board (supra).

For the reasons aforesaid this Court cannot sustain the impugned order which has been passed at Annexure-12. The same is hereby set aside. The Respondent-Board is further directed to proceed in accordance with law and also in accordance with Clause-13 of the agreement and will consider the Petitioner''s case for reduction in payment of A.M.G. charges in the light of observations made in this judgment.

As the matter is an old one, the Respondents are directed to come to a decision after hearing the Petitioner-Company afresh and as expeditiously as possible preferably within a period of four months from the date of receipt/communication of a copy of this order.

Since the matter has to be heard, afresh and on the basis of the observation made in this judgment fairness, demands and it will also be in the fitness of thing that the same is to be heard and decided by an officer other than Mr. H.S. Thakur, who heard the matter and passed order on 26th February, 1990 on the last occasion.

Even though the impugned order is set aside, this Court does not pass any order on the Respondent-Board to refund the amount with interest at the rate of 12% as it directed in the interim order dated-17th May, 1990 of this Court in this proceeding.

Since this matter has to be re-adjudicated once again if the claim of the Petitioner to get reduction of A.M.G. charges is upheld by the Respondent-Board, in that case the Respondent-Board is to pass an appropriate order of refund of the amount deposited under the Court''s order dated-17th may 1990 in accordance with the terms of the said order.

This writ petition thus Succeeds to the extent indicated above. There will be no order as to costs.

Bisheshwar Prasad Singh, J.

I agree.