Full Judgment Text
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CASE NO.:
Appeal (civil) 15478 of 1996
PETITIONER:
Jayshree Chemicals & Anr.
RESPONDENT:
Orissa State Electricity Board & Ors.
DATE OF JUDGMENT: 05/02/2004
BENCH:
R.C. Lahoti & Ashok Bhan
JUDGMENT:
J U D G M E N T
BHAN, J.
Aggrieved against the order passed by the High Court in dismissing
the writ petition filed under Article 226 of the Constitution of India (Original
Jurisdiction Case No. 165 of 1992) the writ petitioners-appellants have filed
the present appeal.
In the writ petition the appellants challenged their liability to pay
minimum charges to the Orissa State Electricity Board (for short "the
Board") under the provisions of the State Electricity Board (General
Conditions of Supply) Regulations of 1981 (for short "the Regulations")
framed under Section 79 (j) & (k) read with Section 49A of the Electricity
(Supply) Act, 1948 (for short "Supply Act"). Clause 31 (e) of the
Regulations provides:
"Every consumer shall during the continuance of
agreement also pay, when required, the monthly
minimum charges even if no electricity is
consumed for any reasons, wheresover, or supply
has been disconnected and also if the monthly
charges for electricity actually consumed much
less than the minimum charges subject to
exemption, if any, provided in the agreement or
under these regulations."
The appellant No. 1 under the Regulations has been categorised as "a
power intensive Industry", i.e., it consumes power as a raw material. It has
entered into two subsisting agreements with the Board (dated 31.10.1980
and 19.2.1983) for supply of electricity to its Sodium Hydrosulphite and
Caustic Soda Plants. In the normal production year of the electricity the
consumer is permitted to consume electricity as per its contracted demand.
Appellant No.2 is a share holder of appellant No.1. Under Section 22 B of
the Indian Electricity Act, 1910 (for short "the Act") the power vests in the
State Government to control the distribution and consumption of the
electricity. Section 22B reads as under:
"22B. Power to control the distribution and
consumption of energy.- (1) If the State
Government is of opinion that it is necessary or
expedient so to do, for maintaining the supply and
securing the equitable distribution of energy, it
may by order provide for regulating the supply,
distribution, consumption or use thereof.
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(2) Without prejudice to the generality of the
powers conferred by sub-section (1) an order made
thereunder may direct the licensee not to comply,
except with the permission of the State
Government, with -
(i) the provisions of any contract, agreement or
requisition whether made before or after the
commencement of the Indian Electricity
(Amendment) Act, 1959, for the supply
(other than the resumption of a supply) or an
increase in the supply of energy to any
person, or
(ii) any requisition for the resumption of supply
of energy to a consumer after a period of six
months, from the date of its discontinuance,
or
(iii) any requisition for the resumption of supply
of energy made within six months of its
discontinuance, where the requisitioning
consumer was not himself the consumer of
the supply at the time of its discontinuance."
Under this provision the State Government irrespective of any contract or
agreement entered into can restrict the supply of electricity to the consumer
if the State Government is of the opinion that it is necessary or expedient so
to do for maintaining the supply and securing the equitable distribution of
energy.
Because of the chronic shortage of power the State Government has
for the last many years starting from 1979 been passing orders/notifications
under Section 22B of the Act. These notifications were coming in several
different ways to prohibit industrial consumers from consuming the entire
extent of power under their respective contracts. The current pattern of such
notification since 1984 was to provide restrictions for an entire year, i.e.,
from the first day of July of one year to the end of the June of the next year,
which was known as a "water year".
Though a water year commenced on the first of July each year, but,
the power resources of the State being largely dependent on hydel
generation, i.e., rainfall and storage of water in the Hirakud and Balimela
reservoirs, it was not possible for either the Electricity Board or the State
Government to assess or evaluate the generation prospects of power and
accordingly made industry wise allocation until the monsoon fully settled all
over the State. Power control orders/notifications under Section 22 B of the
Act used to be passed after the commencement of the water year sometimes
after 2-3 months followed by subsequent notifications each modifying the
preceding one, but making them retrospective from 1st of July of every year.
During the period notification under Section 22B remained in operation,
obligation to pay minimum charges under clause 31(e) of the regulations
stoods waived. Following is the statement depicting the situation since the
water years 1984-85 till 1990-91.
Water Year Order of Govt. of Orissa Suspension of
(July to June) Irrigation & Power Deptt. Contract demand
1984-85 Order No. 3176 dt. 22.1.85 78-66%
1985-86 Order No. 37477 dt. 31.8.85 78.66%
1986-87 Order No. 46885 dt.31.10.86 78.66%
1987-88 Order No. 30826 dt. 16.7.87 70.13%
1988-89 Order No. 31060 dt. 13.7.88 79.29%
1989-90 Order No. EL/111/15/89/6873 79.29%
dt. 14.2.90
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1990-91 i) Order No. El/111-87/90/92-B/EG
dt. 6.8.90
ii) Order No. E1/111-87/90/5021
dt. 24.10.90 64.87%
These notifications contained a specific rider that the same "would
remain in force until further orders". In the notification issued for the water
years starting from 1984-85 to 1989-90 apart from the allotment made for
that particular ’water year’ provisional allotment of energy for the next
water year starting from the next year was also made. For example, in the
order dated 31.8.1985 imposing restriction under Section 22 B of the Act for
the water year 1985-86 it was expressly stated:
"The quantity allotted in Annexure \026 for the water
year 1985-86 may be treated as the provisional
allotment of energy for the water year 1986-87
starting from 1.7.86 unless otherwise revised by
the State Government. The order shall come into
force with immediate effect and shall remain in
force until further orders."
Similarly, notifications issued for the water years 1985-86, 1986-87,
1987-88, 1988-89, 1989-90 also contained the provisional allotments for the
next water year. It was clearly mentioned that any consumption already
made in accordance with the provisional orders shall be adjusted against the
allotment made under the notification. In other words, in the said orders not
only the provision was made to lay down the allotment of the current year
but also provisional allotment was made for the coming year as well. In
contrast to these notifications issued under Section 22-B of the Act, for the
water year 1990-91, restriction was imposed by fixing the percentage of the
estimated annual requirement to be allotted by the Board and it was left to
the Board to make the actual calculation and fix the total million units of
energy to be used by the consumer during the water year. Unlike the
previous notifications for the water years from 1984-85 to 1989-90 in the
notification for the water year 1990-91 provisional allotment for the ensuing
water year 1991-92 was not made.
On 20.9.1991 the Board wrote a letter bearing No. 1733 informing the
appellant No.1 that for the water year 1991-92 notification under Section
22B was not issued and as such there was no restriction in monthly drawal
of such power from July 1991 and therefore with effect from July 1991 the
appellant No.1 shall be liable to pay minimum charges as prescribed in
Orissa tariff rate schedule. Appellant No.1 was also informed that the bills
for July 1991 and August 1991 already claimed without considering
minimum charges was liable to be revised as there was no restriction for
drawal of energy by the industry. The appellant No.1 did not pay the
minimum charges as demanded by the Board. On 26.12.1991 the Board
wrote a letter to the appellant No.1 informing it that supply of energy would
be disconnected in case it fails to clear the outstanding demand.
Aggrieved against this action of the Board the appellants filed the writ
petition challenging the claim of minimum charges from July 1991 to
December 1991 being ultra vires the provisions of Articles 14 and 19(1)(g)
of the Constitution of India and commanding the Board to rescind or cancel
or withdraw the letter dated 26.12.1991 and the subsequent letters
demanding the minimum charges. The High Court dismissed the writ
petition holding that since for the water year 1991-92 a notification under
Section 22B of the Act had not been issued the appellants were liable to pay
the minimum charges for the period from July 1991 as demanded by the
Board till the notification under Section 22B was issued on 16.1.1992.
Shri G.L. Sanghi, learned Senior counsel appearing for the appellants
contended that after the commencement of the water year 1991-92 w.e.f.
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1.7.1991 the appellants believed in good faith that the previous water year’s
regulated allotment made on provisional basis was to be treated as
continuing with all the incidents thereof. This impression was created
considering the practice consistently followed by the State Government and
the orders passed in the previous years. Though there was no specific
notification issued under Section 22B for the water year 1991-92 till
16.1.1992 the appellants bona fide believed that the Board was not in a
position to meet the full contract demand of industrial consumers in the State
due to chronic shortage of power and therefore supply of electricity to the
industries has to be restricted. Board by its previous conduct also induced
the appellants to believe that no adverse consequences like imposition of
minimum charges would be fastened upon the appellants pending the
passing of an order under Section 22B which besides regulating the
allotment of supply was coupled with the inevitable legal incidence of
relieving consumers from liability to pay minimum charges. This bona fide
belief was further strengthened by the wording of the order which clearly
stated that the order "would remain in force until further orders". That even
the Board was not sure as to whether a notification under Section 22B would
be issued or not and that is why it had issued bills for the months of July and
August 1991 as per the provisional allocation and not on the basis of the
minimum charges. Another submission made by the counsel for the
appellants is that the notification issued under Section 22B for the water year
1990-91 which was to continue in operation till further orders could not be
rescinded or varied by a Government order. It could be done by issuing a
fresh notification under Section 22B of the Act.
We do not find force in either of the submissions made on behalf of
the appellants. Section 22B (1) of the Act which is relevant for the present
purpose provides that if the State Government is of the opinion that it is
necessary or expedient so to do for maintaining the supply and securing the
equitable distribution of energy it may by order provide for regulating the
supply, distribution, consumption or use thereof. Sub-section (1) of Section
78-A of the Supply Act lays down that in the discharge of its functions the
Board shall be guided by such directions on questions of policy as may be
given to it by the State Government. The order under Section 22B is passed
in respect of a particular water year. In the allotment orders for the water
years 1984-85, 1985-86, 1986-87, 1987-88, 1988-89 and 1989-90 contained
a provisional allotment for the next water year as well. It was clearly
mentioned in these orders that any consumption already made in accordance
with the provisional orders shall be adjusted against the allotment made
under the notification. In other words, in the said orders not only the
provision was made to lay down the allotment for the current year but also
provisional allotment was made for the coming year as well. Undisputedly
in the regulatory order dated 6th August, 1990 for the water year 1990-91 the
State Government made a departure from the orders passed during the
previous periods in not stating therein any provisional allotment of power for
the ensuing water year. All that was stated in the said order was that the
restriction imposed in it would remain in force until further orders. Section
22B(1) vests discretionary power in the State Government to regulate
supply, distribution, consumption and use of power if in its opinion it is
necessary or expedient so to do. Exercise of the statutory discretion depends
upon the situation prevailing during the period. It would not be either fair or
proper to hold that merely because restrictions in the use of power had been
imposed during the previous years, the consumers would take it that such
restrictions would be imposed during the next water year also even in the
absence of any statutory order passed by the State Government. The words
"this shall remain in force until further orders" only mean that the State
Government was free to revise, modify, alter or rescind their order even
after issue of the aforesaid orders. The power to amend or rescind the order
issued under Section 22B was available to the government under the
provisions of General Clauses Act which provides that the power to make
orders, rules or bye-laws includes the power exercisable in the like manner
and subject to the like conditions to act to amend, verify or rescind or revise.
Lest the same would be questioned at any time by way of abundant caution
the government in the notification issued mentioned "that this shall remain
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in force until further orders". For example, the order dated 31st October,
1986 for the water year 1986-87 was revised by notification dated 6th March,
1987. The allotment made under order dated 14.2.1990 was partially
modified by a notification dated 11th June, 1990 before the expiry of the
period. Similarly, the restriction order dated 6th August, 1990 for the water
year 1990-91 was revised by notification dated 24th October, 1990. The use
of the expression "this shall remain in force until further orders" only means
that the order can be changed or revised or amended or even withdrawn even
in the middle of the year, before the expiry of the period. It did not mean
that when the period of allotment is expressly and specifically mentioned,
the order can be construed to mean that its life shall extend beyond the
external termini mentioned in the order. Unlike the notification issued for
the previous years where the provisional allocation was made for the next
water year as well, in the order issued under Section 22B dated 6th August,
1990 for the water year 1990-91 there was no provisional allotment for the
next water year. This order could not be construed to mean that its life shall
continue beyond 30th June, 1991. Any construction to the contrary would
be in conflict with the express language of the notification dated 6th August,
1990. This view is fortified by the subsequent order for the water year 1991-
92 issued on 16th January, 1992. It is expressly mentioned in the said order
under Section 22B that it shall come into force w.e.f. 17th January, 1992 and
come to an end on 30th June, 1992. It was stated:
"Whereas the different categories of consumers
have been getting unrestricted supply of power as
per their contract demand (subject to peak load
restriction) from 1.7.1991 to 16.1.1992.
Whereas the total availability of power
during the water year 1991-92 from 17th January,
1992 to 30.06.1992 from the generating stations in
Orissa will fall short of the requirement for power
in State\005."
This clearly shows that there was no restriction during the period
from 1st July, 1991 to 16th January, 1992 and the restriction for the water
year 1991-92 became effective only from 17th January, 1992.
No restrictions were imposed for drawal of power between 1st July,
1991 to 16th January, 1992 as the water level in the various reservoirs was
adequate which is also confirmed by the appellant in their letter dated 10th
September, 1991 in which it has been, inter alia, stated that "the present
water level in all dams/reservoirs are satisfactorily good, we expect better
allotment of plans power at the earliest so that we can plan our production
and consumption of power in a better way". This letter clearly goes to show
that the appellant is taking contradictory stand. The appellants were at all
times aware that the power was available and no restrictions had been
imposed for drawal of power during the period from 1st July, 1991 to 16th
January, 1992. Issuance of the bills for the months of July and August, 1991
as per the provisional allocation and not on the basis of minimum charges
does not mean that the Board could either not revise the bills or rectify its
mistake. The issuance of the bills for the months of July and August 1991
on provisional basis would not lead to the conclusion that this act of the
Board had induced the appellants to believe that the previous water year’s
regulated allotment could be treated as continuing for the next water year
1991-92 as well In this view of the matter, the revised bills issued to the
appellant No.1 which is a power intensive industry to pay the ’minimum
charges’ under the terms of the agreement as well as the tariff notification, is
in accordance with law and the claim of the appellants that since the
restriction order for the water year 1990-91 was operative for the water
year 1991-92 they are not liable to pay minimum charges, cannot be
accepted.
Submissions made on behalf of the appellants that the notification
issued under Section 22B for the water year 1990-91 which was to continue
in operation till further orders could not be rescinded or varied by the
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government order is without any substance. It has to be simply noticed and
rejected. Notification issued for the water year 1990-91 was restrictive in its
operation for the water year starting from 1st July, 1990 to 30th June, 1991. It
came to an end with the cessation of its operative period. This contention
has been advanced on the presumption that notification for the water year
1990-91 was to remain in force until further orders including the next water
year. Question of rescinding the notification for the water year 1990-91 did
not arise as it came to an end with the expiry of its durative period. The
notifications were restrictive in its period of operation and were issued from
year to year. The words "would remain in force until further orders" were
used in the notifications to enable the State government to modify or vary
the conditions of supply of energy within the same water year. The letter
dated 20th September, 1991 is only clarificatory informing the appellant
No.1 that there was no restriction imposed by the Government regarding the
consumption of electricity for the water year 1991-92 and the industries
were liable to pay the minimum charges in case they did not consume the
contracted load of energy. It does not rescind or vary the notification for
the water year 1990-91,
For the reasons stated above, we do not find any merit in this appeal
and dismissed the same with no order as to costs.