Full Judgment Text
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).4124 OF 2009
AJMER VIDYUT VITRAN
NIGAM LIMITED …..APPELLANT(S)
VERSUS
HINDUSTAN ZINC LTD. AND
ANOTHER …..RESPONDENT(S)
J U D G M E N T
Rastogi, J.
1. The instant appeal under Section 125 of the Electricity Act,
2003 (hereinafter referred to as the “Act 2003”) has been preferred at
the instance of the distribution company, namely, Ajmer Vidyut
Vitran Nigam Limited (for short “AVVNL”), a Government Company
incorporated under the Companies Act, 1956 with an object, inter
alia, for distribution and supply of electricity, assailing the impugned
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judgment dated 03 February, 2009 passed by the Appellate
Signature Not Verified
Digitally signed by
JAGDISH KUMAR
Date: 2022.02.17
16:35:49 IST
Reason:
Tribunal for Electricity.
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2. The brief facts culled out from the record and relevant for the
purpose are that the Hindustan Zinc Limited (for short “HZL”) has
captive generating plant set up at Chanderia in the District of
Chittorgarh, State of Rajasthan where it generates electricity
primarily for its own consumption and uses the electricity generated
at its units/works situated at:- i) Debari in the district of Udaipur;
ii) Agucha in the district of Bhilwara; and iii) Dariba in the district of
Rajsamand. All the three districts are in the State of Rajasthan and
for wheeling of electricity generated in the captive generating plant,
HZL uses the distribution system of AVVNL from the point of injection
at Chanderia to the points of drawal at its different units/works as
indicated above.
3. In other words, the use of the distribution system for wheeling
electrical energy from the generating point to the drawal is called
“open access facility” and the user of such facility is called “open
access consumer”. For the aforesaid purposes, regulations were
framed by the Rajasthan Electricity Regulatory Commission
(hereinafter referred to as the “Commission”) in exercise of its power
conferred under Section 42 read with Section 181 of the Act, 2003 by
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notification dated 26 May, 2004 called the Rajasthan Electricity
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Regulatory Commission (Terms and Conditions for Open Access)
Regulations, 2004 (for short “Regulations, 2004”) which came to be
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further amended by 3 amendment vide notification dated
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27 December, 2006 under Section 42 read with Section 181 of the
Act, 2003 called the Rajasthan Electricity Regulatory Commission
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(Terms and Conditions for Open Access) (3 Amendment)
Regulations, 2006(hereinafter being referred to as the “Regulations
2006”).
4. Under the scheme of Regulations 2004, open access customer
has been defined under Regulation 2(c) which includes such persons
using or intending to use the transmission system or the distribution
system or both the licences in the State for transmission or wheeling
of electricity in the State and open access agreement is to be executed
between the parties in terms of Regulation 12 and the pricing
mechanism of unscheduled interchange pricing is to be determined
in terms of Regulation 20 as specified by the Commission for the
State from time to time.
5. Regulations 2(c), 12 and 20 of Regulations, 2004 which came to
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be notified on 26 May, 2004 are reproduced thereunder:-
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“2. Definitions
….
c) "Open Access Customer" means a person using or intending to use
the transmission system or the distribution system or both of the
licensees in the state for transmission or wheeling of electricity in the
State;
……...
12. Open Access Agreement
(1) An open access customer shall enter into commercial agreements
with the transmission and distribution licensees, generators, traders
and others, as applicable for use of their transmission and
distribution systems;
(2) The agreement shall provide, amongst other things for the
eventuality of premature termination of agreement and its
consequences on the contracting parties;
(3) After agreements have been entered into and copies furnished to
State Load Dispatch Centre, the State Load Dispatch Centre shall
inform the open access customer the date from which open access
will be available which will not be later than 3 days from the date of
furnishing of agreements.”
20. Unscheduled interchange pricing
The payment for mismatch between the schedule and the actual
drawal shall be governed by the pricing mechanism as specified by
the Commission for the State from time to time.”
6. In terms of the provisions of Regulations 2004, the agreement
for short term open access of distribution system and supply of
regular and standby HT supply came to be executed between the
parties i.e. the appellant and the respondent herein on
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22 September, 2006 and draft format of the open access agreement
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became effective from 01 May, 2006 and they are concerned with
Part III of standby supply and the manner in which the billing has to
take place followed with payments. The relevant clauses of the open
access agreement for the purpose are reproduced thereunder:-
“ 22. Tariff applicable for stand by supply shall be as applicable for
temporary supply as per tariff for electricity supply determined by
RERC as applicable to HT large industrial/ mixed load/ bulk supply
service. Tariff shall be applied on daily basis as & when such standby
supply is availed & shall be subject to minimum annual drawal for 36
days in a financial year.
25. This agreement shall, subject as hereinafter provided, remain in
force at least for a period of one year in the first instance commencing
from the date of supply and shall remain in force till its termination.
Provided that either party shall be at liberty to terminate this
agreement or get his contract demand altered by giving one month's
notice in writing in that behalf subject to the condition shall reduction
in contract demand will be permissible only on completion of initial
period of one year including the notice period. The consumer can also
get his connection permanently disconnected or get his contract
demand reduced on the same day of notice if he is ready to by pay the
minimum billing amount equivalent to one month.
29. Billing
(1) Ajmer Discom (distribution licensee) shall raise the bills at the end
of the month for the use of distribution system for wheeling of Open
Access Power, as also for regular and standby supply. The bills shall
be for:
a. Wheeling charges for the contracted open access power on
distribution system as determined by the Commission from time
to time.
b. Cross-subsidy surcharge as determined by the Commission,
from time to time under OA Regulations.
c. Additional surcharge as determined by the Commission from
time to time under OA Regulation in case the consumer avails
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open access and receives electricity supply from a licensee other
than (i.e. distribution licensee of the area of supply).
d. Regular supply as per tariff for supply of electricity, specified
by the distribution licensee for temporary supply for large
industrial / non domestic/ mixed load service (schedule HT-5).
e. Standby supply as per tariff for supply of electricity,
specified by the distribution licensee for temporary supply
for large industrial/non domestic/ mixed load service,
during the period of outage of generating unit effecting open
access supply for the days of such drawals.
f. Inadvertent drawal of electricity in excess of regular &
standby supply as per subclause (e) at temporary supply
tariff.
g. Reactive energy charges for open access supply at the rates
specified by the Commission.
(2) The Billing shall be made as per finalized energy accounts issued
by SLDC, based on various para-meters at 15 minutes interval,
starting from 0.00 hours of the day, stored in ABT complaint meters
and as specified by the Commission.
Provided, that pending finalization of energy accounts by SLDC, bills
shall be issued by the distribution licensee based on provisional
energy account.
Provided that a soft copy of the provisional and final energy account
shall be supplied to open access customer along with the bills.
30. Payments :
The open access customer shall arrange the payments for the bills
raised by the distribution licensee within the due date indicated on
such bills. In the event of monthly bill[s] not paid in full within the
period specified on the bills, the Open access customer shall pay the
Late Payment Surcharge to the distribution licensee. Late payment
surcharge shall be as specified for applicable tariff at clause 28(d)
from time to time.
This agreement shall be governed by the provisions of the general
conditions of supply of the distribution licensee except for the specific
provisions made in this agreement. Provided that such specific
provisions will apply to the respective part of the agreement. This
agreement is liable to be modified subject to revision/final agreement
approved by RERC.”
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7. Consequently, the Commission in terms of open access
regulations specified a standard format of agreement for short term
open access for distribution system and for HT supply which came to
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be served on 03 January, 2007. It may be relevant to note that
under clause 29(1)(f), the standard format of agreement was supplied
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by the Commission by its letter dated 03 January, 2007, which is
referred to as under:-
“ 29(1)(f) . inadvertent drawal of electricity in excess of regular &
standby supply as per subclause (e) at temporary supply tariff.”
8. Although, it was forwarded to the respondent for its signatures
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on 07 June, 2007, Clause 29(1)(f) of the format was different from
the standard agreement prescribed in the open access regulations
and the change effected was thus (inadvertent drawl of electricity in
excess of regular & standby supply as per sub-clause (e) at temporary
supply tariff).
9. Pursuant to the release of standard format agreement, the
appellant (AVVNL) sought certain clarifications pertaining to alleged
contradiction in Clauses 29(1)(f) and 32(4) of the standard format
agreement from the Commission. In furtherance thereof, the
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appellant issued a revised demand for access drawal of electricity on
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the basis of tariff for regular supply on 30 June, 2007.
10. The reference to the changes in the standard agreement for HT
supply and short term open access in distribution came to be
examined by the Commission in the Petition No.134/07 and after
deliberation, the Commission made substantial changes and altered
Clauses 29(1)(e) and 29(1)(f) and 32(4) of the standard format
agreement and observed that the inadvertent drawal will be billed at
the same rate as regular supply irrespective of whether such
inadvertent drawal was done during a period of outage of generating
unit affecting open access supply or during the period of shortage of
supply.
11. To be more specific, Clause 29(1)(f) earlier provided that all
inadvertent supply would be charged as per temporary supply tariff
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but under order dated 15 September, 2007, the Commission altered
the position substantially and held that instead of the tariff for
temporary supply, a tariff for regular supply will be payable for
inadvertent drawal. The extract of the order passed by the
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Commission dated 15 September, 2007 with which the present
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controversy is concerned is referred to under Clauses 29(1)(e) and
29(1)(f) which are reproduced hereunder:-
“ Clause 29(1)(e) :
13 . Under clause 29(1)(e) it has been proposed that in the situation
of reduced supply or outage of generating unit effecting supply to
Open Access Consumer the tariff for standby supply shall be as per
tariff for temporary supply, whereas in the Agreement the situation
considered is the outage of generating unit only. Jodhpur Discom has
agreed for his proposal, Sh. P.N.Bhandari, also agreed to the proposed
change to be incorporated in the Agreement.
Clause 29(1)(f) :
16 . Under clause 29 of the Agreement it is stipulated that the
distribution licensee shall raise the bills for different purposes
wherein at para (f) it is for inadvertent excess drawal of electricity.
Under clause 29(1)(f), it is now proposed to specify the applicable rate
also which is actually missing for billing inadvertent excess supply for
the sake of clarify in implementation. Sh. Bhandari stated that since
inadvertent supply or drawal, according to Commission's own
definition is inevitable mismatch, which cannot be stopped by licensee
or the CPP, therefore, levy of excess demand charges in such cases
would be outright harsh. Shri Bhandari further submitted that in
clause 29 (l)(f) the provision to charge temporary supply tariff on per
day basis when drawal has exceeded is quite logical and does not
require any change as it being accidental and non intentional.
17 . The inadvertent supply in this case is the excess demand over and
above the regular supply demand plus standby supply demand which
is in excess of regular and standby supply. The existing provision in
the Agreement considered inadvertent drawal, which is in excess of
regular and standby supply. The standby supply has been further
qualified as the supply which is as per sub clause (e) to be billed at
temporary supply tariff. This qualification is inadvertent and can be
deleted. However, this does not mean that the applicable tariff for
inadvertent or excess drawal is temporary supply tariff. The
accounting and billing of permissible and excess demand is covered
in clause 32 of the Agreement for both the scenarios i.e. with ABT &
without ABT. The proposed changes clarify that this inadvertent
supply is a part of excess demand of regular supply contract demand.
Jodhpur Discom has not agreed to the proposed change stating that
drawal of electricity in excess of regular and standby supply should
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be billed at temporary supply tariff. Jaipur Discom also did not agree
to the proposal without stating any reason.
Commission’s decision :
20 . In view of the above, it is decided that the sub-clause 29(1)(f) of
the Agreement be clarified further as under:
"(f) drawal of electricity in excess of sum of the contract demand
under regular supply and standby supply shall be billed
alongwith 29(1)(d) above."
12. No clarification was made by the Commission as to whether the
substantial changes which have been made under the open access
agreement will apply retrospectively from the date of agreement when
executed or prospectively from the date the Commission under its
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Order dated 15 September, 2007 has given effect to. Although a
clarification was made by the Secretary of the Commission to be
prospective which indeed holds no authority but when the bills were
raised by the appellant for the period from June, 2006 to February,
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2008 (for the anterior period) by demand notice dated 12 March,
2008, aggrieved with the same, the respondents filed appeal before
the Appellate Tribunal questioning the order of the Commission
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dated 15 September, 2007 with the grievance that the substantial
modification has been made in terms of the standard format
agreement and is not merely an interpretation/clarification of the
standard format agreement and in the given facts and circumstances,
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it will apply only prospectively and the demand raised for the anterior
period to the substantial changes that the Commission has given
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effect to by its order dated 15 September, 2007 will not in any
manner be construed different on the clarification under terms of
open access agreement.
13. The Appellate Tribunal after taking note of the submissions
made under its order impugned held that the proposed changes
which are effected by the Commission and particularly, in Clause
29(1)(f) are substantial changes in the standard format agreement
and further observed that it has altered the position substantially
and changed the tariff from temporary supply to regular supply in
cases of inadvertent drawal and such substantial
changes/amendments which have been made, in no manner, can be
read as mere clarification but a substantial alteration in the standard
format agreement, therefore, the same can be given effect to only from
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the date, i.e. 15 September, 2007, the Commission has introduced
those amendments under the agreement. The operative part of the
Order of the Tribunal is quoted hereunder:-
“The impugned order of the Commission says that "any
interpretation/clarifications etc. to the order dated 15.09.07 have to
be derived from within it". The Commission thus means that
retrospectivity or prospectivity of the order has to be determined
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from the order itself. Apparently, the Commission is avoiding to
make a categorical pronouncement about the prospectivity or
retrospectivity of the order dated 15.09.07. Nonetheless, the
Commission in paragraph 12 of the impugned order, as extracted
above in paragraph 12, says that the order dated 15.09.07 is but an
interpretation of various clauses of the standard format. Thus the
Commission, without making a categorical pronouncement says
that the order dated 15.09.07 shall apply with effect from the date
standard format was issued. Thus there is a genuine grievance on
the part of the appellant which has required the appellant to present
the appeal. We find force in the contention of the appellant. The
order dated 15.09.07 has to be read as an order amending the
standard format issued on 01.03.07 and therefore can be given effect
to only from 15.09.07. The respondent No.2 in its petition No. 166
of 2007 had prayed that the order dated 15.09.07 be declared as
operative retrospectively from the effective date of agreement i.e.
01.05.06. This prayer could not at all have been allowed because
even the format as issued on 01.03.07 could not be given
retrospectivity from 01.05.06. The parties had agreed in the original
agreement to abide by any change in the terms and conditions of
open access notified by the Commission. This does not mean every
time there is a change, notified by the Commission, the change will
relate back to the effective date of the agreement. Every change can
have only prospective effect. Therefore, the change brought about by
the order dated 01.03.07 would be effective only from 01.03.07.
Similarly, the change brought about by order dated 15.09.07 could
be effective from 15.09.07. The petition No. 166 of 2007 presented
by respondent No.2 before the Commission only deserved to be
dismissed.”
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14. The judgement of the Appellate Tribunal dated 03 February,
2009 became the subject matter of challenge in appeal before us
under Section 125 of the Act 2003.
15. Learned counsel for the appellant submits that changes which
have been given effect to by the Commission under its order dated
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15 September, 2007 are strictly in terms of the scheme of
Regulations 2004 which clearly postulate that the parties will abide
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by any change in the terms and conditions, if any, being notified by
the Commission and once the Commission has recorded its
satisfaction and introduced those changes in the open access
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agreement dated 22 September, 2006, it goes without saying that
such clarification stands incorporated and made a part of the
agreement from the date of its execution. It is true that to give
retrospective effect to any statutory instrument, power is vested with
the legislature but in the instant facts and circumstances, where the
parties have entered into a commercial agreement(open access
agreement) with open eyes that they will abide by any change in the
terms and conditions of the open access agreement notified by the
Commission, all alterations effected by the Commission indeed will
have to be read as a part of the agreement as being incorporated from
its very inception. Thus, in the facts and circumstances, the finding
of prospective applicability of the changes in Clause 29(1)(f) which
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has been given effect to by the Tribunal under its order dated 03
February, 2009 is not sustainable and needs to be interfered with by
this Court.
16. Learned counsel for the respondents, on the other hand, while
supporting the finding recorded by the Tribunal submits that the
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Commission under its order dated 15 September, 2007 has made
substantial changes in the open access agreement executed between
the parties and Clause 29(1)(f), in particular, which was clear in
terms that during the period of outage of the generating unit effecting
the open access supply because of which all inadvertent supply
would be charged as per temporary supply tariff which has been
substantially altered by the Commission and instead of the tariff for
temporary supply, the tariff for regular supply became payable for
inadvertent drawal and this cannot be considered to be a mere
clarification under the terms of agreement executed between the
parties and if that being so, all such substantial
modifications/amendments which are made under the terms of
agreement, in no manner, can be read prejudicial to the interest of
the parties and if such substantial change which has been given
effect to is given retrospective effect, that indeed will seriously
prejudice the rights of the respondents, more so, when the conditions
of the open access agreement with which the present dispute is
concerned in reference to Clauses 29(1)(e) and 29(1)(f) of the
agreement are neither in contradistinction nor in contravention to
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the provisions of the Regulations 2004 or of 3 Amendment 2006. In
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the given circumstances, the finding recorded by the Tribunal that
such changes being substantial in character may not be read
prejudicial to the interest of the parties inter se to be read
prospectively and that has been accepted by the respondents and
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accordingly, the payments are made after 15 September, 2007 in
terms of the modified clause 29(1)(f) which the Commission has given
effect to and the finding which is duly supported by law needs no
interference of this Court.
17. We have heard the learned counsel for the parties and with their
assistance perused the material available on record.
18. The question in the instant appeal before us is as to whether
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the Order dated 15 September, 2007 of the Commission is a mere
interpretation/clarification of standard format agreement or the
order changes the position substantially the terms of the format
having prospective effect for raising future bills.
19. It is not disputed that the Commission issued the draft
agreement to give effect to the Regulations, 2004 and further
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3 amendment was made to the regulations on 27 December, 2006
with provisions for unscheduled interchange pricing. The
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Commission further made amendment in the format on 03 January,
2007 and included Clause 32 in the agreement.
20. The initial standard format agreement executed between the
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parties on 22 September, 2006 effective from 01 May, 2006
undisputedly, refer to inadvertent drawal of electricity in sub-clause
29(1)(f) as quoted above and that such drawal in excess of regular
and standby supply was to be charged as per sub-clause (e). Sub-
clause (e) simply provided that standby supply would be charged as
per temporary rates during the period of outage of generating unit
affecting open access supply for the days of such drawal. Clause 22
makes no exception for standby supply during the period of outage
of generating unit affecting open access supply. In other words, the
“period of outage of generating unit affecting open access supply” in
sub-clause (e) is not of any consequence but all that it can mean is
that during the time of outage, the standby supply will be charged at
the same rate at which temporary supply is charged and if sub-clause
(e) and sub-clause (f) are read in conjunction, it clearly manifests that
all inadvertent supply will be charged as per temporary supply tariff.
Sub-clauses 29(1)(e) and 29(1)(f) which have been substantially
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altered by the Commission under its Order dated 15 September,
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2007 holds that instead of the tariff of temporary supply, the tariff of
regular supply will be payable for inadvertent drawal.
21. It may further be noticed that the new sub-clause makes no
reference to outage of the generating units or of unscheduled
interchange. At the same time, Clause 32(4) under the heading
“unscheduled interchange pricing” also mentions excess drawal at
the drawal end beyond the permissible limit in case of reduced supply
or outage of suppliers generating station. The situation contemplated
in Clauses 29(f) and 32(4) deals in different context and if they are
overlapping, it will always be open for clarification but the Order of
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the Commission dated 15 September, 2007, in our view, cannot be
considered to be as such a clarification since it has virtually amended
the original Clause 29(1)(f) thereby changing the tariff for inadvertent
drawal from temporary supply rate to the regular supply rate which
indeed is a substantial alteration in the conditions of the agreement.
22. It is also not the case of the appellant that the conditions of
open access agreement with which we are presently concerned and
particularly, Clauses 29(1)(e) and 29(1)(f) of the agreement are either
in contradistinction or in contravention to the Regulations, 2004 and
tariff to be charged for inadvertent drawal from temporary supply rate
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was equally permissible under the scheme of Regulations, 2004 and
agreement was accordingly executed between the parties in
compliance thereof.
23. In our considered view, the substantial change/modification
which has been given effect to by the Commission under its order
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dated 15 September, 2007 under Clause 29(1)(f) effecting the tariff
for inadvertent drawal from temporary supply rate to regular supply
rate is indeed a substantial change in the condition of the agreement
and prejudicial to the interest of the parties (respondents herein) and
cannot be read to apply retrospectively from the date of agreement
executed between the parties.
24. Although, we cannot lay down a straight-jacket principle as to
what is to be considered a clarification or what may tantamount to a
substantial change or modification but if we take note of the guiding
principles from Section 152 of the Code of Civil Procedure, 1908 in a
way where there is an unintentional omission or mistake or an
arithmetic or typographical error, if any, while drafting the agreement
that may have been permissible to give an effect at a later stage from
its inception but, at the same time, where there is a substantial
amendment/alteration in the conditions of agreement, if taken place
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with its inception, may certainly cause prejudice to the rights of the
parties inter se financially or otherwise. As we are dealing with the
commercial agreement, if any modification, that too substantial is
being permitted to be altered under the agreement executed between
the parties at a later stage with retrospective effect even by the
statutory authority in the garb of correction or mistake or any
typographical error, if any, that may, if prejudicial to the interest of
the parties inter se in law be neither permissible nor advisable to give
effect anterior to the date of modification/altercation in terms and
conditions of the agreement.
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25. This Court, by an interim order dated 27 August, 2010,
directed the appellant to file an undertaking in the format of an
affidavit that in case the appeal fails, the money which has been
deposited by the respondents will be refunded subject to adjustment,
if any, with interest that may be fixed by the Court at the appropriate
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time. Taking note of the order dated 27 August, 2010 passed by
this Court, directing the appellant to refund the amount deposited by
the respondents with interest, we consider it appropriate to clarify
that since the parties are in long business relations, let the money
which has been deposited by the respondents as noticed by this
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Court in the order dated 27 August, 2010, be adjusted against the
future bills to be raised by the appellant in the terms as agreeable to
the parties.
26. Consequently, the appeal stands dismissed with the
observations.
27. Pending application(s), if any, stand disposed of.
… …………………….J.
(AJAY RASTOGI)
……………………….J.
(ABHAY S. OKA)
NEW DELHI
FEBRUARY 17, 2022.
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