J.K. Tyre Loses Lockdown-Era Demand-Charge Relief As Karnataka HC Cites Some Power Use And No Contractual Notice

In brief

The question

1. Whether “demand charges” levied under the applicable tariff were “minimum charges” reducible under Clause 3 of the agreements.

The court held

JKTIL was not entitled to a reduction or refund of the April 2020 demand charges under Clause 3 because the clause concerned alteration of contracted demand and JKTIL had not given the required notice.

It also directed

The Court allowed CESCOM’s appeal and set aside the Single Judge’s order.

01Facts

J.K. Tyre and Industries Limited (JKTIL), a non-MSME consumer, received high-tension electricity under two agreements with Chamundeshwari Electricity Supply Corporation Limited (CESCOM).

¶ 4–10

During the COVID-19 lockdown in April 2020, JKTIL’s consumption fell substantially.

¶ 4–10

It sought waiver or relaxation of demand/fixed charges, but CESCOM declined, stating that non-MSME consumers were entitled only to deferred payment.

¶ 4–10

The agreements’ Clause 3, headed “Reduction of Minimum Charges,” provided for alteration of contracted demand in specified circumstances, subject to notice.

¶ 11–12

The Single Judge held that the lockdown triggered Clause 3 and directed CESCOM to retain only a proportion of the April 2020 demand charges, requiring the balance to be refunded or adjusted.

¶ 11–12

CESCOM appealed, challenging the interpretation of Clause 3 and raising the availability of a statutory consumer-grievance remedy.

¶ 13

02Issues

i.1. Whether “demand charges” levied under the applicable tariff were “minimum charges” reducible under Clause 3 of the agreements.

¶ 14–19, 30

ii.2. Whether the lockdown and JKTIL’s reduced consumption entitled it to an alteration of contracted demand under Clause 3, despite the absence of the notice contemplated by that clause.

¶ 20–29

03Law Applied

The Court construed the agreements as a whole: Clause 2 established the contracted demand, while Clause 3 permitted its alteration in specified circumstances, provided due notice of the cause and the extent of reduction was given for the full billing month(s); Clause 16 separately governed ordinary reductions of contracted demand through a fresh agreement.

¶ 20–23, 27–29

Under the Conditions of Supply, “demand charge” is based on contracted or recorded maximum demand, while “minimum charges” are charges payable under the applicable tariff.

¶ 15–17

The applicable tariff order calculated billing demand as the recorded maximum demand or 85% of contracted demand, whichever was higher.

¶ 18

Clause 9 of the agreements required payment for electricity supplied at tariff rates irrespective of whether the installation was in service or under disconnection.

¶ 24–25

Provisions in the judgment · 2 · Linked ones open on LawLens

KARNATAKA HIGH COURT ACT, 1961 Section 4

Electricity Act, 2003 Section 181

04Reasoning

The Court held that Clause 3’s heading did not determine its operation: the clause’s text altered “the contracted demand,” which had to be read with Clause 2, rather than providing a general waiver of charges described as minimum charges.

¶ 20–23, 30

The demand charges in question were calculated by reference to the contracted demand under the tariff; the tariff did not provide for a separate minimum charge.

¶ 18–19

Although JKTIL’s consumption had fallen, it had received and used some electricity in April 2020, and the record disclosed no notice seeking alteration of contracted demand under Clause 3.

¶ 26, 29

Its correspondence sought waiver or relaxation of charges, not the contractual alteration required by that clause.

¶ 26, 29

The Court therefore found no basis to reduce the charges under Clause 3.

¶ 29