2009 (12) TMI 517 - HC - Companies Law

Recovery for damages - whether ultra vires? - Held that - Present case is in the nature of contract of indemnity for any loss of the licensee for the period less than two years or for six months which ever is less. Therefore, such recovery is in the nature of damages. Thus, such recovery cannot be held bad for the newly registered consumer under regulation 17 (ii), hence, it is intra vires. But when the consumer is old registered consumer where fresh agreement/s is/ are executed only for load capacity, cannot be treated to be newly registered consumer in view of regulation 17(vi), therefore, claim of licensee against consumer is ultra vires by operation. The order impugned is quashed. The petitioner is entitled to the relief of refund upon adjustment of admitted sum, if any, within a period of two months from the date of communication of this order

Issues Involved:
1. Validity of the impugned orders dated 20.4.1998 and 20.5.1998.
2. Validity of the citation dated 23.7.1998.
3. Recovery of amounts as arrears of land revenue.
4. Adjustment and refund of amounts owed by UPSEB to the petitioner.
5. Validity of regulation 17(ii) of the Electricity Supply (Consumers) Regulation, 1984, in light of Article 14 of the Constitution of India and Section 23 of the Indian Contract Act.

Detailed Analysis:

1. Validity of the Impugned Orders Dated 20.4.1998 and 20.5.1998:
The petitioner, a partnership concern engaged in the manufacture of steel strips, entered into multiple agreements with the U.P. State Electricity Board (UPSEB) for varying power loads over time. The dispute arose when the petitioner applied for load reduction, and despite disconnection on 18.9.1996, the respondents demanded six months' minimum consumption guarantee (MCG) charges. The petitioner challenged the orders dated 20.4.1998 and 20.5.1998, which upheld this demand. The court found that the dispute involved interpretation of regulation 17(ii) and its applicability to old consumers, thus necessitating judicial review.

2. Validity of the Citation Dated 23.7.1998:
The respondents issued a certificate under Section 5 of the U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958, for recovery of dues as arrears of land revenue. The petitioner argued that this action was taken without considering their pending representations. The court noted that the matter had previously been remanded by the Supreme Court for reconsideration on merit, specifically addressing the vires of regulation 17(ii).

3. Recovery of Amounts as Arrears of Land Revenue:
The court examined whether the petitioner, as an old registered consumer, was liable for MCG charges under regulation 17(ii). It was determined that regulation 17(ii) should not be read in isolation but in conjunction with regulation 17(vi), which deems the petitioner an old consumer despite subsequent agreements for load changes. Consequently, the demand for MCG charges based on the new agreement was found to be ultra vires.

4. Adjustment and Refund of Amounts Owed by UPSEB to the Petitioner:
The court directed that the petitioner is entitled to a refund of any amounts owed by UPSEB, adjusted against any admitted sums. This decision was based on the finding that the demand for MCG charges was not applicable to the petitioner as an old registered consumer.

5. Validity of Regulation 17(ii) of the Electricity Supply (Consumers) Regulation, 1984:
The court addressed the petitioner's challenge to regulation 17(ii) on grounds of being ultra vires Article 14 of the Constitution of India and Section 23 of the Indian Contract Act. The court referenced several judgments, including Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly and Hindustan Times v. State of U.P., to highlight the principle that contracts imposed by governmental authorities on parties in unequal bargaining positions are subject to judicial review. The court concluded that regulation 17(ii) is intra vires for newly registered consumers but ultra vires when applied to old registered consumers under regulation 17(vi).

Conclusion:
The court quashed the impugned orders and directed the respondents to refund any amounts owed to the petitioner within two months. The writ petition was disposed of, and no costs were awarded.

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