1997 (3) TMI 600 - SC - Indian Laws

Validity of Notification dated April 21, 1990 questioned - Held that - We cannot agree that the rate of late payment surcharge provided by clause 7(b) is penal, but having regard to the particular facts and circumstances of this case and having regard to the fact that petitioners could possibly have understood their obligation to pay interest/late payment surcharge for the period of stay, we reduce the rate of late payment surcharge payable under clause 7(b) to eighteen percent. But this direction is confined only to the period covered by the stay orders in writ petitions filed challenging the Notification dated April 21, 1990 and limited to March 1, 1993, the date on which those writ petitions were dismissed. For the above reasons, the appeals fail and are dismissed subject to the above mentioned direction with respect to the rate of levy of late payment surcharge under clause 7(b) of the Notification dated April 21, 1990.

Summary

Issues Involved:
1. Validity of the Notification dated April 21, 1990, revising electricity rates/tariffs.
2. Applicability of late payment surcharge under Clause 7(b) during the period of stay orders.
3. Interpretation of the Supreme Court's decision in Adoni Ginning Factory v. Secretary, Andhra Pradesh State Electricity Board.
4. Nature of the late payment surcharge as penal.

Detailed Analysis:

1. Validity of the Notification dated April 21, 1990:
The appellants challenged the Notification issued by the Uttar Pradesh State Electricity Board under Section 49 of the Electricity (Supply) Act, 1948, which revised electricity rates/tariffs and included a provision for late payment surcharge. The Allahabad High Court dismissed the writ petitions challenging the Notification, and the Supreme Court upheld this dismissal, affirming the validity of the Notification.

2. Applicability of Late Payment Surcharge under Clause 7(b) During the Period of Stay Orders:
The appellants argued that since the High Court had stayed the operation of the Notification, Clause 7(b) (late payment surcharge) was inoperative during the stay period (July 25, 1990, to March 1, 1993). The Supreme Court rejected this argument, stating that the stay of the Notification did not relieve the consumers of their obligation to pay the late payment surcharge. It was emphasized that an order of stay does not nullify the Notification but merely suspends its operation temporarily.

3. Interpretation of the Supreme Court's Decision in Adoni Ginning Factory v. Secretary, Andhra Pradesh State Electricity Board:
The appellants relied on the Adoni Ginning case to argue that no surcharge could be demanded during the stay period. The Supreme Court clarified that Adoni Ginning did not establish a principle that a stay of a Notification relieves consumers of their obligation to pay interest or surcharge. The Court pointed out that Adoni Ginning dealt with an injunction preventing the collection of dues but did not address the accrual of interest during the stay period. The Court affirmed that a decision is authoritative only for what it explicitly decides and rejected the appellants' interpretation of Adoni Ginning.

4. Nature of the Late Payment Surcharge as Penal:
The appellants contended that the late payment surcharge under Clause 7(b) was penal because it amounted to 25.5% per annum. The Supreme Court did not agree that the surcharge was penal but acknowledged the appellants' possible bona fide misunderstanding of the Adoni Ginning decision. Consequently, the Court reduced the surcharge rate to 18% for the period covered by the stay orders (July 25, 1990, to March 1, 1993).

Conclusion:
The Supreme Court dismissed the appeals, upholding the validity of the Notification dated April 21, 1990, and confirming the applicability of the late payment surcharge under Clause 7(b). However, the Court provided relief by reducing the surcharge rate to 18% for the specific period covered by the stay orders. The Writ Petition (C) No.761 of 1993 was also dismissed for the same reasons. No costs were awarded.