1979 (4) TMI 158 - SC - Indian Laws

Issues Involved:
1. Statutory Obligation of U.P.S.E.B. to Supply Energy
2. Applicability of Section 22B of the Electricity Act, 1910
3. Validity of the Proviso to Clause 6(a)(i) of the U.P. Electricity Order, 1977
4. Allegations of Malice in Law
5. Change in Circumstances and Implied Repeal of the Order

Issue-Wise Detailed Analysis:

1. Statutory Obligation of U.P.S.E.B. to Supply Energy:
The High Court held that U.P.S.E.B. was statutorily obligated to supply energy to the Company under sections 18 and 26 of the Electricity (Supply) Act, 1948, and clause VI of the Schedule to the Act. However, the Supreme Court clarified that while U.P.S.E.B. is a licensee, section 22 of the Act, which mandates the supply of energy to every person within the area of supply, does not apply to U.P.S.E.B. The obligation under clause VI of the Schedule to the Act is applicable only where distribution mains have been laid by the Board, which was not established in this case. Therefore, the High Court's finding that U.P.S.E.B. was bound to supply energy to the Company was erroneous.

2. Applicability of Section 22B of the Electricity Act, 1910:
The Supreme Court held that the energy generated by the Renusagar Power Company, a subsidiary of the Company, was subject to control under section 22B of the Act. The Court emphasized that the definition of "energy" in section 2(g) of the Act is broad and includes energy generated and supplied under section 28. Therefore, the State Government had the authority to regulate the distribution, consumption, and use of energy generated by the Renusagar Power Company under section 22B.

3. Validity of the Proviso to Clause 6(a)(i) of the U.P. Electricity Order, 1977:
The High Court declared the proviso to clause 6(a)(i) of the Order ultra vires, holding that section 22B did not confer the power to prohibit the supply of energy to any consumer. The Supreme Court disagreed, stating that the proviso did not prohibit the supply of energy but imposed a cut of 50% in the monthly consumption of electricity, with a further regulation for consumers with their own source of generation. The proviso was a step towards regulating the supply and ensuring equitable distribution of energy. The Supreme Court found the proviso valid but chose not to restore it, given the current supply of 42.5 MW to the Company.

4. Allegations of Malice in Law:
The Company argued that the Order was made with malice in law to compel it to agree to a higher rate for energy supply. The Supreme Court examined statements by the Chief Secretary and the Minister and found no evidence of malice. The Court noted that the State Government's actions were based on genuine concerns about energy scarcity and the need for equitable distribution. The Court rejected the argument of malice in law, stating that the dominant purpose behind the Order was proper and reasonable.

5. Change in Circumstances and Implied Repeal of the Order:
The High Court held that the Order had outlived its purpose due to changes in circumstances, such as improved reservoir levels and newly commissioned units. The Supreme Court disagreed, emphasizing that the shortage of thermal energy persisted and that the overall demand for energy exceeded supply. The Court held that the Order remained valid and necessary for maintaining the supply and securing equitable distribution of energy. The Court noted that any significant improvement in energy generation could be addressed through a fresh application for exemption under clause 10 of the Order.

Conclusion:
The Supreme Court allowed Civil Appeal No. 921 of 1978 to the extent that the proviso to clause 6(a)(i) was valid but did not restore it. Civil Appeal No. 425 of 1979 was dismissed. The parties were directed to bear their own costs.

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