1995 (12) TMI 381 - SC - Indian Laws

Summary

Issues Involved:

1. Validity of upward revisions of electricity tariffs by the Kerala State Electricity Board.
2. Liability of the respondent-Company to pay interest on unpaid bills due to the revised tariffs.
3. Application of the principle of restitution in the context of erroneous judicial decisions.

Summary:

1. Validity of Upward Revisions of Tariffs:
The Kerala State Electricity Board revised electricity tariffs in 1980, 1982, and 1984. The respondent-Company challenged these revisions, and the Kerala High Court struck down the revisions on December 19, 1985. The Supreme Court, however, upheld the validity of the revisions on August 26, 1986, making the respondent-Company liable for the revised tariffs.

2. Liability to Pay Interest:
The Board demanded interest at 18% per annum on the unpaid bills due to the revised tariffs. The respondent-Company refused to pay the interest and challenged the demand in the Kerala High Court. The Single Bench quashed the interest demand, and the Division Bench upheld this decision, stating that there was no enforceable demand after the High Court's decision until the Supreme Court's interim order.

3. Principle of Restitution:
The Supreme Court emphasized the principle of restitution, citing various precedents, including decisions from the Privy Council. It was highlighted that the erroneous decision of the Kerala High Court allowed the respondent-Company to avoid payment based on revised tariffs and gainfully utilize the saved amount. The Supreme Court held that the Board is entitled to claim interest at 18% on the unpaid bills as part of restitution to restore the Board to the position it would have been in had there been no erroneous decision.

Conclusion:
The Supreme Court set aside the Kerala High Court's decisions, allowing the Board to claim interest at 18% on the unpaid portion of the bills. The appeals were allowed, and no order as to costs was made.